Officials watching property tax adjustments

Editor's Note: This is part two in a two-part series looking at the effect of property tax adjustments. See the Dec. 23 edition for the impact on Lake County.

With only 15 percent of the informal reviews of property tax reappraisals completed, it's going to be a little while before Flathead County officials can really measure the effects of any adjustments to property tax payments on local budgets.

As property taxes have come in, Adele Krantz, Flathead County treasurer, said her office has more than $1.86 million of taxes in protest.

These go into a separate fund that the county can't touch until those issues are resolved or the funds are repaid with interest on successful protests. Last year, the county only had $151,000 in protest, Krantz said.

The county doesn't yet know what the effect will be on the budget, but officials seem hopeful.

"We are concerned," county administrator Mike Pence said. "But we do have reserve funds in place to cover these eventualities."

Pence said that if the situation becomes more serious, the county will have to take a closer look at its budget.

Krantz said that by budgeting for a 0 percent increase, new construction may be able to balance out a shortfall on the other end.

The good news, Krantz said, is that the delinquent rate is only a percent higher from last year from 6.77 percent to 7.65 percent.

Every six years, the Montana Department of Revenue is required to reappraise properties for tax purposes. Property taxes are used to fund education, local government and other services in the state.

The most recent reappraisal cycle, which ran from Jan. 1, 2002, through July 1, 2008, saw taxable values significantly raised for some residents in Flathead County.

Residential property increased roughly 73 percent in value overall in the county.

As a result, the county had about 7,500 property owners file for an informal review, so the local Department of Revenue office still has a ways to go since they've only made it through the 15 percent thus far.

The shear volume has caused some of the hold up in getting through the reviews, according to Scott Williams, regional manager of the Department of Revenue, but staffing has also been a problem.

The office has been affected by hiring freezes, like other offices and businesses in the area, and is feeling the strains of being understaffed, he said.

"We'd like to deal with them as quickly as possible," Williams said.

The office also got an upsurge in informal reviews filed based off of information from the Northwest Montana Association of Realtors, which he says has been found to be inaccurate.

The data from the association underestimates the percent increase over the past six years, Williams said. Some of the percentages were miscalculated, he said.

"If we were to use their data, we'd be 10 to 20 percent higher than we are right now," Williams said.

Williams said this data has in some cases doubled his office's workload. Each form, no matter what information attached, requires a full review. Each can take about three to five hours.

Williams estimates it will take substantial decreases through adjustments to affect the collection because of mitigation.

Most of the adjustments thus far have been made for use or utility questions on land.

"If it's a factual error, it's pretty common that we make those corrections," Williams said.

Every time property tax assessments appear in local media, Williams said his office sees a spike in public interaction.

These interactions also slow the process by taking staff away from informal reviews to answer questions.

Williams said a common misconception his office has been dealing with has been that the Department of Revenue values properties and then collects taxes. County treasurer's offices collect taxes.

The wages of the people in his office don't come from these property taxes, he said, but out of the state's general fund.

"We don't have a horse in this race," Williams said.

The next step for property owners unsatisfied with their informal review is the county Tax Appeals Board.

That board was required to meet by Dec. 30, but since residents are supposed to have 30 days to appeal after getting the results of their informal reviews, the county has applied for an extension for the board.

Williams said this has been fairly common statewide because of the delay in getting assessments out to residents.

To find out more about the reappraisals and the appeals process, visit http://revenue.mt.gov.