A relief measure touted by Republican Gov. Greg Gianforte as a tonic for widespread frustration over Montana’s rising residential property taxes passed a key vote in the Legislature’s House Appropriations Committee on Thursday — but only after taking on amendments that appeared aimed at winning support from a critical mass of the committee’s Democrats.

The budget committee, where majority Republicans hold 13 of 23 seats, followed the vote on the governor’s tax bill by advancing two bills Democratic leaders have pitched as their preferred tax relief options. Committee members also added a coordination clause to the governor’s legislation that ties its final form to one of the Democratic proposals. 

Votes on the three tax bills were repeatedly delayed this week as lawmakers worked to negotiate a deal that would allow the Gianforte-backed relief measure to clear the budget committee. The governor’s bill passed Thursday on a 15-8 vote with support from six Democrats and opposition from four Republicans — enough Republican dissent that it would have failed without Democratic backing.

The next step for all three bills are votes on the House floor. Any of the bills that clear the House will head to the Senate, where several key votes in recent weeks have seen a faction of moderate Republicans generally aligned with Gianforte siding with minority Democrats in defiance of GOP leadership from the party’s hardline wing.

Gianforte’s tax relief bill, House Bill 231, aims to reduce property taxes on resident homeowners and landlords by raising them on second home owners and Airbnb-style short-term rentals. Sponsored by House Appropriations Chair Llew Jones, R-Conrad, the bill works by adjusting the tax rates that determine how much of a property’s market value is considered taxable, lowering the rate for primary residences and long-term rentals and raising it for other residential properties.

One of the two Democratic tax bills, House Bill 154, would create an income tax credit to offset property taxes for low- and middle-income Montanans. In contrast to other measures that focus on property owners, it would provide direct aid to renters by assuming that 15% of their rent is attributable to property taxes.

The other Democratic proposal advanced Thursday, House Bill 155, would tweak rates similarly to the governor’s proposal. It would specify a progressive rate structure for residential properties that works much like tiered structures commonly used for income taxes, where higher property values end up taxed at higher rates. (Both HB 231 and HB 155 include provisions intended to shield small businesses from tax shifts.)

The amendments added to the Gianforte bill Thursday tweak its math so it provides more relief to homes that are less than twice the state’s median value of $360,000 and also ensure relief flows to more homes in high-value places like Bozeman and Kalispell. Notably, lawmakers also added the coordination provision that explicitly ties the governor’s bill to to Democrats’ tax credit bill — specifying that homes below the double-median-value threshold would get an even greater reduction if the Legislature doesn’t pass the tax credit relief.

That latter provision could serve as a “poison pill” clause for the governor’s bill, given that the push for residential tax relief has been watched somewhat nervously by business and agricultural groups worried that efforts to reduce residential taxes could saddle them with higher taxes. If those groups determine that residential tax relief will cause business owners and farmers too much pain, their lobbying efforts could derail the relief bill before it makes it to the governor’s desk.

As of 2024, residential property made up 58% of Montana’s property tax base.

Eric Dietrich is deputy editor of the Montana Free Press, a nonprofit newsroom, and can be reached at [email protected].