Some regions hit harder with six-year appraisal lag time

• Richland County values soar, Flathead County’s drop

The Montana Constitution and state laws require that Montana revalue all state property on a regular basis, since values change over time, and use the same method for each category of property so they’re treated fairly across the state, revenue officials said.

And the Legislature uses capping methods to ensure that local and state governments don’t get a windfall profit through the appraisal process and that the proportionate share of taxes paid by residential, commercial and agricultural property stays the same.

Even so, there are some inherent disparities in the average size of the market value increases and decreases that Montanans had in their residential appraisal notices in different regions depending on how their part of the state weathered the 2007 housing crisis and recession and subsequent energy boom, said Ed Caplis, director of the Revenue Department’s Tax Policy and Research Division.

Statewide, the average market value of residential property fell nearly 3 percent from the last 2008 appraisal to the current, 2014 appraisal process.

In Flathead County, the market value of residential and recreation property were still at sky-rocket values when the 2008 appraisal took place, but dropped sharply as the bottom dropped out of the housing market, he said.

Even though property values are starting to improve again there, the average market value of residential property in Flathead County fell nearly 15 percent in the 2014 appraisals.

In contrast, the average 2014 market value for residential property soared 102 percent in Richland County, the center of Montana’s portion of the Bakken oil fields where drilling and growth boomed until last fall’s drop in crude oil prices stalled further exploration.

Market appraisal rates are more middling in Cascade County, with average residential appraisals increasing about 7 percent this appraisal cycle.

Caplis credited the impact of Malmstrom Air Force Base and the Montana Air National Guard for keeping the Great Falls economy steady during the recession, plus the city’s role as an agricultural service center during a period until recently of high commodity prices.

At the Revenue Department’s urging, the 2015 Montana Legislature shortened the next appraisal cycle for residential and agricultural property from six years to two years to more quickly address such economic changes and more accurately reflect the market price, Caplis said. The Revenue Department was given legislative approval to hire 11 of the 18 additional employees it sought to conduct the appraisals more frequently.

Appraisers will determine the majority of residential market values by comparing a particular home to as many as five or six similar properties that sold recently to help gauge its market value. But the Revenue Department still is required to verify property characteristics by conducting on-site field inspections to look for improvements or deterioration.

More generally, Caplis said he’s aware that the appraisal notices that the Revenue Department mailed to homeowners in the first two weeks of July probably “caused sticker shock” among many Montanans, but in most cases aren’t as scary as they seem.

While the market values listed on the forms may have jumped significantly, he said, homeowners should realize those reflect market changes that occurred over the six years between the last appraisal in 2008 and the one last year.

County treasurers will determine the actual property taxes levied by applying local mill values and assessments after local governments set their final budgets in late September. It is conceivable property taxes could go down in some counties that saw their tax based increased through major industrial or commercial developments, state officials said.