August 26, 2015 Comments are off Montana Stockgrowers Association
Share:

Explanation of Montana Tax Reappraisal Notices

The following is a guest column from Montana Representative Rob Cook, R-Conrad

Representative Rob CookThe arrival of reappraisal notices from the Montana Department of Revenue (DOR) has many Montana taxpayers experiencing sticker shock. But, before we are panicked enough to begin construction of a bunker, it would be useful to know how a sharp increase in appraised market value affects our actual tax bill.

Let’s look at a reappraisal notice. Assume that we find in the table on page 2 that the previous year taxable value for our residence was $1000 and that our current year taxable value is now a frightening $1500. Should we expect that our current year property taxes will also increase by a factor of 1.5?

The short answer is no and, while there are many factors that contribute to this, I’ll attempt to explain a few of the most important.

First, we should consider that if the taxable value of our property grew at such an alarming rate, shouldn’t the taxable value of all the neighboring properties have grown by a similar factor? If we didn’t complete any new construction or major renovations since the last appraisal in 2008 – then it is likely that our new values simply reflect an uptick in the local housing market and that our new taxable value has not moved disproportionately to that of our neighbors.

Perhaps inadvertently, we have uncovered one of the nuances of the Montana property tax system – when we are investigating a particular class of property the absolute value of an individual change is not as important as the comparison of the properties relative change to the relative change of other members in its class. For example, if the average change for neighboring properties was 1.3 and our change was 1.5, then we should expect that our taxes will increase by a greater percentage than our neighbors. Conversely, if the average change for neighboring properties was 1.7, then we could expect that our taxes would increase by a smaller percentage than our neighbors. In the latter case, it is actually possible for our taxes to decrease!

Next, we should consider what happens when the taxable value of every class of property increases. We know that the total taxes collected is equal to the taxable value multiplied by the mill rate, so did our county and local government just get a license to explode their budgets?

Fortunately, in this scenario, taxpayers are protected by Montana law. The growth in county and local government budgets is limited to one-half the average rate of inflation plus the taxes provided by any new growth. Thus, if the total taxable value goes up, the mill rate must be reduced so that total collections do not exceed the maximum allowable budget.

Finally, if we take into account the maximum budget constraint and the relative movement of our property within its class, it becomes apparent that the actual property taxes we will be required to pay does not mirror the increase in taxable value. In fact, in most cases any increase in property taxes should lie much closer to the increase provided by the maximum budget constraint than to the multiplier derived from the comparison of the current and existing taxable values.

This has been a very simplistic explanation of a reappraisal notice and I would be remiss if I did not mention that, in addition to the discussed relative movement within a class, there is also relative movement between classes. The legislature attempts to mitigate the latter by employing a technique called ‘taxable value neutrality’.

Taxable value neutrality simply means that the statewide total taxable value of residential, commercial, and agricultural properties remains the same each year. This was achieved in the last session by lowering the tax rates for each of these classes.

Because this mitigation technique is applied to the statewide totals, it can cause tax shifting at the local level. If we wish to be strictly accurate, these shifts must be considered when attempting to decipher the actual tax impact of the reappraisal notice.

Our property tax system and reappraisal process can be difficult to understand. I have selected a residential property example but the same considerations apply to commercial and agricultural properties. I hope the explanation has been useful and I appreciate your time.

June 25, 2015 Comments are off Montana Stockgrowers Association
Share:

Stockgrowers Supports Senate Passage of Trade Promotion Authority

On Wednesday, June 24, the U.S. Senate passed Trade Promotion Authority Act, sending H.R. 2146 to the President’s desk by a vote of 60-38. Montana Stockgrowers is supportive of this legislation, which will allow the President greater authority to negotiate international trade agreements, which is important to many of our state’s agricultural products.

“There was a time when the largest part of our economic activity was domestic, but now our future depends on our ability to be globally competitive,” says Errol Rice, MSGA Executive Vice President. “TPA is key to accessing the additional demand from the 96% of consumers that live outside the United States.”

According to Michael Froman, U.S. Trade Ambassador in an interview with The Wall Street Journal, the average tariff in TPP countries is three to four times as high as in the U.S, which equates to 70% on autos, 50% on machinery, 35% on chemical and 50% on beef. A successful TPP agreement will reduce these tariffs, which in turn creates more economic opportunity for our U.S. cattle market.

Since 1974, Congress has enacted TPA legislation that gives the President guidelines on negotiating trade agreements while giving Congress the final up or down vote. MSGA has been working very hard to ensure that agriculture and business has the balance of power to get TPA reauthorized.

Phillip Ellis, President of National Cattlemen’s Beef Association (NCBA), hails the final passage, noting the importance of trade and export markets to the value of U.S. cattle.

“Cattlemen and women have seen tremendous value in trade, exporting over $7.1 billion worth of U.S. beef in 2014, which alone accounts for over $350 in added value per head of cattle in the United States,” says Ellis. “This value is not just from increased demand, but also from adding value to variety meats that have very limited value here at home.”

Ellis continues, “As the demand for U.S. beef continues to grow around the world, the future success of the beef industry rests in our ability to meet foreign demand without inference of tariff and non-tariff trade barriers. With TPA passed, the U.S. can focus on finalizing trade agreements like the Trans-Pacific Partnership that will give us greater access to consumers throughout the Pacific Rim.”

Montana Stockgrowers appreciates the support of Senator Daines and Congressman Zinke in supporting greater access to international trade markets, which improves demand and support for products grown and raised on farms and ranches across Montana and the United States.

Public Lands Council Logo
November 14, 2013 Comments are off Montana Stockgrowers Association
Share:

PLC and NCBA Hail House Committee Passage of H.R. 3189

Public Lands Council Logo
(The following is a press release from the Public Lands Council)

WASHINGTON—(Nov. 14, 2013) Today, the Public Lands Council (PLC) and the National Cattlemen’s Beef Association (NCBA) hailed the House Committee on Natural Resources for passage of H.R. 3189 The Water Rights Protection Act (WRPA), the bill passed as bipartisan legislation with a recorded vote of 19-14. The bill was introduced in early October by Scott Tipton (R-Colo.) and co-sponsors, Mark Amodei (R-Nev.), Rob Bishop (R-Utah), Tom McClintock (R-Calif.), and Jared Polis (D-Colo.).

WRPA was developed to protect water rights from a recent directive and actions by the U.S. Forest Service (USFS) which allow the agency to usurp water rights from private entities — despite private water development and property rights. The USFS is attempting to obtain these water rights for the federal government as a condition of issuing standard land use permits; however, USFS has repeatedly failed to provide just compensation — a violation of the Fifth Amendment.

“This bill is commonsense legislation, which will allow western producers to stay in business,” said Brice Lee, PLC president and Colo. rancher. “The directive and actions by the Forest Service and their attempt to unjustly acquire these rights amounts to a total negligence of states’ water law, private property rights, and the Constitution. The full committee taking up H.R. 3189 is promising — we are urging the House to take the bill to the floor and stop the USFS directive in its infancy.”

Last month, the Subcommittee on Water and Power held a hearing on the bill, inviting a panel of witnesses who testified to the importance of water rights to private business. Witnesses explained the necessity of sovereign state water laws, which are long-established in the West. Witnesses told the subcommittee how devastating the impacts of this directive are to industries, including ski companies and federal land ranching — stressing the importance of these water rights and their significance in keeping businesses viable in western communities.

NCBA President and Wyo. rancher Scott George applauded the committee for taking up and passing the bill.

“This legislation is urgent and the committee’s hearing sends an important message to the USFS — holding them accountable and ensuring they cannot abuse water-right holders any further,” George said. “Ultimately, the USFS directive and similar actions could put a lot of folks out of business. Committee passage of this legislation is a step in the right direction for Congress and serves as an opportunity for them to protect private property rights for the livestock industry.”

Both Lee and George urge the House to move H.R. 3189 to the floor for swift passage and for the Senate to take the bill up without delay.

PLC has represented livestock ranchers who use public lands since 1968, preserving the natural resources and unique heritage of the West. Ranchers who utilize public lands own nearly 120 million acres of the most productive private land and manage vast areas of public land, accounting for critical wildlife habitat and the nation’s natural resources. PLC works to maintain a stable business environment in which livestock producers can conserve the West and feed the nation and world.