Montana Supreme Court protects taxpayers and students equally
| December 29, 2023 7:00 AM
The Montana Supreme Court’s recent order upholding the Montana Department of Revenue’s calculation of the 95 school equalization mills provided a protective shield for residential property taxpayers and students educated in Montana’s public schools.
The court’s decision respected and preserved bipartisan decisions made by the 2023 Legislature estimating revenues and appropriating funds to fund Montana’s public schools.
Some county officials erroneously asserted that levying 77.89 instead of 95 school equalization mills would have saved the day for local property taxpayers. This is not the case.
The reduction in uniform mills would have reduced taxes for out-of-state corporations by millions per year. By comparison, this change would have reduced an average homeowner’s property taxes by only $45 per year.
In addition, particularly in areas of low wealth, the school funding formula would have eventually caused an increase in variable mills for primary residence property taxpayers by twice that amount, or more, to make up for the difference.
Given that the Montana Supreme Court has unanimously held that the counties’ interpretation of the law is “irreconcilable with the Montana Constitution” hopefully we can all move on and consider other proposals that will enhance equity and address rising residential property taxes. Before we do so, it is important to understand the benefit that school equalization mills bring to property taxpayers across the state.
The 95 school equalization mills are used within the school funding formula to keep residential property taxes down. The 95 mills ensure that high wealth areas pay their fair share and reduce reliance on variable local mills that would, in the absence or reduction of such mills, automatically pick up the difference. The Legislature adopted the uniform school equalization mills to satisfy a court order in 1993, and freed Montana’s public schools from excessive reliance on variable local mills in communities across Montana that existed at that time.
The uniform school equalization mills reduce the burden of residential property taxes and ensure that large corporations headquartered out of state shoulder a fair share of the obligation to fund schools in each community. The significant variation in the value of a mill across the state helps illustrate this issue.
The value of a single mill in each school district in Montana varies from a high of $434,000 to a low of $74, with a statewide average of $20,500. To raise the same amount of money from a single mill in the highest wealth district would take 5,864 mills in the poorest district in Montana and 21 mills in the average district across the state.
Put another way, in the highest wealth district in the state, a single mill generates $2,765 per pupil. In the lowest wealth district, a mill generates 34 cents. Across the state, the average is $108 per pupil.
In the absence of or reduction in the 95 mills, Montana resident homeowners, renters, and main street business owners will pick up an increasing share of the costs of funding our schools while out-of-state corporations will enjoy reductions in their taxes.
The Legislature’s passage of annual property tax rebates of $675 on primary residences provide temporary annual property tax relief through July 2025, giving the 2025 Legislature the time it needs to convene, obtain public input, and work to ensure fairness and equity in taxes across the state. MQEC will be there to ensure a voice for the students of Montana and for local property taxpayers who have long supported their community schools.
The Montana Quality Education Coalition is a nonprofit organization headquartered in Helena. Formed in 2001, MQEC’s mission is to advocate for adequate and equitable public school funding and to defend the Montana Constitution’s guarantee of free quality public education. Dr. Douglas Reisig serves as MQEC’s Executive Director.