Tax Increment Financing Reform Would Deliver Property Tax Relief to Montanans

Property tax relief is a top priority for Senate Republicans this legislative session. I’m sponsoring one such bill, SB 2, which reforms how tax increment financing (TIF) districts sunset – if they ever do – in order to lower property taxes for all local taxpayers. Essentially, the bill rewards taxpayers who contribute to economic development over the span of a TIF project.

TIFs are subsidized by taxpayers outside the TIF district over the decades-long life of a project, which increases residents’ taxes and takes money away from schools and other services. I support TIFs, but they need to be transparent and not abused.

SB 2 does not stop the development of TIFs. That choice will still be up to local governments. However, TIFs should not be used to inflate city budgets at their conclusion, increasing taxes after that point. Under SB 2, TIF districts would become standard parts of a city’s overall tax base when they are sunset, instead of entering as newly taxable property.

There are ongoing disputes in Montana over TIFs, highlighting the need to reform how they work. In Missoula, TIFs currently collect approximately $20 million per year in property taxes, indirectly raising taxes on everyone in the city. Common sense dictates that diverting $20 million in property taxes will cause other Missoula residents’ taxes to increase. The city already collects approximately $50 million per year in total property taxes right now.

Moreover, the redevelopment agency that administers Missoula TIFs has an annual personnel budget of nearly $1 million for seven full time employees. I suspect some of those employees are making more than average at the expense of taxpayers and schools.

Roseburg Forest Products properties have several developers looking at developing their site, which will provide more jobs in Missoula. Some of those developers do not want to be annexed into the city of Missoula, nor do they desire TIF money.

Regardless, Missoula wants to put the property into a TIF district to directly control all the taxes from new growth that will happen. Doing so would increase the taxes of Missoula residents, who are already paying some of the highest property taxes in Montana.

By reforming how TIFs work, local residents can directly benefit from their contribution to TIFs through lower property taxes. Taxpayers should not be punished for supporting development; they should be rewarded.

Montanans have made it clear that they want property tax relief. This bill delivers precisely that, while keeping TIFs as an option for cities to revitalize their communities.