The City Commission has decided to send the Safety Levy to the ballot. Commissioners previously sought a property tax increase of 191% to fund the levy, essentially doubling the city’s budget to support this single levy. Outspoken supporters of the levy, like Commissioner Rick Tryon, quickly changed their tune when met with negative feedback from citizens. Although they’re still out of touch with what homeowners in Great Falls can afford, the safety levy is headed to the ballot, asking homeowners to approve a 65% increase to their property taxes.
How Much Would the Levy Cost You?
The city has noted that a 65% increase would come out to about $156.00 for a $100,000 house and around $300 for a $200,000 house. . A quick look at Realtor.com shows that the average home price in Great Falls is far nearer to $300,000. Using a house valued at 100,000 is a useless example of how the levy would affect most homeowners. So why is the city intentionally downplaying the expected cost to homeowners? Put simply, they know we can’t afford a 65% increase any more than we could afford their initial 191% increase.
Now the city is also looking to spend $150,000 on a private firm to advocate for the levy. That’s right, they’re spending over $150,000 of OUR tax money in an attempt to ALSO raise our property taxes by 65% Combine the hefty PR price tag with the arguably misleading housing market numbers being provided, and it seems the Commission is well aware that their ask is not practicable, affordable, or popular.
What’s the Return on Investment?
With the city seeking such a major tax increase, it’s important voters know what exactly this levy will fund. Of particular note, the levy would add two School Resource Officers (SROs) to the budget, with a total cost of $230,000 to the taxpayers. However, multiple studies have shown that SROs in no way increase the safety of schools. Rather, their presence has been shown to be harmful to the student population, particularly students of color. The National Education Association reports, “Yet research shows that SROs do little to reduce on-campus violence or mass shootings, and their presence is often damaging to students of color and students with disabilities. Having SROs in schools can actually create higher rates of behavioral incidents and spikes in suspensions, expulsions, and arrests.”
Studies also show that more police does not necessarily increase community safety. There is no indication that increasing law enforcement’s budget will result in a reduction of serious crime in our city. While police respond to crime, preventing crime is done by increasing community resources, like access to treatment programs for substance use and mental health. Do we want to focus on punishing criminals, or preventing crime from happening in the first place?
Can Great Falls Afford Higher Taxes?
In addition to concerns with the allocation of levy funds, the fact remains that Great Falls citizens are simply overtaxed and underpaid. An emerging housing crisis has already exacerbated the Great Falls housing market, and a 65% tax increase could be the final nail in the coffin for homeowners on a fixed income. Voters already approved a county safety levy last fall. Schools and other vital services also routinely rely on levies to support the increased costs of meeting community needs. If this massive safety levy were to pass, it would likely mean disaster for future levy attempts for other entities, like our schools. If education and public services deteriorate due to lack of funding, we could create an endless loop of increased crime and increased police budgets with a city that isn’t any safer.
Put simply, Great Falls citizens don’t have extra cash to support a 65% property tax increase.
Which begs the question, why is the Commission pushing dramatic property tax increases on homeowners while simultaneously giving massive tax breaks to companies like Calumet? How did the city decide our budget could forego $2.77 MILLION DOLLARS from the refinery, and then turn around and ask homeowners to pay an extra 65% on their houses? Read about the city’s massive tax-gift to Calumet here: https://wtf406.com/2022/09/county-approves-another-tax-break-for-refinery/
So which is it Great Falls? Do homeowners need to pay 65% more to fund a levy? Or are we so well-funded that we can give big-businesses massive tax breaks? Perhaps Great Falls will have fewer safety needs when none of us can afford to live here? Vote for the safety levy, and we’ll soon find out.
Billings Republican Representative Sherry Essman is proposing a “fee” to be collected by city and county governments on a variety of non-profit organizations, including churches. Essman’s bill, HB 391, was heard in the House Taxation Committee on February 8th. Sixteen opponents testified against the bill. There were no supporters.
If enacted into law, the bill would provide that tax-exempt non-profits, ranging from educational institutions to health care providers to churches, would be required to pay a fee to local governments. The fee would be based on square footage of their building, which is exempt from property tax because of its non-profit status. The revenue would be spent on public safety and road maintenance.
During the hearing, Republican Representative Scot Kerns of Great Falls questioned the bill, saying that it was inconsistent with “local control.” It seems Kerns and other Republicans pick and choose what kind of local control they care about when it comes to other bills. (WTF406 has already written a story on Kerns’ connections to religious institutions https://wtf406.com/2022/10/separation-of-church-and-state-not-for-kerns/) A thorough analysis of the impact of the bill (called a fiscal note) has been requested but was not yet available.
This bill won’t go very far. It faces opposition from some big players in politics, like non-profit hospitals (Benefis and Great Falls Clinic) and churches. Still, it shines a light on how much tax exempt property affects local government.
The great thing about human beings is that we learn from past mistakes. Unless you are Governor Greg Gianforte and his Republican allies in the legislature. As the Governor rolls out his package of tax cuts, and legislators clamor to get on board, it seems that no one remembers the 2003 Montana Legislature and Senate Bill 407, Judy Martz’s big tax cut plan that failed to deliver on its promises.
But before getting into the lessons from Senate Bill 407, let’s refresh ourselves on the economic theory that is driving Republicans to promote big tax cuts for the wealthy. It’s called “trickle down” economics. The idea is to give tax cuts to wealthy people who will then hire more people and pay more taxes which will lead to a better world. It turns out that cutting taxes on the wealthy just allows them to put more dollars into things like stock buybacks, offshore accounts, and other financial mechanisms that simply make them richer and do little for community investment. Even though most economists have debunked “trickle down economics,” Republican politicians cling to it as an article of faith and continue to promote it.
Now, back to 2003 and Senate Bill 407. Judy Martz was the Governor, and Republicans held majorities in both houses of the legislature. Then as now, Republicans were supremely confident that tax cuts result in increased revenue by stimulating growth. So they passed significant reductions to capital gains taxes and the income tax rates paid by wealthy individuals.
Specifically, SB 407 reduced the tax rate on top income earners (that’s tax speak for rich people) from 11% to 6.5%. It also created a 1% tax credit for capital gains income (that’s tax speak for money people make selling things like stock and real estate). Sounding familiar? Gianforte is proposing to reduce the top income tax rate along with giving a tax credit to people paying capital gains taxes.
But the real story about SB 407 is just how wrong the projections of the effect on public services and state revenue turned out to be. It ended up costing more than its promoters promised. . .lots more. In 2011 the Department of Revenue conducted an analysis of the fiscal impact of SB 407. Among other things the analysis concluded that the cut in income tax turned out to cost more than three times the projections during the 2003 legislature. The cost of the capital gains tax cut was double the projections. That meant much less money available for schools, local governments, and basic public services. Not surprisingly, the analysis also showed that the beneficiaries of these tax cuts largely turned out to be rich people.
So, here we sit in 2023, just like 2003. Republicans control both houses of the legislature and the Governor’s Office. And just like 2003, these politicians seek to cut taxes mostly on rich people. But there is a big difference as well. In 2003 the state was facing a budget crisis. Thanks to Joe Biden’s American Rescue Plan Act, in 2023 we have a big budget surplus and, along with that, we have the opportunity to invest in our institutions and infrastructure. While rural nursing homes are closing across the state, while the State Hospital is crumbling before our eyes, while cities and counties are struggling to make ends meet, while schools are hard pressed to find qualified staff, why would we make it a priority to give tax breaks to the wealthiest among us before those problems are addressed? The answer from the Republicans is, “Just be patient. It will all trickle down.”
Ken Toole was a member of the Senate Tax Committee in 2001, 2003, and 2005. He served as the vice chair in 2005. He served on the Public Service Commission from 2007 to 2011. He was also the President of The Policy Institute, a private group which conducted research on economic issues including taxation.
Most of us who have property pay our property taxes. We don’t like it much. We grouse and groan and twice a year we write a check to the county treasurer. That money pays for our schools, police, fire control, the courts, parks and recreation. . .basically all of the things that make Great Falls a nice place to live.
Churches are exempt from property tax. That is where we stumbled on the curious case of Great Falls Senator Jeremy Trebas and the property at 1300 1st Avenue North. The building is the home of Break Forth Bible Church. But it is owned by a limited liability company, Rearview Mirror LLC. The registered agent for Rearview Mirror LLC is Jeremy Trebas.
According to the MT Department of Revenue, the property at 1300 1st Ave N is classified as a religious institution. So, despite its appraised value of almost $360,000, it is not obligated to pay the amount of property tax most of us pay. The only Break Forth Bible Church registered with the Secretary of State’s office has its principal office in Glendive. It is registered as a non-profit corporation which is the usual practice for churches. BFBC is one church with six locations: Great Falls, Miles City, Glendive, Dickinson, Williston & Minot.
Most people know churches are exempt from taxation (and more than a few of us don’t like that much) but the law is the law. The thing is, it really has to be owned by a church to get the exemption. Montana law (15-6-201 MCA) states that in order for property to be exempt from property tax obligations it has to be, “buildings and furnishings in the buildings that are owned by a church and used for actual religious worship. . .” That means it can’t be used for any other purpose. On May 6th of last year Trebas posted on facebook that he had purchased the building to house his accounting office and that space was also available for meetings. Bottom line, the building is not eligible for the religious property tax exemption.
Turns out Trebas paid property tax of only $267 for the first half of 2022 and owes the same amount for the second half of the year which was due in November. He has failed to notify the Department of Revenue that the property is no longer qualified for the religious exemption. (Don’t worry folks, we have let them know). Just to put this in perspective for our readers, a smaller residential property which appraised for considerably less across the street paid $3,636.08 in property tax last year.
There are two ways to look at this situation. It is possible that Trebas simply didn’t know about the tax status of the building and the bureaucracy has been slow to catch up. Or it is possible Trebas knows very well what he is doing and is simply taking advantage of the situation to cut his tax bill—significantly.
We believe it is the latter for a few reasons. First, Trebas is a CPA and is much more knowledgeable about the ins and outs of tax law than the average citizen. Second, Trebas’ current tennant, the Break Forth Bible Church, which we assume is paying rent to Trebas’ holding company, (Rear View Mirror LLC) is a church. If it owned the building, it would be eligible for the exemption. And certainly having the sign for the church on the front of the building would make most people, including Dept of Revenue employees, assume that the tax exempt status is appropriate. Finally, when Trebas paid the tax bill on the building he had to know that the amount on the bill was extremely low. His own residence, which appraises for far less than the building at 1300 1st Avenue N at $160,000, has an annual tax bill of $1,819.22, over triple the amount of the much larger and much more valuable property he has in his holding company, Rear View Mirror LLC.
This could be a case of bumbling incompetence or a slick trick to avoid paying the property taxes he is obligated to pay. You decide.
Commissioner Rick Tryon’s support of an upcoming “Safety Levy” seems to be wavering. In a recent article on his rightwing blog, E City Beat, Tryon attempted to downplay his prior support for the levy, which could result in a tax increase of 191% for Great Falls taxpayers. Instead, Tryon characterized the potential tax increase as a “rumor” in need of debunking.
However, the video and minutes from the Great Falls City Commission’s November 15, 2022 work session tells a very different story. At this session, the Commission was presented with three different options for the levy. These were characterized as “Good” “Better” and “Best.” The “Best” option would require a 191% tax increase, and this is the package the Commission unanimously agreed to explore further.
Although Tryon may feign amnesia now, these meetings are recorded. Around the 46-minute mark, Tryon discusses the option he supports. He states, “The Best is actually, the 33-36, to me, just at first blush, appears to be the bare minimum of what we need to do here.” Tryon, and all other members of the Commission, made clear that they support the “Best” package.
And that potential 191% tax increase? It’s certainly not a myth, and it’s likely only the beginning of a huge increase in spending. Tryon states that he expects the total costs to be more than what’s estimated. In the video we hear Tryon say, “I would agree with Commissioner McKinney that we may have been a little bit low-bidding some of this and we may have to think in terms of, ya know, bringing it up a little bit here.”
Taking a page from the ol’ Republican playbook, Tryon is saying one thing in meetings, and another when he’s met with resistance from the community. Don’t be fooled by these mixed messages. Tryon is fully aware of what option the Commission is exploring moving forward, and it’s the one with the HUGE tax increase.
Don’t believe us? Take it from the meeting minutes themselves, which state, “It was the consensus of the Commission that Deputy City Manager Anderson determine definite amounts for the “Best” option.” Not a “myth.”
We are in the calm before the storm — that period between elections and the legislative session. After a sweeping victory in the elections, the Republicans are sharpening their knives to cut already stressed public infrastructure and services. And along the way, they plan to “rebate” much of the current budget surplus to the taxpayers of Montana. How much, (and who gets it) remains to be seen, but count on it happening.
Is there really a Surplus?
So first let’s talk about the budget surplus. While it is true that we have a record surplus, it is not true that it all came from Montana taxpayers. Plain and simple, much of the money was sent to Montana from the Federal government in the form of Biden’s American Rescue Plan Act (ARPA) and other Covid relief programs for the purpose of providing emergency grants, lending, and investment to hard-hit small businesses so they can rehire and retain workers. And damn little of the money coming from the Federal Government came from Montana taxpayers. For every dollar Montana sends to the Federal Government, it receives $1.47 back. Interestingly, 7 of the 10 states which pay the least and receive the most from the Federal Government are governed by Republicans, while over 50% of the states which actually send more to the Feds than they get back are governed by Democrats. https://www.moneygeek.com/living/states-most-reliant-federal-government/
Back in August, the right flank of Republican legislators began thumping their chests, demanding a special session to “return the surplus” to Montanans. In promoting the call for a special session, Republican Mark Blasdel said, “Legislative Republicans are excited to return excess tax money back to the taxpayers who paid it, … What taxpayers need to know at this point is that under Republican leadership, they can look forward to receiving their money back that the state doesn’t need.” Nice rhetoric, but we don’t think they were really talking about sending anything back to the people who live in other states, ones that actually foot the bill for a big part of the surplus.
Well, the effort to call a special session failed and highlighted the friction between moderate and hard-right Republicans. Republican Representative Llew Jones of Conrad wrote an editorial which ran in papers across the state arguing to use the surplus for long term investments in infrastructure. . .a rare good idea from a Republican. (Here in Great Falls we didn’t see it because the Great Falls Tribune doesn’t run editorials).
The votes of Republican legislators here in Great Falls follow the fault line split between “moderate” and hard-right Republicans. Supporters of a tax rebate special session included: Lola Galloway, Stephen Galloway, Scot Kerns, Steve Gist, and Jeremy Trebas. Opponents included Wendy McKamey, Steve Fitzpatrick, Ed Buttrey, Fred Anderson and Brian Hoven. (Democrat Carlie Boland voted no and Democrat Tom Jacobson did not respond to the Secretary of State’s poll).
But let’s get back the idea of giving tax rebates at the state level using ARPA funds from the federal government. Stated simply, it violates the spirit and the letter of the law. ARPA specifically prohibits states using the funding for tax rebates. Seems those wiley Federal bureaucrats anticipated that some states would try to put the money in wealthy people’s pockets rather than use it to stimulate their economies by putting dollars to work providing street level services and money for investment to deal with the economic havoc caused by the pandemic.
So in the up-coming session the war of wiggle words will begin. The Republican party is so wedded to the failed idea of “trickle down economics” that they can’t see, or don’t care about, the reality that giving tax breaks to wealthy people simply does not do much to stimulate the economy. Instead it goes into fancy financial vehicles and things like stock buybacks which actually move money out of the community. And given that Republicans in Montana have consistently passed legislation that is unconstitutional or in violation of existing Federal law we can bet that they will go ahead with their plan no matter what.
The Real Cost
So we just want to leave this with a final thought. Cascade County just passed a public safety levy. We’ll see property tax increases from that. The City of Great Falls is about to put their own public safety levy on the ballot. High end estimates of the property tax increase of a City safety levy will double the city’s budget and result in a 191% increase in city property tax bills. https://theelectricgf.com/2022/11/18/city-considering-35-million-public-safety-levy/
State tax cuts and rebate programs often result in increased local government spending on vital services such as police, fire, facility maintenance, roads, streets, and schools. And if the local mill levies fail, the quality of the community suffers. Schools can’t hire teachers, public safety suffers, streets get potholes and VIOLA! No one wants to live here. And ironically, Republicans justify this snowballing deterioration of our community infrastructure in the name of “economic development.”
