MTLeg Viewpoint: Breaking the Circuit on High Property Taxes

"we continue to hear stories about Montanans being priced out of housing as property values rise and their tax burden rises with them, sometimes making a family home of many years suddenly unaffordable."

It’s no secret that Montana has a property tax problem. Year after year, we continue to hear stories about Montanans being priced out of housing as property values rise and their tax burden rises with them, sometimes making a family home of many years suddenly unaffordable.

In the last legislative session, Democrats championed a solution to this problem: a circuit breaker tax credit to help ensure that property taxes never price Montanans out of their homes. Circuit breaker credits are not a new idea, not even in Montana. States from Idaho to West Virginia utilize some form of property tax circuit breaker. Here at home, we have limited circuit breaker programs targeting disabled veterans, the elderly, and extremely low-income property owners. 

Montana’s current programs have significant limitations and are in need of reform so they can deliver on their promise of keeping Montanans in their homes and limiting the burden of rising property taxes. First, the property tax relief programs we have in Montana are restricted to specific groups in the population, primarily the elderly and disabled veterans. While the desire to support these folks is commendable, we know that far more families need the relief that a circuit breaker credit can provide. A separate program is targeted toward very low-income property owners. It doesn’t do anything to help middle-class property owners or renters who, while not directly taxed, still feel the weight of property taxes passed onto them by their landlords. This program also has a significant “notch-effect” which can mean an income difference as small as a dollar can lead to a drastic change in the amount of relief they are eligible for.

In the 2021 session, I carried SB 10, a broad circuit breaker credit developed on a bipartisan basis during the 2019-2020 interim. This bill would have made a circuit breaker credit available to both homeowners and renters of all ages and without hard limits on income, though it targeted the bulk of relief to low- and middle-income taxpayers. In addition, SB 10’s circuit breaker credit would have included a “co-pay” provision that limited relief to 75% of the tax burden, ensuring that taxpayers would not be totally insulated from the impacts of increased property tax rates — maintaining “skin in the game” when voters are making decisions on new tax levies. The Governor’s Budget Office projected that almost 35,000 taxpayers would have received a tax credit under SB 10, with more than $31 million in property tax relief statewide.

Unfortunately, SB 10 and several other similar Democratic “circuit breaker” bills didn’t make it over the finish line in the 2021 session, with none of the proposals even seeing votes on the floors of the House or Senate. However, Montana Democrats remain dedicated to providing meaningful property tax relief through circuit breakers and other innovative solutions that balance the very real revenue needs of local governments with the significant challenges homeowners and renters face today.

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Senate Minority Leader Jill Cohenour, D-East Helena, represents Senate District 42.

Frontier Institute’s MTLeg Viewpoint series provides an opportunity once per month for Montana legislators to deliver an update about topics that matter to our followers. Offers to publish columns were made and remain open to both the Legislative Majority and Minority. Opinions expressed by guest authors do not necessarily represent the positions of the Frontier Institute.