Reappraisal adjustments mar budget

Editor's note: This is part one in a two-part series looking at the effect of property tax adjustments. See next week's edition for the impact on Flathead County.

Officials here are saying the effects of the statewide property tax reappraisal process that has angered taxpayers this year have also begun to weigh heavily on Lake County.

More than $130,000 in adjustments on property tax payments have been granted to taxpayers in the county so far. While the taxpayers are seeing some relief, it has created a worrisome revenue shortfall for the county. County commissioners' and Lake County Treasurer Patti Kugler's rough estimates show this could be only one-third of the adjustments to be granted.

The county could receive just $800 in generated revenue for every $1,000 budgeted, commission chairman Paddy Trusler said. He estimated this could break down to the county losing $100,000 in revenue to provide services.

Certified value notices, which help set the budget, were mailed in June, before taxpayer assessments were sent. The county has 45 days to set a budget, and the taxpayers have 30 days to appeal their assessments.

Those timelines meant there was no time to reflect lower tax payments after readjustments.

A record 2,360 county residents filed forms to request informal reviews after they received assessments this year. Increases in Lake County were especially noticeable in some cases because of the large amount of recreational property, which held its value better because of higher demand.

Trays and trays of mail are waiting for Lake County Treasurer's Office employees to sort through. They are still working through the protested tax forms now. Protested tax funds are put into a separate account the county can't touch for 90 days, or until it's repaid with interest on successful protests. The Department of Revenue performs the appraisals to make adjustments on the request of the taxpayers.

"Not in the 23 years that I've worked here has it been this bad. This has been horrendous," Kugler said. "I just think it's really unfair what the state of Montana did to the taxpayers in our area."

The 2008 legislature passed House Bill 658 to mitigate the reappraisal done by DOR. A reappraisal is done by the state every six years.

In one case, a lakeshore tract was adjusted from just over $1.2 million to a final bill of $445,800.

"We've had more surprises as a result of the reappraisal than I ever want to have in my life," Trusler said.

The Lake County Commissioners sent DOR director Dan Bucks a letter asking how to deal with the revenue shortfall two weeks ago. But Trusler said that as of last Thursday, they had not received a response.

Commissioners did tell county agencies to only spend 90 percent of their budgets. All capital expenses also had to be approved. No employees were given a cost of living increase.

The huge increase in activity has created a backlog for everyone. The DOR is still working on appraisals for adjustments requested through the huge increase of informal reviews. County tax board work, a taxpayer's second step after unsuccessful protests through the DOR, is supposed to be finished by Dec. 30. This board's work has now been extended through March.

"Where it all ends, we don't know. What we do know is it's going to be detrimental to the county," Trusler said.

Municipal and school budgets will feel the effects as well.

"They just have to stop spending, they have to be very conservative with their monies," Kugler said.

Polson City Commissioners heard several times this fall from city treasurer Bonnie Manicke that the city's general all-purpose fund was very low. Manicke reported that she had to ask for a $200,000 advance from the county as the city waits for a tax payment that was scheduled for Dec. 15.

Increased delinquent taxes may cause another problem. Those numbers have not been tabulated yet. But as Kugler sees it, with the higher number of foreclosures and tough economic times, there's another storm brewing there.

A "lookback" stipulation in HB 658 will allow the 2011 legislature to re-examine the assessment. This will be absolutely necessary, Trusler said. The legislators should have realized how the bill would effect the counties during session, and need to know that what they passed is broken.

Bottom line, he said, cutting property taxes means cutting services.