BEFORE THE Department of REVENUE
OF THE STATE OF MONTANA
TO: All Concerned Persons
1. On August 19, 2016, the Department of Revenue published MAR Notice No. 42-2-957 pertaining to the public hearing on the proposed amendment of the above-stated rules at page 1424 of the 2016 Montana Administrative Register, Issue Number 16.
2. On September 13, 2016, a public hearing was held to consider the proposed amendment. Robert Story, Montana Taxpayers Association, appeared and testified at the hearing and provided written comments. No other members of the public appeared for the hearing and no additional written comments were received.
3. The department is not amending ARM 42.19.1403 and 42.19.1404.
4. The department amends ARM 42.19.1411 as proposed.
5. Based upon the comments received, the department amends ARM 42.19.1401, 42.19.1407, and 42.19.1408 as proposed, but with the following changes, new matter underlined, deleted matter interlined:
42.19.1401 DEFINITIONS The following definitions apply to this subchapter:
(1) "Levy district" means a geographically distinct area where all of the properties are subject to the same combination of taxing
jurisdictions jurisdiction's mill levies. Levy districts are created for administrative purposes and do not have any taxing authority.
(2) and (3) remain as proposed.
(4) "Taxing jurisdiction" means a government entity authorized to impose tax on property. A taxing jurisdiction may include the properties in one or more levy districts.
(5) and (6) remain as proposed.
42.19.1407 DETERMINATION OF BASE YEAR AND INCREMENTAL VALUES OF TAX INCREMENT FINANCING DISTRICTS (TIFD) (1) remains as proposed.
(2) The incremental value of a TIFD cannot be less than zero.
42.19.1408 DETERMINATION AND REPORT OF BASE YEAR, ACTUAL, AND INCREMENTAL TAXABLE VALUES – TIMING (1) through (4) remain as proposed.
(5) A TIFD may include one or more levy districts. If a TIFD
encompasses two or includes more than one levy districts district, the department will apportion the base taxable value and the incremental taxable value between the levy districts by:
calculate calculating the total base taxable value and the total and incremental taxable value for the TIFD; and
apportion apportioning the base taxable value and the incremental taxable value to each levy district according to its contribution to the total taxable value of the TIFD.
6. The department has thoroughly considered the comments and testimony received. A summary of the comments received and the department's responses are as follows:
COMMENT 1: Robert Story, Executive Director, Montana Taxpayers Association, commented that his organization concurs with most of the proposed changes in the rules and thinks it is a good idea to get a levy district definition in the rules. However, with regard to ARM 42.19.1407, he stated his understanding is that incremental taxable values can never get below zero and, if true, this should be mentioned in the rule unless it is found elsewhere in the Administrative Rules of Montana.
RESPONSE 1: The department appreciates Mr. Story's comments and agrees that an amendment to ARM 42.19.1407 is necessary to make the rule clearer, as language regarding values below zero is not currently found elsewhere in the rules. Therefore, the department has added a new section to the rule to include this detail.
COMMENT 2: Mr. Story further commented that ARM 42.19.1408 is confusing. There are many levy districts in any taxing jurisdiction. There may be no increment in some levy districts, while one levy district may have all the increments. A levy district may be as small as one property. He stated that he does not understand the purpose of the proposed new language in (5)(b) and would like the department to explain the operation of this section of the rule. He further stated that he is uncertain that the language in that section means what the department intended it to mean, why the language exists, and if it will operate properly as worded.
RESPONSE 2: The department appreciates Mr. Story's insight, as TIFDs can be very confusing. Taxing jurisdictions and levy districts serve different purposes. Mr. Story may be referring to a taxing jurisdiction which has the ability to generate an increment. Levy districts do not generate increments, but rather they are groups of geographically distinct parcels that are subject to the same mill levies. The department has further amended the language in ARM 42.19.1408(5) to make this clearer, and is also further amending ARM 42.19.1401(1) and (4) to expand the language in the definitions for the same reason.
/s/ Laurie Logan /s/ Mike Kadas
Laurie Logan Mike Kadas
Rule Reviewer Director of Revenue
Certified to the Secretary of State October 17, 2016.