Bill Summary – FastDemocracy

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                                    _____________ BILL NO. _____________
                                          (Primary Sponsor)
                           INTRODUCED BY _________________________________________________
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 A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING PROPERTY TAX LAWS; REVISING TAX
 RATES FOR CERTAIN CLASSES OF PROPERTY; PROVIDING DEFINITIONS; REVISING LOCAL
 GOVERNMENT LEVY LIMITS TO PROVIDE THAT A LOCAL GOVERNMENT MAY LEVY MILLS EQUAL TO
 THE 2025 MILL LEVY PLUS AN INFLATION ADJUSTMENT; AMENDING SECTIONS 15-6-132, 15-6-133, 15-
 6-134, 15-6-135, 15-6-137, 15-6-138, 15-6-141, 15-6-145, 15-6-156, 15-6-157, 15-6-158, 15-6-159, 15-6-162,
 15-6-163, AND 15-10-420, MCA; AND PROVIDING AN APPLICABILITY DATE.”
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 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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         Section 1. Section 15-6-132, MCA, is amended to read:
         "15-6-132.   Class two property -- description -- taxable percentage. (1) Class two property
 includes the annual gross proceeds of metal mines.
         (2)      Class two property is taxed at 3% 1.5% of its annual gross proceeds, as defined in 15-23-801."
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         Section 2. Section 15-6-133, MCA, is amended to read:
         "15-6-133.   Class three property -- description -- taxable percentage. (1) Class three property
 includes:
         (a)      agricultural land as defined in 15-7-202;
         (b)      nonproductive patented mining claims outside the limits of an incorporated city or town held by
 an owner for the ultimate purpose of developing the mineral interests on the property. For the purposes of this
 subsection (1)(b), the following provisions apply:
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          (i)      The claim may not include any property that is used for residential purposes, recreational
 purposes as described in 70-16-301, or commercial purposes as defined in 15-1-101 or any property the
 surface of which is being used for other than mining purposes or has a separate and independent value for
 other purposes.
          (ii)     Improvements to the property that would not disqualify the parcel are taxed as otherwise
 provided in this title, including that portion of the land upon which the improvements are located and that is
 reasonably required for the use of the improvements.
          (iii)    Nonproductive patented mining claim property must be valued as if the land were devoted to
 agricultural grazing use.
          (c)      parcels of land of 20 acres or more but less than 160 acres under one ownership that are not
 eligible for valuation, assessment, and taxation as agricultural land under 15-7-202(1), which are considered to
 be nonqualified agricultural land. Nonqualified agricultural land may not be devoted to a commercial or
 industrial purpose. Nonqualified agricultural land is valued at the average productive capacity value of grazing
 land.
          (2)      Subject to subsection (3), class three property is taxed at 2.16% 1.5% of its productive capacity
 value.
          (3)      The taxable value of land described in subsection (1)(c) is computed by multiplying the value of
 the land by seven times the taxable percentage rate for agricultural land."
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          Section 3. Section 15-6-134, MCA, is amended to read:
          "15-6-134.   Class four property -- description -- taxable percentage -- definitions. (1) Class four
 property includes:
          (a)      subject to subsection (1)(e), all land, except that specifically included in another class;
          (b)      subject to subsection (1)(e):
          (i)      all improvements, including single-family residences, duplexes, trailers, manufactured homes,
 or mobile homes used as a residence, except those specifically included in another class;
          (ii)     appurtenant improvements to the residences, including the parcels of land upon which the
 residences are located and any leasehold improvements;
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           (iii)   vacant residential lots; and
           (iv)    rental multifamily dwelling units.
           (c)     all improvements on land that is eligible for valuation, assessment, and taxation as agricultural
 land under 15-7-202, including 1 acre of real property beneath improvements on land described in 15-6-133(1)
 (c). The 1 acre must be valued at market value.
           (d)     1 acre of real property beneath an improvement used as a residence on land eligible for
 valuation, assessment, and taxation as forest land under 15-6-143. The 1 acre must be valued at market value.
           (e)     all commercial and industrial property, as defined in 15-1-101, and including:
           (i)     all commercial and industrial property that is used or owned by an individual, a business, a
 trade, a corporation, a limited liability company, or a partnership and that is used primarily for the production of
 income;
           (ii)    all golf courses, including land and improvements actually and necessarily used for that
 purpose, that consist of at least nine holes and not less than 700 lineal yards;
           (iii)   commercial buildings and parcels of land upon which the buildings are situated; and
           (iv)    vacant commercial lots.
           (2)     If a property includes both residential and commercial uses, the property is classified and
 appraised as follows:
           (a)     the land use with the highest percentage of total value is the use that is assigned to the
 property; and
           (b)     the improvements are apportioned according to the use of the improvements.
           (3)     (a) Except as provided in 15-24-1402, 15-24-1501, 15-24-1502, and subsection (3)(b) of this
 section, class four residential property described in subsections (1)(a) through (1)(d) of this section is taxed at
 1.35% 1.5% of market value.
           (b)     The tax rate for class four residential property described in subsections (1)(b)(i), (1)(b)(ii), (1)
 (c), and (1)(d) that is owner-occupied is 1%.
                   The tax rate for the portion of the market value of a single-family residential dwelling in excess
 of $1.5 million is the residential property tax rate in subsection (3)(a) multiplied by 1.4.
           (c)     The tax rate for commercial property is the residential property tax rate in subsection (3)(a)
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 multiplied by 1.4.
         (4)      Property described in subsection (1)(e)(ii) is taxed at one-half the tax rate established in
 subsection (3)(c).
         (4)      As used in this section, the following definitions apply:
         (a)      "Duplex" means a parcel or lot with two dwelling units that are designed for residential
 occupancy by not more than two family units living independently from each other.
         (b)      (i) "Owner-occupied" means a single-family residence, duplex, trailer, manufactured home, or
 mobile home used as a residence that a taxpayer owned and lived in for at least 7 months of the year and for
 which the taxpayer certifies eligibility to the department for the tax rate provided in subsection (3)(b).
         (ii)     The term includes a residence that meets the requirements of subsection (4)(b)(i) and:
         (A)      that shares a residential lot with an accessory dwelling unit as that term is defined in 76-2-345;
 or
         (B)      for which a portion of the residence is leased as long as the owner also occupies the residence
 for at least 7 months of the year."
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         Section 4. Section 15-6-135, MCA, is amended to read:
         "15-6-135.    Class five property -- description -- taxable percentage -- exemption. (1) Class five
 property includes:
         (a)      all property used and owned by cooperative rural electrical and cooperative rural telephone
 associations organized under the laws of Montana, except property owned by cooperative organizations
 described in 15-6-137(1)(a);
         (b)      air and water pollution control and carbon capture equipment as defined in this section;
         (c)      any personal or real property used primarily in the production of ethanol-blended gasoline
 during construction and for the first 3 years of its operation;
         (d)      all land and improvements and all personal property owned by a research and development
 firm, provided that the property is actively devoted to research and development;
         (e)      machinery and equipment used in electrolytic reduction facilities; and
         (f)      all property used and owned by persons, firms, corporations, or other organizations that are
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 engaged in the business of furnishing telecommunications services exclusively to rural areas or to rural areas
 and cities and towns of 1,200 permanent residents or less.
           (2)     (a) "Air and water pollution control and carbon capture equipment" means that portion of
 identifiable property, facilities, machinery, devices, or equipment certified as provided in subsections (2)(b) and
 (2)(c) and designed, constructed, under construction, or operated for removing, disposing, abating, treating,
 eliminating, destroying, neutralizing, stabilizing, rendering inert, storing, or preventing the creation of air or
 water pollutants that, except for the use of the item, would be released to the environment. This includes
 machinery, devices, or equipment used to capture carbon dioxide or other greenhouse gases. Reduction in
 pollutants obtained through operational techniques without specific facilities, machinery, devices, or equipment
 is not eligible for certification under this section.
           (b)     Requests for certification must be made on forms available from the department of revenue.
 Certification may not be granted unless the applicant is in substantial compliance with all applicable rules, laws,
 orders, or permit conditions. Certification remains in effect only as long as substantial compliance continues.
           (c)     The department of environmental quality shall promulgate rules specifying procedures,
 including timeframes for certification application, and definitions necessary to identify air and water pollution
 control and carbon capture equipment for certification and compliance. The department of revenue shall
 promulgate rules pertaining to the valuation of qualifying air and water pollution control and carbon capture
 equipment. The department of environmental quality shall identify and track compliance in the use of certified
 air and water pollution control and carbon capture equipment and report continuous acts or patterns of
 noncompliance at a facility to the department of revenue. Casual or isolated incidents of noncompliance at a
 facility do not affect certification.
           (d)     To qualify for the exemption under subsection (3)(b)(i), the air and water pollution control and
 carbon capture equipment must be placed into service after January 1, 2014, for the purposes of environmental
 benefit or to comply with state or federal pollution control regulations. If the air or water pollution control and
 carbon capture equipment enhances the performance of existing air and water pollution control and carbon
 capture equipment, only the market value of the enhancement is subject to the exemption under subsection (3)
 (b)(i).
           (e)     Except as provided in subsection (2)(d), equipment that does not qualify for the exemption
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 under subsection (3)(b)(i) includes but is not limited to equipment placed into service to maintain, replace, or
 repair equipment installed on or before January 1, 2014.
         (f)      A person may appeal the certification, classification, and valuation of the property to the
 Montana tax appeal board. Appeals on the property certification must name the department of environmental
 quality as the respondent, and appeals on the classification or valuation of the equipment must name the
 department of revenue as the respondent.
         (3)      (a) Except as provided in subsection (3)(b), class five property is taxed at 3% 1.5% of its
 market value.
         (b)      (i) Air and water pollution control and carbon capture equipment placed in service after January
 1, 2014, and that satisfies the criteria in subsection (2)(d) is exempt from taxation.
         (ii)     (A) Except as provided in subsection (3)(b)(ii)(B), fiber optic or coaxial cable, as defined in 15-
 6-156, installed and placed in service on or after July 1, 2021, is exempt from taxation for a period of 5 years
 starting from the date the fiber optic or coaxial cable was placed in service, after which the property exemption
 is phased out at a rate of 20% a year, with the property being assessed at 100% of its taxable value after a 10-
 year period. In order to maintain the exemption, the owner of fiber optic or coaxial cable shall reinvest the tax
 savings from the exemption by installing and placing in service new fiber optic or coaxial cable in Montana
 within 2 years from the date the owner first claimed the exemption provided for in this subsection (3)(b)(ii)
 without charging those costs to the consumer. The cost of installing or placing into service fiber optic or coaxial
 cable with the reinvested tax savings without charging those costs to the consumer must be equal to or greater
 than the value of the tax savings received from the tax incentive.
         (B)      Fiber optic or coaxial cable installed using federal funds received pursuant to section 9901 of
 the American Rescue Plan Act is not eligible for exemption from taxation under this section.
         (C)      An entity that claims a tax exemption under this subsection (3)(b)(ii) shall maintain adequate
 books and records demonstrating the investment the owner made when installing and placing in service fiber
 optic or coaxial cable in Montana. The property owners shall make those records available to the department
 for inspection upon request.
         (4)      (a) The property taxes exempted from taxation by subsection (3)(b)(ii) are subject to
 termination or recapture if the department determines that the owner failed to install and place in service new
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 coaxial or fiber cable in Montana as provided in subsection (3)(b)(ii) or otherwise violates the provisions of this
 section.
            (b)    Upon notice from the department that the owner's exemption has terminated, any local
 governing body may recapture taxes previously exempted in that jurisdiction, plus interest and penalties for
 nonpayment of property taxes as provided in 15-16-102, during any tax year in which an exemption under the
 provisions of subsection (3)(b)(ii) was improper. Any recapture must occur within 10 years after the end of the
 calendar year in which the exemption was first claimed.
            (c)    The recapture of abated taxes may be canceled, in whole or in part, if the local governing body
 determines that the taxpayer's failure to meet the requirements is a result of circumstances beyond the control
 of the taxpayer."
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            Section 5. Section 15-6-137, MCA, is amended to read:
            "15-6-137.   Class seven property -- description -- taxable percentage. (1) Except as provided in
 subsection (2), class seven property includes:
            (a)    all property owned by cooperative rural electrical associations that serve less than 95% of the
 electricity consumers within the incorporated limits of a city or town, except rural electric cooperative properties
 described in 15-6-141(1)(c);
            (b)    electric transformers and meters; electric light and power substation machinery; natural gas
 measuring and regulating station equipment, meters, and compressor station machinery owned by noncentrally
 assessed public utilities; and tools used in the repair and maintenance of this property.