Montana Viewpoint
December 10, 2007

I would be surprised if many people looked at the Montana Department of Revenue (DOR) as their buddy when it comes to protecting them from property tax increases, but a recent DOR victory in the Montana Supreme Court will have just that effect for property owners in Sanders, Yellowstone, Cascade and Rosebud Counties.

One of the biggest political players in the State of Montana has lost a legal battle with the DOR and will have to release $8 million of protested property taxes to the state and to local governments. PPL, the out of state energy company that bought the Montana Power Company’s electrical generating facilities, has protested their property taxes non-stop since they bought the plants in 2000. Their complaint was that the Department of Revenue used a different method to establish PPL’s property value than it did for other electric generating companies. Last week the Montana Supreme Court, in a unanimous decision, found that PPL power plants had been valued using the same method used with other companies. It was a very big win for the people of the state of Montana as well as for the schools and counties affected by PPL’s tax protest.

If PPL had been successful in its challenge, their property taxes would have gone down dramatically and local property taxes would have increased to make up the difference.

Before going any further I want to point out that government agencies from the Governor’s office on down the line are required to follow the laws written by the people’s representatives, and the DOR is no different. That means that they have to justify and defend the methods they use to administer the tax laws, and to correct errors and omissions made by taxpayers and themselves. We tend to think of that in terms of our having to pay more in taxes, but the road, as they say, runs both ways. A few years ago the DOR found that NorthWestern had neglected to take a legitimate deduction and paid more in property tax than they owed. The DOR brought it to NorthWestern’s attention, and saved them millions. 

That 8 million bucks that PPL will have to release to local governments is important, but more important is that the decision negates a major argument used by PPL to bargain their property tax bills down at the expense of the small Montana property owner. But this is only one victory in that battle.

To put it plainly, some out-of state energy companies are using property tax protests the way some people make their living by walking in front of busses. They claim to have been hit by the bus, phony up an injury, and sue the bus company for an unrealistic amount of money over imaginary damages. The bus company looks at the legal cost to defend itself in court, and finds it is cheaper to offer the “injured” party a cash settlement.

Likewise PPL and their cohorts protest millions of dollars of their property taxes year after year and try to get a settlement rather than go to court. PPL has protested $38.2 million dollars in property taxes since they moved to Montana in 2000. Other utilities account for an additional $51 million since 2004.

Make no mistake about it; protesting property taxes is a right which I support when they are used legitimately. But I believe PPL and others are overstepping the bounds of legitimate use, and are also using the protests for political leverage. In a classic example of “divide and conquer,” at the same time as they are putting the hurt on county governments, they are doing their best to enlist their help to battle the DOR.

For the last two legislative sessions PPL, the Montana Chamber of Commerce, and others have supported bills that would limit the timeframe the DOR has to handle protests. By misrepresenting the facts, they have done their best to enlist the County Treasurers Association in their cause by inferring that it is the Department of Revenue that is causing the problem by not negotiating a settlement or by dragging their feet.

While the companies wanted to establish a timeline for the DOR, they rejected a DOR proposal to adopt the Federal Rules of Civil Procedure to establish uniform timelines for information exchange for both parties. Apparently uniformity is not something everybody wants.

I believe in a government that protects the little guy and by defending the law instead of making a settlement, the Montana Department of Revenue has protected many Montana homeowners and small businesses from property tax increases.

Jim Elliott
Phone: 406-444-1556
Mail: State Senate Helena, MT 59620