Property tax problems brewing in another Western state are reinforcing the usefulness of California's Proposition 13, which protects the Golden State's property owners from massive tax increases based on skyrocketing assessments.
In Montana, many property owners are seeing their property tax bills triple as their assessed values increase based on sales of neighboring properties – the same problem faced by homeowners and business owners in California prior to Proposition 13. The Seattle Times reported on the plight of Charles Abell, a resident of Montana's Flathead Valley who bought his home for $35,000 in 1967 and had planned to live there for the rest of his life – "until the tax bill came this fall."
The newspaper explained: "Abell already knew that property values in the Flathead – a new romping ground for Hollywood celebrities, sports stars and international CEOs – far exceeded what they were when he graduated from Whitefish High School. His 70-year-old house in the tax appraisal in 2002 was worth a stunning $553,900, thanks to its location right on the lake. Now, though, the Montana Department of Revenue says Abell's property is worth $2.64 million."
The senior homeowner paid $9,200 for this year's property taxes, and expects the annual tax to grow to at least twice that amount when the new appraisal takes effect in 2014. The Montana Department of Revenue, headed by Dan Bucks, also has bad news for Mr. Abell's brother, who lives in a nearby cabin that was built by their parents. He faces an annual property tax bill of $30,462, which exceeds his annual income. His rustic log cabin, which sits on 4 acres, has been assessed at $4.2 million, based on the “highest and best use” system of valuing property.
Other Montana property owners are facing similar problems. State law requires that their properties be reassessed every six years, and some have seen their assessed values increase 1,000 percent since the last assessment. A 90-year-old woman saw her home's assessed value go from $540,000 to $2.1 million, and her annual tax will increase from $5,500 to $14,200 when the new assessment takes effect in 2014. Another resident said his annual property tax will go from $6,500 to $18,400. The tax will take approximately one-fourth of his expendable income.
The Times reports, "There have been widespread calls for a California-style measure like Proposition 13 to limit annual increases, or tie taxes to what owners paid for a property." Some residents are beginning a signature drive to amend the state constitution. Legislative action does not appear to be an option, because lawmakers, who meet only once every other year, adjourned in April after passing only a minor property tax relief bill.
A former Californian who is facing a property tax increase from $5,616 to $13,996 said he may move out of Montana. He told the newspaper: "I could probably pay it. I can manage it. But I'm not sure I want to. If you're living in a state that doesn't care about their people, and are willing to force out the longtime homeowners, is this really where you want to be?" (Source: The Seattle Times, January 19.)
Cal-TaxReports, January 25, 2010
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