Montana’s real estate bonanza turns political as property taxes soar
The downside of the pandemic-powered boom has gripped state legislatures across the West and is a hot campaign issue in Montana’s gubernatorial race.By Karin Brulliard
May 22, 2024 at 6:00 a.m. EDT
GLEN, Mont. — The pastoral expanse that Art Mangels has called home for 10 years comes with views of snowy peaks, banks on the trout-rich Big Hole River and acres of grasslands traversed by bears, moose and muskrats.
These days, it also comes with a property tax bill 35 percent higher than in 2022.
The spike is one effect of a western Montana pandemic real estate boom that has transformed Bozeman, two hours away, into what Mangels calls “Bozeangeles,” and is reverberating here in Beaverhead County, where cows far outnumber people. The ripples are threatening to cross from personal into political. Like other longtime residents, Mangels has soured on the state’s crimson-red legislature and governor.
“What’s happened is the real rich people have bought up a lot of acreage, a lot of big ranches,” the retired potato farmer, who now runs struggling fishing cabin rentals, said as he sat at the kitchen table in the cozy home he shares with his wife. “We’re farmers over 50 years, and then for 10 years here, we’ve contributed greatly to the economy. And now we’re getting penalized for it.”
Four years after covid sent a new class of remote workers in search of stunning scenery and cheaper housing across the Mountain West, residents are reeling from tax hikes driven by extraordinary growth in property values. While taxes remain relatively low, the increases have been jolting to homeowners already stressed by higher gas, grocery and insurance prices. The Montana Free Press reported that some counties here saw median increases of up to 46 percent.
The resulting public outcry has gripped legislatures and spawned a range of proposals for a problem that is inherently complex. Property taxes are a major funding source for local services and especially important in a state such as Montana, which has no sales tax and no appetite for one.
Art Mangels, 77, opened Big Hole River Retreat about a decade ago. He worries that the sharp rise in his property taxes, on top of other increasing costs, may force him to sell. (Holly Pickett for The Washington Post)
In Wyoming, the legislature this year passed a property tax package that included caps and an expanded rebate program. Its counterpart in Colorado this month cut residential assessment rates as part of an 11th-hour overhaul to the property tax code. Though similar battles are happening in various places across the country, this region may be the hottest of hot spots.
“There’s a real urgency on the part of lawmakers to quote-unquote fix this,” said Manish Bhatt, a senior policy analyst with the nonpartisan Tax Foundation who sits on a Montana task force that Gov. Greg Gianforte (R) has exhorted to find solutions.
In few places have property taxes become as volatile an issue as in Montana, a once proudly purple state where some of the nation’s fastest growth since 2020 coincided with a sharp right turn in leadership. A recent University of Montana surveyfound that nearly 60 percent of residents view development “sprawling into what were once ranches or open lands” and the “changing character of the state” as serious problems.
Conservative county commissioners have revolted over collections they say the state should have mitigated. And Democrat Ryan Busse has made property taxes the centerpiece of his campaign to flip the governorship this fall, framing the hikes as evidence that Gianforte and his Republican supermajority are selling out Montana to wealthy outsiders and corporate interests.
“There’s always been this belief in Montana that you live here, you’re not going to make a lot of money, it’s going to be hard, but man — you get to live the Montana life. Now the struggle is too much,” Busse said before a recent campaign event at a bar in rural Ennis. Attendees whooped as he slammed Gianforte, a multimillionaire former software entrepreneur elected in 2020.
A dozen Busse billboards around the state blame the governor for the tax pain, while the Democrat’s ads detail how Gianforte fared personally: Taxes on the incumbent’s sprawling Bozeman property increased at a far lower rate than those of his neighbors, while taxes on his Helena home decreased even as most neighbors’ bills rose.
Busse, a former firearms executive, believes his message is resonating. He says Republicans frequently tell him they are outraged.
“I think it’s absolutely, 100 percent, about them feeling a Montana being taken from them and rigged for wealthy people,” he said.
Gianforte’s spokeswoman, Kaitlin Price, responded by email Monday that insinuations the governor received preferential treatment amounted to “cravenly” questioning state appraisers’ integrity. She said the governor’s Bozeman property qualified as agricultural land — a category that saw taxes drop in the aggregate — because it produces barley and alfalfa and boards horses and mules.
Price blamed the higher tax bills on counties that are “spending out of control.” She suggested they “take a page out of the governor’s playbook and rein in their spending and taxes.”
Mangels, a retired potato farmer who now runs cabin rentals, drives through his property in Glen, Mont. (Holly Pickett for The Washington Post)
The debate in Montana swirls around whether the legislature should have offset the blow to homeowners. Property taxes are calculated based on real estate values assessed by a state agency and multiplied by a property tax class rate. In turn, that figure is multiplied by “mills” — $1 per $1,000 of taxable value — then divided by 1,000 and collected by localities and the state. The localities’ collections are subject to caps. Counties send out the bills.
In November 2022, the Montana Department of Revenue notified the legislature that skyrocketing home values would bring a major rise in residential property taxes and that lawmakers could lower the tax rate to keep revenue “neutral.”
They declined to do so, and because residential values had risen much more than other classes of property, homeowners ended up shouldering a larger share of the tax burden and sending an additional $80 million to state coffers already enjoying a surplus. Some major corporations saw property taxes decrease, as did agriculture.
The legislature instead offered homeowners temporary rebates of up to $1,350, which for most would cover the tax spikes.
On the receiving end of both pleas and vitriol, the counties rebelled. To mitigate the blow, 49 of the 56 jurisdictions opted to collect only a portion of the mills the state uses to help equalize school funding. A public schools consortium objected, saying the move would hurt them over time. The Gianforte administration ultimately prevailed in court.
Republican state Rep. Llew Jones said lowering the residential rate might have helped homeowners in western Montana, where appraisals surged, but would have pushed more of the burden onto small businesses in the less-desirable eastern Montana, “where there’s no trees.”
What’s more, Jones said, one-fifth of residential property taxes are paid by out-of-staters who do not pay Montana income tax — including millionaires like Tom Brady and Justin Timberlake — and yet would have gotten a windfall from a lower rate.
