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Flathead County reduces collection of school property tax mills

by HEIDI DESCH
Daily Inter Lake | October 6, 2023 12:00 AM

Flathead County has reduced the amount of state school property taxes it plans to collect falling in line with several counties around Montana that are disputing the state’s requirement to collect a set number of mills for school equalization funding.

The county commissioners on Wednesday unanimously approved a resolution that reduces the mill levy from 95 to 77.9 for fiscal year 2024. The change amounts to a reduction of $8.5 million locally and as a result will reduce property tax bills sent out in the next few weeks, according to the county.

Commissioner Randy Brodehl said the money provided to schools would not change as a result of the resolution and the move prevents the county from overtaxing property owners.

“This cuts money that the governor and executive branch would be able to spend out of the [state] general fund for schools,” he said. “This will not change the amount that goes to schools. It’s up to the legislative branch to determine how much money the schools get.”

The state has consistently levied 95 mills annually for schools despite a provision in the law that requires a reduction in levying authority when taxable values increase.

Gov. Greg Gianforte and school advocates say that 95 mills is the correct amount that should be levied based upon state law and that reducing it could put future school funding in jeopardy.

The Gianforte administration on Monday filed a lawsuit against Missoula County seeking a decision noting that the county’s interpretation of the matter interferes with the state’s constitutional obligation to “fund and distribute in an equitable manner to the school districts the state’s share of the cost of the basic elementary and secondary school system.”

Joining several counties making the same claim, Commissioner Pam Holmquist on Wednesday said that the state has enough money in the General Fund to provide funding to schools and doesn’t need the additional mills.

“We’re simply asking the state to do their part in capping taxes just like the counties do,” she said. “And budget conservatively like we do in Flathead County.”

Commissioner Brad Abell said he would not have supported the measure if it meant less money for schools.

“This holds the state to the same level of accountability that local governments are when it comes to our ability to increase taxes,” he said.

The 95 mills came as a response to previous litigation from school districts that found the state was inadequately funding public education due to excessive reliance on local levy funding. It sought to equalize funds between wealthier and poorer districts.

Property taxes rates are based on mills. Each mill equates to $1 which is levied per $1,000 of a property’s taxable value. So when a property’s value increases the amount of tax revenue from the property also increases as the mill rate increases.

City and county governments are limited in the amount they can collect because of a cap in the mills they can collect. Thus, they argue collections are actually less because the number of mills total they can levy decreases as taxable value increases.

The same cap hasn’t been applied to the school levy as the state has continued to levy 95 mills instead of reducing it.

The state Department of Revenue in September issued a memo to counties saying that the school equalization levy remains at 95 mills.

Flathead commissioners last month approved sending a letter to the state Attorney General’s Office showing its support of a letter from Beaverhead County seeking an opinion on state law as it pertains to taxing authority and 95 mills tied to funding schools.

That request, however, was denied by Attorney General Austin Knudsen’s office in a letter on Sept. 25 saying the matter should be decided through the courts.

Features Editor Heidi Desch may be reached at 758-4421 or hdesch@dailyinterlake.com.