As Reps endorse major property tax bill, Busse lobbies lawmakers for rival proposal

Just as the House Taxation Committee passed a major property tax package and celebrated the win Friday, a group of former government officials were carrying out a lobbying push for a different property tax bill in the other chamber.

The effort to pass property tax relief has been drawn out over the last three and a half months of the legislative session and stood still for multiple weeks, with much of the legislating going on behind the scenes. But as the Legislature enters its final weeks, the urgency for substantial property tax relief is ramping up.

Homeowners' property tax bills skyrocketed over the past few years, putting financial strain on many residents. Nearly all lawmakers and the governor agree that providing property tax relief this session is essential, in part because property tax bills are set to rise again.

Montana legislators, lobbyists make property tax progress behind the scenes

Friday was a clear turning point in the House for the topic, but the temperature in the Senate was drastically different, as senators sat on a competing property tax bill that has the backing of 2024 Democratic gubernatorial candidate Ryan Busse and former officials who worked in Democratic Gov. Brian Schweitzer's administration.

“The dam broke on the House side,” said Rose Bender, the director of research for the Montana Budget and Policy Center who primarily weighs in on tax policy. “We’ll see about the Senate side.”

Senate Bill 542, sponsored by Sen. Wylie Galt, R-Martinsdale, was originally three pages and only sought to temporarily freeze property values. After Friday morning's taxation committee hearing, all that language is now gone. It was replaced by nearly 50 pages of amendments that were drawn from other flagship property tax bills from both the Democrats and the bill backed by the governor and carried by Rep. Llew Jones, the Conrad Republican who is one of the main drivers behind the state budget and major tax policy.

The largest amendment contains numerous provisions. It provides a $400 rebate for primary residents in conjunction with the upcoming reappraisal cycle. It also seeks to implement a tiered rate system starting this year that taxes higher-value homes at higher rates, something that is heavily backed by many Democrats.

In future years, it implements a different version of a tiered rate system — a key component of Jones’ bill — under which the top tax rate for the highest-value homes is lower than it will be this year. Short-term rentals and second homes that are not long-term rentals will also be taxed at a higher rate than primary residences.

What it does not include is any explicit assistance for renters, who have seen their landlords raise rents following their own property tax bill increases. Jones has continually said that providing a friendly tax rate to landlords who have long-term rentals should trickle down to the tenants.

“It still rides on the charity of the landlord,” said Rep. Jonathan Karlen, a Missoula Democrat.

The bill additionally lowers the tax rate for agricultural land in part to ensure that when residential rates are decreased, they are not pushed too much onto large agricultural landowners.

Because the new form of HB 542 was pieced together Friday morning through amendments, concrete numbers on how much relief it will provide are not yet available.

Rep. Katie Zolnikov, R-Billings, who voted against the hefty amendment, had some reservations about the higher tax rates on second homes and would have preferred to see a longer-term rebate. She also expressed frustration about the fact the legislation started out as a “Plan D” effort to freeze property values and is now an entirely different bill, saying there was not an adequate window for public input.

Even so, there was an air of levity in the room as lawmakers came to agreement and passed the bill as a whole on a unanimous voice vote. As Great Falls Republican Rep. George Nikolakakos emerged from the taxation committee room, there was music playing loudly from a TV and he waved his fingers, pretending to conduct the choir in celebration of their endorsement of SB 542.

Legislators amend major bills, breaking a weeks-long standstill on MT property tax reform

“We came here with the goal to provide property tax relief to the citizens,” said House Taxation Committee chairman Rep. Paul Fielder, R-Thompson Falls. “This bill will provide good property tax relief … it will benefit a lot of people.”

But as House Taxation Committee members celebrated their endorsement of a bipartisan property tax relief bill, a group had been executing a push for a competing property tax bill, House Bill 528, in the other chamber since the night before.

The lobbying effort appears to largely be coming from a group nicknamed the "Giddy Ups," which includes Busse, Schweitzer advisers and cabinet members, and others who served in state government. The group has been texting and calling senators to garner votes for HB 528 since Thursday, six senators told the Montana State News Bureau.

Around the Capitol, HB 528, which is sponsored by Bigfork Republican Rep. Ed Byrne, has been nicknamed “The Busse Bill" because it is nearly the same form of property tax reform that Busse was pushing on the campaign trail.

The main text message that is being sent to lawmakers is identical and lauds the bill for the huge cuts it implements to residential rates.

"Every Montana homeowner gets a property tax cut," the message starts.

"MT Homeowners will thank you," it continues. "Lobbyists for big out-of-state corporations don’t win – homeowners do!"

Because of the complicated and rigid way Montana levies property taxes, it is difficult to provide relief for homeowners without costing the state hundreds of millions of dollars or forcing other people — such as business owners, corporations or farmers — to pay more in taxes.

The bill takes a simple approach and slashes tax rates for residential properties, agricultural properties and some commercial properties, and therefore places the tax burden on many other businesses. Not all Democrats are on board with the approach, however.

"I think the Democrats who are opposed to this bill are wrong," Busse said Friday, adding that it is the "best fix."

When asked about the shifts, Busse said he has “not done the calculations,” but likes it because it’s being opposed by many large corporations who were not pinched by property tax spikes in recent years, unlike residents.

Not only are HB 528 and SB 542 different in philosophy, they are now directly in conflict: Also amended into SB 542 Friday by the House Taxation Committee was coordination language that says if that bill passes, HB 528 is void.

“I think that's got a tougher road,” said Senate Minority Leader Pat Flowers, D-Belgrade, said of HB 528 earlier this week.

HB 528 is awaiting a vote on the Senate floor and there are currently three amendments in the hopper. It will also likely go to another Senate committee and have to clear a vote there. SB 542 still has a number of hurdles to clear as well. The bill is set to go to the House floor next, where it will face a vote of the 100 representatives.