Montana’s Department of Revenue acknowledged errors in adding an estimated $1.2 billion of new residential construction to the state’s property tax rolls. The admission came during a legislative committee meeting where officials discussed potential solutions, including seeking legislative funding for aerial imagery and addressing high turnover among appraisal staff. Robin Rude, deputy director of the Property Assessment Division, confirmed the oversight, stating, “That is a real number. It is a real big number.”
An audit report found the department misses about 14% of new construction annually, translating to $8 million in missed property tax revenue. This shortfall shifts between $3 million and $6 million onto other taxpayers. Although this represents less than 1% of annual collections, it can significantly impact smaller jurisdictions.
Montana is one of two states managing property tax rolls at the state level, requiring staff to track development and renovations. Department officials cited challenges such as staff turnover, fieldwork demands, and low pay, particularly in high-cost areas like Bozeman. Scott Mendenhall, the department’s deputy director, highlighted efforts to improve staff onboarding and development but identified pay as a major hurdle.
Legislative auditor Angus Maciver advised addressing retention before requesting additional hiring funds, emphasizing the importance of retaining staff as a primary resource. Auditors noted the reliance on building permits and time-consuming inspections, with inconsistencies in how local offices share permit data.
Potential legislative action could mandate consistent permit reporting, and better coordination with the Department of Labor and Industry was suggested. High-quality aerial imagery was proposed to efficiently track development, with an upcoming proposal potentially influencing the next budget cycle. Mendenhall indicated the governor’s office is interested in this implementation.
During the meeting, Mendenhall represented Director Brendan Beatty, who was attending to ranch duties.
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