Helena, Montana – Many Montanans have expressed worry in recent years about property taxes, which are generally decided at the municipal level rather than the state level. Now, a plan has been put forth that aims to curb the rise in local taxes by limiting the annual growth in overall spending for large cities and counties.
The House Local Government Committee held a hearing on House Bill 324 on Thursday. It was introduced by Rep. Caleb Hinkle, a Republican from Belgrade. For counties with more than 20,000 population and cities with more than 10,000 citizens, it would impose an expenditure cap starting in 2026. Except in a proclaimed emergency or when voters authorize the increase for one fiscal year, the total annual expenditures of such governments could not rise faster than the rate of inflation and population growth put together. Any surplus funds would have to be used to lower property taxes.
The “Taxpayer Bill of Rights,” or “TABOR,” is a Colorado legislation, according to Hinkle. He asserted that managing municipal spending was preferable to imposing a property tax ceiling.
Former Missoula city councilman and current director of community engagement for Americans for Prosperity-Montana, Jesse Ramos, testified in favor of HB 324. He said that although there are currently restrictions on the number of mill levies that can be raised without a public vote, governments can still raise money in other ways, such as through special district funds. He claimed that by covering all sources of income, the law will increase transparency.
“If cities are doing a good job, they don’t even know we passed the bill,” he said. “And if cities are doing ‘a bad job’ by just spending too much and taxing their citizens out of their homes and making it unaffordable for folks to live there, they just have to ask the voters. I’m not saying they can’t do it, this bill doesn’t say they can’t do it, the sponsor isn’t saying they can’t do it – they’re just saying, ‘Just be transparent.’”
The bill now covers 10 counties (Butte-Silver Bow, Cascade, Flathead, Gallatin, Lake, Lewis and Clark, Lincoln, Missoula, Ravalli, and Yellowstone) and seven cities (Belgrade, Billings, Bozeman, Great Falls, Helena, Kalispell, and Missoula).
HB 324 was opposed by organizations like the Montana Association of Counties and the Montana League of Cities and Towns. Eric Bryson, executive director of MACo, outlined a number of technical issues with the bill that his organization had, including how it will affect “enterprise funds” that are meant to be self-sufficient and the fact that counties manage to fund for numerous other local districts whose operations they cannot control. According to him, local governments cannot handle all funding equally, and supporters would have to make changes to the law in order for it to pass.
“I would be happy to sit down with them and identify ways that, in Montana, we have processes in place that we could come up with a theory to cap year over year both revenues and expenditures,” Bryson said. “But you can’t take a Colorado bill and slap it in Montana and make it work. And that’s what this bill does.”
Ramos stated that he anticipates modifications will be offered to meet the majority of the objections voiced by detractors.
On Thursday, the committee did not immediately move on the bill.
