|
Governor’s Property Tax Reappraisal Advisory Council
Meeting
|
Note: Reports and other materials from this meeting
are available by request. Please contact Cynthia Piearson,
Department of Revenue, at (406) 444-6700 or cpiearson@state.mt.us.
Jan. 11, 2003
MINUTES - DRAFT
Attendees:
Chairman Senator Bob Story
Vice Chairman Kurt Alme
Representative John Brueggemann
Representative Gary Branae
Ward Ernst
Excused:
Senator Emily Stonington
Nick Hogan
Susan Humbolt
Department of Revenue Staff Present:
Judy Paynter, Tax Policy and Research Process Lead
Brad Simshaw, Principal Tax Policy Analyst
Ryan Jose, Tax Policy Analyst
Marla Tilton, Administrative Assistant
Guests:
Senator Bob DePratu
Representative Jim Peterson
Representative Ron Devlin
Representative Carl Waitschies
Information
The information base is the material prepared for the
Council. The only handouts referred to are those given in
addition to the basic Council materials.
The meeting was called to order at 9:05 am and roll call was
taken.
Chairman Bob Story opened the meeting and reviewed the history
of the Council meetings. Chairman Story noted that during the
meeting on December 20, 2002, the Council moved to make one
recommendation to the Governor and may have several more during the
final meeting today. The first recommendation was to prepare
to do the traditional adjustments that have been done in the past,
which are rate and exemption adjustments. The first motion is
as follows:
The Council recommends an adjustment to decrease the tax rate
from 3.46% to 3.00%, increase the homestead exemption from 31% to
34%, and increase the comstead from 13% to 15% along with the
current law phase-in of the January 1, 2003 appraisal values.
Brad Simshaw, Department of Revenue, gave his report on
Further Analysis of Preliminary Reappraisal
Valuations. The Council discussed points in the
report.
Chairman Bob Story asked for further explanation of the chart on
page 5 using Madison County as an example. He noted that the
improvement change in tax liability shows 12.6% and the land change
in tax liability was 13.98% and the dollar amounts are $114.46 for
improvement and only $11.72 for land. Chairman Story wanted
to understand the large dollar difference between improvement and
land. Brad Simshaw responded that this suggests the
improvement value in Madison County compared to land value is about
10 times more on an average. The ratio of the land value to
the improvement value is greater in some counties than others.
Representative Ron Devlin used Sweet Grass County as an example
and asked for further clarification of what the $172.99 increase in
the chart on page 5 represents. Brad Simshaw responded that
the $172.99 represented what the average increase for the
improvement and land property tax liabilities would be if
reappraisal were phased-in over the next 6 years. Judy
Paynter added that this increase would be due to reappraisal and
does not reflect what may occur due to changes in mills due to
budget changes. The mills reflected in this report assume
that local governments would hold the property tax dollars in their
budgets steady.
Chairman Bob Story commented that with the chart on page 7,
where the numbers start going negative, those revenues have to be
picked up by other property taxpayers in the county. Brad
Simshaw responded that all taxpayers in all the tax classes would
make up this money.
Dud Mahler, citizen from Whitefish, looking at the information
on page 8 in the appendix, asked what allows an increase in the
number of people that had decreases in taxes and lowers the number
of people that had increases? Brad Simshaw responded that it
is a comparison of the top chart to the bottom chart on page
8. Chairman Bob Story added that if we did nothing, we would
have an increase in revenue under current law. Basically, we
are taking a potential increase in revenue and backing out state
revenue, and local government and school revenue, by adjusting the
taxable value. Approximately the same revenue is
collected. Dud Mahler said it seems that the property owners
who will get increases, get lower increases. Chairman Story
responded that the people who get increases under the
Council’s recommendation get lower increases than they would
under current law. Under the Council’s recommendation,
the revenue paid by taxpayers who get an increase is offset by the
revenue lost from taxpayers who get a decrease, and the state
collects slightly less money on the 95 and 6 mill levies.
Representative Jim Peterson asked if this would be done by
increasing the exemption and lowering the taxes. Brad Simshaw
responded that decreasing the tax rate from 3.46% to 3.00% would in
a sense take them back to current law levels. The tax rate
applied to agriculture land mitigates the average increase of 15%
due to reappraisal.
Dud Mahler, citizen from Whitefish, questioned the total number
of dollars paid by the people that are paying total taxes, and
asked if the burden shifted to that same number of people who are
on the other side? Chairman Story responded that if we look
at the last chart on page 7, it would be seen that in every county
within the residential property class there are some homeowners
paying more and some paying less. Once you get to Roosevelt
County, the ones paying less accumulatively, pay less than the ones
paying more so that the homeowners in the whole of all those
counties pay fewer taxes. Dud Mahler added that the burden
seems to shift to those people who had the increase. Chairman
Story added that some of it shifts to other classes, such as
business equipment, centrally assessed utilities, railroads and
other classes of properties.
Harold Lockhart, citizen from Whitefish, asked how close the
estimates were to reality. Chairman Story responded that
these are estimates and any changes would be due to new
construction.
Brad Simshaw informed the Council and audience of corrections on
pages 10 and 11 where reference to the year 2003 should be
2002.
Harold Lockhart, citizen from Whitefish, asked what criteria was
used in creating the tables on page 11. Brad Simshaw
responded that the criteria used in this group was selected by
having at least a 25% increase in liability and that increase had
to be $500 or greater. Therefore, the criteria eliminates
those that had a 25% or greater increase but that increase was only
$100. It also eliminates those that may have had a $600
increase but that increase was only a 10% increase in
liability.
Ward Ernst asked if the Council were to recommend a homestead
split between land and improvements, would this be feasible
administratively? Brad Simshaw responded that there would be
no problem with the computer system in the offices of the
Department of Revenue.
Chairman Bob Story opened the meeting for further
discussion.
Representative John Brueggeman commented that he was interested
in acquisition value and would also like to see the land exemption
go up.
Representative Gary Branae commented that he would like the
Council to look further into acquisition value.
Ward Ernst commented that he was not convinced that acquisition
value was the answer, especially in a long-term situation.
Ward added that he did like the splitting of the land and
residential property.
Kurt Alme pointed out that the Council asked the Department of
Revenue staff to come back with more research data on the valuation
methodology. If we stay with the same valuation methodology
we’ve been using, what does it look like for folks who are
seeing big increases? Where are they located, what are their
situations, and are there land improvements issues? Kurt
added that we expected land improvements to be the major cause
statewide, but it turned out to be more of a mix. Kurt Alme
asked if there was another methodology the Council needed to
use. Is there a land cap style methodology or is there
something we can do by lining out the interests we are trying to
protect, one being the ability to pay?
Chairman Bob Story added that we start having a two-track system
in the legislature. One is to move to acquisition value,
which has been tried before and somewhat difficult to do. The
other one is to use the traditional approach and set up systems for
those people who need help.
Mike Gustafson, citizen of Billings, commented that we are
shifting the taxes back and forth between improvements and
land. He added that we have to recognize this state is going
through a major change. We may have to take a look at the
whole property tax system.
Dud Mahler, citizen of Whitefish, commented that what we are
talking about doing is band-aiding the current system. We
will be in the same place, doing the same thing six years from
now. It just makes sense that we look at overall property tax
reform now. If we don’t do something now, we’ll
face it next year and end up needing tax reductions. Right
now we can make a tax revenue neutral tax reform bill. The
models for coming up with tax reform exist. There are many
other states that have done this, so why can’t Montana?
He would suggest we change our policy of property taxation to say
we are going to have a fixed budget and we will count for increases
and decreases in property, but we are going to make it revenue
neutral all the time. Property will be reappraised, but if
the increase of the assessed value is limited to that amount that
has decreased throughout the state, then the problem has been
solved. This requires changing the thought process. He
thinks acquisition value is the way to go, but if we decide that is
not the way to go, then we can do it within the current
system. He recommends following the example of Michigan,
where they reassess on a regular cycle and limit the assessed value
increase to 2% or CPI.
Ward Ernst asked Mr. Mahler if he was saying that we should
throw out market values? Dud Mahler responded no because we
need market values. Mr. Mahler suggested that if we reassess,
then market value would increase. Next is the homestead
exemption, fix so you limit the assessed value increase to 2% a
year or CPI. If that rate is held until the property is sold
and then increased for the new buyer, the taxes will be very
fair.
Jim Stack, citizen from Whitefish, commended the Department of
Revenue for coming up with the idea of the landstead exemption,
something to help ease the impact. Mr. Stack added that the
problem with the landstead exemption is that after doing a search
on the Internet, nothing came back. We are really struggling
to try to put a band-aid on top of a band-aid. We have the
comstead exemption for commercial class and the homestead exemption
for residential. Now we are going to do a landstead
exemption. The newspapers in the state describe our property
tax as the most hated tax in Montana and there is a good reason for
it because the residents of Montana don’t trust it. It
is totally unpredictable. The percentages that were done by
the Department of Revenue give us a lot of comfort. Even with
the best fix available in the current system, 1 in 13 of the
Montana residents have more than a 25% valuation increase; 1 in 75
have more than a 50% increase in valuation.
That can be devastating for retirees. Mr. Stack said that
in his November presentation he laid out the challenge:
fairness, protection, predictability. Predictability means
that Montana residents should have an idea where their property
taxes are going to go from one year to the next; however, they
don’t. They live in fear of what the six-year appraisal
cycle will do and they even live in fear of what the legislature
can do in between these cycles. Removing the land cap doubled
the property taxes for hundreds of property owners in the Flathead
area. We need protection for the retirees and fairness for
all Montana residents. Mr. Stack urged the Council not to do
a landstead exemption. One of his recommendations was an
acquisition tax and another was a fixed phase-in with a maximum
rate of 2-3% each reappraisal cycle.
Dick Hoefle, resident of Billings, commented in support of Mr.
Stack’s recommendations to the Council.
Senator Bob Depratu spoke about acquisition value and some bills
that are forthcoming that would address this issue. Senator
Depratu also addressed the perception that we sometimes have that
this problem is limited to Whitefish and Flathead County. The
problem now exists statewide. It exists around lakes
statewide, on rivers statewide, out in beautiful countryside, where
you aren’t on a river or on a lake but you are near
development. We have seen some huge developments take place
in the state that are dramatically increasing properties that have
been in families for years. We also are seeing that this
affects more and more people who are elderly and we have to be
aware of this. We are trying to keep our young people in the
state. Our young people are being driven away by all the
different forms of taxes, which affect our economic
development. We have to recognize that the ad valorum system
really isn’t a system that is working any more. Just
look at the mechanics of administering and implementing the ad
valorum tax and reappraisal. In this state many of our
residents feel very strongly about property rights. We have a
tremendous amount of our state where our appraisers can’t
even tell what’s being constructed in the rural areas.
They have no idea what they are appraising because they can’t
get to the property. They don’t have permission to come
onto the property and they can’t see the property. We
don’t have any idea whether we are taxing or appraising a
home at $200,000 or if it should be appraised at $800,000 or a
million dollars. I think there are a lot of inequities caused
by this factor alone. As we go along, we are going to see
more and more militancy of property owners not wanting appraisers
to come onto their property because they know they are going to get
a big property tax break by keeping their property away from the
eyes of the appraiser. He is working along with others on
bills to approach acquisition property tax. He thinks it is a
system that can be very beneficial and will address a lot of the
issues. He realizes this is probably about the fourth time in
the last ten years that this method of property tax appraisal has
been approached, but he believes that in looking back and talking
with people that we are addressing many of the issues that have
stalled acquisition value in the past. We are addressing the
issues of property owners aged 55 and older, first time homebuyers,
and deflating property. We are addressing the issue of
keeping up with inflation by putting in an inflation factor that
would raise the valuation annually by the CPI or 2% whichever is
greater.
He complimented Brad Simshaw on the work done this
morning. He thinks the work, together with the question
Representative Waitschies raised, makes one of the strongest
arguments for acquisition-based appraisal possible.
Representative Waitschies said, after we have gone through all of
this, it comes down to a policy decision as to which one of these
formulas we would take and to which taxpayer we shift the property
tax. Should we shift it to the west where it is high and
going up, or should we shift it to the east where sometimes the
property taxes are going down? With acquisition based
property tax, that doesn’t happen. The appraisal is
determined by the market place. We set the appraisal base
with our bills; we set the appraisal based on the 2002 appraisal
value. The tax bill received on November 1 is the starting
point and then you stay there. The next year your property
tax value will go up a maximum of 2%. Or, if the property is
sold, the property tax value will then go up or down to whatever
that purchase price is, and that will be the new value for the
property. It lessens the need for appraisers. There
will always be a need for appraisers for special
circumstances. It is going to be a system that would simplify
and make things easier.
He knows there are homes in his area that are in the $6 million
range; and legitimately the value is real from the standpoint of
what people from outside of Montana are coming in and are willing
to invest into a piece of property for a home. If we look at
those appraisals, we will find that those homes are being appraised
at about $3 million to $3.5 million. That means that people
from outside of Montana who own most of these homes are walking in
here, are not paying any sales tax, are not paying any other tax,
and are getting a $2.5 million valuation break on their property
taxes. On the other hand, people in the neighborhood who have
had homes that are now worth $1 million, but bought these homes 30
or 40 years ago for only $40,000 or $50,000 see their appraisals
are up to $100,000 or $150,000. Unfortunately those
appraisals have to be brought way up, and it is really those folks
that don’t want to see this increase. It was addressed
earlier that there are folks who over this two year period, are
going to see a 200% increase in their taxes and they were already
paying a very high tax. He would ask that the Council give
some serious consideration to getting some recommendation on
acquisition value as far as our tax method is concerned. He
believes it has merit. The legislative taxation committees
are seeing tax bills that want to do a lot of different things with
other types of taxes in Montana. In a lot of cases, the end
result of these bills passing would be to lower our income tax and
lower our property tax. The people in Montana are saying they
want our property tax reduced. We have also band-aided the
income tax over the years because we kept giving
exemptions.
Kurt Alme commented that acquisition value is clearly the big
issue for the Council to discuss. Kurt added the Council
should decide what our scope is going to be and how far down that
path we are going to go to try to resolve that issue.
Chairman Bob Story commented that our charge is to examine the
impact of reappraisal and to recommend policy changes needed to
mitigate and address the impact. He noted that the Council
had a motion at the last meeting. Chairman Story said if the
Legislature decides to do traditional things, then the Council has
a good starting point. Some of the groundwork has already
been done. We would expect the Legislature to address those
people who have big problems after the standard fix. We can
also state as a council that the ad valorum system has some
significant problems and we should look at a replacement property
tax system. We don’t need to draft an acquisition bill
because Senator Depratu already has one in the works and the
Legislature should give that equal consideration. The
Governor appointed this Council to make a recommendation and the
Governor could still make a different recommendation. The
next step may be that the Department of Revenue begins working on
the analysis that Senator Depratu would need for his bill.
Ward Ernst asked if the reappraisal was constitutional or
law? Kurt Alme responded that there is no constitutional
requirement specifically to reappraise; there is a constitutional
requirement for equity.
Ward Ernst thought the acquisition value would be the most
equitable way to go with reappraisal.
Chairman Bob Story asked Senator Bob Depratu if his proposal
would be dealing with both commercial and residential
properties. Senator Depratu responded that it would deal with
both. Chairman Story asked if both classes would follow the
rest of the classes in the average value of annual increase or
would we be slowing down the growth of class 4 relative to all the
other classes so that a tax shift from residential to all the other
classes is created? Senator Depratu responded that he could
not give an answer on that yet. He added it would be factored
in with the CPI or 2%, whichever is higher, starting with the 2002
tax valuation, then it would increase by that factor annually and
would continue to do so indefinitely.
Chairman Bob Story asked the Department of Revenue if they could
research what the rate of growth would be in all other classes
except for class 4. Brad Simshaw said he would look into the
requested information.
Chairman Bob Story commented that in class 4 there would be two
things driving the rate of growth, the 2% or CPI, which applies to
everybody and the increase that comes every time a house sells so
that the rate of growth in class 4 will always be greater.
Senator Bob Depratu responded there would always be a growth that
will exceed 2% due to new construction and pricing of housing.
Representative John Brueggeman commented that the Council should
recommend a serious policy change and that the Legislature should
look at acquisition value. He also added that some other
states had a cap via a phase-in at 1% or 2% and he would be very
interested in taking a look at that. Representative Ron
Devlin responded that the 1997 Legislature made an attempt to do
that with a phase-in over 50 years, but after a court decision
which required valuation decreases to be fully decreased the first
year, the 1999 Legislature changed the phase in period for the
increases to the reappraisal cycle.
Representative Ron Devlin asked Brad Simshaw if all of class 4
or just residential property contributes 32% of the total property
tax. Brad Simshaw responded that it was the residential
property in class 4. Senator Devlin asked if we freeze values
or stabilize them, could there be something done that residential
property continues to contribute 32% of the overall tax? Brad
Simshaw responded that we could determine the tax share or tax base
directly with the tax rate. You can determine how much that
will be with whatever system alters the market value or acquisition
value.
Representative Ron Devlin asked if there was any data from 10
years ago that would tell us the rate of growth in residential
property as compared to the other classes of property. Brad
Simshaw responded there was a report from the prior meeting with
information. The historical information of growth in class 4
residential would contain inflationary growth as well as new
construction.
Jim Stack, citizen from Whitefish, commented that one of the
problems seen in this state are the properties owned by
out-of-state residents. Mr. Stack suggested the Department of
Revenue look at the past 3 years of realty transfer certificates
with the new 2003 appraisal figures.
Kurt Alme reminded the Council that the issue for review today
was the outlier concerns. The Council did take a look at the
landstead, although we didn’t offer a global solution.
The Council should at least articulate a couple of principles that
we think are important. He suggested the Council summarize
ideas and potentially adjourn today.
Ward Ernst would like the tax committees to consider separating
land and improvements and also have the Legislature look into
acquisition value. Chairman Bob Story reminded Ward Ernst
that our charge is to recommend to the Governor also.
Representative John Brueggeman was interested in looking at an
example where the land is completely tax-exempt under a landstead
and have a 8.4% homestead exemption. This committee should
recommend a cap on the phase-in. Chairman Bob Story asked for
clarification. Would this capped phase-in be for six years,
reappraise and start that phase-in for six years.
Representative John Brueggeman responded yes. Chairman Story
commented residential property reappraisal in a lot of these areas
will be equal to or less than 2% a year. These homes are
going to be at full appraisal in two years while other people are
never going to reach full reappraisal value. This is what
raises the constitutional issue, but this method can be
explored.
Judy Paynter, Department of Revenue, commented that there was a
period of time where the department didn’t complete the work
on time for the reappraisal cycle and the legislature extended the
cycle. This became a real concern with people whose
property values were growing slower because they were paying a
higher effective tax or a bigger portion of the property tax
revenue than another part of the state where property values were
growing much faster, and thus, had a lower effective property tax.
This concern resulted in the legislature directing the department
to adjust annually valuations annually by a sales assessment
ratio. This eventually lead to a court case and it was
determined that a sales assessment ratio adjustment was not
legal.
Representative Gary Branae moved that in addition to the
previous motion, the Council express in the final report that they
are concerned with the outliers and that there should be a strong
look at acquisition as a viable option.
Representative John Brueggeman asked if the motion satisfied
Senator Depratu? Senator Bob Depratu responded that he would
like a stronger recommendation. Chairman Bob Story asked
Senator Depratu if he would like the Council to recommend
acquisition value but also in the alternative, here is what we can
do to fix the system. Senator Depratu responded that he would
very much appreciate a recommendation to the Governor from the
Council so that the Governor would give acquisition value the same
consideration as the other solutions.
Jim Stack, citizen of Whitefish, commented that if acquisition
value got into the legislative taxation committees and started
running into strong questions, something to think about is that you
are going to have this proposal as a backup. It is going to
be easy to go with just what we’ve gone with before, that is
a band-aid, and maybe with another band-aid on top such as the
landstead exemption. You will never get a change, unless you
put the substantial proposal out there first and say we have no
predictabity, we have no protection. We recommend that you
look at acquisition value. If that does not meet the
Council’s criteria, then here is the recommendation from the
Department of Revenue
Representative John Brueggeman suggested three options:
- Acquisition Value, a serious long-term policy change
- Adjustments to Current Law
- Option A - Landstead
- Option B - Simple adjustments, band-aid if you will, to the current ad valorum system which would be represented by the second
meeting’smotion.
Chairman Bob Story asked for final clarification of the
motion.
Judy Paynter responded that this committee already adopted one
motion to deal with current law and along with that motion would be
the concern of the outliers and there should be a strong look at
the acquisition value as a viable option.
Chairman Bob Story asked for discussion of the motion.
The Council discussed that this expresses acquisition value as a
serious long-term policy change and also gives the option on how to
adjust the current system by the previous meeting’s motion
and the concern about outliers.
Kurt Alme commented that the legislature may go down two
different paths. Take a look at acquisition value; take a
look at the current system. And, if the legislature goes with
the current system, how do they address the outliers? He
suggested that we be more specific regarding outliers. What
we are interested in doing is trying to make taxes predictable and
affordable for Montana residents. We want to be careful if we
are going to craft some outlier solution. He agrees
with Mr. Stack that he doesn’t think we want to craft it for
wealthy non-residents who come in with an understanding of what
they are going to pay, even though they may be seeing a substantial
tax increase based on the property value. He is not sure we
are also interested in giving a homestead type of exemption or
extending these type of exemptions to non-residents who don’t
stay here and contribute to our income tax system and our other
taxes. He would like to suggest that we can throw out some
different ideas, landstead being one of them. He thinks we
can do phase-in percentages or we can do either one of them or a
landcap piece. The other thing we can do is build on what we
have done with the percentage increase in property tax and income
for the ability to pay. Draw a line and say if the
taxpayer’s property tax percent goes up this much and the
taxpayer’s income is in this bracket, then we are going to
provide property tax relief -- whether it is the income tax system
or property tax system. That might be the best way. All
of these ideas introduce complications and those complications are
going to have to be weighed against whether or not it is
accomplishing what we want to accomplish. The principles that
he would like to get into this motion are predictability, but maybe
more importantly the ability to pay. We never want to be in a
position of taxing Montanans out of their homes.
Representative Gary Branae said he agrees with Kurt Alme’s
statement.
Kurt Alme amended the motion to say that property taxes for the
outliers need to be made predictable and affordable for Montana
resident homeowners. The amendment passed unanimously.
Chairman Bob Story asked for further discussion on the amended
motion.
Harold Lockhart, citizen of Whitefish, asked for a definition of
outlier. Kurt Alme responded that his definition of an
outlier is people who see their property tax values increasing
significantly.
Representative Carl Waitschies expressed concern with tying
property taxes to income levels. This could be labeled as
social engineering rather than tax policy. Representative
Waitschies added that basically a resident should choose
accommodations that he can afford.
Dud Mahler, citizen of Whitefish, commented that in his
research, he found the meaning of ‘ability to pay’
was: the ability to pay is demonstrated by the act of buying
a property. It is indicated that you have the ability to pay
if you can buy the property, so if you use the limit to increase
the assessed value, then you don’t exceed the person’s
ability to pay. Presently, when the tax is increased, it is
exceeding the owner’s ability to pay the tax. So if a
property owner had the ability to pay when buying the property, and
we have limited the increases to some reasonable amount to cover
the decreases that are going on in the property system, then that
requirement has been satisfied.
Jim Stack, citizen of Whitefish, commented that one of the big
differences of the ability to pay comes in the form of ownership
and other states have tried to do that and it has always become a
very big issue. If you have an out of state owner, you have
nothing other than their word on their ability to pay. If you
have recreational property that is passed on from parent to
children and one lives out-of-state, do you combine their incomes
or what? How do you get that income from the out-of-state
child?
Chairman Bob Story asked if there was any further discussion on
the motion or the amendment, which has to do with homeowners and
the ability to pay or residents and the ability to pay? If
not, the Council should proceed to vote on the amended motion.
The amended motion read:
In addition to the previous motion, the Council is concerned
with making property tax predictable and affordable for the
minority of Montana resident homeowners who would still experience
a significant increase in tax liability resulting from reappraisal;
and there should be a strong look at acquisition value as a viable
option to the current property tax system.
The motion as amended passed unanimously.
Chairman Bob Story asked the Council to review the minutes from
meetings on November 21, 2002 and December 20, 2002. There
were no changes to the minutes. The Council voted, and
unanimously approved the minutes for both meetings.
Chairman Bob Story asked the Department of Revenue to get a
legal opinion regarding if we stayed with the cyclical reappraisal
but only phased-in a percentage of it over the period of the cycle
and whether that would create a legal issue with equity. We
will have those jurisdictions where all the property will be
phased-in in a couple years and some will have reappraisal values
that just continue to disappear from the horizon.
Chairman Bob Story said he thought there were some good
suggestions from the audience that we evaluate the property tax
system. The Council had a report on acquisition value that
showed some of the problems of the acquisition value. He
hoped the audience didn’t interpret those to be the
Department of Revenue decision on acquisition value. Those
were basically standard arguments gathered through a literature
search. He is sure Mr. Stack understands the process.
There are some things out there that need to be done regarding
legal issues and how you deal with what we talked about
before. Is the growth rate a predictable growth rate under an
acquisition system? How does that growth rate compare to the
growth rates of other classes, and are we going to either be
shifting property taxes from other classes to homeowners or from
homeowners to other classes? The shift would happen even
under an acquisition system, if the values are growing at 5% and
everybody else is growing at 2%. Unless we change our mill
cap statute, you are basically starting to shift everyone
else’s property tax to homeowners.
Dud Mahler, citizen from Whitefish, said when you start talking
about limiting rates, if you stayed with the ad valorum system,
this is exactly the same as the current reappraisal every six years
cycle, except that we limit the increase in assessed value each
year. This is no different than playing around with the
homestead exemption now. We are playing with the assessed
valuation every six years. It would be doing the same
thing in limiting the increased value. He suggested the only
problem to address is the reassessment of property at time of
sale. Property values do increase and decrease over a cycle;
if you phase-in at 2% or a fixed rate, it tends to catch up.
He doesn’t see any problem with implementing acquisition
value; it is fair, it is reasonable and it is predictable and it is
doable now. Other states have done it.
Chairman Bob Story asked if there were any other questions.
Representative John Brueggemann asked that the Department of
Revenue take a look at another option with respect to landstead
exemptions. Chairman Bob Story asked Brad Simshaw if he would
take out vacant land in his final report on a landstead.
Chairman Senator Bob Story adjourned the meeting at 12:25
pm. Any further meetings of the Council are subject to
the call of the Chairman.
Senator Bob Story, Chairman
Kurt Alme, Vice Chairman
| 
