Senate Bill No. 195
Introduced By harp, mercer, aklestad, mccann, foster, rose, jore, simpson, peck, dowell, grinde, walters, hayne, mills, mcnutt, smith, ohs, m. hanson, cobb, bookout-reinicke, emerson, barnett, orr, baer, crippen, tash, hertel, nelson, hargrove, bitney, adams, ellis, denny, lawson, mood, sliter, beaudry, depratu, molnar, wiseman, wells, l. taylor, benedict, mohl, stang, lynch, jabs, keating, soft, bankhead, masolo, knox, anderson, rehbein, boharski, keenan, curtiss, bergman, grimes, zook, brainard, hibbard, grady, pavlovich, quilici, mcgee, feland, shea, trexler, devlin, swysgood, beck, mesaros, kottel, burnett, bishop, wilson, thomas, jenkins, sprague, crismore, m. taylor, mahlum, wagner, grosfield
A Bill for an Act entitled: "An Act delaying ELIMINATING the effect of the current property reappraisal cycle FOR
CLASS THREE, FOUR, AND TEN PROPERTY; delaying the next reappraisal cycle until the year 2000; requiring the
department of revenue to use the values established in 1996 for all classes of property subject to property taxation for tax
years 1997 through 1999; requiring the department of revenue to value new CLASS THREE, FOUR, AND TEN property
or reclassified CLASS THREE, FOUR, AND TEN property in a manner consistent with the way property was valued
within the same class in 1996 1993; ALLOWING AN EXTENSION OF 1997 STATUTORY DEADLINES RELATING
TO PROPERTY TAXES; PROVIDING FOR A CONTINGENT ADJUSTMENT OF TAX RATES FOR CLASS THREE,
FOUR, AND TEN PROPERTY TO COMPENSATE FOR INCREASED VALUATION OF TAXABLE PROPERTY;
amending sections 15-6-133, 15-6-134, 15-6-143, 15-7-103, 15-7-111, and 15-7-221 15-7-112, AND 15-8-111, MCA, and
sections 5 and 6, Chapter 563, Laws of 1995; and providing an immediate effective date DATES and a retroactive
applicability date."
STATEMENT OF INTENT
A statement of intent is required for this bill because 15-7-111 gives rulemaking authority to the department of revenue for
determining the valuation of new and reclassified CLASS THREE, FOUR, AND TEN property in the same manner as
property was valued within the same class in 1996 1993.
The legislature contemplates that the rules adopted by the department should address, at a minimum, the following:
(1) the base year to be used for determining the assessed value of new or reclassified CLASS THREE, FOUR, AND TEN property consistent with the base year of existing property in the same class;
(2) the method for determining the assessed value of new or reclassified CLASS THREE, FOUR, AND TEN property when a base year is not relevant to the determination of value of property in the same class; and
(3) other criteria to ensure that the assessed value of new and reclassified CLASS THREE, FOUR, AND TEN property is determined in the same manner as other property in the same class.
Be it enacted by the Legislature of the State of Montana:
SECTION 1. SECTION 15-6-133, MCA, IS AMENDED TO READ:
"15-6-133. Class three property -- description -- taxable percentage. (1) Class three property includes:
(a) agricultural land as defined in 15-7-202;
(b) nonproductive patented mining claims outside the limits of an incorporated city or town held by an owner for the ultimate purpose of developing the mineral interests on the property. For the purposes of this subsection (1)(b), the following provisions apply:
(i) The claim may not include any property that is used for residential purposes, recreational purposes as described in 70-16-301, or commercial purposes as defined in 15-1-101 or any property the surface of which is being used for other than mining purposes or that has a separate and independent value for other purposes.
(ii) Improvements to the property that would not disqualify the parcel are taxed as otherwise provided in this title, including that portion of the land upon which the improvements are located and that is reasonably required for the use of the improvements.
(iii) Nonproductive patented mining claim property must be valued as if the land were devoted to agricultural grazing use.
(c) parcels of land of 20 acres or more but less than 160 acres under one ownership that are not eligible for valuation, assessment, and taxation as agricultural land under 15-7-202(1). The land may not be devoted to a commercial or industrial purpose.
(2) Class three property is taxed at the taxable percentage rate applicable to class four property, as provided in
15-6-134(2)(a) 3.645%.
(3) The land described in subsection (1)(c) is valued at the productive capacity value of grazing land, at the average grade of grazing land, and the taxable value is computed by multiplying the value by seven times the taxable rate for agricultural land."
SECTION 2. SECTION 15-6-134, MCA, IS AMENDED TO READ:
"15-6-134. Class four property -- description -- taxable percentage. (1) Class four property includes:
(a) all land, except that specifically included in another class;
(b) all improvements, including trailers or mobile homes used as a residence, except those specifically included in another class;
(c) the first $100,000 or less of the market value of any improvement on real property, including trailers or mobile homes, and appurtenant land not exceeding 5 acres owned or under contract for deed and actually occupied for at least 7 months a year as the primary residential dwelling of any person whose total income from all sources, including net business income and otherwise tax-exempt income of all types but not including social security income paid directly to a nursing home, is not more than $15,000 for a single person or $20,000 for a married couple or a head of household, as adjusted according to subsection (2)(b)(ii). For the purposes of this subsection (1)(c), net business income is gross income less ordinary operating expenses but before deducting depreciation or depletion allowance, or both.
(d) all golf courses, including land and improvements actually and necessarily used for that purpose, that consist of at least nine holes and not less than 3,000 lineal yards; and
(e) all improvements on land that is eligible for valuation, assessment, and taxation as agricultural land under 15-7-202, including 1 acre of real property beneath improvements on land described in 15-6-133(1)(c). The 1 acre must be valued at market value.
(2) Class four property is taxed as follows:
(a) Except as provided in 15-24-1402 or 15-24-1501, property described in subsections (1)(a), (1)(b), and (1)(e) is taxed at
3.86% 2.78% of its market value.
(b) (i) Property qualifying under the property tax assistance program in subsection (1)(c) is taxed at 3.86% 2.78% of its
market value multiplied by a percentage figure based on income and determined from the following table:
Income Income Percentage
Single Person Married Couple Multiplier
Head of Household
$ 0 - $ 6,000 $ 0 -$ 8,000 20%
6,001 - 9,200 8,001 - 14,000 50%
9,201 - 15,000 14,001 - 20,000 70%
(ii) The income levels contained in the table in subsection (2)(b)(i) must be adjusted for inflation annually by the department of revenue. The adjustment to the income levels is determined by:
(A) multiplying the appropriate dollar amount from the table in subsection (2)(b)(i) by the ratio of the PCE for the second quarter of the year prior to the year of application to the PCE for the second quarter of 1995; and
(B) rounding the product thus obtained to the nearest whole dollar amount.
(iii) "PCE" means the implicit price deflator for personal consumption expenditures as published quarterly in the Survey of Current Business by the bureau of economic analysis of the U.S. department of commerce.
(c) Property described in subsection (1)(d) is taxed at one-half the taxable percentage rate established in subsection (2)(a).
(3) Within the meaning of comparable property, as defined in 15-1-101, property assessed as commercial property is comparable only to other property assessed as commercial property and property assessed as other than commercial property is comparable only to other property assessed as other than commercial property."
SECTION 3. SECTION 15-6-143, MCA, IS AMENDED TO READ:
"15-6-143. Class ten property -- description -- taxable percentage -- alternative classification. (1) Class ten property
includes all forest lands as defined in 15-44-102.
(2) Class ten property is taxed at the percentage rate "P" 0.35% of its forest productivity value.
(3) For taxable years beginning January 1, 1994, and thereafter, the taxable percentage rate "P" applicable to class ten
property is 4%/B, where B is the certified statewide percentage increase to be determined by the department of revenue as
provided in subsection (4). The taxable percentage rate "P" must be rounded downward to the nearest 0.01% and must be
calculated by the department before July 1, 1994.
(4) (a) Prior to July 1, 1994, the department shall determine the certified statewide percentage increase for class ten
property using the formula B = X/Y, where:
(i) X is the appraised value, as of January 1, 1994, of all property in the state, excluding use changes occurring during the
preceding year, classified under class ten as class ten is described in this section; and
(ii) Y is the appraised value, as of January 1, 1993, of all property in the state that would be classified under class ten as
class ten is described in this section as this section reads in 1993.
(b) B must be rounded downward to the nearest 0.0001%."
Section 4. Section 15-7-103, MCA, is amended to read:
"15-7-103. Classification and appraisal -- general and uniform methods. (1) It is the duty of the department of revenue to implement the provisions of 15-7-101 through 15-7-103 by providing for a general and uniform method of:
(a) for a general and uniform method of classifying lands in the state for the purpose of securing an equitable and uniform
basis of assessment of said lands for taxation purposes;
(b) for a general and uniform method of appraising city and town lots;
(c) for a general and uniform method of appraising rural and urban improvements;
(d) for a general and uniform method of appraising timberlands forest lands.
(2) All lands The department shall be classified classify all lands according to their use or uses and graded shall grade land
within each class according to soil and productive capacity. In such classification work classifying lands, the department
use shall be made of use soil surveys and maps and all other pertinent available information.
(3) All lands must be classified by parcels or subdivisions not exceeding 1 section each, by the sections, fractional sections, or lots of all tracts of land that have been sectionized by the United States government, or by metes and bounds, whichever yields a true description of the land.
(4) All agricultural lands must be classified and appraised as agricultural lands without regard to the best and highest value use of adjacent or neighboring lands.
(5) (a) In any periodic revaluation of taxable property completed under the provisions of 15-7-111 after January 1, 1986,
all ALL property classified in 15-6-134 must be appraised on its market 1993 value in the same AS DETERMINED BY
THE BASE year USED FOR THE 1993 REAPPRAISAL.
(b) For tax years beginning January 1, 1997, and ending December 31, 1999, the department shall use the assessed values
established in 1996. The For all other years IN ANY PERIODIC REVALUATION OF TAXABLE PROPERTY UNDER
THE PROVISIONS OF 15-7-111, the department shall publish a rule specifying the year used in the appraisal.
(6) All sewage disposal systems and domestic use water supply systems of all dwellings may not be appraised, assessed,
and taxed separately from the land, house, or other improvements in which they are located. In no event may the The
sewage disposal or domestic water supply systems may not be included twice by including them in the valuation and
assessing them separately."
Section 5. Section 15-7-111, MCA, is amended to read:
"15-7-111. Periodic revaluation of taxable property -- exception -- rules. (1) (a) The Except as provided in subsection
(1)(b), the THE department of revenue shall administer and supervise a program for the revaluation of all taxable property
subject to taxation under Title 15, chapter 6, part 1, within the state AND THAT MUST BE REVALUED ON A
PERIODIC BASIS. The department shall complete this revaluation program by December 31, 1996 1999. A
comprehensive written reappraisal plan must be promulgated by the department. The reappraisal plan adopted must provide
that all property in each county be revalued by December 31, 1996 1999. The department shall furnish a copy of the plan
and all amendments to the plan to the board of county commissioners of each county.
(b)(2) For tax years beginning January 1, 1997, and ending December 31, 1999, the department shall:
(i)(A) use the assessed values established in tax year 1996 1993 for all classes of property subject to taxation under Title
15, chapter 6, part 1 15-6-133, 15-6-134, AND 15-6-143; and
(ii)(B) value new property or reclassified property in a manner consistent with the method of valuing property within the
same class in tax year 1996. The department shall adopt rules for determining the assessed valuation of new property or
reclassified property within the same class.
(2) Beginning January 1, 1997 2000, the department of revenue shall administer and supervise a program for the
revaluation of all taxable property within the state at least every 3 years. A comprehensive written reappraisal plan must be
promulgated by the department. The reappraisal plan adopted must provide that all property in each county be revalued at
least every 3 years. The department shall furnish a copy of the plan and all amendments to the plan to the board of county
commissioners of each county."
Section 3. Section 15-7-221, MCA, is amended to read:
"15-7-221. (Temporary) Phasein of the taxable value of agricultural land. The increase or decrease in taxable value of
agricultural land resulting from the change in the method of determining productive capacity value under 15-7-201, as that
section read on December 31, 1996, must be phased in beginning January 1, 1995, as follows:
(1) For the year beginning January 1, 1995, and ending December 31, 1995, the taxable value of agricultural land in each
land use and production category must increase or decrease from the December 31, 1994, value by one-third of the
difference between the product of the productive capacity value of agricultural land for 1995 determined under 15-7-201
times the class three tax rate and the taxable value of agricultural land as of December 31, 1994.
(2) For the year beginning January 1, 1996, and ending December 31, 1996, the taxable value of agricultural land in each
land use and production category must increase or decrease from the December 31, 1994, value by two-thirds of the
difference between the product of the productive capacity value of agricultural land for 1995 determined under 15-7-201, as
that section read on December 31, 1996, times the class three tax rate and the taxable value of agricultural land as of
December 31, 1994.
(3)(2) (a) Beginning January 1, 1997, and ending December 31, 1999, the taxable value of agricultural land in each land use
and production category is equal to 100% of the productive capacity value of agricultural land determined under 15-7-201
times the class three tax rate subsection (1).
(b) Beginning January 1, 2000, the taxable value of agricultural land in each land use and production category is equal to
100% of the productive capacity value of agricultural land determined under 15-7-201 times the class three tax rate.
(4)(3) This section does not apply to land described in 15-6-133(1)(c). (Repealed effective January 1, 1998 2001--secs. 4,
5, Ch. 563, L. 1995.)"
Section 4. Section 5, Chapter 563, Laws of 1995, is amended to read:
"Section 5. Effective dates. (1) [Sections 1, 3, 6, and this section] are effective on passage and approval.
(2) [Section 2] is effective January 1, 1997 2000.
(3) [Section 4] is effective January 1, 1998 2001."
Section 5. Section 6, Chapter 563, Laws of 1995, is amended to read:
"Section 6. Applicability. (1) [Sections 1 and 3] apply retroactively, within the meaning of 1-2-109, to tax years beginning
after December 31, 1994.
(2) [Section 2] applies to tax years beginning after December 31, 1996 1999."
SECTION 6. SECTION 15-7-112, MCA, IS AMENDED TO READ:
"15-7-112. Equalization of valuations. The same method of appraisal and assessment shall must be used in each county
of the state to the end so that comparable property with similar true market values and subject to taxation in Montana shall
have has substantially equal taxable values value at the end of each cyclical revaluation program hereinbefore provided."
SECTION 7. SECTION 15-8-111, MCA, IS AMENDED TO READ:
"15-8-111. Assessment -- market value standard -- exceptions. (1) All taxable property must be assessed at 100% of its market value except as otherwise provided.
(2) (a) Market value is the value at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.
(b) If the department uses construction cost as one approximation of market value, the department shall fully consider reduction in value caused by depreciation, whether through physical depreciation, functional obsolescence, or economic obsolescence.
(c) Except as provided in subsection (3), the market value of all motor trucks; agricultural tools, implements, and machinery; and vehicles of all kinds is the average wholesale value shown in national appraisal guides and manuals or the value of the vehicle before reconditioning and profit margin. The department shall prepare valuation schedules showing the average wholesale value when a national appraisal guide does not exist.
(3) The department may not adopt a lower or different standard of value from market value in making the official assessment and appraisal of the value of property, except:
(a) the wholesale value for agricultural implements and machinery is the loan value as shown in the Official Guide, Tractor and Farm Equipment, published by the national farm and power equipment dealers association, St. Louis, Missouri;
(b) for agricultural implements and machinery not listed in the official guide, the department shall prepare a supplemental
manual in which the values reflect the same depreciation as those found in the official guide; and
(c) the value of properties in 15-6-133, under class three, 15-6-134, under class four, and 15-6-143, under class ten, is not determined based on current market or current productivity value. The value is determined based on the market or productivity value for the base year of the 1993 reappraisal cycle. The 1993 reappraisal cycle is the cycle in which new values were assessed beginning in 1993. The base year for class four property is the year adopted by administrative rule for the 1993 reappraisal as required by 15-7-103. The base year for class three and ten properties is the year used in determining productivity for the 1993 reappraisal. The values must be considered equalized when property values are at or near the base year market or productivity value used for the 1993 reappraisal.
(c)(d) as otherwise authorized in Title 15 and Title 61.
(4) For purposes of taxation, assessed value is the same as appraised value.
(5) The taxable value for all property is the percentage of market or assessed value established for each class of property.
(6) The assessed value of properties in 15-6-131 through 15-6-133 15-6-134 and 15-6-143 is as follows:
(a) Properties in 15-6-131, under class one, are assessed at 100% of the annual net proceeds after deducting the expenses specified and allowed by 15-23-503 or, if applicable, as provided in 15-23-515, 15-23-516, 15-23-517, or 15-23-518.
(b) Properties in 15-6-132, under class two, are assessed at 100% of the annual gross proceeds.
(c) Properties in 15-6-133, under class three, are assessed at 100% of the productive capacity of the lands in 1994 when valued for agricultural purposes. All lands that meet the qualifications of 15-7-202 are valued as agricultural lands for tax purposes.
(d) Properties in 15-6-134, under class four, are assessed as provided in subsection (3)(c) of this section.
(d)(e) Properties in 15-6-143, under class ten, are assessed at 100% of the forest productivity value of the land in 1994
when valued as forest land.
(7) Land and the improvements on the land are separately assessed when any of the following conditions occur:
(a) ownership of the improvements is different from ownership of the land;
(b) the taxpayer makes a written request; or
(c) the land is outside an incorporated city or town."
NEW SECTION. SECTION 8. EXTENSION OF 1997 DEADLINES RELATING TO PROPERTY TAXATION. AS A RESULT OF THE CHANGE IN THE BASE YEAR FOR REAPPRAISAL OF CLASS THREE, FOUR, AND TEN PROPERTY ENACTED BY THE 55TH LEGISLATURE, IT IS NOT POSSIBLE TO COMPLY WITH CERTAIN STATUTORY DEADLINES RELATING TO APPRAISALS, ASSESSMENTS, APPEALS, REIMBURSEMENTS, BUDGETS, AND COLLECTION OF PROPERTY TAXES. THE STATE APPRAISAL AND ASSESSMENT PROCESS WILL BE DELAYED, WHICH IN TURN WILL CAUSE DELAYS FOR THE TAX APPEAL BOARDS AND LOCAL GOVERNMENT TAXING JURISDICTION BUDGETING AND COLLECTION PROCESSES. THEREFORE, FOR TAX YEAR 1997, ALL DEADLINES ARE EXTENDED AS NECESSARY AND REASONABLE IN ORDER TO ALLOW FOR THE ORDERLY AND EFFICIENT ASSESSMENT AND COLLECTION OF TAXES.
NEW SECTION. Section 9. Effective date DATES -- retroactive applicability. (1) EXCEPT AS PROVIDED IN
SUBSECTION (2), [This THIS act] is effective on passage and approval and applies retroactively, within the meaning of
1-2-109, to tax years beginning after December 31, 1996.
(2) IF [SECTIONS 4 THROUGH 8] ARE DECLARED INVALID, THEN [SECTIONS 1 THROUGH 3] ARE EFFECTIVE ON THE DATE THAT [SECTIONS 4 THROUGH 8] ARE INVALID.
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