Wonky Word Wednesdays: Centrally Assessed Property Taxes

May 07, 2014

Have you ever felt like talking about the budget is a bit like taking the vocabulary part of the SATs? There are so many words that we would never use in our day to day lives! I generally know what they mean, but probably could not define them if asked.

With that in mind, we decided to start Wonky Word Wednesdays. Each Wednesday we will pick a word or phrase and do our best to explain what it is in a way that we can all understand. If you have words you want us to explain – in layman’s terms that is – comment below, or post on our Facebook page, and we will add it to our growing list.

The first wonky word (or phrase) will be Centrally Assessed Property Taxes.  At MBPC, we have been closely following Charter Communications proposed ballot initiative. Charter Communications is asking voters to redefine its property so it is no longer centrally assessed, dropping its tax rate from 6% to 3%.  

Centrally Assessed Property began as a way to tax industries – like the railroad – that had property in multiple counties or states and that operated as one big system. The idea was that the company would be taxed uniformly across the state, instead of asking each county to figure out the value of the company’s property located within its boundaries to determine how much in property taxes the company should pay.

The same general rules apply today. A centrally assessed property must operate as a single entity and must be connected across county or state borders, even if that connection is not a physical one - like a telephone wire. The different types of property that Montana law requires to be centrally assessed include: railroads, telephone lines, power lines, natural gas transmission or oil transmission lines, pipelines, airlines, coal mines, etc.

One example of a centrally assessed property is a cell phone company.  It may not have a specific tower in each Montana county, and those towers are not physically connected by a wire. However, a cell phone company is one single company and the ability for the towers to communicate with each other forms the “connection.” This connection is critical for the cell phone company to operate its business across the state. This connection is also what gives the company its value. Therefore, it is centrally assessed in Montana by the Department of Revenue on a statewide basis rather than asking each county to determine how much it should pay in taxes.

Centrally assessed properties are an important part of Montana’s tax code. Hopefully we all understand them a bit better now – I know I do! Check back each Wednesday for more wonky words from your friends at the Montana Budget and Policy Center. And don't forget to let us know what terms you would like us to explore next!

Montana Budget & Policy Center

Shaping policy for a stronger Montana.

MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.