Revenue officials explain appraisal process in local meetings
Jason Boggess and Katie Kakalecik of the Montana Department of Revenue spoke to an overflow crowd at the Holiday Inn on 10th Avenue South on July 10 about the new property appraisals.
The department recently sent property classification and appraisal notices to all owners of residential, commercial, industrial, and agricultural land properties.
They include the department’s determination of market or productivity value and the taxable value for your property that will be used by your county treasurer to determine the property taxes owed for tax year 2023 and 2024, according to a DoR release.
Many property owners have said their taxable values jumped significantly this year.
“The new market values that appear on appraisal and classification notices are a result of how the real estate market has impacted sales prices across the state. We have seen the popularity of Montana grow significantly in 2020 and 2021, resulting in higher selling prices for property. The department is tasked with valuing property at 100 percent of its market value, therefore the value shown on the notice is what you could expect your property to sell for in today’s market,” according to an email from the DoR’s property assessment division to The Electric.
Boggess told The Electric that most years, Cascade County has seen property values increase about two to three percent in appraisal years.
The appraisals are based on property data from Jan. 1, 2022, Boggess said.
This year, the average residential increase in Cascade County property values was about 31 percent, he said.
“People saw that spike,” he said.
That’s due to the market, which went up over the last two years due to demand, low interest rates, buying power and low supply of housing, Boggess told The Electric.
The demand outpaced the supply, driving up housing prices in most markets, including Cascade County, Boggess said.
Commercial property values went up about 27 percent, Boggess said.
He said that if a property owner doesn’t believe their property valuation is correct to contact to fill out the Request for Informal Classification and Appraisal Review (Form AB-26) within 30 days from the date on your classification and appraisal notice, according to DoR.
Or property owners can call the local DoR office at 406-454-7460.
Boggess said it’s unlikely that tax rates will go up at the same pace of property values, which is what city staff explained during their July 5 commission meetings.
Boggess said that if the market comes back down by the next appraisal, that will be reflected in updated property valuations.
According the DoR, property taxes are calculated with these formulas:
- Current Market (Assessed) Value x Tax Rate = Current Taxable Value
- Current Taxable Value x Millage Rate/1000 = General Property Taxes
More information on how to interpret the assessment notice is located on the DoR website.
Property owners can, and should, verify their property data on the website at property.mt.gov, according to DoR.
According to the DoR figures, the 2023 median residential value is $237,800, which is a 31 percent increase over the previous appraisal year, or an increase of $56,400.
The median value is the “middle” value of residential or commercial properties within the county, meaning that half of the properties are valued higher than the median and half are valued lower, according to DoR.
Several local residents attended the July 5 City Commission meeting said they were concerned about the increase in their appraised values from the state and how that would impact their taxes.
The notices from the state included an estimated tax impact, but city officials said during the July 5 meeting that those numbers may not be accurate.
Mayor Bob Kelly said that the taxable value of his home rose by about 40 percent, but using last year’s mill value, estimated that his local taxes would go up about 15 percent.
Melissa Kinzler, city finance director said that they don’t receive the newly taxable values from DoR until August so have made budget projections based on the previous year’s values, but that when someone’s taxable values increase, it doesn’t represent an increase in revenue for the city.
She said that when taxable values go up, typically the mill value goes up and the city levies fewer mills so taxes don’t increase as significantly.
She said it’s not necessarily the case that local taxes will increase at the same rate as the taxable values.
Kelly said during the July 10 meeting that “this is not a windfall for the city” and that the city can only raise property taxes by half the average rate of inflation for the last three years.
This year, that is set by the Montana Department of Administration at 2.46 percent and equates to $451,129 of new tax revenue for the city.
Kinzler said the state does property reappraisals every two years, but this round is more dramatic than the past.
City Manager Greg Doyon said they’re aware there’s been fear and confusion from taxpayers about the appraisal notices.
He said the tax impact isn’t likely to be what property owners are seeing in those notices but they won’t know for sure until the city receives its certified taxable values in August and sets its mill levies.
Additional voter approved levies though, such as the library levy, will have increase local taxes, whether property values increase not, according to city staff and DoR staff.
One attendee at the July 10 meeting asked if the city new about the property tax increases before sending the library levy to the voters.
Kelly said that they didn’t have the numbers in March when they sent the question to voters and that the reappraisal process wasn’t a consideration.
From 2013 to 2022, the compound annualized growth rate in city taxes was 3.52 percent.
A year over year comparison of values of total value increases by county or taxing jurisdiction back to 2014 can be found on our website here.
According to the DoD data, the market value of commercial and residential property in Great Falls in 2022 was $6,328,057,598 and the taxable value was $107,111,238.
The property appraisal division said they don’t have anything posted to their website that compares reappraisal years, but each November of even years, the department is required to report to the Legislature’s Revenue Interim Committee the estimated increases in reappraisal.
In 2022, the department reported that based on preliminary modeling of the 2023 reappraisal cycle, the estimated changes in property values would be:
Under state law, DoR is required to provide a taxable value neutral rate for residential, commercial, and agricultural property on a statewide basis. The table below from the November 2022 report shows the current law tax rate for these properties and the estimated taxable value neutral rates using the estimated growth rates for each class of
The 2022 report to the legislative committee included maps showing the estimated increase in market values by county and showed 30 percent for Cascade County, lower than some of the other major counties, with a high of 64 percent