Property taxes are neither red/blue nor political. The state sets the rules for property taxes, the counties follow these rules. And everyone – regardless of their political affiliation – pays.

It’s no secret that Missoula and Beaverhead counties have opposing political views, but we agree on the current property tax issue.

The Governor has sent another letter to all Montana homeowners about property taxes, which has likely landed in your mailboxes. The letter claims that 1) property taxes are high because some local governments’ spending is out of control; and 2) the state’s revenue from property taxes is “low.” Both statements are inaccurate and require factual clarification.

First, county spending and county taxes are not the same thing. While counties collect property taxes to provide essential services, they are not the only source of revenue.

For example, counties often receive grants from the federal government to complete large road projects that they otherwise could not finance. Counties spend the money from these grants, which is reflected in their budgets, but this is not local property tax money.

In fact, two-thirds of Missoula County’s spending comes from funds other than property taxes. The MD&A’s audit of Beaverhead County for fiscal year 2023 is similar: “Countywide tax revenues represent 34% of total funds, nontax revenues represent 41.5%, and 24.5% is cash (as of the end of the last fiscal year).”

Again, total county spending and local property taxes are not the same thing. To say otherwise is either ignorant or disingenuous.

Second, state law caps county property taxes. Increases are capped at half the three-year average inflation rate annually; this is called the “mill cap.” Therefore, counties cannot legally do what the governor is asking.

Their taxes have risen by well over half the inflation average. This is due to a combination of three actions/omissions:

• The state chose during the last legislative session (2023) to maintain a high property tax rate set by Montana law. Before the session, the Department of Revenue told lawmakers that a 0.94% rate would leave the property tax on residential properties unchanged. The state has chosen to stick with its 1.35% rate.

• There was a record increase in property values; and

• Select industries received a tax cut at the expense of residential taxpayers: telecommunications, railroads, airlines, pipelines, and NorthWestern Energy. (They paid for your tax increase and its tax break.)

When you combine the three factors above, your taxes skyrocketed even though the increase in county tax revenue was less than the rate of inflation.

What Governor Gianforte calls the “small share” of the state’s property taxes amounts to $81 million for state government. For a resident of Beaverhead County outside of city limits, the “small share” of the state’s property taxes is over 20% of the total tax burden. Even more drastically, in Gallatin County, the state’s “small share” is higher than the county’s entire share.

A “mill” is a unit of measurement for taxation, just as a mile is a unit of distance. However, the dollar value of a mill changes as property values ​​change. As property prices skyrocketed last year, so did mill values.

As a result, counties used fewer mills than the previous year. Missoula County, for example, reduced the number of mills used, and each Beaverhead County division with voting mill authority voluntarily made a mill reduction to offset the increase in tax bills. The counties asked the governor and the state to do the same.

However, the state continued to demand the full 95 mills, despite the exorbitant mill value. This astronomical mill value earned the state another $81 million because it would not reduce the number of mills it used. The counties did so.

Yes, the state has the legal power to access the full 95 per thousand, but it also has a responsibility not to do so, especially knowing that the tax burden would soon skyrocket.

But the governor is right about one thing: it is time to reform the property tax system.

Mike McGinley is a Beaverhead County Commissioner and Josh Slotnick is a Missoula County Commissioner.