Missoula, MT — Property tax relief has been a key focus of this year’s Montana legislative session, and lawmakers are considering a novel approach to ease the tax burden. Rep. Brad Barker, R-Luther, introduced two bills on Wednesday that would ask voters whether they support a statewide sales tax if it meant reducing property taxes.
The two pieces of legislation, House Bills 841 and 842, were presented in hearings before the House Taxation Committee. While neither bill would implement a sales tax directly, they would lay the groundwork for the Legislature to act if public support is given.
House Bill 842: Statutory Referendum for a Sales Tax
House Bill 842 proposes a statutory referendum to be placed on the November 2026 ballot. If passed, it would allow the Legislature to enact a statewide sales tax of up to 4%, with the revenue earmarked to reduce property taxes that fund public schools and universities.
The bill also specifies that the sales tax would exempt essential purchases, such as housing, groceries, fuel, and healthcare. Barker argued that this exemption would help shield lower-income residents from the tax’s impact, a key concern for many critics of sales taxes.
“If we are going to consider a sales tax, we want to make sure it minimizes the burden on the people who are already struggling with the cost of living,” Barker said during Wednesday’s hearing.
House Bill 841: Constitutional Amendment to Protect Sales Tax Revenue
Alongside HB 842, Rep. Barker also introduced House Bill 841, a constitutional amendment that would guarantee any revenue generated from the proposed sales tax could only be used to reduce property taxes. Under the proposed amendment, the Legislature could only allocate the funds to other purposes if three-quarters of both houses of the Legislature approved the change.
This measure is seen as crucial by Barker, who believes that without such protections, it would be difficult to convince the public to support a sales tax. “A sales tax may raise significant revenue, but without guarantees that it will be used specifically for property tax relief, the public might be reluctant to accept it,” Barker said.
A New Economic Landscape in Montana
Montana voters rejected statewide sales taxes in 1971 and 1993, but Barker argued that the state’s economy has changed considerably since those votes. He pointed to the decline of traditional industries like mining and milling, which once provided substantial revenue for the state, and the increase in tourism as key factors that make the current tax system less effective.
“We’ve lost mills, we’ve lost mines, we’ve lost the revenue associated with that production and extraction of our natural resources,” Barker explained. “At the same time, we’ve seen a significant increase in the amount of tourism coming to this state, which hasn’t been reflected in our tax system.”
Barker estimates that a 4% sales tax could raise up to $1.3 billion annually, a sum that could significantly reduce property taxes, especially those that fund education.
Support and Opposition
Supporters of the bills argue that a sales tax could be a fair and effective way to address the growing burden of property taxes, particularly on homeowners. Ross Butcher, a Fergus County commissioner who spoke on behalf of the Montana Association of Counties (MACo), expressed support for HB 841, calling it a crucial safeguard to ensure the tax would not be seen as an additional burden.
“We need to make sure that the local taxpayer isn’t just getting taxed again,” Butcher said. “This bill defines a way to ensure that the funds raised by a sales tax would only be used for property tax relief.”
However, the proposal is not without its critics. Opponents of the bills, including Amanda Curtis, president of the Montana Federation of Public Employees, argue that the proposal sets up a false dichotomy between property taxes and a sales tax, forcing voters into a difficult decision. Curtis warned that the shift from property taxes to a sales tax could disproportionately affect lower-income Montanans, who tend to spend a larger portion of their income on taxable goods and services.
“This creates a false choice,” Curtis said. “It forces voters to choose between supporting their schools and taking on an additional tax burden, which many may find unfair.”
The Road Ahead
While the bills have sparked significant debate, they are far from a done deal. To place a constitutional amendment on the ballot, HB 841 would need to garner two-thirds support in the Legislature — a tall order that may require bipartisan backing. By contrast, HB 842, the referendum for a sales tax, requires only a simple majority in both chambers.
Despite the hurdles ahead, Barker is optimistic about the potential for these bills to spark a broader conversation about Montana’s tax system. He emphasized that the bills are meant to gauge public opinion and would not immediately result in the implementation of a sales tax.
“Think of this ballot initiative as a poll of the voters,” Barker said. “If the public is interested in exploring a sales tax as a way to reduce property taxes, then we can work out the specifics later. But first, we need to know what they think.”
As the legislative session continues, it remains to be seen whether the bills will gain enough support to make it to the 2026 ballot. For now, the future of Montana’s tax system may depend on the will of the voters.
