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Nearly one in three Montana homeowners qualifies for help in paying property taxes. But few apply for it.
Community News Service
UM School of Journalism
As legislation to help Montanans with their property taxes sailed through Senate this week, its sponsor conceded defeat in his mission to add millions in property-tax relief for Montana’s neediest homeowners: disabled veterans, the poor and elderly retirees on fixed incomes.
Rep. Mike Jopek, D-Whitefish, is sponsoring the only surviving bill to lessen the sting of the latest statewide residential property reappraisal, which rose by an average of 55 percent statewide from January 2002 through July 2009.
It’s one of the session’s most important bills because it has the potential to affect every Montanan homeowner. The impacts would vary widely, but the idea is that by gradually raising deductions and cutting tax rates, most Montanan won’t see big increases due solely to rising property values.
But Jopek worries that the Senate version of his bill won’t provide enough help to those who need it most. He had said previously that he would try to kill the measure if the Senate didn’t better fund assistance programs for such homeowners.
He later dropped that threat, but didn’t hide his frustration that instead of cutting taxes for more Montanans, the bill in its current form means homeowners will pay a total of $12 million more in property taxes over five years, due to the reappraisal alone.
“These economic times are extremely difficult right now, with record high unemployment, the real estate market has slumped drastically, and this is the highest appreciation in Montana’s history,” Jopek said. “(The years) 2002-2008 were good years, but homeowners have it tough right now, especially the elderly, the working homeowner and disabled American vets.”
Jopek fought to increase funding for special programs to help the needy pay their property taxes, but those increase were stripped from the bill Wednesday. He also objected to the Senate’s decision to exempt park land and roads in subdivisions from property taxes.
“We had a good bill, the version that came out of the House,” Jopek said. “We added about $60 million over six years to those programs. But now we’ve given exemptions to people in gated communities instead of elderly people or low-income people.”
Currently, the state offers several programs to help Montana’s needy caught between a bad economy and spiraling property values. Montana's law allows a hefty deduction for single people with incomes under $20,000, and married couples or heads of households that make less than $26,600.
Another program offers property-tax exemptions to homeowners who are honorably discharged disabled veterans and make less than $35,266 a year if single or $42,319 annually if married or filing as heads of household. Spouses of deceased disabled vets are also eligible for exemption if their income is less than $29,388 or reductions based upon income over this amount but less than $39,968.
Meanwhile, homeowners age 62 or older may qualify for an income-tax credit, depending on their incomes and the amount of property taxes they pay.
Another program, the Extended Property Tax Assistance program, passed by the 2003 Legislature, offers a reduction to those whose taxable value increases by more than 24 percent and whose tax liability increases by $250 or more the first year after a reappraisal cycle.
Ed Caplis, of the Montana Department of Revenue, said that of the 240,000 owner-occupied homes in Montana, about 70,000, or 30 percent, are eligible for one of these assistance programs.
Yet only about 8,000 homeowners, or 11 percent of those eligible, participate.
No one knows why so few apply for the help. Perhaps they don’t know it’s available. Perhaps it’s the stigma of asking for help. Perhaps it’s the red tape.
“To qualify, you have to verify your income with the local Department of Revenue, go through a bit of paperwork, which might be part of the reason someone doesn’t want to come in,” Caplis said. “Maybe (the exemption) is only a couple dollars worth so it’s not worth the hassle. There are numerous reasons why people wouldn’t be participating.”
Even so, Caplis predicts that the recession and jobs losses may inspire more Montanans to seek help.
According to the Montana Department of Labor’s Web site, the state’s jobless rate stands at 6 percent, well below the national average of 8.1 percent, but climbing nonetheless.
Jopek predicts the recession will hurt elderly homeowners his Whitefish district who have seen their property values spike because of the city’s rapid growth but now struggle to pay their property taxes.
Mike O’Neal, director of the Montana Home Choice Coalition, an organization that provides housing for people with disabilities, said low-income people pay a disproportionate amount of their income on property taxes, regardless of their ability to pay. Even so, he supports Jopek's desire to expand these special tax breaks.
“If they receive less benefit, the worry is that they’re not going to have enough money for food and medicine,” O’Neal said.
Jopek said that he is still willing to consider compromise amendments. He still wants to readdress the exemption that is being given to subdivision roads and park land.
“I think it’s pretty egregious that there are exemptions being given to developers instead of older taxpayers,” Jopek said. “We’re going to see if we can get a compromise. If we can’t, I’m willing to walk away from the bill.”
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