Constitutional Initiative 121: Bad Tax Policy Does Not Belong in Montana’s Constitution
Rose Bender | March 2022 | Presented by the Montana Budget & Policy Center
CI-121 is a complicated and confusing proposal that will change Montana’s Constitution. It will treat Montana taxpayers differently depending on where someone lives and will have far-reaching repercussions for Montana communities. Once in the constitution, it will be almost impossible to remove, even when it ends up hurting Montanans.
CI-121 could result in losing as much as $265 million in state and local revenue.
- From Great Falls to Glendive, Montana communities need local taxes to fund their schools, fire departments, and public safety.
- CI-121 could result in a loss of as much as $235 million for local governments and local schools, and the state would lose $30 million per year in revenue, funds that currently go to K-12 schools.
- Local schools, cities, and counties will have little choice but to shift property taxes to small businesses, farmers, ranchers, and other property taxpayers.
CI-121 will cut funding for schools, hurting over 89 school districts – big and small.
- Our schools are largely funded by property tax revenues flowing through the state and school budgets, so schools are likely to lose the lion’s share of the $265 million in cuts.
- After California passed a similar measure (Proposition 13), local property tax funding dropped nearly 60 percent, and K-12 spending fell to some of the lowest in the nation.
CI-121 is a massive tax handout to wealthy, out-of-state property owners.
- Currently, Montana taxes homes over $1.5 million at a higher rate.
- Out-of-staters own over 70 percent of those expensive homes. Because CI-121 caps property taxes at 1 percent of value, these high-value homes would see some of the largest tax cuts.
- To make it simple - those with the most expensive homes will get the biggest tax break.
CI-121 is unfair and will treat Montana homeowners differently.
- This Constitutional change will have a huge impact on urban areas, like Billings and Missoula, while providing little tax relief, if anything, for everyone else.
- In California post-Proposition 13, homeowners living in wealthier, coastal California cities received property tax reductions averaging in the thousands of dollars while those living inland received property tax reductions averaging one-tenth as much.
- CI-121 will penalize new homeowners, including families looking to buy their first home and seniors needing to downsize.
- By capping property taxes at 2019 values, this policy will incentivize people to hold onto homes. For homes that do turnover, new homeowners will have higher taxes than their neighbors, making it even harder for Montanans to afford buying a home.
Leaders in Montana need to address property taxes but adding terrible tax policy into our Constitution is not the way. CI-121 is confusing, will hurt our local schools, will make Montanan’s housing crisis worse, and will cause Montana problems for generations.