House Midsession Report
Representative Brad Barker, House District 55
This past week marked the transmittal break at roughly the halfway point of Montana’s 69th Legislature. All general bills had to pass from the House or Senate to the opposite chamber to remain alive. 898 bills made it to the opposite chamber by the deadline. All general bills that did not pass third reading by the deadline are dead. Moving forward, only Appropriations (spending) bills, revenue (taxes and fees) bills, ballot initiative proposals and interim study proposals have later transmittal dates and can still be introduced.
Short-Term Property Tax Relief
The leading near-term property tax relief bill, House Bill (HB) 231 revises property tax rates with a three-tiered system for residential properties (0.9%, 1.1%, 1.9%) and a two-tiered system for commercial properties (1.5% under $1.9M, 1.9% above). HB 231 predominantly shifts the burden from resident homeowners to non-resident and short-term rental homes. The combined value of Montana resident homesteads and second homes up to two times the median home value receives the lowest rate of 0.9%. The portion of a homestead’s value above two times and up to four times the median value is taxed at a rate of 1.1%. Above four times the median is taxed at 1.9%. Long-term rentals are taxed at 1.1%. Non-homestead or long-term rental homes are taxed at 1.9%.
Long-Term Property Tax Relief
Four of my bills seek to reduce property taxes in the longer term by reducing spending and asking voters to decide on shifting revenue by using sales tax to reduce property taxes by $1.3 billion.
On the spending side, my HB 567 gives school districts incentives and the tools needed to share resources to lower costs for local property taxpayers. If all school districts in each county share resources for administrative functions (like payroll), custodial services, instructional services, technical education, food services, software licensing, special education, and transportation, they would receive a 50% increase in the quality educator payment from the state. Participation is optional for each local school board. This bill passed the House and is now in the Senate.
My HB 606 streamlines the tools available for school district reorganization. The only way for school districts to currently reorganize two unlike districts, like an elementary and a high school district, into one district is through an annexation. This requires the annexed district to dissolve its board rather than joining both boards which could leave that community without representation. HB 606 allows two or more districts to reorganize with full representation from both original boards. Recognizing that rural schools serve as the foundation of Montana’s rural communities by providing educational, social, and economic stability, my goal is to make them stronger by improving operational efficiency, resource sharing, school choice, and local control. This bill passed the House and is now in the Senate.
On the revenue side, two bills that I introduced this week would ask voters to consider adjusting tax policy to the reality of Montana’s current economy. We have seen substantial reductions in natural resource extraction and increases in tourism. Over the past 20 years, property tax revenue lost as mills and mines closed shifted to other property tax classes. The preponderance shifted to residential property taxes since they account for the majority of the total property value in Montana.
Before considering any initiative to reduce property taxes with sales tax, we must first ensure that it could only be used for that purpose. The Montana Constitution currently caps sales tax at 4%. One bill, draft LC 3590, is a Constitutional Initiative to further restrict the use of any statewide sales tax. This initiative would add one line to Article XIV, section 8 of the Montana Constitution, “Sales tax or use tax revenue, less administrative costs, must be used solely to reduce property taxes that fund public schools and the Montana university system unless appropriated for other purposes by a vote of three-fourths of the members of each house of the legislature”. This bill requires a vote of two-thirds of the Legislature or 100 of 150 votes to go on the November 2026 ballot.
A second bill, draft LC 3589, is a statutory referendum to ask voters if they want the Legislature to levy a 4% sales tax to reduce the property taxes that fund public schools and the Montana university system. The ballot initiative would exempt housing & utilities, groceries, fuel used for transportation & agriculture, health care, and financial & insurance services from any sales tax. Modeling for fiscal year 2025 shows a 4% sales tax with the exemptions would generate about $1.3 billion. It would not eliminate the roughly $1.66 billion of state and local property taxes that fund education, but it could significantly reduce those taxes which account for 54%, on average, of each tax bill. It would not reduce the additional $470 million in income taxes that also fund education. This bill requires a simple majority in both chambers of the Legislature to appear on the November 2026 ballot.
Please email, text, or call with any questions or feedback. I am honored to serve you and remain committed to continuing to earn your trust.
