MISSOULA - Across Montana, renters make up 30% of the population, a figure that's even larger in the state's bigger cities like Missoula, where renters comprise more than 50% of the population.
But the leading bill before the Legislature would offer a $500 property tax rebate only to property owners on their primary residence — down from the $1,000 rebate initially proposed in House Bill 222.
Jonathan Karlen, D-Missoula, said that while property owners deserve the rebate, renters shouldn't be overlooked in the equation, as they too have faced an increase in housing costs.
“About one-third of Montanans are renters. In Missoula County it's more than 50%,” Karlen told members of the House Appropriations Committee in Helena this week. “We believe it's really important to include renters as part of any property tax rebate. Renters have absorbed a large portion of our property tax increases. Landlords pass that increase on to renters.”
Karlen described his bill (House Bill 258) as a tax rebate that would “provide much needed relief for Montana families and do so in a targeted manner." It would provide a rebate of up to $650 on a primary residence and is capped at 130% of a county's area median income.
But the Appropriations committee includes 16 republicans and just seven Democrats, and backers of Karlen's bill suggest it will face an uphill climb, if it climbs at all. But those who do support it see it as a more equitable way to return money to nearly all taxpayers, not just those who own property.
“Both property owners and renters alike have been affected by a sharp and rapid increase in housing costs over the past couple years,” said Tirza Asbell, the advocacy director for Montana Women Vote. “Over half of extremely low-income families are burdened disproportionately by these costs, spending over 50% of their income on housing and utilities.”
Housing markets have shifted with costs
In Missoula, the housing market has undergone significant changes in recent years, and many of the challenges were exacerbated by the COVID-19 pandemic.
In 2015, five years before the pandemic hit, the median price of a home in Missoula was $249,900 while the average cost of renting a two-bedroom unit was $806, according to the Missoula Organization of Realtors.
In last year's housing report, however, the median cost of a Missoula home had climbed to $540,000 while the average cost of renting a two-bedroom unit reached $1,155. Property taxes across the state have also climbed alongside property values.
But some say it's not likely that a rebate on property taxes will trickle down to renters and result in savings.
“Renters obviously pay property taxes as a function of paying rent, and it's really important that relief includes renters,” Missoula Mayor Jordan Hess told the Missoula Current on Friday. “They're also more cost-burdened and have seen a greater increase in costs over the past couple years.”
While the tax-relief bill backed by Gov. Greg Gianforte provides short-term relief in the way of property tax rebates, Hess and some other community leaders would rather see that revenue go toward long-lasting projects, such as infrastructure.
“I know the governor's budget has some short-term relief, but I'd rather see us invest in infrastructure and in our communities,” Hess said. “But if we're going to do short-term relief, then it ought to include renters.”
Hess, who testified before the committee on Wednesday, believes Karlen's bill is likely a long shot. Republican lawmakers posed leading questions during the hearing, with one suggesting Karlen “search your heart and consider becoming a Republican.”
And while the Legislature doesn't appear to be considering statewide tax reform this session other than rebates, Hess and other leaders of Montana's larger cities haven't given up hope.
On Friday, Hess said mayors from Montana's larger cities have started a regular call to discuss issues and strategies, and how to achieve meaningful change with a Republican dominated Legislature.
“I know there's a bunch of tax policy, and I'm not optimistic about some of the things local governments need,” Hess said. “But we ought to look at thoughtful property-tax reform that diversifies the revenue sources for local government. We need to start talking about that over and over again. It probably won't happen this session, but we have to keep talking about it so in 2025 or 2027, or sometime down the road, we can reform our broken tax system.”
