Property tax furor partly the fault of Montana's Constitution

One reason property taxes are a blazing issue in Montana is that the state constitution affords insufficient protection against tax hikes.

This is the fifth column in a series explaining why Montanans should opt for a new state constitutional convention when they vote on the issue in 2030.

Representative democracy has many advantages. But it also has some disadvantages. Experience has shown that, over time, legislative decision-making is inherently biased toward more debt, taxes, and spending. This is because the special interests that benefit tend to be better organized, and therefore more effective at lobbying, than the majority that pays the bills.

A dramatic illustration of this occurred during the 1840s. Severe overspending drove several states into bankruptcy or near-bankruptcy. As a result, states began to insert fiscal restrictions into their constitutions. Today, Vermont is the only state whose constitution lacks them.

They take several forms. Some impose fixed maximums on taxes, spending, or debt. Some ban particular kinds of fiscal measures. Some require special procedures for approving increases in debt, taxation, or spending. These procedures usually include a vote of the people or a legislative supermajority.

Some fiscal provisions are durable, but others have loopholes or are otherwise poorly written. In addition, courts often are hostile to them. In Colorado, for example, the courts have greatly weakened that state’s celebrated “Taxpayer’s Bill of Rights” (TABOR).

Having learned from history, the delegates who wrote the 1889 Montana constitution included a variety of fiscal restrictions. Their constitution flatly prohibited certain kinds of spending, including state funding of local government. It granted the legislature no power to impose sales or personal income taxes. Above fixed amounts, the 1889 charter required voter approval of state tax rates and of state and local debt.

These restrictions frustrated pro-spending lobbies, which provided much of the force behind the movement to adopt the 1972 constitution.

The historical record before and during the 1972 convention shows that, while the delegates meant well, few understood the history behind fiscal restrictions or the reasons for them. The record also shows that the organizers controlled the information flow in a way that kept the delegates uninformed.

Even so, the 1972 delegates did not reject fiscal limits entirely. The current constitution requires a balanced state budget, and it requires either a public vote or a legislative supermajority to create state debt. Overall, however, the 1972 constitution’s fiscal curbs are minimal—as Montanans learn anew whenever they receive their property tax bills.

Excessive taxation is not a new problem in Montana. In 1998, voters adopted Constitutional Initiative 75. CI-75 imposed no absolute limits, but it required voter approval of new taxes and tax hikes. Notably, it guarded against tax hikes due solely to property valuation increases.

Despite its modest scope, CI-75 infuriated the spending establishment. Then-Governor Marc Racicot personally argued in the well of the Montana Supreme Court that the court should overturn the election. The court obliged with a new election rule, which it imposed retroactively on the CI-75 referendum.

You can argue that CI-75 is still part of the state constitution. As the U.S. Supreme Court has made clear, a state may not impose new election rules on elections already held. Additionally, the Montana Supreme Court subsequently admitted that assuming post-election jurisdiction was illegal.

Still, it is unlikely that the courts would enforce CI-75 at this late date. And the state supreme court’s restrictions on popular amendment render it impossible for the people to adopt any comprehensive reform.

Thus, only a new convention can propose a permanent solution.