New appraisal notices sting taxpayers

“People are up in arms” about the appraisal notices that recently arrived from the Department of Revenue, says Lake County Treasurer Erika Jennison.

The appraisals, based on a two-year assessment cycle, reflect the dramatic increase in market value for homes and property in Lake County and across much of Montana.

Jennison said one visitor to her office who owns lakeshore property said his assessment had risen by $500,000. The valuation for a modest home in Polson, assessed at $145,000 in the previous cycle, increased to $200,000.

“My own assessment almost doubled,” says Wayne Freeman, lead appraiser for the Department of Revenue office in Polson. The staff at his office has been “very busy” fielding questions since appraisals were mailed the end of June.

“All of us are taxpayers here as well so we’re concerned too,” he said. “We’re not the enemy. We sympathize – we’re feeling it ourselves.”

The form sent by the DOR also includes an estimated property tax, based on last year’s mill rate. However, city and county officials pointed out that local government spending increases are, by state law, capped at 1.5% of the average rate of inflation over a three-year period. To keep their budgets in line with that cap, local governments will have to lower the mills they assess.

“We just have to wait and see,” advise Lake County commissioner Bill Barron. “I think most people will see an increase in property taxes, but I don’t think it’s going to be nearly as bad as the new appraisals make it look.”

That’s in large part because the appraisals list this year’s valuation but use last year’s mill rate to estimate general taxes. A more accurate estimate will arrive in late August, when the DOR sends certified values to local governments which they then use to set local mills.

“If the values are way up, the mill levies usually go down to offset it,” said Jennison.

And according to Polson city manager Ed Meece, “Even if appraisals and assessments go through the roof we’re still limited to what we can collect – that’s state law.” He adds that using last year’s mills and the new appraisals to calculate this year’s taxes is “at best, misleading.”

“When taxable values skyrocket, our property tax revenues don’t,” he says. “They’re built specifically not to do that.”

The assessment also doesn’t include the local fees and voted levies, including – for Polson property owners – the two bond issues passed this spring to finance local school improvements.

“We can’t control the levies that voters pass, and that will affect that end number,” Freeman said.

DOR hosts public meeting July 11

The DOR is hosting public meetings across the state this month to help taxpayers understand the property valuation process and how the department determined the new values that appear on their classification and appraisal notices. In Polson, the meeting is 3-6 p.m. next Tuesday, July 11, at the Red Lion Inn.

According to Freeman, DOR staff will meet one-on-one with taxpayers and try to address their concerns. They’ll also provide information on two tax-rebate programs passed by the Legislature this year – one for income taxes and the other for property taxes. A land-value property tax assistance program is also available to help protect landowners who have lived in a house full time (at least 7 months) for at least 30 years.

Taxpayers have 30 days from the date printed on the appraisal notice to challenge their appraisals by submitting a Form AB-26 to the Department of Revenue (mtrevenue.gov), or by submitting an appeal directly to the local tax appeal board through the county clerk and recorder’s office.

Freeman advises those who choose to appeal to prepare with factual information, since appraisals of residential property are based on market value.

“We’re human, and our appraisers sometimes make errors,” he said. “We rely heavily on the taxpayer to review the information and respond, and we work really hard to work with taxpayers and be fair.” If necessary, they can send appraisers to the property to take a second look.

He added that there seems to be a misconception that property values have fallen in Lake County. But housing sales – whether through real estate agents or between individuals – tell a different story. He notes that DOR offices in Sanders and Mineral counties have also reported substantial increases in property values, as reflected in sales.

“Honestly, it gives me more confidence in the numbers we’re putting out because we’ve seen it done by separate appraisers in separate places,” he said. “The market has really changed across western Montana. When I see all the data come together, it’s pretty hard to refute that the market has gone up the way it has.”

He adds that lakeshore property has been especially hard hit and landowners who may have had a family cabin for generations are seeing an appraisal hike that far exceeds the percentage increase that the rest of the county faces.

“We have sale after sale that puts them in this million-dollar category and they have these old cabins. It just makes them so hard to hang on to,” Freeman said. “We’re having tough conversations right now and the anger is understandable.”

“Here at the office, we don’t create those rules,” he added. “We’re just trying to do our job.”

For more information on the appraisal and appeal process, call 406-872-6228 or visit mtrevenue.gov.