County, taxpayers straining under burden of federal laws
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As a CPA and State Legislator, I know how complicated and confusing Montana’s tax code can be. Our property tax system is among Montana’s most confusing tax systems, and it is expensive to administer. In fiscal year 2015, approximately $1.4 billion in real property tax revenue was collected by state and local jurisdictions in Montana. Of this amount, 18.25 percent was allocated to the state, 26.73 percent for county services, 32.41 percent for local schools, 7.42 percent for education retirement and transportation, 10.58 percent for city services and 4.61 percent for fire districts and other miscellaneous services. These amounts vary from county to county based upon levies set by various taxing jurisdictions.
Throughout Western Montana, we have millions of acres of federal land. The United States Supreme Court has interpreted the Supremacy Clause in the Constitution to say that states cannot tax the federal government. In 1976, the federal government started the Payment In Lieu of Taxes program due to the demand federal property has on infrastructure and services provided by local governments. PILT payments have steadily declined over the years and have been threatened in federal budgets for many years.
In Lake County, we have seen tax exempt property increase dramatically as more and more privately owned property is sold and put in the trust for the Confederated Salish and Kootenai Tribes, making it tax exempt and effectively reducing our local tax base. In 2015, tax exempt property status of land-only resulted in an estimated $2.3 million reduction in tax revenue to Lake County. That doesn’t include the recent sale of Kerr Dam, which may or may not come off the tax rolls and could result in an estimated loss of another $1.9 million in local tax revenue.
This federal policy is putting a strain on county services and taxpayers.
If Lake County, our cities, and schools are going to provide services at current levels, the federal government must provide some type of payment in lieu of taxes or the local taxing jurisdictions will be forced to cut services or dramatically raise taxes.
Another strain on Lake County taxpayers is public law 280 (PL 280), an agreement between the state of Montana and the Confederated Salish and Kootenai Tribes that requires the county to prosecute felonies allegedly committed by tribal members. On other Montana reservations, the federal government would prosecute in these instances. The federal government has not provided Lake County with any funding to provide these services, yet the federal government does not need to hire federal agents, prosecutors or judges to handle these felony cases on the Flathead Reservation. While PL 280 does benefit Lake County citizens, both tribal and non-tribal, Lake County should not have to continue providing these services on the backs of local taxpayers.
As your Representative for Montana House District 12, I will continue to work with local, state and federal officials to solve these issues and many more.
