Gianforte’s Second-Home Tax Faces Legislative Headwinds
Sponsor pushes business lobbyists to oppose competing bill as some lawmakers express doubts about governor’s signature property tax proposal
An email sent to some of the state’s most prominent business lobbyists this weekend by the lawmaker advancing Republican Governor Greg Gianforte’s signature property tax relief bill indicates that the bill may be in political jeopardy as it competes with another proposal moving through the Montana Legislature.
The bill’s sponsor, Representative Llew Jones, R-Conrad, expressed optimism Sunday about the prospects of the governor’s bill. Other lawmakers, though, told MTFP on Sunday the governor’s measure is drawing opposition as it works its way through the Montana Senate and that they currently prefer other ideas.
The governor’s proposal, House Bill 231, aims to reduce homeowner and landlord property taxes while raising taxes on second homes and Airbnb-style short-term rentals to minimize how much residential relief shifts higher taxes onto businesses. Developed by Jones through Gianforte’s property tax task force, the measure has been touted by the governor as his signature response to surging residential property taxes. Those rose 21% on median between 2022 and 2023 and, according to the state revenue department, could increase by another 11% as a result of this year’s reappraisal cycle.
However, in a message sent at 4:44 a.m. Saturday to lobbyists who represent refineries, utility companies and agricultural groups, among others, Jones cautioned the recipients that a competing tax relief measure, House Bill 528, seems to have become “the preferred bill for implementing tax cuts.”
Sponsored by freshman Representative Ed Byrne, R-Bigfork, HB 528 slashes tax rates for residential, commercial and agricultural property in an effort to offset rapid property value growth — essentially implementing the simple tax rebalance pitched by Democrat Ryan Busse as he challenged Gianforte in last year’s election.
Byrne said in a Sunday interview that he and the bill’s other backers have deliberately kept it low-profile as they’ve garnered support for an alternative to Jones’ bill from conservative Republicans and Democrats.
“Him and the governor are dead set — they want [HB] 231 and nothing else,” Byrne said.
Jones, who occupies a central role in most of the Capitol’s tax and budgeting discussions as the chair of the House Appropriations Committee, also told the lobbyists that his committee was likely to vote HB 528 forward this week.
“I am comfortable moving forward in this direction if that’s the general agreement, although I believe [HB] 231 was more beneficial for almost all groups,” Jones wrote.
Supporters of the simple rebalance approach say it’s an elegant way to roll back the clock on Montana’s pandemic-era property value surge. Jones, though, has argued for his more complex proposal, saying a simple rebalance shifts taxes onto industrial properties and would saddle farm and small business properties with ruinous tax increases in rural jurisdictions that haven’t seen rapid home value growth.
Jones’ Saturday email included attachments with analysis of the Byrne tax bill conducted at his request by the Montana Department of Revenue. It estimates that HB 528 would drive up taxes for properties that aren’t residential, commercial or agricultural — i.e., industrial properties — by 24% on average next year relative to current tax law. A similar analysis for the Gianforte-Jones bill, in comparison, forecasts an 8% average increase.
The revenue department analysis also details potential impacts on specific taxpayers. It indicates that, for example, HB 528 would raise the annual tax bill for the Phillips 66 refinery in Billings by $3.8 million. Similarly, Calumet’s Montana Renewables could see a $1.9 million increase on its biofuel refinery in Great Falls.
“There are certainly nasty bites in some counties for key businesses, so I was a bit surprised that this is the chosen bill,” Jones wrote. He continued: “If this approach is not the desired one, it’s important for Appropriation committee members and legislative leadership to be informed as soon as possible.”
Jones’ email was provided to MTFP by a source. In a Sunday interview, he confirmed he had sent the message but maintained he was still confident in his ability to shepherd the governor’s bill through the Legislature.
“I’ll lean into [HB] 231 here once House Bill 2 crosses,” Jones said, referring to the state’s major budget bill, which is scheduled for debate on the House floor this week.
His Saturday email, Jones said, was intended to nudge lobbyists into more actively resisting HB 528, which passed an initial House floor vote 90-9 with minimal debate March 21 and drew only two opponents as it was heard before the House Appropriations Committee on March 25. The Gianforte-Jones bill, in comparison, passed its most recent House vote on a 68-30 margin.
“Since we’re not hearing from any of the business lobbyists any of the concerns with the Byrne bill currently, I’m assuming they’re OK with it,” Jones said Sunday.
One of the lobbyists included on Jones’ email, Montana Taxpayers Association President Bob Story, did testify against HB 528 before the appropriations committee, where he called it “just about the most disruptive bill to the current property tax system that we’ve ever seen.”
Other lobbyists who were included on the message include Mark Taylor, whose clients include Colstrip operator Talen Energy; Mark Baker, whose clients include Exxon Mobile, Charter Communications and AT&T; Melissa Lewis, whose clients include Charter Communications and the Montana Petroleum Association; NorthWestern’s Alan Olson; Calumet’s Krista Lee Evans; and the Montana Farm Bureau Federation’s Nicole Rolf.
While there’s broad agreement among lawmakers that the Legislature needs to pass significant residential property tax relief this year, different legislative factions have spent much of the session jockeying to advance their own ideas without reaching a politically viable compromise.
Gianforte and Jones, who is the de facto leader of the Legislature’s comparatively moderate Republican “Solutions Caucus” faction, have pushed HB 231. Minority Democrats have advanced their own alternatives, including House Bill 155, which rebalances taxes between different classes with a tiered rate structure that focuses relief on lower-value properties. Senate Republican leadership, which is generally aligned with the party’s hardline wing, has also advanced Senate Bill 90, which in its current form would divert some lodging tax dollars to set up an annual tax rebate fund.
Senate Taxation Committee Chair Greg Hertz, R-Polson, said Sunday that he opposes both Jones and Byrne’s bills in their current forms, in part because the second-home tax increase in the Jones’ bill would fall on Montana taxpayers who own multiple properties.
“We still need to work through the process,” Hertz said. “I don’t see anything right now that has broad-based support on either side of the aisle.”
The sentiment was echoed by House Minority Leader Katie Sullivan, D-Missoula, who said Sunday that she’s hearing the Gianforte-Jones bill is struggling to attract support in the Senate, in Senate Tax specifically.
“I would say both legislators and lobbyists are looking to other tax bills in the building to see what’s available,” Sullivan said.
While Gianforte initially said he wanted HB 231 passed by mid-February so its provisions could be implemented for this fall’s property tax bills, Montana lawmakers commonly negotiate major policy proposals until the closing days of legislative sessions, sometimes overhauling bills with the resulting policy ideas late in the legislative process. This year’s session is currently scheduled to conclude no later than early May.
Byrne, HB 528’s sponsor, said he’s worried that legislative inaction on property tax relief would empower a tax reform group that is working to place a tax cap constitutional initiative on the state’s 2026 ballot. Earlier iterations of the tax cap initiative have been vigorously opposed by unions and business groups that argued it would upend Montana’s property tax system, which funds K-12 education, law enforcement and most other local government services.
“If the Legislature doesn’t do significant property tax I think every person I know will sign that initiative regardless of how bad it is,” Byrne said.
By Eric Dietrich for Montana Free Press
Can't believe I'm agreeing with Gianforte, but raising taxes on second homes and Airbnb-style short-term rentals is a very good idea.