****
69th Legislature 2025 SB 2.1
- 1 - Authorized Print Version – SB 2
1 SENATE BILL NO. 2
2 INTRODUCED BY G. HERTZ
3 BY REQUEST OF THE REVENUE INTERIM COMMITTEE
4
5 A BILL FOR AN ACT ENTITLED: “AN ACT PROVIDING THAT THE RELEASE OF INCREMENTAL TAXABLE
6 VALUE IS NOT CONSIDERED NEWLY TAXABLE PROPERTY FOR THE PURPOSE OF CALCULATING
7 LOCAL GOVERNMENT LEVIES; AMENDING SECTIONS 15-10-420 AND 20-9-336, MCA; AND PROVIDING
8 AN APPLICABILITY DATE.”
9
10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
11
12 Section 15-10-420, MCA, is amended to read:
13 "15-10-420. Procedure for calculating levy. (1) (a) Subject to the provisions of this section, a
14 governmental entity that is authorized to impose mills may impose a mill levy sufficient to generate the amount
15 of property taxes actually assessed in the prior year plus one-half of the average rate of inflation for the prior 3
16 years. The maximum number of mills that a governmental entity may impose is established by calculating the
17 number of mills required to generate the amount of property tax actually assessed in the governmental unit in
18 the prior year based on the current year taxable value, less the current year's newly taxable value, plus one-half
19 of the average rate of inflation for the prior 3 years.
20 (b) A governmental entity that does not impose the maximum number of mills authorized under
21 subsection (1)(a) may carry forward the authority to impose the number of mills equal to the difference between
22 the actual number of mills imposed and the maximum number of mills authorized to be imposed. The mill
23 authority carried forward may be imposed in a subsequent tax year.
24 (c) For the purposes of subsection (1)(a), the department shall calculate one-half of the average
25 rate of inflation for the prior 3 years by using the consumer price index, U.S. city average, all urban consumers,
26 using the 1982-84 base of 100, as published by the bureau of labor statistics of the United States department of
27 labor.
28 (2) A governmental entity may apply the levy calculated pursuant to subsection (1)(a) plus any ****
69th Legislature 2025 SB 2.1
- 2 - Authorized Print Version – SB 2
1 additional levies authorized by the voters, as provided in 15-10-425, to all property in the governmental unit,
2 including newly taxable property.
3 (3) (a) For purposes of this section, newly taxable property includes:
4 (i) annexation of real property and improvements into a taxing unit;
5 (ii) construction, expansion, or remodeling of improvements;
6 (iii) transfer of property into a taxing unit;
7 (iv) subdivision of real property; and
8 (v) transfer of property from tax-exempt to taxable status.
9 (b) Newly taxable property does not include an increase in value that arises because of an
10 increase in the incremental taxable value within a district that uses tax increment financing district. or
11 (4) (a) For the purposes of subsection (1), the taxable value of newly taxable property includes the
12 release of taxable value from the incremental taxable value of a district that uses tax increment financing district
13 because of:
14 (i) a change in the district boundary of a tax increment financing district;
15 (ii) an increase in the base taxable value of the tax increment financing district pursuant to 7-15-
16 4287; or
17 (iii) the termination of a district that uses tax increment financing district.
18 (b) If a tax increment financing district terminates prior to the certification of taxable values as
19 required in 15-10-202, the increment value is reported as newly taxable property in the year in which the tax
20 increment financing district terminates. If a tax increment financing district terminates after the certification of
21 taxable values as required in 15-10-202, the increment value is reported as newly taxable property in the
22 following tax year.
23 (c) For the purpose of subsection (3)(a)(ii), the value of newly taxable class four property that was
24 constructed, expanded, or remodeled property since the completion of the last reappraisal cycle is the current
25 year market value of that property less the previous year market value of that property.
26 (d) For the purpose of subsection (3)(a)(iv), the subdivision of real property includes the first sale
27 of real property that results in the property being taxable as class four property under 15-6-134 or as
28 nonqualified agricultural land as described in 15-6-133(1)(c). ****
69th Legislature 2025 SB 2.1
- 3 - Authorized Print Version – SB 2
1 (5)(4) Subject to subsection (8) (7), subsection (1)(a) does not apply to:
2 (a) school district levies established in Title 20; or
3 (b) a mill levy imposed for a newly created regional resource authority.
4 (6)(5) For purposes of subsection (1)(a), taxes imposed do not include net or gross proceeds taxes
5 received under 15-6-131 and 15-6-132.
6 (7)(6) In determining the maximum number of mills in subsection (1)(a), the governmental entity:
7 (a) may increase the number of mills to account for a decrease in reimbursements; and
8 (b) may not increase the number of mills to account for a loss of tax base because of legislative
9 action that is reimbursed under the provisions of 15-1-121(7).
10 (8)(7) The department shall calculate, on a statewide basis, the number of mills to be imposed for
11 purposes of 15-10-109, 20-9-331, 20-9-333, 20-9-360, and 20-25-439. However, the number of mills calculated
12 by the department may not exceed the mill levy limits established in those sections. The mill calculation must
13 be established in tenths of mills. If the mill levy calculation does not result in an even tenth of a mill, then the
14 calculation must be rounded up to the nearest tenth of a mill.
15 (9)(8) (a) The provisions of subsection (1) do not prevent or restrict:
16 (i) a judgment levy under 2-9-316, 7-6-4015, or 7-7-2202;
17 (ii) a levy to repay taxes paid under protest as provided in 15-1-402;
18 (iii) an emergency levy authorized under 10-3-405, 20-9-168, or 20-15-326;
19 (iv) a levy for the support of a study commission under 7-3-184;
20 (v) a levy for the support of a newly established regional resource authority;
21 (vi) the portion that is the amount in excess of the base contribution of a governmental entity's
22 property tax levy for contributions for group benefits excluded under 2-9-212 or 2-18-703;
23 (vii) a levy for reimbursing a county for costs incurred in transferring property records to an
24 adjoining county under 7-2-2807 upon relocation of a county boundary;
25 (viii) a levy used to fund the sheriffs' retirement system under 19-7-404(3)(b); or
26 (ix) a governmental entity from levying mills for the support of an airport authority in existence prior
27 to May 7, 2019, regardless of the amount of the levy imposed for the support of the airport authority in the past.
28 The levy under this subsection (9)(a)(ix) (8)(a)(ix) is limited to the amount in the resolution creating the ****
69th Legislature 2025 SB 2.1
- 4 - Authorized Print Version – SB 2
1 authority.
2 (b) A levy authorized under subsection (9)(a) (8)(a) may not be included in the amount of property
3 taxes actually assessed in a subsequent year.
4 (10)(9) A governmental entity may levy mills for the support of airports as authorized in 67-10-402, 67-
5 11-301, or 67-11-302 even though the governmental entity has not imposed a levy for the airport or the airport
6 authority in either of the previous 2 years and the airport or airport authority has not been appropriated
7 operating funds by a county or municipality during that time.
8 (11)(10)The department may adopt rules to implement this section. The rules may include a method for
9 calculating the percentage of change in valuation for purposes of determining the elimination of property, new
10 improvements, or newly taxable value in a governmental unit."
11
12 Section 20-9-336, MCA, is amended to read:
13 "20-9-336. School equalization and property tax reduction account -- uses.
14 equalization and property tax reduction account in the state special revenue fund. Contingent on appropriation
15 by the legislature, money in the account is for distribution to school districts as the second source of funding for
16 state equalization aid as provided in 20-9-343. At fiscal yearend, any fund balance in the account exceeding
17 what was appropriated must be transferred to the guarantee account established in 20-9-622.
18 (2) The account receives revenue as described in 20-9-331, 20-9-333, and 20-9-360.
19 (3) Beginning in fiscal year 2025, each December the superintendent of public instruction shall
20 forecast the amount of revenue the account will receive in that fiscal year by dividing the sum of the taxable
21 value of all property in the state reported by the department of revenue pursuant to 20-9-369 by 1,000 to
22 determine a statewide value mill and then multiplying that amount by 95 mills, or the number of mills calculated
23 by the department of revenue under 15-10-420(8)(7) for the applicable fiscal year. If the forecasted amount
24 differs from the amount determined through the same calculation in the prior fiscal year by $2 million or more
25 and is:
26 (a) less, then the superintendent shall:
27 (i) decrease the multiplier used to calculate the statewide elementary and high school guaranteed
28 tax base ratios used for funding BASE budgets under 20-9-366 to the nearest whole number determined by the ****
69th Legislature 2025 SB 2.1
- 5 - Authorized Print Version – SB 2
1 superintendent to result in a decrease in the amount of guaranteed tax base aid distributed to eligible school
2 districts equal to 85% of the decrease in the calculated amount between the 2 years; and
3 (ii) decrease the multiplier used to calculate the statewide elementary and high school mill value
4 per ANB for school retirement guaranteed tax base purposes under 20-9-366 to the nearest whole number
5 determined by the superintendent to result in a decrease in the amount of retirement guaranteed tax base aid
6 distributed to eligible school districts equal to 15% of the decrease in the calculated amount between the 2
7 years;
8 (b) more, then the superintendent shall increase the multipliers used in the guaranteed tax base
9 formulas under 20-9-366 and in the formula for school major maintenance aid under 20-9-525 to the nearest
10 whole number by an amount calculated by the superintendent to result in an increase in the amount of
11 guaranteed tax base aid and school major maintenance aid distributed to eligible counties and school districts
12 equal to 55% of the increase in the calculated amount between the 2 years in the following order, with any
13 amount exceeding the caps under subsections (3)(b)(i) through (3)(b)(iii) flowing to the next mechanism:
14 (i) first, the multiplier used in calculating the statewide mill value per elementary and high school
15 ANB for retirement purposes, not to exceed 305%;
16 (ii) second, the multiplier used in calculating the amount of state school major maintenance aid
17 support for each dollar of local effort, not to exceed 365%; and
18 (iii) third, the multiplier used in calculating the facility guaranteed mill value per ANB for school
19 facility entitlement guaranteed tax base purposes, not to exceed 300%.
20 (4) (a) The adjustments to the multipliers under subsection (3) are applicable to state equalization
21 aid distributions in the fiscal year following the adjustment.
22 (b) Adjustments to the multipliers made under subsection (3) remain in effect in subsequent years
23 unless further changed under 20-9-366 or subsection (3) of this section or as otherwise provided by law."
24
25 NEW SECTION. Section 3. Applicability. [This act] applies to property tax years beginning after
26 December 31, 2025.
27 - END -