Senate Bill No. 100

Introduced By beck

By Request of the Department of Revenue

A Bill for an Act entitled: "An Act clarifying the classification of forest land for property tax purposes; clarifying the property tax rate applied to forest land; revising the definitions of "forest land" and "forest productivity value"; amending sections 15-6-143 and 15-44-102, MCA; and providing an immediate effective date and a retroactive applicability date."

Be it enacted by the Legislature of the State of Montana:

Section 1.  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" 0.79% 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 2.  Section 15-44-102, MCA, is amended to read:

"15-44-102.   Definitions. For the purposes of this part, unless the context requires otherwise, the following definitions apply:

(1)  "Culmination of mean annual increment" means the point of optimum net wood production on an acre of forest land.

(2)  "Cultivated Christmas trees" means Christmas trees that are grown on land prepared by intensive cultivation and tilling, such as by plowing or turning over the soil, and on which all unwanted plant growth is controlled for the exclusive purpose of raising Christmas trees.

(3)  "Department" means the department of revenue.

(4)  "Forest" means forest land and the timber on the land.

(5)  "Forest land" means contiguous land of 15 acres or more in one ownership that is capable of producing timber that can be harvested in commercial quantity and is producing timber unless the trees have been removed by man through harvest, including clearcuts, or by natural disaster, including but not limited to fire. Forest land includes land:

(a)  that has not been converted to another use; or and

(b)  that has a dedicated use that is evidenced by a statement of intent by the owner for the eventual harvest of timber on which the annual net wood production equals or exceeds 25 cubic feet an acre at the culmination of mean annual increment.

(6)  "Forest productivity value" means the value of forest land for assessment purposes, which value is determined only on the basis of its ability potential to produce timber, other forest products, and associated agricultural products through an income approach provided for in 15-44-103.

(7)  "Harvest" means an activity related to the cutting or removal of timber for use or sale as a forest product.

(8)  "Landowner" means an individual, corporation, association, company, firm, joint venture, syndicate, or trust.

(9)  "Mean annual net wood production" means the average net usable volume of wood that 1 acre of forest land will grow in 1 year under average current and actual forest conditions and under current and reasonable management practices for each forest valuation zone established under 15-44-103.

(10) "Stumpage value" means the amount that timber would sell for under an arm's-length transaction made in the ordinary course of business, expressed in terms of dollars per unit of measure.

(11) "Timber" means all wood growth on privately owned land, mature or immature, alive or dead, standing or down, that is capable of furnishing raw material used in the manufacture of lumber or other forest products. The term does not include cultivated Christmas trees."

NEW SECTION. Section 3. Effective date -- retroactive applicability. [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.