HELENA — After a debate Thursday, the Montana House has allowed two bills to move forward that lay out two significantly different ways of providing residents with property tax relief. One is Gov. Greg Gianforte’s top priority property tax bill, while the other has backing from legislative Democrats.

The next step for House Bills 231 and 155 will be the House Appropriations Committee, which reviews all legislation that deals with significant amounts of state money.

(Watch the video for a closer look on the two proposals moving forward.)

HB 231, sponsored by Rep. Llew Jones, R-Conrad, would establish “homestead” property tax rates. After being amended in committee, it would drop the rate on Montanans’ primary residences and long-term rentals from 1.35% to 0.9% or 1.1%, as long as they’re not at least three times as valuable as the statewide median property. It would lower rates for smaller commercial properties from 1.89% to 1.5%. However, for residential and commercial properties that don’t qualify for the homestead rates, the rates would increase to 1.9%.

Jones said the bill isn’t perfect, but that stakeholders have been working for a long time to find a fair balance.

“Anytime you play with this model, somebody pays,” he said. “You're not really cutting anything – you're deciding who pays this. This fits fairly well. We've tried it a thousand different ways, and each way has a beneficiary and also has a loser.”

The House endorsed HB 231 on a 75-25 vote. Representatives also rejected a proposed amendment from Rep. Jane Gillette, R-Three Forks, that would have based qualification for the homestead rate on the median residential property value in each county, instead of the state overall.

Gillette said she was concerned that, in areas with high property values and heavy demand, like Gallatin and Flathead Counties, homeowners would have to pay the highest rate even if they live in a home that’s not expensive for their area.

“By no fault of your own, you live in a modest house and now the value of your house has skyrocketed,” she said. “So that’s what this amendment does, is it helps that situation.”

Jones said the amendment would make it much more difficult to create an “equitable, manageable tax system statewide.”

HB 155, from Rep. Mark Thane, D-Missoula, also got an endorsement Thursday, on a 79-21 vote. It would establish a graduated tax rate for residential property – 0 for the first $50,000 of a property’s value, then gradually increasing, from 1% on properties up to $500,000 to 2% for those worth more than $2 million. The House Taxation Committee amended out a proposed exemption on the first $200,000 of value on a commercial property.

Thane said, as residential property values across the state have grown in recent years, residential owners have borne a larger share of the statewide property tax burden. He said his bill would spread that out to other classes of property.

“Some people would say that's a property tax shift,” he said. “It may be semantics, but I would say simply it's a rebalancing that needs to occur, so that we can provide property tax relief to residential property owners.”

Both Jones and Thane acknowledged to MTN Thursday that, as written, their bills would conflict with each other. That means the Appropriations Committee will have decisions to make on which they want to keep moving forward and if they want to make further changes to the bills.

Gianforte has made the homestead proposal his main property tax priority this session. At a news conference Thursday morning, ahead of the House debate, he touted HB 231 as a benefit both for everyday Montanans and for businesses.

“By bringing down property taxes on where workers live, they'll be more secure in their homes,” he said. “By doing these things, Montanans won't feel like they have to leave home or a job they love because of high taxes.”

Gianforte has urged lawmakers to pass HB 231 by mid-February, saying that would be the deadline state regulators need to get the new lower rates implemented for this tax year. During Thursday’s news conference, he said there could be some additional “wiggle room” on that date, but he still wanted to get the bill to his desk as soon as possible.

If HB 231 passes through the Appropriations Committee, it will still need to pass a final vote on the House floor and make it through the Senate before going to Gianforte.