25 January 2023 — 1042 mst

If the legislature does not protect low income homeowners
from unpayable property taxes, the son of CI-121 will emerge

By James Conner

Last year, when a constitutional amendment, CI-121, similar to California’s Proposition 13 that froze the appraised value of homes, was approved for signature gathering, Montana’s Democrats and Republicans worked independently, and for different reasons, to keep the initiative off the ballot.

They succeeded, partly because of their efforts, partly because the authors of CI-121 did not mount an aggressive campaign to gather signatures. Getting an initiative’s language approved for signature gathering is the easy part of legislating by the vote of the people. Obtaining enough signatures to make the ballot is harder, and now usually required paid signature collectors, and mounting a successful campaign to prevail in the general election is harder still.

Opponents of CI-121 alleged a multitude of horribles would result if the initiative were approved: government would be curtailed, education would be gutted, farmers and businesses (farming is a business) would pay more than their fair share. That frenzied, and in my judgment not entirely honest, campaign, coupled with vague pleas from legislators to let them find solutions in this session of the legislature, prevailed.

Now the legislature is in session, it’s time to put up or shut up — and I see little sign that enough is being put up to rescue low income, and especially low fixed income, homeowners from property valuations that will result in taxes they are unable to pay.

Why?

Because Republicans want to avoid actions that could result in higher property taxes for businesses and farmers, who have the option of raising prices to cover higher taxes, or of absorbing high taxes.

Because Democrats represent powerful public employee unions who fear that property tax caps would result in their members losing their jobs or not getting desired pay increases.

Because Democrats fear that programs financed by property taxes would be cut.

These fears of Democrats are legitimate.

But Democrats do not seem to fear that property valuations driven by real estate speculation will impose on low income and low fixed income Montanans, tax assessments so high they must sell their homes lest they are unable to pay their taxes and lose their homes to seizures and auctions by government taxmen.

Unlike income and sales taxes, property taxes are not connected to ability to pay.

Suppose a couple of modest means, say a school teacher wife and truck driving husband, buy a modest home in a pleasant neighborhood, raise their family there, and retire with a modest income, having paid off their mortgage and paid their property taxes. Now suppose there is real estate speculation that drives up their property value to double or triple what it was a few years ago. Suddenly their taxes become onerous. Then their taxes become so high they must sell despite heroic efforts, such as reverse mortgages, to pay those taxes.

Is that fair? Is that just?

No. It’s an outrage.

But it’s occurring, especially in places such as Flathead and Gallatin Counties.

And if our legislator fail to do something about it, citizens will band together to pass initiatives that make CI-121 look tame.

What can and should be done?

First, make paying property taxes easier. Allow monthly payments and for payments to be withheld from paychecks. Allow deferred payments against the equity in the house. Allow payment plans for taxpayers in arrears. There’s no reason for requiring two big payments a year, and for requiring that all back taxes be paid in a lump sum.

Second, for elderly homeowners (70 or over) with incomes below the poverty level, cap valuations at the year 2000 level, and exempt them from paying more than 15 percent of their net income.

Third, increase the income tax, and restore its progressivity. It’s been cut so often to pander to high income Montanans that more and more of the tax burden fall on payers of property taxes. The property tax is the most regressive tax that exists.

Finally, impose a three percent statewide sales tax on all goods and services except groceries and medicine (prescription and over the counter). A sales tax has its downsides, but it’s much more fair than property taxes that are untethered from the ability to pay.

No one should have to sell a home because property taxes are too high. No one.

I hope Democrats are listening. If in their attempts to service their public service union clients they continue to allow a tax system that hurts low income people, that drives how income people out of their home, they will continue losing legislative elections. They must help people stay in their homes.

So must Republicans, who must acknowledge that although the well to do hate taxes, they always have the means to pay their fair share and therefore, should be compelled to pay their fair share.

If this legislature again fails to protect low income homeowners from excessive and unpayable property taxes, the son of CI-121 will emerge.

And if that happens, I will support it.