MACo Takes Governor to Task Over Inflating Tax Base Without State Need and Without Benefit to Schools

On November 28, Ross Butcher, Montana Association of Counties (MACo) President and Fergus County Commissioner, sent a letter to Governor Greg Gianforte asking the governor to exercise restraint in using the levying power the Montana Supreme Court has determined is his. Butcher asked Gianforte to refrain from raising the calculated school equalization levy from the 77.9 mills, as calculated by his Department of Revenue, to the maximum 95 mills allowed by law “and demonstrate the greater fiscal responsibility you’ve asked county commissioners to demonstrate.”

It has been reported that on November 29, Kaitlin Price, a spokesperson for the Governor, regarding Butcher’s letter responded to NBC Montana:

“As the governor has said repeatedly, most local governments, including counties, are good stewards of taxpayer resources, live within their means, and exercise restraint with property tax increases."

“Some, however, are spending out of control, continue to fund their largesse with skyrocketing property taxes, and unreasonably put that heavy burden on the backs of Montana homeowners. The governor and legislators in 2021 and 2023 enacted fiscally responsible, conservative budgets that have held the line on new spending, permanently cut Montanans’ taxes, and provided Montanans with up to almost $4,000 in tax rebates. The counties that are spending and taxing at alarming rates should take that page out of the governor’s playbook and rein in their spending and taxes," said Price.

“If the governor were to cut the public school equalization mills, as wealthy lobbyists and some county commissioners are calling for, the effect would be to defund our public schools and harm Montana students. A few large industrial corporations and out-of-staters who have second and third homes in private resort communities would receive a massive windfall, while the average Montana homeowner would get enough to cover a couple cups of coffee a month. As the governor has said repeatedly, we won’t defund our public schools, and we’ll ensure each Montana child has access to a quality education," says Price.

MACo takes issue with items in the response.  First, they state that the decision to levy more than 77.9 mills is discretionary and he (the governor) is choosing to raise property taxes.  Eric Bryson, Executive Director of MACo, stated, “If he does that, the new base for school equalization will be the revenue derived from the mills this year (an inflated amount because they are using extra mills to generate an additional $100 million).  Property taxpayers will pay the increased amount repeatedly because next year’s calculation is derived from this year’s revenue.” Increases in mill levies are limited to the dollar amount previously levied plus half the rate of inflation for the previous three years.

Second, MACo maintains that the State has the funds to cover the school funding obligation already on hand.  Bryson explains, “The extra mills Gianforte is levying this year simply saves the general fund.  Period.  Schools get no more or no less money whether the levy is at the current maximum of 77.9 mills or the discretionarily inflated 95 mills.  No school benefits or is harmed in the difference, only the State General Fund (which already has a surplus).  Schools don’t need the extra mills, and the State General Fund doesn’t need the extra mills.  Levying 77.9 has no impact on school funding.”

Additionally, MACo points out that Class 4 property owners (residential) pay the vast majority of property taxes in Montana.  “Citing second home owners and centrally assessed (who’s taxes are paid by rate payers anyway) as disproportionately benefiting is factually incorrect and is a red herring.  Residential property tax payers benefit from the State limiting its property tax extraction to the current mill levy limitation of 77.9 mills.  Prudent and fiscally responsible management would only levy the extra mills, held in reserve, in times when the State and the Schools need the revenue.  State school funding is set this biennium, and there will be no more nor less revenue regardless of the collection of the equalization mills.  If the State doesn’t need the cash, and the schools won’t benefit from the extra mills, then why is the State levying mills in excess of the current year limitation?  ONLY TO SAVE THE GENERAL FUND AND ESTABLISH AN INFLATED BASE to extract from next year.”

Finally, Bryson clarified “Local governments, following the taxation laws and delivering the services demanded by local constituents, reap the benefits of retaining their locally elected offices in elections across Montana.  Local governments that don’t deliver what their constituents demand or that ‘overtax and overspend’ over the objection of their local voters, suffer the electoral consequences.  If the Governor doesn’t like the way his local government governs, he gets one vote in Gallatin County.”