In the real estate market, 2002 to 2008 were great times. Construction was up; homes sold and were worth record highs. Not true today, as the worldwide market collapse hit the real estate industry hard. This is bad news for homeowners and local businesses when it comes to property taxes, as the slump puts our market values far below their assessed value.
Pundits will tell us that reappraisal and property tax hikes are a result of eastern Montana versus western Montana. But when we look at the vote tally on the final mitigation bill requested by the Joint Senate Committee on Reappraisal, we see a starkly different story.
I know the story all too well, as I carried this bill for the Senate committee but, in the end, voted against it. My repeated warnings of the bad consequences for homeowners and small businesses, particularly in growth regions, were ignored. So, I voted against the bill with my name on it. I also carried many tax bills to cap the growth of homeowner taxes, all of which were killed.
Every Senate Republican, except one, voted for this bad law. Nearly 90 percent of House Republicans joined the fray. Compare that with 75 percent of House Democrats joining me in voting no and nearly 50 percent of Senate Democrats voting no. Republicans ignored our warnings that the haphazard strategy would not work. They even ignored warnings from within their own party about the impact to heritage homeowners, particularly the elderly. Special interest lobbyists wrongly said it would work and the Republicans believed them.
We should thank Republicans as we pay an average 15 percent more in property taxes next month; some much more. Suddenly, as appraisals are hitting homeowner mailboxes, Republicans flip-flopped from saying the bill was fair to saying that the numbers were skewed.
I came home from Helena last spring knowing the bill with my name on it, that I could not support, was a colossal failure. The Republicans did not listen to anyone but the lobbyists, even as the fiscal note was clear: the bill would increase taxes dramatically for many.
The Republican Senate hijacked the House version of the final mitigation bill and exempted only 85 percent of the effect of growth. The Senate amended the House bill, which mitigated 100 percent of reappraisal, and forced homeowners and downtown businesses to pay $6 million more in taxes over the biennium and another $6 million over the cycle.
Senate Republicans removed all the assistance to the elderly, disable, and poor homeowners and renters. Then Senate Republicans added a new tax on homes worth more that
$1.5 million. No wonder elderly and lakeshore homeowners are hopping mad.
As a result, 60 percent of Montana homeowners will see their property taxes increase up to $200 over last year, some much higher. This is bad news during our difficult economic times.
Republican legislators have the majority in numbers, 77 seats of 150, to call a special session of the legislature to fix their mess. Sadly, they offer no upfront solutions. The fix, though, is simple - but would require a bit of spine from Republican leadership and tax chairmen to stand against the tide of special interest lobbyists.
The solutions were all presented in the 2009 session: capping a homeowner's tax growth to no more than
3 percent, extending reappraisal to guarantee no more than
5 percent tax growth for businesses and homeowners, establishing lower rates for people whom live in their homes and pay more than $100 in increased taxes, and aggressively expanding assistance to elderly, poor and disabled homeowners and renters.
Over the years, the Montana Association of Realtors adamantly opposed our attempts to cap homeowner's taxes to inflationary growth, to reappraise only upon the sale of a home, and to abate a portion of property taxes for homeowners whom file income taxes. Seems like lobbyists believe that if we stay put in our homes, it's bad for their industry.
Basic math skills are necessary in business and needed in politics as we debate tax bills. An upfront and known $12 million tax increase is not a rounding error, no matter how many special interest groups tell you otherwise. And a new tax on larger homes is simply a new tax.
A sales assessment ration will look at how valuations have changed and be presented to the 2011 Legislature, not nearly in time for the tax man. If folks have better solutions than those outlined, please pass them onward. A fairer tax system is in all our best interests.
Rep. Mike Jopek is a Whitefish farmer and served in the 2005, 2007 and 2009 Montana legislatures.