Bill to revise taxation on forestland advances in state Senate
A bill to revise forestland taxation laws passed through the Senate Taxation Committee last week with a unanimous vote and was referred to the Senate Finance and Claims Committee.
The goal of SB 3, sponsored by Sen. Mike Cuffe, R-Eureka, is to incentivize timberland owners to continue growing trees through a fair system of taxation, supporters say.
The legislation has four primary elements: It revises the tax rates for 2023 and 2024 following a criticized evaluation done in 2021; shifts to a two year appraisal cycle to discourage tax rate volatility; adopts a 10-year olympic average to forestland taxation; and extends the forestland taxation advisory committee.
“The bottom line is we have to have a taxation system that encourages landowners to keep their land as timberland,” said Paul McKenzie, the vice president and general manager of F.H. Stoltze Land & Lumber in Columbia Falls, of the bill.
The appraisal process for timberland is difficult, according to McKenzie, because both the productivity of the land and the quality of timber are taken into account. Creating a two year cycle that is paired with a 10-year olympic average will mitigate some of that difficulty.
“It takes a really long time to grow a tree in Montana,” McKenzie said. “It takes about 70 years to even see a revenue stream.”
There is a public incentive for property to remain timberland as well, according to Julia Altemus of the Montana Woods Products Association. About 850,000 acres of industrial timberland in the state fall into the block management program, with most of that property in Western Montana. These lands are open to the public for outdoor enjoyment and hunting access.
“To keep forest lands forested and not encourage them to be sold off for other use, there needs to be an equitable taxbase,” Altemus said. “If taxes were to go up, people could make more money if they just sell their property.”
Cuffe, who represents the once-bustling logging communities of Lincoln County, sees preserving forestland, jobs and timber production as critical for the region and state.
During a Jan. 10 hearing of the Senate Taxation Committee, which was the first committee to read and vote on the bill, Cuffe took the podium.
“Northwest Montana is home to a fabulous history of timber, plywood, and lumber,” he said. “Much of my life was spent in that world.”
Cuffe, who is a former partner and superintendent of Lone Pine Timber Industries lumber mill and has worked in management at lumber and plywood mills in Libby, brought the bill forward as requested by the Revenue Interim Committee. He also has served as a member of the forestland taxation advisory committee along with Stoltze’s McKenzie.
Multiple supporters spoke in favor of the legislation — no one testified against it — at the committee meeting. One speaker, Scott Mendenhall, who is deputy director of the Montana Department of Revenue, recommended the bill.
“This brings certainty to taxation for taxpayers,” Mendenhall said.
Likewise, Allen Chrisman, the president of Montana Forest Owners Association, supports the bill, specifically because it removes the year to year volatility of timber, which Chrisman called a “highly variable market commodity.”
On Jan. 18, the bill was referred to the Senate Finance and Claims Committee, where members will analyze the bill’s fiscal note in the coming days.
“This taxation methodology is going to help keep our timberlands as timberlands — as they have been traditionally,” McKenzie said.