Why your property tax bill soared this year

Why your property tax bill soared this year

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New analysis of state data by Montana Free Press confirms what many homeowners in the state may have already noticed. Residential property taxes are up substantially this year. At the same time, some large industrial businesses are paying millions of dollars less.

Montana Free Press Deputy Editor Eric Dietrich crunched the numbers and joined MTPR’s Austin Amestoy to explain.

Takeaways:

  • Taxes increased for almost all homeowners in the state
  • Homeowners have typically seen their taxes rise between 11% and 35% this year
  • Home values grew more than other property types, shifting more taxes to homeowners
  • Total collections statewide increased this year by around $253 million

Austin Amestoy: Eric, you told me you’ve spent weeks poring over reams of spreadsheets from the state to respond to a question on many Montana homeowners minds, which is just how much are property taxes up this year? It sounds like you’ve got a clear picture of that answer at this point?

Eric Dietrich: Well, thanks, Austin. And to be fair, clear is relative with this issue. But, I think just to start off with, it’s hard, a little bit, because there’s a lot of variation between different situations. Different parts of the state, different types of properties in the same parts of the state. So I should caveat what I’m about to say here with it. Any number simple enough to say on the radio is also kind of a sweeping generalization. That said, though, if you’re going to make me pick one number for your listeners, it’s 21%. That’s the median increase in taxes paid this year for residential properties. As I look through the data I was working with, I, you know, saw increases between 11% and 35%, typical for homeowners. So, again, there’s been a range. But the long and short is that, taxes are in fact up from almost anyone who owns homes in the state and by hundreds of dollars for a lot of people.

Austin Amestoy: Eric, we could probably spend all of our time today chatting about how you arrived at those figures. But for, for myself, for the listeners, give us the highlights if you would.

Eric Dietrich: Yeah. So the long and short of it is I was able to get the Department of Revenue, the state Department of Revenue, to give me property by property data that includes both the new tax values and then the tax rates assessed by local governments. And you can combine those things together to estimate tax bills. So I did that for each of 960,000 properties statewide for 2022 and 2023. And then that let me compare how the tax bills have been changed across individual properties and then also kind of grouping those together by community and by type of property to. So looking at residential versus commercial versus ag, that sort of thing.

Austin Amestoy: So we have the numbers at this point. They show residential property taxes, in general, up this year. I think the biggest question, though, on my mind and the one that we’ll be digesting for a while is the why of it. Property tax calculations can kind of feel like a black box to anyone who doesn’t do it for a living. But Eric, do you have an understanding of what caused this big hike for homeowners at this point?

Eric Dietrich: Yeah. So my understanding is that there are really two big things happening right now that are worth understanding. The first is that more taxes are being collected, and that’s true by both state and local level property taxes. My estimate … is that total collections statewide are up this year by about $253 million, or about 12%.

The second thing is wonkier, but I think it’s important to understand. And that’s that residential properties are paying more of the tax bill this year proportionately than they were last. And that’s because taxes are billed proportionally to the value of your home. Like, the slice of the pie that your home represents is the slice of the local budgets that you’re responsible for paying. And home values have grown so much this year, and other types of properties have not grown in a corresponding way. And that has the effect of pulling an extra tax burden onto homes that was formerly on businesses and other types of properties.

Industrial properties in particular are down by a lot this year, which means they end up paying less. I’m going to pick on Northwestern Energy, the state’s largest taxpayer, here for a second. Their tax bill is down by 20% this year on all their generation facilities and power lines and all of the stuff you need to have to run an electric utility. And that’s because that’s an evaluation that’s made by the state Department of Revenue. But the result of that is that their tax bill is $35 million less and that amount has to be made up somewhere else by other taxpayers.

So again, to summarize, a lot going on. It’s a complex system, but there are really two things. There’s more money being collected and the way the system is working is shifting more burden onto homes.

Austin Amestoy: Well, there’s many more questions we’ll be answering in the coming months, Eric, but hopefully today that black box is a little less dark. Thanks for joining me and sharing your reporting.

Eric Dietrich: I’m glad to be here. Hope this helps, folks.



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