BILLINGS – Montana lawmakers are moving forward with a bipartisan property tax relief bill that promises to lower costs for homeowners, long-term renters, and small businesses.
It comes after Montanans faced historic property tax increases, and some even faced losing their homes or paying increased bills.
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Billings leaders say the legislative measure could have unintended consequences for the state's largest city.
House Bill 231, known as the Homestead Rate Cut Bill, would permanently reduce property tax rates for many residents while shifting the tax burden to short-term rentals, high-value second homes, and large corporations, such as coal mines and refineries.
The bill has received strong support from both Republicans and Democrats, as well as pressure to pass from Gov. Greg Gianforte.
But Billings officials say the proposal could result in significant budget cuts for essential services, including eliminating crucial police and fire positions.
A Unique Challenge for Billings
Billings is one of two Montana cities with a voter-approved charter limiting the number of property tax mills the city can levy.
The other is Sunburst on Montana's Hi-Line.
City Finance Director Andy Zoeller says that restriction means Billings would not be able to adjust its tax rates to compensate for the revenue loss the bill would create.
"It was pretty obvious," Zoeller said, adding that the bill would likely mean a $6.5 million to $7 million reduction in revenue next year.
The city's 1977 charter prevents officials from increasing property taxes without voter approval, leaving little time to respond if the bill passes.
"And this bill would become effective immediately," Zoeller said. "We wouldn’t have time to go to the voters and say, ‘Hey, will you change this rate?’”
Impact on Public Safety
The potential revenue shortfall has city officials worried about cuts to essential services, particularly public safety. According to Zoeller, Billings could face:
- A $2.5 million cut to the police department, eliminating about 24 full-time officer positions
- A $2 million cut to the fire department, resulting in the loss of 18 to 20 firefighters
- An additional 20 job cuts in other city departments
Zoeller said the city is not able to absorb such drastic reductions.
Lawmakers Respond
The bill’s sponsor, Rep. Llew Jones, R-Conrad, acknowledged that the city charter issue was not identified until the bill reached the floor.
"The intent was not to harm," Jones said. "The intent is to allow the citizens to have a tax cut. If we don’t do this, then I guess everyone can keep paying high taxes. We can address this—it’s a technical issue."
At last check, Jones said an amendment to the bill was on the way.
One fix being tossed around would essentially allow Billings to collect taxes at the same rate in 2026, as they did in 2025 – but then the tax changes for HB 231 would go into effect.
Chamber of Commerce Weighs In
Even if a fix is made for Billings, Dan Brooks with the Billings Chamber of Commerce, said the measure still raises concerns for the business community.
"Sometimes you come in with a solution for some, and it's very negative and impactful for others," Brooks said. "We in Billings have been the best city at keeping property taxes low."
Brooks said that 88% of Billings’ commercial properties would see a lower tax rate, but larger industries would take on a greater tax burden.
"We would rather leave things the way they are," Brooks said. "Our businesses want certainty and predictability in the markets."
As lawmakers work to finalize the details of the bill, with Billings in mind, leaders say they will continue pushing for changes to prevent major cuts to critical services.
