Bill > HB865

This bill revises how local governments in Montana can calculate and increase property tax levies, introducing several key changes. It allows cities, counties, and consolidated city-counties to establish a large taxpayer reserve account, which would require depositing 10% of revenue from newly taxable property annually. This account can only be used in specific circumstances, such as when a large taxpayer (defined as an entity among the top 20% of taxpayers by taxable value) permanently ceases operations or experiences a significant decrease in taxable value. The funds can then be used for purposes like paying outstanding bonds, decreasing mill levies, attracting new industry, providing employment incentives, or investing in infrastructure. The bill also modifies how governmental entities calculate their maximum mill levy, increasing the inflation limitation from one-half to the full average rate of inflation (not to exceed 4%) and changing how newly taxable property is factored into levy calculations. Specifically, governmental entities can now include different percentages of newly taxable value depending on whether they create a large taxpayer reserve account (50% inclusion) or not (40% inclusion). The changes will apply to property tax years beginning after December 31, 2025, providing local governments with new flexibility in managing property tax revenues and responding to significant changes in their tax base.

Budget and Finance

https://bills.legmt.gov/#/laws/bill/2/LC1170