Deposit non-levy revenue in school equalization and property tax relief account
Summary
HB 18 revises Montana’s school equalization funding framework by directing additional revenue streams into the state’s school equalization and property tax reduction account. The bill amends several statutes to ensure that certain non-levy revenues—most notably a portion of bentonite production tax revenue, surplus county equalization levy collections, and specified federal/state payments and other local revenues—are deposited into the account used to support elementary and high school BASE funding. It also updates the distribution formulas for bentonite production taxes so that, for newer production, a larger share flows to the school equalization account and county distributions are adjusted accordingly.
The bill also makes conforming changes to county school finance provisions. It clarifies that county basic school levies and related revenues are to be deposited and tracked in the school equalization and property tax reduction account, and it adds oil and natural gas production taxes to the list of revenues used for county school equalization. The act takes effect July 1, 2025, and is framed as a revenue-deposit and accounting measure rather than a broad tax-rate increase.
Impact
HB 18 amends sections 15-39-110, 17-3-222, 20-9-331, 20-9-332, and 20-9-333 of the Montana Code Annotated. Its practical effect is to redirect and consolidate certain revenue sources into the school equalization and property tax reduction account established in 20-9-336, increasing the pool of money available for elementary and high school BASE funding and property tax relief purposes. It also changes how bentonite production tax revenue is split among the state, counties, and the school equalization account, and it requires counties to separately account for these revenues and remit surpluses to the state under specified conditions.
Sentiment
The bill appears to have been broadly supported throughout the legislative process. It passed committee and floor votes overwhelmingly in both chambers, with most votes unanimous or near-unanimous and only a small number of dissenting votes in the Senate on second and third reading. The lack of recorded committee testimony in the provided materials suggests limited public controversy in the available record, and the bill’s progression indicates general agreement on its school-funding and property-tax-relief purpose.
Contention
The main policy issue is not whether to fund schools, but how revenue should be allocated among the state, counties, and school equalization account. Counties and local taxing jurisdictions may have an interest in retaining more of the bentonite and other non-levy revenues, while the bill shifts a larger share into the state school equalization and property tax reduction account. Another possible point of concern is the inclusion of oil and natural gas production taxes and surplus levy revenues in the equalization account, which could affect local revenue retention and budgeting. However, the voting record suggests these concerns did not generate significant opposition in the legislature.