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A senior from Montana has delivered a viral speech about the sorry state
of property taxes in the Treasure State.
“I’m on Social Security, I’m 68-years-old and working just to pay my
taxes,” says Kurt, in a clip shared on TikTok by Ryan Busse, who is
running to be the next governor of Montana.
Kurt claims that over the last couple of years, his annual property taxes
have soared from $895 to almost $8,000 — an increase of around 790% —
which he says is like paying almost “$700 a month rent to the state to
live in our own house.” The state has an Elderly Homeowner/Renter Tax
Credit, and the maximum credit is $1,150.
“There needs to be a moratorium on what we have to pay,” he says, adding
that he’s had to continue working into what should be his retirement
golden years to cover his mounting property costs. “I’m stubborn enough
[that] I don’t want to dig into my bank account to pay them.”
Kurt is one of thousands of Montana homeowners suffering sticker shock
over recent property tax hikes. He says: “We just can’t take this anymore.
This was a great place and it still is, but the people that made it great
can’t afford to live here anymore.”
Here’s what’s going on in the Treasure State.
Soaring property values
There are many reasons why property taxes may increase over time. First
and foremost, property tax is typically based on a percentage of a home’s assessed value — so if your value goes up, it’s likely that your tax bill
will too.
In Kurt’s case, he claims to have bought his property in 1995. In the 29
years since then, the family home (he does not share where in Montana the property is located) has undoubtedly increased in value.
According to FRED Economic Data’s house price index for Billings, MT (the state’s most populous city), the average house price at the end of 1995
was around $103,860 and by the end of 2023 it had soared around 272% to
more than $387,000.
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Looking at the data since 1985, the steepest jump in value in Billings and elsewhere in the state occurred between 2021 and 2023 — during and after
the COVID-19 pandemic, when there was a surge of migration to the state
and housing demand quickly outpaced supply. This corresponds with Kurt’s complaint that his property taxes have soared “over the last couple of
years,” which likely occurred because his property value increased.
Instead of working deep into what should be his retirement years, Kurt
could sell the family home, collect his capital gains and move somewhere smaller (and with a more manageable tax bill) — but the house holds too
much sentimental value for him to consider that.
“My children were raised [there]. They want to get married there, and I
plan on being there until the very end,” he says — even if that means
taking winter and summer shifts.
Other homeowners in Montana, who aren’t quite so attached to their
properties, may see selling and moving as their only viable option.
According to a Montana Free Press (MTFP) analysis of revenue department
data for the 956,000 properties on the state’s property tax rolls in both
2022 and 2023, the median Montana residential property owner saw a 21%
hike on their property taxes this year, with typical increases ranging
between 11% and 35%. That translates into residential tax bills that will
be $98 to $660 a year more.
Where do the taxes go?
Property taxes make up almost 97% of local tax revenue here, considerably
more than the 71% share for local governments in all U.S. states together, according to a state legislature brief. Property taxes account for 9.9% of
the tax revenue of the Montana state government, as opposed to 1.7% for
all the state governments.
Montana's great reliance on property taxes is possibly due to the
comparitively lower tax revenue from sales and excise taxes. Montana has
no state or local sales tax.
Property taxes are calculated by multiplying the property’s market value
by its tax rate (1.35% for residential properties) and its mill levies
(one mill generates $1 for each $1,000 in taxable value). For example, for
a property worth $400,000 with a tax rate of 1.35% and a mill rate of 650,
the property tax would be $3,510.
Almost all property taxes in Montana go towards county and city government services like K-12 schools, law enforcement and fire departments. This
money does not typically go towards state services, like universities and prisons, which are funded by state income tax.
As inflation has increased nationwide, this has not only driven up the
cost of living, but it also inflated the costs of providing public
services. As a result, some local governments have had to compensate by
raising property tax rates.
There’s no easy fix to Montanans’ property tax nightmares. The state
department of revenue has promised property tax rebates for the 2022 and
2023 tax years of up to $675 for eligible homeowners, using $350 million
from the state’s budget surplus.
While that may help some cash-strapped Montana homeowners, the
“moratorium” on taxes that Chuck so desperately wants remains highly
unlikely.
https://finance.yahoo.com/news/montana-man-68-begs-moratorium-
100200538.html
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