The Montana Department of Revenue (DOR) delivered the City's tax year 2009 certified taxable value (CTV) statement in September, 2009, about a month later than in prior years.  The 2009 tax year was the first year of the six year property reappraisal cycle. The DOR received a large number of residential and commercial property tax appeals due to higher than anticipated valuations. These appeals resulted in a decrease in the CTV. The City received a revised copy of the CTV in December 2009. The DOR continue reviewing appeals through the spring and sent the City its third CTV statement in March 2010. The December and the March statements each reduced the previously stated CTV. These decreases in CTV resulted in the City collecting $7.7 million for the 2004 Public Safety levy (PS II), a shortfall of $493,000 from the $8.2 million authorized by voters.  The Council discussed the issue at its September 7 work session and instructed staff to prepare a resolution that recaptures the shortfall in tax year 2010 (FY 2011). 

The Council must hold a public hearing and then may:
- Approve the resolution; or
- Not approve the resolution.

The City will levy 50.95 mills for tax year 2010 (FY 11) in order to collect the authorized $8.2 million. Recapturing the $493,000 PS II tax requires that rate to increase to 53.82 mills.  Even though the recapture requires levying 2.87 additional mills, the total rate of 53.82 mills is only 1.9 mills higher than the tax year 2009 levy, due to property value growth. This will be a one year increase and the rate is expected to decline next year, assuming that reappraisal mitigation and growth increase the city’s total taxable value in tax year 2011.

The total mills levied for tax year 2010 will increase from 168.55 to 171.42 which will increase total City taxes on a $200,000 home from $433 to $440 for 2010 compared to $440 for 2009.  The amounts are the same for both years even though more mills are being levied because total City taxable value increased.

Voters passed a Public Safety Levy in November 2004 (PS II) that incrementally increased each year, until reaching its maximum of $8.2 million per year in the fifth and subsequent years. The City estimated that it would ultimately levy a total of 60 mills to produce $8.2 million per year, but informed voters that if the community continued to grow, the number of mills would decline. Tax year 2009 (or fiscal year 2010) was the fifth year of the cumulative and permanent levy.

The Department of Revenue (DOR) issued the City’s 2009 Certified Taxable Value (CTV) statement in September 2009. The City Council set the number of mills for the PS II at the September 21, 2009, regular meeting, based on the CTV issued by the DOR.

The 2009 tax year was the first year of the six year property reappraisal cycle. The DOR received a large number of residential and commercial property tax appeals due to higher than anticipated valuations. These appeals resulted in a decrease in the CTV. The City received a revised copy of the CTV in December 2009. The DOR was still reviewing protests in the spring of 2010 and sent the City its third CTV statement in March 2010. The December and the March statements each reduced the previously stated CTV. These decreases in CTV resulted in the City levying and collecting $7.7 million for PS II, a shortfall of $493,000. Most local governments can “recapture” un-levied taxes in subsequent years under MCA 15-10-420 (1) (b) as follows:

(b) A governmental entity that does not impose the maximum number of mills authorized under subsection (1)(a) may carry forward the authority to impose the number of mills equal to the difference between the actual number of mills imposed and the maximum number of mills authorized to be imposed. The mill authority carried forward may be imposed in a subsequent tax year.

The City of Billings is not specifically authorized to recapture taxes under this state code section because its taxing authority is controlled by the City Charter. City Administration, Legal and Finance have reviewed the PS II Charter amendment and pertinent Montana Code. The County Treasurer was also consulted on the legalities of recapturing the un-levied 2009 PS II taxes in tax year 2010 (FY 2011). The consensus is that the City can legally levy the additional mills this fall to collect the shortfall from tax year 2009.

Despite the strong case and consensus, there is a possibility that a tax payer could challenge the recapture.