Republicans are pushing a new tax-cap, Constitutional Initiative 121, to be on the ballot for Montana voters. CI-121 limits annual increases in valuations of residential property to either 2% or the inflation rate (whichever is lower) when assessing property taxes, if the property is not newly constructed, significantly improved, or had a change of ownership since Jan. 1, 2019. CI-121 establishes 2019 as the base year for the valuations of residential property. It requires the Montana Legislature to limit total ad valorem property taxes on residential property to 1% or less of the assessed valuation.
If passed, CI-121 will drastically change how the state funds education. Currently, 29% of public school funds come from local property tax, 64% from state aid and 7% from federal and other sources. An analysis of CI-121 by the Governor’s Office of Budget and Program Planning predicts an $84 million dollar decrease in school funding in the first three years, if the measure is passed.
This tax cap applies in every school district. This takes local control of school funding away from communities. Why? Because special mill assessments that local citizens have approved will be negated if the combined state tax and mill levies exceed the cap, so the local taxes will be uncollectible.
