County landowners protest about $250,000 in property taxes

The property reassessments of 2009, required every six years, were supposed to be revenue-neutral. Some tax bills would rise a little and some would actually go down, the Montana Department of Revenue said.

In Valley County, most homeowners are paying less than last year, but agricultural land rates went markedly higher, and landowners have filed about 1,700 AB-26 forms, requests for informal review, according to Allen Bunk, the Valley County assessor for the Montana Department of Revenue. Reviews are still being held by management staff in Helena, and none of the AB-26 forms have been returned to taxpayers with a decision yet.

"It's been a very hectic season for everybody in our office," Bunk said. "The reappraisals did a great job but they didn't do so good in Valley County. Three counties were pretty high, Blaine, Phillips and Valley."

He said in the last 21 years he has dealt with maybe a dozen appeals. Now his office is looking at more than 500. Department of Revenue managers told him that only 2 percent of the state taxpayers have appealed their assessments. The most were in Flathead County. Twenty-seven percent of the appeals were in ag land and these three north-central counties have a large share of them.

Valuations were based on land classification and productivity. Most of the AB-26s in Valley County were filed to protest an increase in estimated productivity of ag land. A few properties in the county were assigned averages of 30 or 35 bushels per acre, whereas the county average is 24 bushels.

"That doesn't quite seem kosher," Bunk said. "Farmers I talk to tell me that seems more like optimum than an average.

"The best hope is that the department will come up with a methodology that works for Valley County, Phillips County and Blaine County. They kind of stick out."

The ag land reassessments statewide were done with United States Natural Resource Conservation Service soil surveys to arrive at average grain yields, tons of hay per acre and grazing capacities. It was supposed to be scientific and objective and arrive at uniform results, but somehow these counties came in higher than their neighbors.

"It usually works pretty good, but there a few cases where the shoe doesn't fit," Bunk said.

Karl Sauskojus, who farms in northeast Valley County, wrote a letter to the editor to the Courier on Nov. 18 saying his tax for 2009 had increased 50 percent. He lives next to the Daniels County line. Production on his land is rated 28 bushels per acre, and across the road in Daniels County the rating is 21 bushels. Some of his land has been rated up to 36 bushels per acre.

Sauskojus urged landowners to pay their taxes under protest and in Valley County, a large number of people have done that. Some 247 taxpayers protested taxes on about 540 parcels of land. They paid the whole tax, but usually they protested the amount in excess of last year's tax.

"November was very interesting around here," said Valley County Treasurer Jenny Reinhardt.

One person had 14 protested parcels; one had eight, many had four or five. Reinhardt came in nights and weekends to enter the paperwork. She said about 97 percent of the people filed an AB-26 request for informal review by the Department of Revenue.

"We tried to work with people so they could protest accurately and successfully," Reinhardt said. "We don't have any 'tax protesters.' These people pay their taxes. They are just upset at the increase."

If the taxpayer disagrees with the decision on their informal review, they can appeal to the County Tax Assessment Board. The current local board has never met, Bunk said. There have been no appeals in five years anyway. Further appeal is possible to the State Tax Assessment Board - by either party, the taxpayer or the Department of Revenue. Beyond that is the possibility of appeal to a district judge.

Bunk said tax problems are pretty easily remedied. There are things they can agree to, minimal amounts that make everybody happy.

"We try to accommodate taxpayers any time we can," Bunk said. "Our job is to be fair and reasonable."

The protested taxes are held in an escrow fund until the review process is completed. Then the money is either returned to the taxpayer or disbursed to the various governmental entities that are funded by property taxes. About $250,000 is being held in escrow in Valley County, according to Valley County Commissioner Bruce Peterson, chairman of the commission. About one-third of it would have gone to the county, one-third to schools, and the rest to towns, the Weed District and the state and other agencies.

Peterson said that the protested taxes amount to less than 1 percent of the tax revenue of Valley County, which bills about $13 million.

"We've got some cushion in the budget," Peterson said. "It's not going to affect what we're doing. It's not going to break the county - initially we were afraid it might. If this were to continue every year, we'd start getting some problems."

The six school districts in the county were variously affected, according to how much protested ag land they have. The protested amounts shorted the Lustre budget $2,000, kept $26,180 from Glasgow and dinged Opheim's budget by $27,880, for a total of $85,840.

Glasgow School District officials have seen this coming and hoped for a special legislative session to deal with reappraisal, but Gov. Brian Schweitzer nixed that idea. Superintendent Glenn Hageman said that he is going to Helena next weekend to get an idea of how the tax protest is being addressed. If nothing has been done by Jan. 15, he will look hard at places to cut the Glasgow school budget.

"We totally depend on taxes and by law we can't save money," Hageman said. "We are supposed to return it to taxpayers. I always talk about a sustainable source of revenue for schools. I've been in this for 21 years and it's been a roller coaster."

Leroy Nelson is superintendent of a much smaller school district up in Opheim. The property tax shortfall amounts to 3 percent of his district's budget.

"It's something we're keeping an eye on," he said. "It's not going to impact us greatly, but we want it sooner rather than later."

He said budgets are tight in schools, but this is not a situation where they must make drastic changes of any sort.

"It's substantial enough, but it won't keep us from moving forward and operating. The important thing is the timeline. There is no timeline. That makes it interesting."

There is a deadline of May 16 to have the tax appeals done, which is just before the second round of property taxes are due. Bunk does not know if the government will meet the deadline or if it will have to ask for an extension.

"I have no idea," Bunk said. "I'm stuck out here in limbo with a lot of unhappy taxpayers."