HELENA - Owners of commercial property in a number of counties, headed by Yellowstone, may face higher property tax bills than the Montana Legislature anticipated, lawmakers learned Friday.
Undated numbers from the Revenue Department showed the value of commercial property has increased by an average of 43.4 percent statewide after the recent statewide reappraisal.
That's higher than the 34 percent average increase the 2009 Legislature used to mitigate the financial sting of reappraisal on these property owners. That average was based on earlier numbers.
Differences in some counties were even more extreme.
In Yellowstone County, the new average increase in commercial property values is 52 percent, or more than twice the 23 percent average hike discussed during the Legislature.
Average commercial property values in Wibaux County went from nearly 54 percent to 74 percent, while Ravalli County jumped from 29 percent to 72 percent.
"It was a nasty surprise," Sen. Jeff Essmann, R-Billings, said. "This group of small business owners is going to be paying more than their fair share and what they paid during the past cycle."
Sen. Kim Gillan, D-Billings, said, "This comes at a very difficult economic time."
Among other urban counties, Lewis and Clark went from 46 percent to 55 percent; Missoula went from 25 percent to 35 percent; and Silver Bow dropped from 33 percent from 47 percent.
Essmann urged all Yellowstone County commercial property owners to go to the Revenue Department's office in Billings to request an informal review of their assessment.
The higher taxes are not a certainty yet. Property owners can seek informal reviews or file formal appeals to make their case for lower numbers.
Later, Essmann said that Senate Republicans are calling on the administration of Democratic Gov. Brian Schweitzer to come up with a remedy.
"We're concerned about the small businesses paying more than everyone else agrees the goal was for the next two years," he said. "We'd like to see a remedy sooner or later."
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Asked what the remedy should be, Essmann said, "I think the (revenue) director and the governor deserve the opportunity to sort through that first."
"The position before the session is that the mitigation should be revenue neutral on a statewide basis," Essmann said. "We're concerned that because of this mistake, it is not."
He said he wants to know how much additional tax revenue state and local governments will collect because of the changes.
In response, Gov. Brian Schweitzer said, "Essmann complaining about his bill is like the architect that was warned by the engineer over and over again if you build it that way, it will fall down."
Schweitzer said he didn't sign the bill into law. He let it take law without his signature.
The measure, House Bill 658, by Rep. Mike Jopek, D-Whitefish, passed the House but was rewritten by the Republican-controlled Senate Taxation Committee that Essmann headed.
"It's unfortunate," Schweitzer said. "No one knew it was going to be in Jeff Essmann's Senate district where the greatest anomalies would occur. Now that these chickens have come to roost in his front yard, he doesn't like it so much. Well, I didn't like it either."
Revenue Director Dan Bucks disagreed with Essmann that the change in averages was a mistake.
"When we present data in the session, it is the best estimate at the time," he said. "It is just an estimate. We made it clear to the Legislature that the data would continue to change as the "reappraisal process is completed."
The department undertook additional reappraisal work on commercial property after the Legislature adjourned, he said.
"When the commercial land price data work was completed in Yellowstone County, it raised the value in that county," Bucks said. "Because of the importance of Billings as a commercial center, it has changed the numbers at this stage."