Property taxes in Montana's largest cities.

• Author: Young, Douglas J.

The property tax is the most hated tax in the United States. Property taxes are more likely to be involved in "tax revolts" than any other tax; Montana citizens' 1986 attempt to freeze property taxes via Initiative 105 is a prime example. The property tax may also be the least understood tax, because it involves murky concepts like mill levies, appraisals (and reappraisals), exemptions, and taxable value rates.

This article examines property taxes in Montanas largest urban areas--Billings, Bozeman, Butte, Great Falls, Helena, Kalispell, and Missoula. Tax rates--also known as mill levies are the highest in Missoula and lowest in Bozeman. Mill levies are affected by local government spending and the size of the tax base--the amount of taxable property in a community. Over the past 20 years, mill levies have risen dramatically, in large part because of decisions made by the Montana Legislature.

Property Tax Mill Levies

Figure 1 displays the property tax mill levies in the seven largest cities in Montana. A "mill" is one one-thousandth (1/1,000). Mill levies are multiplied times the taxable value of property to determine the dollar value of property taxes. Therefore, higher mill levies result in higher property taxes on properties of equal value. Residents of Missoula pay the highest mill levies, while residents of Bozeman pay the lowest. Missoula's mill levies are about 10 percent higher than the average of the seven cities, while Bozeman's are about 13 percent lower.

Table 1 displays property tax mill levies by use. Missoula's mill levies are the second highest at the county level and the highest at the city level, while Gallatin County's levy and Bozeman's city levy are the lowest. Education levies are close to average. Butte, Great Falls, and Missoula also utilize special district levies to finance Urban Transportation and other services.

Many communities levy additional miscellaneous taxes for fire protection, parks, health, water, transportation, and special improvement districts (SIDs), which provide street lighting, sidewalks and curbs, sewers, and storm drains. These taxes appear on property tax bills but are not technically "mill levies."

Figure 2 on page 4 summarizes these Miscellaneous Taxes and SIDs on a per-capita basis for fiscal years 2008 and 2013, including taxes levied by cities, counties, and various other districts. These taxes are highest in Lewis and Clark County and lowest in Gallatin County. Miscellaneous Taxes and SIDs increased an average of 22 percent in the last five years; Lewis and Clark County had the largest increase and Yellowstone County the smallest.

Why Do Mill Levies Vary Around the State?

There are several reasons mill levies are higher in some communities and lower in others. City and county spending may be higher, requiring more taxes to pay for the spending. Another possible reason is that the property tax base may be smaller (larger), requiring a higher (lower) mill levy to raise the same amount of revenue. In addition, local...