Montana Senate Bill SB2

Montana 2025 Regular Session

• Introduced: 12/18/24
• Refer: 1/7/25
• Engrossed: 3/19/25
• Refer: 3/20/25
• Failed: 5/23/25

Caption

Revise treatment of tax increment upon expiration of tax increment financing provision

Summary

SB 2 revises Montana’s property tax mill levy calculations to change how tax increment financing (TIF) districts are treated when incremental taxable value is released. The bill states that the release of incremental taxable value from a TIF district is not considered “newly taxable property” for purposes of calculating local government levies, and it amends the property tax levy formula in 15-10-420, MCA, accordingly. It also makes conforming changes to the school funding account statute in 20-9-336, tying school equalization and guaranteed tax base calculations to the revised statewide mill levy computation. The bill also clarifies when released TIF value is counted in levy calculations, including changes in district boundaries, increases in base taxable value, and district termination. It sets an applicability date for property tax years beginning after December 31, 2025, and includes a coordination clause making the act void if another specified bill, SB 117, is also passed and approved. In practical terms, the measure affects how local governments, school funding formulas, and the Department of Revenue calculate taxable value and mill levies when TIF districts end or change.

Impact

SB 2 would amend Montana property tax law by narrowing the circumstances in which value released from a tax increment financing district is treated as newly taxable property for local government levy limits. This would affect the calculation of maximum mills under 15-10-420, MCA, and would also alter the statewide mill calculations used in school finance under 20-9-336, MCA. Local governments, school districts, and the Department of Revenue would need to apply the revised valuation rules beginning with property tax years after December 31, 2025.

Sentiment

The bill appears to have had mixed but substantial support, advancing through the Senate and House with several close votes. It passed Senate committee and floor votes, and it also cleared House concurrence and third reading by narrow margins, suggesting the policy was viable but politically divided. The final status indicates it died in standing committee, despite earlier passage, which points to unresolved concerns or procedural resistance late in the process.

Contention

The main point of contention is how to classify value released from TIF districts for property tax levy purposes: supporters appear to favor excluding that released increment from “newly taxable property” to avoid increasing local levy capacity, while opponents likely viewed the change as affecting local revenue calculations and school funding formulas. The close committee and floor votes in both chambers indicate disagreement across party or regional lines, likely involving local government finance, school aid impacts, and the treatment of expiring or changing TIF districts. The coordination clause with SB 117 also suggests the bill was part of a broader package or alternative approach to TIF-related tax policy.