Generally revise property taxes

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1 SENATE BILL NO. 32
2 INTRODUCED BY J. TREBAS
3
4 A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING PROPERTY TAX LAWS; REVISING TAX
5 RATES FOR CERTAIN CLASSES OF PROPERTY; PROVIDING DEFINITIONS; REVISING LOCAL
6 GOVERNMENT LEVY LIMITS TO PROVIDE THAT A LOCAL GOVERNMENT MAY LEVY MILLS EQUAL TO
7 THE 2025 MILL LEVY PLUS AN INFLATION ADJUSTMENT; AMENDING SECTIONS 15-6-132, 15-6-133, 15-
8 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,
9 15-6-163, AND 15-10-420, MCA; AND PROVIDING AN APPLICABILITY DATE.”
10
11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
12
13Section 1. Section 15-6-132, MCA, is amended to read:
14 "15-6-132. Class two property -- description -- taxable percentage. (1) Class two property
15 includes the annual gross proceeds of metal mines.
16 (2) Class two property is taxed at 3% 1.5% 1.65% of its annual gross proceeds, as defined in 15-
17 23-801."
18
19Section 2. Section 15-6-133, MCA, is amended to read:
20 "15-6-133. Class three property -- description -- taxable percentage. (1) Class three property
21 includes:
22 (a) agricultural land as defined in 15-7-202;
23 (b) nonproductive patented mining claims outside the limits of an incorporated city or town held by
24 an owner for the ultimate purpose of developing the mineral interests on the property. For the purposes of this
25 subsection (1)(b), the following provisions apply:
26 (i) The claim may not include any property that is used for residential purposes, recreational
27 purposes as described in 70-16-301, or commercial purposes as defined in 15-1-101 or any property the
28 surface of which is being used for other than mining purposes or has a separate and independent value for
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1 other purposes.
2 (ii) Improvements to the property that would not disqualify the parcel are taxed as otherwise
3 provided in this title, including that portion of the land upon which the improvements are located and that is
4 reasonably required for the use of the improvements.
5 (iii) Nonproductive patented mining claim property must be valued as if the land were devoted to
6 agricultural grazing use.
7 (c) parcels of land of 20 acres or more but less than 160 acres under one ownership that are not
8 eligible for valuation, assessment, and taxation as agricultural land under 15-7-202(1), which are considered to
9 be nonqualified agricultural land. Nonqualified agricultural land may not be devoted to a commercial or
10 industrial purpose. Nonqualified agricultural land is valued at the average productive capacity value of grazing
11 land.
12 (2) Subject to subsection (3), class three property is taxed at 2.16% 1.5% 1.65% of its productive
13 capacity value.
14 (3) The taxable value of land described in subsection (1)(c) is computed by multiplying the value of
15 the land by seven times the taxable percentage rate for agricultural land."
16
17Section 3. Section 15-6-134, MCA, is amended to read:
18 "15-6-134. Class four property -- description -- taxable percentage -- definitions. (1) Class four
19 property includes:
20 (a) subject to subsection (1)(e), all land, except that specifically included in another class;
21 (b) subject to subsection (1)(e):
22 (i) all improvements, including single-family residences, duplexes, trailers, manufactured homes,
23 or mobile homes used as a residence, except those specifically included in another class;
24 (ii) appurtenant improvements to the residences, including the parcels of land upon which the
25 residences are located and any leasehold improvements;
26 (iii) vacant residential lots; and
27 (iv) rental multifamily dwelling units.
28 (c) all improvements on land that is eligible for valuation, assessment, and taxation as agricultural
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1 land under 15-7-202, including 1 acre of real property beneath improvements on land described in 15-6-
2 133(1)(c). The 1 acre must be valued at market value.
3 (d) 1 acre of real property beneath an improvement used as a residence on land eligible for
4 valuation, assessment, and taxation as forest land under 15-6-143. The 1 acre must be valued at market value.
5 (e) all commercial and industrial property, as defined in 15-1-101, and including:
6 (i) all commercial and industrial property that is used or owned by an individual, a business, a
7 trade, a corporation, a limited liability company, or a partnership and that is used primarily for the production of
8 income;
9 (ii) all golf courses, including land and improvements actually and necessarily used for that
10 purpose, that consist of at least nine holes and not less than 700 lineal yards;
11 (iii) commercial buildings and parcels of land upon which the buildings are situated; and
12 (iv) vacant commercial lots.
13 (2) If a property includes both residential and commercial uses, the property is classified and
14 appraised as follows:
15 (a) the land use with the highest percentage of total value is the use that is assigned to the
16 property; and
17 (b) the improvements are apportioned according to the use of the improvements.
18 (3) (a) Except as provided in 15-24-1402, 15-24-1501, 15-24-1502, and subsection (3)(b) of this
19 section, class four residential property described in subsections (1)(a) through (1)(d) of this section is taxed at
20 1.35% 1.5% 1.65% of market value.
21 (b) The tax rate for class four residential property described in subsections (1)(b)(i), (1)(b)(ii),
22 (1)(c), and (1)(d) that is owner-occupied is 1% 1.25%.
23 (b) The tax rate for the portion of the market value of a single-family residential dwelling in excess
24 of $1.5 million is the residential property tax rate in subsection (3)(a) multiplied by 1.4.
25 (c) The tax rate for commercial property is the residential property tax rate in subsection (3)(a)
26 multiplied by 1.4.
27 (4) Property described in subsection (1)(e)(ii) is taxed at one-half the tax rate established in
28 subsection (3)(c).
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1 (4) As used in this section, the following definitions apply:
2 (a) "Duplex" means a parcel or lot with two dwelling units that are designed for residential
3 occupancy by not more than two family units living independently from each other.
4 (b) (i) "Owner-occupied" means a single-family residence, duplex, trailer, manufactured home, or
5 mobile home used as a residence that a taxpayer owned and lived in for at least 7 months of the year and for
6 which the taxpayer certifies eligibility to the department for the tax rate provided in subsection (3)(b).
7 (ii) The term includes a residence that meets the requirements of subsection (4)(b)(i) and:
8 (A) that shares a residential lot with an accessory dwelling unit as that term is defined in 76-2-345;
9 or
10 (B) for which a portion of the residence is leased as long as the owner also occupies the residence
11 for at least 7 months of the year."
12
13Section 4. Section 15-6-135, MCA, is amended to read:
14 "15-6-135. Class five property -- description -- taxable percentage -- exemption. (1) Class five
15 property includes:
16 (a) all property used and owned by cooperative rural electrical and cooperative rural telephone
17 associations organized under the laws of Montana, except property owned by cooperative organizations
18 described in 15-6-137(1)(a);
19 (b) air and water pollution control and carbon capture equipment as defined in this section;
20 (c) any personal or real property used primarily in the production of ethanol-blended gasoline
21 during construction and for the first 3 years of its operation;
22 (d) all land and improvements and all personal property owned by a research and development
23 firm, provided that the property is actively devoted to research and development;
24 (e) machinery and equipment used in electrolytic reduction facilities; and
25 (f) all property used and owned by persons, firms, corporations, or other organizations that are
26 engaged in the business of furnishing telecommunications services exclusively to rural areas or to rural areas
27 and cities and towns of 1,200 permanent residents or less.
28 (2) (a) "Air and water pollution control and carbon capture equipment" means that portion of
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1 identifiable property, facilities, machinery, devices, or equipment certified as provided in subsections (2)(b) and
2 (2)(c) and designed, constructed, under construction, or operated for removing, disposing, abating, treating,
3 eliminating, destroying, neutralizing, stabilizing, rendering inert, storing, or preventing the creation of air or
4 water pollutants that, except for the use of the item, would be released to the environment. This includes
5 machinery, devices, or equipment used to capture carbon dioxide or other greenhouse gases. Reduction in
6 pollutants obtained through operational techniques without specific facilities, machinery, devices, or equipment
7 is not eligible for certification under this section.
8 (b) Requests for certification must be made on forms available from the department of revenue.
9 Certification may not be granted unless the applicant is in substantial compliance with all applicable rules, laws,
10 orders, or permit conditions. Certification remains in effect only as long as substantial compliance continues.
11 (c) The department of environmental quality shall promulgate rules specifying procedures,
12 including timeframes for certification application, and definitions necessary to identify air and water pollution
13 control and carbon capture equipment for certification and compliance. The department of revenue shall
14 promulgate rules pertaining to the valuation of qualifying air and water pollution control and carbon capture
15 equipment. The department of environmental quality shall identify and track compliance in the use of certified
16 air and water pollution control and carbon capture equipment and report continuous acts or patterns of
17 noncompliance at a facility to the department of revenue. Casual or isolated incidents of noncompliance at a
18 facility do not affect certification.
19 (d) To qualify for the exemption under subsection (3)(b)(i), the air and water pollution control and
20 carbon capture equipment must be placed into service after January 1, 2014, for the purposes of environmental
21 benefit or to comply with state or federal pollution control regulations. If the air or water pollution control and
22 carbon capture equipment enhances the performance of existing air and water pollution control and carbon
23 capture equipment, only the market value of the enhancement is subject to the exemption under subsection
24 (3)(b)(i).
25 (e) Except as provided in subsection (2)(d), equipment that does not qualify for the exemption
26 under subsection (3)(b)(i) includes but is not limited to equipment placed into service to maintain, replace, or
27 repair equipment installed on or before January 1, 2014.
28 (f) A person may appeal the certification, classification, and valuation of the property to the
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1 Montana tax appeal board. Appeals on the property certification must name the department of environmental
2 quality as the respondent, and appeals on the classification or valuation of the equipment must name the
3 department of revenue as the respondent.
4 (3) (a) Except as provided in subsection (3)(b), class five property is taxed at 3% 1.5% 1.65% of its
5 market value.
6 (b) (i) Air and water pollution control and carbon capture equipment placed in service after January
7 1, 2014, and that satisfies the criteria in subsection (2)(d) is exempt from taxation.
8 (ii) (A) Except as provided in subsection (3)(b)(ii)(B), fiber optic or coaxial cable, as defined in 15-
9 6-156, installed and placed in service on or after July 1, 2021, is exempt from taxation for a period of 5 years
10 starting from the date the fiber optic or coaxial cable was placed in service, after which the property exemption
11 is phased out at a rate of 20% a year, with the property being assessed at 100% of its taxable value after a 10-
12 year period. In order to maintain the exemption, the owner of fiber optic or coaxial cable shall reinvest the tax
13 savings from the exemption by installing and placing in service new fiber optic or coaxial cable in Montana
14 within 2 years from the date the owner first claimed the exemption provided for in this subsection (3)(b)(ii)
15 without charging those costs to the consumer. The cost of installing or placing into service fiber optic or coaxial
16 cable with the reinvested tax savings without charging those costs to the consumer must be equal to or greater
17 than the value of the tax savings received from the tax incentive.
18 (B) Fiber optic or coaxial cable installed using federal funds received pursuant to section 9901 of
19 the American Rescue Plan Act is not eligible for exemption from taxation under this section.
20 (C) An entity that claims a tax exemption under this subsection (3)(b)(ii) shall maintain adequate
21 books and records demonstrating the investment the owner made when installing and placing in service fiber
22 optic or coaxial cable in Montana. The property owners shall make those records available to the department
23 for inspection upon request.
24 (4) (a) The property taxes exempted from taxation by subsection (3)(b)(ii) are subject to
25 termination or recapture if the department determines that the owner failed to install and place in service new
26 coaxial or fiber cable in Montana as provided in subsection (3)(b)(ii) or otherwise violates the provisions of this
27 section.
28 (b) Upon notice from the department that the owner's exemption has terminated, any local
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1 governing body may recapture taxes previously exempted in that jurisdiction, plus interest and penalties for
2 nonpayment of property taxes as provided in 15-16-102, during any tax year in which an exemption under the
3 provisions of subsection (3)(b)(ii) was improper. Any recapture must occur within 10 years after the end of the
4 calendar year in which the exemption was first claimed.
5 (c) The recapture of abated taxes may be canceled, in whole or in part, if the local governing body
6 determines that the taxpayer's failure to meet the requirements is a result of circumstances beyond the control
7 of the taxpayer."
8
9Section 5. Section 15-6-137, MCA, is amended to read:
10 "15-6-137. Class seven property -- description -- taxable percentage. (1) Except as provided in
11 subsection (2), class seven property includes:
12 (a) all property owned by cooperative rural electrical associations that serve less than 95% of the
13 electricity consumers within the incorporated limits of a city or town, except rural electric cooperative properties
14 described in 15-6-141(1)(c);
15 (b) electric transformers and meters; electric light and power substation machinery; natural gas
16 measuring and regulating station equipment, meters, and compressor station machinery owned by noncentrally
17 assessed public utilities; and tools used in the repair and maintenance of this property.
18 (2) Class seven property does not include wind generation facilities, biomass generation facilities,
19 energy storage facilities classified under 15-6-157, and property classified under 15-6-163.
20 (3) Class seven property is taxed at 8% 1.5% 1.65% of its market value."
21
22Section 6. Section 15-6-138, MCA, is amended to read:
23 "15-6-138. Class eight property -- description -- taxable percentage. (1) Class eight property
24 includes:
25 (a) all agricultural implements and equipment that are not exempt under 15-6-207 or 15-6-220;
26 (b) all mining machinery, fixtures, equipment, tools that are not exempt under 15-6-219, and
27 supplies except those included in class five under 15-6-135;
28 (c) for oil and gas production, all:
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1 (i) machinery;
2 (ii) fixtures;
3 (iii) equipment, including flow lines and gathering lines, pumping units, oil field storage tanks, water
4 storage tanks, water disposal injection pumps, gas compressor and dehydrator units, communication towers,
5 gas metering shacks, treaters, gas separators, water flood units, and gas boosters, together with equipment
6 that is skidable, portable, or movable;
7 (iv) tools that are not exempt under 15-6-219; and
8 (v) supplies except those included in class five;
9 (d) all manufacturing machinery, fixtures, equipment, tools, except a certain value of hand-held
10 tools and personal property related to space vehicles, ethanol manufacturing, and industrial dairies and milk
11 processors as provided in 15-6-220, and supplies except those included in class five;
12 (e) all goods and equipment that are intended for rent or lease, except goods and equipment that
13 are specifically included and taxed in another class or that are rented under a purchase incentive rental
14 program as defined in 15-6-202(4);
15 (f) special mobile equipment as defined in 61-1-101;
16 (g) furniture, fixtures, and equipment, except that specifically included in another class, used in
17 commercial establishments as defined in this section;
18 (h) x-ray and medical and dental equipment;
19 (i) citizens band radios and mobile telephones;
20 (j) radio and television broadcasting and transmitting equipment;
21 (k) cable television systems;
22 (l) coal and ore haulers;
23 (m) theater projectors and sound equipment; and
24 (n) all other property that is not included in any other class in this part, except that property that is
25 subject to a fee in lieu of a property tax.
26 (2) As used in this section, the following definitions apply:
27 (a) "Coal and ore haulers" means nonhighway vehicles that exceed 18,000 pounds an axle and
28 that are primarily designed and used to transport coal, ore, or other earthen material in a mining or quarrying
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1 environment.
2 (b) "Commercial establishment" includes any hotel, motel, office, petroleum marketing station, or
3 service, wholesale, retail, or food-handling business.
4 (c) "Flow lines and gathering lines" means pipelines used to transport all or part of the oil or gas
5 production from an oil or gas well to an interconnection with a common carrier pipeline as defined in 69-13-101
6 or a rate-regulated natural gas transmission or oil transmission pipeline regulated by the public service
7 commission or the federal energy regulatory commission.
8 (d) "Governing body" means the governing body of the county where the class eight property is
9 located.
10 (e) "Manufacturing machinery, fixtures, and equipment" means all property used in the
11 manufacturing process, whether permanently or temporarily in place, to transform raw or finished materials into
12 something possessing a new nature or name and adopted to a new use. The term includes but is not limited to
13 refinery property.
14 (3) Except as provided in 15-24-1402 and this section, class eight property is taxed at:
15 (a) for the first $6 million of taxable market value IS TAXED AT:
16 (A)FOR THE FIRST $6 MILLION OF TAXABLE MARKET VALUE in excess of the exemption amount in
17 subsection (4), is taxed at, 1.5%; and; AND
18 (B)FOR ALL TAXABLE MARKET VALUE IN EXCESS OF $6 MILLION, 1.65%
19 (b) for all taxable market value in excess of $6 million, 3%.
20 (4) (a) Except as provided in subsection (4)(b), the first $1 million of market value of class eight
21 property of a person or business entity is exempt from taxation.
22 (b) Subject to subsection (6), manufacturing machinery, fixtures, and equipment installed and
23 placed in service after December 31, 2022, are exempt or partially exempt from taxation for a period of 5 years
24 starting from the later of the date they were placed in service or October 1, 2023, after which the exemption
25 amount allowed under subsection (6)(d) is phased out at a rate of 20% of the amount allowed by the governing
26 body a year, with the property being assessed at 100% of its taxable value after a 10-year period. An entity that
27 claims a tax exemption under this subsection (4)(b) shall maintain adequate books and records demonstrating
28 the investment the owner made when installing and placing the property into service in the state. The property
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1 owners shall make the records available to the department for inspection on request.
2 (5) The gas gathering facilities of a stand-alone gas gathering company providing gas gathering
3 services to third parties on a contractual basis, owning more than 500 miles of gas gathering lines in Montana,
4 and centrally assessed in tax years prior to 2009 must be treated as a natural gas transmission pipeline subject
5 to central assessment under 15-23-101. For purposes of this subsection, the gas gathering line ownership of all
6 affiliated companies, as defined in section 1504(a) of the Internal Revenue Code, 26 U.S.C. 1504(a), must be
7 aggregated for purposes of determining the 500-mile threshold.
8 (6) (a) In order for a taxpayer to receive the tax abatement described in subsection (4)(b), the
9 taxpayer shall submit an application for the abatement and a project plan to the governing body and receive
10 approval pursuant to this subsection (6). For property in which a taxpayer does not seek approval prior to
11 commencing construction, the taxpayer shall apply:
12 (i) by March 1 of the year during which the abatement is first applicable for property placed in
13 service on or after October 1, 2023; or
14 (ii) by January 31, 2024, for property placed in service after December 31, 2022, and before
15 October 1, 2023.
16 (b) In order to receive an abatement, the governing body must approve the abatement request in
17 the application by resolution for each project, following due notice as provided in 7-1-2121 and a public hearing.
18 The governing body may not grant approval for the project until the applicant's property taxes have been paid in
19 full. Taxes paid under protest do not preclude approval. If a taxpayer receives approval of a tax abatement prior
20 to commencement of construction, the abatement does not extend to property that is outside the scope of the
21 project plan that was submitted to the governing body with the application.
22 (c) The purpose of the public hearing is to determine whether the manufacturing machinery,
23 fixtures, and equipment eligible for an abatement has an impact on services. The governing body shall:
24 (i) publish due notice within 60 days of receiving a taxpayer's complete application for the tax
25 abatement; and
26 (ii) conduct a public hearing regarding an application for the tax abatement and make a
27 determination whether the eligible abatement activities will have a fiscal impact to the county.
28 (d) Within 120 days of receiving the application provided for in subsection (6)(a), the governing
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1 body shall issue a decision regarding whether to allow the abatement at 100%, 90%, or 80%. If the governing
2 body fails to issue a decision within 120 days of receiving the application, the application is considered
3 approved in an amount equal to 100%. If the property qualifies for the abatement, the local government may not
4 deny the abatement and the minimum amount of the abatement may not be less than 80%."
5
6Section 7. Section 15-6-141, MCA, is amended to read:
7 "15-6-141. Class nine property -- description -- taxable percentage. (1) Class nine property
8 includes:
9 (a) centrally assessed allocations of an electric power company or centrally assessed allocations
10 of an electric power company that owns or operates transmission or distribution facilities or both;
11 (b) if congress passes legislation that allows the state to tax property owned by an agency created
12 by congress to transmit or distribute electrical energy, allocations of properties constructed, owned, or operated
13 by a public agency created by congress to transmit or distribute electrical energy produced at privately owned
14 generating facilities, not including rural electric cooperatives;
15 (c) rural electric cooperatives' property, except wind generation facilities, biomass generation
16 facilities, and energy storage facilities classified under 15-6-157 and property used for headquarters, office,
17 shop, or other similar facilities, used for the sole purpose of serving customers representing less than 95% of
18 the electric consumers located within the incorporated limits of a city or town of more than 3,500 persons in
19 which a centrally assessed electric power company also owns property or serving an incorporated municipality
20 with a population that is greater than 3,500 persons formerly served by a public utility that after January 1,
21 1998, received service from the facilities of an electric cooperative;
22 (d) allocations for centrally assessed natural gas distribution utilities, rate-regulated natural gas
23 transmission or oil transmission pipelines regulated by either the public service commission or the federal
24 energy regulatory commission, a common carrier pipeline as defined in 69-13-101, or the gas gathering
25 facilities specified in 15-6-138(5); and
26 (e) centrally assessed companies' allocations except:
27 (i) electrical generation facilities classified under 15-6-156;
28 (ii) all property classified under 15-6-157;
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1 (iii) all property classified under 15-6-158 and 15-6-159;
2 (iv) property owned by cooperative rural electric and cooperative rural telephone associations and
3 classified under 15-6-135;
4 (v) property owned by organizations providing telephone communications to rural areas and
5 classified under 15-6-135;
6 (vi) railroad transportation property included in 15-6-145;
7 (vii) airline transportation property included in 15-6-145;
8 (viii) telecommunications property included in 15-6-156; and
9 (ix) all property classified under 15-6-163.
10 (2) Class nine property is taxed at 12% 1.5% 1.65% of market value."
11
12Section 8. Section 15-6-145, MCA, is amended to read:
13 "15-6-145. Class twelve property -- description -- taxable percentage. (1) Class twelve property
14 includes all property of a railroad car company as defined in 15-23-211, all railroad transportation property as
15 described in the Railroad Revitalization and Regulatory Reform Act of 1976 as it read on January 1, 1986, and
16 all airline transportation property as described in the Tax Equity and Fiscal Responsibility Act of 1982 as it read
17 on January 1, 1986.
18 (2) For the tax year beginning January 1, 1991, and for each tax year thereafter, class Class
19 twelve property is taxed at the percentage rate "R", to be determined by the department as provided in
20 subsection (3), or 12% 1.5% 1.65%, whichever is less.
21 (3) R = A/B where:
22 (a) A is the total statewide taxable value of all commercial property, except class twelve property,
23 as commercial property is described in 15-1-101(1)(d); and
24 (b) B is the total statewide market value of all commercial property, except class twelve property,
25 as commercial property is described in 15-1-101(1)(d).
26 (4) (a) For the taxable year beginning January 1, 1986, and for every taxable year thereafter, the
27 department shall conduct a sales assessment ratio study of all commercial and industrial real property and
28 improvements. The study must be based on:
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1 (i) assessments of such property as of January 1 of the year for which the study is being
2 conducted; and
3 (ii) a statistically valid sample of sales using data from realty transfer certificates filed during the
4 same taxable year or from the immediately preceding taxable year, but only if a sufficient number of certificates
5 is unavailable from the current taxable year to provide a statistically valid sample.
6 (b) The department shall determine the value-weighted mean sales assessment ratio "M" for all
7 such property and reduce the taxable value of property described in this subsection (4) only, by multiplying the
8 total statewide taxable value of property described in subsection (4)(a) by "M" prior to calculating "A" in
9 subsection (3)(a).
10 (c) The adjustment referred to in subsection (4)(b) will be made beginning January 1, 1986, and in
11 each subsequent tax year to equalize the railroad taxable values.
12 (5) For the purpose of complying with the Railroad Revitalization and Regulatory Reform Act of
13 1976, as it read on January 1, 1986, the rate "R" referred to in this section is the equalized average tax rate
14 generally applicable to commercial and industrial property, except class twelve property, as commercial
15 property is defined in 15-1-101(1)(d)."
16
17Section 9. Section 15-6-156, MCA, is amended to read:
18 "15-6-156. Class thirteen property -- description -- taxable percentage. (1) Except as provided in
19 subsections (2)(a) through (2)(i), class thirteen property includes:
20 (a) electrical generation facilities, except wind generation facilities, biomass generation facilities,
21 and energy storage facilities classified under 15-6-157, of a centrally assessed electric power company;
22 (b) electrical generation facilities, except wind generation facilities, biomass generation facilities,
23 and energy storage facilities classified under 15-6-157, owned or operated by an exempt wholesale generator
24 or an entity certified as an exempt wholesale generator pursuant to 42 U.S.C. 16451;
25 (c) noncentrally assessed electrical generation facilities, except wind generation facilities, biomass
26 generation facilities, and energy storage facilities classified under 15-6-157, owned or operated by any
27 electrical energy producer;
28 (d) allocations of centrally assessed telecommunications services companies; and
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1 (e) dedicated communications infrastructure described in 15-6-162(5) for which construction
2 commenced after June 30, 2027, or for which the 15-year period provided for in 15-6-162(5)(c) has expired.
3 (2) Class thirteen property does not include:
4 (a) property owned by cooperative rural electric cooperative associations classified under 15-6-
5 135;
6 (b) property owned by cooperative rural electric cooperative associations classified under 15-6-137
7 or 15-6-157;
8 (c) allocations of electric power company property under 15-6-141;
9 (d) electrical generation facilities included in another class of property;
10 (e) property owned by cooperative rural telephone associations and classified under 15-6-135;
11 (f) property owned by organizations providing telecommunications services and classified under
12 15-6-135;
13 (g) generation facilities that are exempt under 15-6-225;
14 (h) qualified data centers classified under 15-6-162; and
15 (i) property classified under 15-6-163.
16 (3) For the purposes of this section, the following definitions apply:
17 (a) (i) "Electrical generation facilities" means any combination of a physically connected generator
18 or generators, associated prime movers, and other associated property, including appurtenant land and
19 improvements and personal property, that are normally operated together to produce electric power. The term
20 includes but is not limited to generating facilities that produce electricity from coal-fired steam turbines, oil or
21 gas turbines, turbine generators that are driven by falling water, or solar panel systems.
22 (ii) The term does not include electrical generation facilities used for noncommercial purposes or
23 exclusively for agricultural purposes.
24 (iii) (A) The term also does not include a qualifying facility certified by the federal energy regulatory
25 commission.
26 (B) To qualify for consideration of an abatement as allowed in 15-24-1402, the requesting entity
27 must disclose, in writing, its intent to request certification as a qualifying facility to the governing body.
28 (C) If the intent is not disclosed and an abatement granted, abatement may be rescinded by the
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1 governing body.
2 (D) Certified qualifying facilities are classified under 15-6-134 and 15-6-138.
3 (iv) The term also does not include a facility that is owned and operated by a person not primarily
4 engaged in the generation or sale of electricity other than power from a small power production facility and
5 classified under 15-6-134 and 15-6-138.
6 (b) (i) "Fiber optic or coaxial cable" means any fiber optic or coaxial cable, including all capitalized
7 costs associated with installing and placing in service the fiber optic or coaxial cable, and other property that is
8 normally operated when installing and placing in service fiber optic or coaxial cable to deliver digital
9 communication and access to the internet.
10 (ii) The term does not include routers, head-end equipment, central office equipment and other
11 electronics, or hardware or software not directly associated with installing and placing in service fiber optic or
12 coaxial cable or the buildings used to house equipment.
13 (4) (a) Except as provided in subsection (4)(b), class thirteen property is taxed at 6% 1.5% 1.65%
14 of its market value.
15 (b) (i) Except as provided in subsection (4)(b)(ii), fiber optic or coaxial cable installed and placed in
16 service on or after July 1, 2021, is exempt from taxation for a period of 5 years starting from the date the fiber
17 optic or coaxial cable was placed in service, after which the property exemption is phased out at a rate of 20%
18 a year, with the property being assessed at 100% of its taxable value after a 10-year period. In order to
19 maintain the exemption, the owner of fiber optic or coaxial cable shall reinvest the tax savings from the
20 exemption by installing and placing in service new fiber optic or coaxial cable in Montana within 2 years from
21 the date the owner first claimed the exemption provided for in this subsection (4)(b) without charging those
22 costs to the consumer. The cost of installing or placing into service fiber optic or coaxial cable with the
23 reinvested tax savings without charging those costs to the consumer must be equal to or greater than the value
24 of the tax savings received from the tax incentive.
25 (ii) Fiber optic or coaxial cable installed using federal funds received pursuant to Section 9901 of
26 the American Rescue Plan Act is not eligible for exemption from taxation under this section.
27 (iii) An entity that claims a tax exemption under this subsection (4)(b) shall maintain adequate
28 books and records demonstrating the investment the owner made when installing and placing in service fiber
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1 optic or coaxial cable in Montana. The property owners shall make those records available to the department
2 for inspection upon request.
3 (5) (a) The property taxes exempted from taxation by subsection (4)(b) are subject to termination
4 or recapture if the department determines that the owner failed to install and place in service new coaxial or
5 fiber cable in Montana as provided in subsection (4)(b) or otherwise violates the provisions of this section.
6 (b) Upon notice from the department that the owner's exemption has terminated, any local
7 governing body may recapture taxes previously exempted in that jurisdiction, plus interest and penalties for
8 nonpayment of property taxes as provided in 15-16-102, during any tax year in which an exemption under the
9 provisions of this section was improper. Any recapture must occur within 10 years after the end of the calendar
10 year in which the exemption was first claimed.
11 (c) The recapture of abated taxes may be cancelled, in whole or in part, if the local governing body
12 determines that the taxpayer's failure to meet the requirements is a result of circumstances beyond the control
13 of the taxpayer."
14
15Section 10. Section 15-6-157, MCA, is amended to read:
16 "15-6-157. Class fourteen property -- description -- taxable percentage. (1) Class fourteen
17 property includes:
18 (a) wind generation facilities of a centrally assessed electric power company;
19 (b) wind generation facilities owned or operated by an exempt wholesale generator or an entity
20 certified as an exempt wholesale generator pursuant to 42 U.S.C. 16451;
21 (c) noncentrally assessed wind generation facilities owned or operated by any electrical energy
22 producer;
23 (d) wind generation facilities owned or operated by cooperative rural electric associations
24 described under 15-6-137;
25 (e) biomass generation facilities up to 25 megawatts in nameplate capacity of a centrally assessed
26 electric power company;
27 (f) biomass generation facilities up to 25 megawatts in nameplate capacity owned or operated by
28 an exempt wholesale generator or an entity certified as an exempt wholesale generator pursuant to 42 U.S.C.
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1 16451;
2 (g) noncentrally assessed biomass generation facilities up to 25 megawatts in nameplate capacity
3 owned or operated by any electrical energy producer;
4 (h) biomass generation facilities up to 25 megawatts in nameplate capacity owned or operated by
5 cooperative rural electric associations described under 15-6-137;
6 (i) energy storage facilities of a centrally assessed electric power company;
7 (j) energy storage facilities owned or operated by an exempt wholesale generator or an entity
8 certified as an exempt wholesale generator pursuant to 42 U.S.C. 16451;
9 (k) noncentrally assessed energy storage facilities owned or operated by any electrical energy
10 producer;
11 (l) energy storage facilities owned or operated by cooperative rural electrical associations
12 described under 15-6-137;
13 (m) battery energy storage systems that comply with federal standards on the manufacture and
14 installation of the systems that are owned and operated by an electrical energy storage producer, electrical
15 energy producer, or energy trading entity or by the owner or operator of an electrical vehicle charging site;
16 (n) all property of a biodiesel production facility, as defined in 15-24-3102, that has commenced
17 construction after June 1, 2007;
18 (o) all property of a biogas production facility, as defined in 15-24-3102, that has commenced
19 construction after June 1, 2007;
20 (p) all property of a biomass gasification facility, as defined in 15-24-3102;
21 (q) all property of a coal gasification facility, as defined in 15-24-3102, except for property in
22 subsection (1)(t) of this section, that sequesters carbon dioxide;
23 (r) all property of an ethanol production facility, as defined in 15-24-3102, that has commenced
24 construction after June 1, 2007;
25 (s) all property of a geothermal facility, as defined in 15-24-3102;
26 (t) all property of an integrated gasification combined cycle facility, as defined in 15-24-3102, that
27 sequesters carbon dioxide, as required by 15-24-3111(4)(c);
28 (u) all property or a portion of the property of a renewable energy manufacturing facility, as defined
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1 in 15-24-3102, that has commenced construction after June 1, 2007;
2 (v) all property of a natural gas combined cycle facility;
3 (w) equipment that is used to capture and to prepare for transport carbon dioxide that will be
4 sequestered or injected for the purpose of enhancing the recovery of oil and gas, other than that equipment at
5 coal combustion plants of the types that are generally in commercial use as of December 31, 2007, that
6 commence construction after December 31, 2007;
7 (x) high-voltage direct-current transmission lines and associated equipment and structures,
8 including converter stations and interconnections, other than property classified under 15-6-159, that:
9 (i) originate in Montana with a converter station located in Montana east of the continental divide
10 and that are constructed after July 1, 2007;
11 (ii) are certified under the Montana Major Facility Siting Act; and
12 (iii) provide access to energy markets for Montana electrical generation facilities listed in this
13 section that commenced construction after June 1, 2007;
14 (y) all property of electric transmission lines, including substations, that originate at facilities
15 specified in this subsection (1), with at least 90% of electricity carried by the line originating at facilities specified
16 in this subsection (1) and terminating at an existing transmission line or substation that has commenced
17 construction after June 1, 2007;
18 (z) the qualified portion of an alternating current transmission line and its associated equipment
19 and structures, including interconnections, that has commenced construction after June 1, 2007;
20 (aa) all property of a renewable diesel production facility, as defined in 15-24-3102, that has
21 commenced construction after December 31, 2020; and
22 (bb) all property of a sustainable aviation fuel production facility, as defined in 15-24-3102, that has
23 commenced construction after December 31, 2020.
24 (2) (a) The qualified portion of an alternating current transmission line in subsection (1)(z) is that
25 percentage, as determined by the department of environmental quality, of rated transmission capacity of the
26 line contracted for on a firm basis by buyers or sellers of electricity generated by facilities specified in
27 subsection (1) that are located in Montana.
28 (b) The department of revenue shall classify the total value of an alternating current transmission
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1 line in accordance with the determination made by the department of environmental quality pursuant to
2 subsection (2)(a).
3 (c) The owner of property described under this subsection (2) shall disclose the location of the
4 generation facilities specified in subsection (1) and information sufficient to demonstrate that there is a firm
5 contract for transmission capacity available throughout the year. For purposes of the initial qualification, the
6 owner is not required to disclose financial terms and conditions of contracts beyond that needed for
7 classification.
8 (3) Class fourteen property does not include facilities:
9 (a) at which the standard prevailing rate of wages for heavy construction, as provided in 18-2-414,
10 was not paid during the construction phase; or
11 (b) that are exempt under 15-6-225.
12 (4) For the purposes of this section, the following definitions apply:
13 (a) "Biomass generation facilities" means any combination of boilers, generators, associated prime
14 movers, and other associated property, including appurtenant land and improvements and personal property,
15 that are normally operated together to produce electric power from the burning of organic material other than
16 coal, petroleum, natural gas, or any products derived from coal, petroleum, or natural gas, with the use of
17 natural gas or other fuels allowed for ignition and to stabilize boiler operations.
18 (b) (i) "Compressed air energy storage" means the conversion of electrical energy to compressed
19 air by using an electrically powered turbocompressor for storage in vessels designed for that purpose and in the
20 earth, including but not limited to deep saline formations, basalt formations, aquifers, depleted oil or gas
21 reservoirs, abandoned mines, and mined rock cavities.
22 (ii) The term includes the conversion of compressed air into electrical energy by using
23 turboexpander equipment and electrical generation equipment.
24 (c) (i) "Energy storage facilities" means hydroelectric pumped storage property, compressed air
25 energy storage property, regenerative fuel cells, batteries, flywheel storage property, or any combination of
26 energy storage facilities directly connected to the electrical power grid and associated property, appurtenant
27 land and improvements, and personal property that are designed to:
28 (A) receive and store electrical energy as potential energy; and
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1 (B) convert the stored energy into electrical energy for sale as an energy commodity or as
2 electricity services to balance energy flow on the electrical power grid in order to maintain a stable transmission
3 grid, including but not limited to frequency regulation ancillary services and frequency control.
4 (ii) The term includes only property that in the aggregate can store at least 0.25 megawatt hour
5 and has a power rating of at least 1 megawatt for a period of at least 0.25 hour.
6 (iii) The term does not include property, including associated property and appurtenant land and
7 improvements, that is used to hold water in ponds, reservoirs, or impoundments related to hydroelectric
8 pumped storage as defined in subsection (4)(e).
9 (d) "Flywheel storage" means a process that stores energy kinetically in the form of a rotating
10 flywheel. Energy stored by the rotating flywheel can be converted to electrical energy through the flywheel's
11 integrated electric generator.
12 (e) "Hydroelectric pumped storage" means a process that converts electrical energy to potential
13 energy by pumping water to a higher elevation, where it can be stored indefinitely and then released to pass
14 through hydraulic turbines and generate electrical energy.
15 (f) (i) "Regenerative fuel cell" means a device that produces hydrogen and oxygen from electricity
16 and water and alternately produces electrical energy and water from stored hydrogen and oxygen.
17 (ii) The term does not include a green hydrogen facility, green hydrogen pipeline, or green
18 hydrogen storage system as defined in 15-6-163.
19 (g) "Wind generation facilities" means any combination of a physically connected wind turbine or
20 turbines, associated prime movers, and other associated property, including appurtenant land and
21 improvements and personal property, that are normally operated together to produce electric power from wind.
22 (5) (a) The department of environmental quality shall determine whether to certify that a
23 transmission line meets the criteria of subsection (1)(x), (1)(y), or (1)(z), as applicable, based on an application
24 provided for in 15-24-3112. The department of environmental quality shall review the certification 10 years after
25 the line is operational, and if the property no longer meets the requirements of subsection (1)(x), (1)(y), or
26 (1)(z), the certification must be revoked.
27 (b) If the department of revenue finds that a certification previously granted was based on an
28 application that the applicant knew was false or fraudulent, the property must be placed in class nine under 15-
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1 6-141. If the application was fraudulent, the applicant may be liable for additional taxes, penalty, and interest
2 from the time that the certification was in effect.
3 (6) Class fourteen property is taxed at 3% 1.5% 1.65% of its market value."
4
5Section 11. Section 15-6-158, MCA, is amended to read:
6 "15-6-158. Class fifteen property -- description -- taxable percentage. (1) Class fifteen property
7 includes:
8 (a) carbon dioxide pipelines certified by the department of environmental quality under 15-24-3112
9 for the transportation of carbon dioxide for the purposes of sequestration or for use in closed-loop enhanced oil
10 recovery operations;
11 (b) qualified liquid pipelines certified by the department of environmental quality under 15-24-3112;
12 (c) carbon sequestration equipment;
13 (d) equipment used in closed-loop enhanced oil recovery operations; and
14 (e) all property of pipelines, including pumping and compression equipment, carrying products
15 other than carbon dioxide, that originate at facilities specified in 15-6-157(1), with at least 90% of the product
16 carried by the pipeline originating at facilities specified in 15-6-157(1) and terminating at an existing pipeline or
17 facility.
18 (2) For the purposes of this section, the following definitions apply:
19 (a) "Carbon dioxide pipeline" means a pipeline that transports carbon dioxide from a plant or
20 facility that produces or captures carbon dioxide to a carbon sequestration point, including a closed-loop
21 enhanced oil recovery operation.
22 (b) "Carbon sequestration" means the long-term storage of carbon dioxide from a carbon dioxide
23 pipeline in geologic formations, including but not limited to deep saline formations, basalt or oil shale
24 formations, depleted oil and gas reservoirs, unminable coal beds, and closed-loop enhanced oil recovery
25 operations.
26 (c) "Carbon sequestration equipment" means the equipment used for carbon sequestration,
27 including equipment used to inject carbon dioxide at the carbon sequestration point and equipment used to
28 retain carbon dioxide in the sequestration location.
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1 (d) "Carbon sequestration point" means the location where the carbon dioxide is to be confined for
2 sequestration.
3 (e) "Closed-loop enhanced oil recovery operation" means all oil production equipment, as
4 described in 15-6-138(1)(c), owned by an entity that owns or operates an operation that, after construction,
5 installation, and testing has been completed and the full enhanced oil recovery process has been commenced,
6 injects carbon dioxide to increase the amount of crude oil that can be recovered from a well and retains as
7 much of the injected carbon dioxide as practicable, but not less than 85% of the carbon dioxide injected each
8 year absent catastrophic or unforeseen occurrences.
9 (f) "Liquid pipeline" means a pipeline that is dedicated to using 90% of its pipeline capacity for
10 transporting fuel or methane gas from a coal gasification facility, biodiesel production facility, biogas production
11 facility, ethanol production facility, renewable diesel production facility, or sustainable aviation fuel production
12 facility.
13 (g) "Plant or facility that produces or captures carbon dioxide" means a facility that produces a flow
14 of carbon dioxide that can be sequestered or used in a closed-loop enhanced oil recovery operation. This does
15 not include wells from which the primary product is carbon dioxide.
16 (3) Class fifteen property does not include a carbon dioxide pipeline, liquid pipeline, or closed-loop
17 enhanced oil recovery operation for which, during construction, the standard prevailing wages for heavy
18 construction, as provided in 18-2-414, were not paid during the construction phase.
19 (4) (a) Except as provided in subsection (4)(b), class fifteen property is taxed at 3% 1.5% 1.65% of
20 its market value.
21 (b) Carbon sequestration equipment placed in service after January 1, 2014, that is certified as
22 provided in subsection (5) and that has a current granted tax abatement under 15-24-3111 is taxed at 1.5% of
23 its reduced market value during the qualifying period provided for in 15-24-3111(7).
24 (5) (a) Requests for certification must be made on forms available from the department of revenue.
25 Certification may not be granted unless the applicant is in substantial compliance with all applicable rules, laws,
26 orders, or permit conditions. Certification remains in effect only as long as substantial compliance continues.
27 (b) The board of oil and gas conservation shall promulgate rules specifying procedures, including
28 timeframes for certification application, and definitions necessary to identify carbon sequestration equipment for
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1 certification and compliance. The department of revenue shall promulgate rules pertaining to the valuation of
2 carbon sequestration equipment. The board of oil and gas conservation shall identify and track compliance in
3 the use of carbon sequestration equipment and report continuous acts or patterns of noncompliance at a facility
4 to the department of revenue. Casual or isolated incidents of noncompliance at a facility do not affect
5 certification.
6 (c) A person may appeal the certification, classification, and valuation of the property to the
7 Montana tax appeal board. Appeals on the property certification must name the board of oil and gas
8 conservation as the respondent, and appeals on the classification or valuation of the equipment must name the
9 department of revenue as the respondent."
10
11Section 12. Section 15-6-159, MCA, is amended to read:
12 "15-6-159. Class sixteen property -- description -- taxable percentage. (1) Class sixteen property
13 includes high-voltage direct-current converter stations that are constructed in a location and manner so that the
14 converter station can direct power to two different regional power grids.
15 (2) Class sixteen property does not include property described in subsection (1) for which the
16 standard prevailing rate of wages for heavy construction, as provided in 18-2-414, was not paid during the
17 construction phase.
18 (3) (a) The department shall determine whether to certify that the property meets the criteria of
19 subsection (1).
20 (b) If the department finds that a certification previously granted was based on an application that
21 the applicant knew was false or fraudulent, the property must be placed in class nine under 15-6-141. If the
22 application was fraudulent, the applicant may be liable for additional taxes, penalty, and interest from the time
23 that the certification was in effect.
24 (4) Class sixteen property is taxed at 2.25% 1.5% 1.65% of its market value."
25
26Section 13. Section 15-6-162, MCA, is amended to read:
27 "15-6-162. Class seventeen property -- description -- taxable percentage. (1) Class seventeen
28 property includes the land, improvements, furniture, fixtures, equipment, tools that are not exempt under 15-6-
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1 219, and supplies except those included in class five under 15-6-135 of a qualified data center.
2 (2) (a) "Qualified data center" means the land, improvements, and personal property of a facility
3 designed or modified to house networked computers or equipment supporting computing, networking, or data
4 storage that is composed of one or more buildings under single ownership on contiguous parcels of land that
5 consist of at least:
6 (i) 300,000 square feet, where the total cost of land, improvements, personal property, and
7 software is at least $150 million with construction commencing after June 30, 2017; or
8 (ii) 25,000 square feet of new or expanded area, where the total cost of land, improvements,
9 personal property, and software is at least $50 million invested during a 48-month period with construction
10 commencing after January 1, 2019.
11 (b) The term includes but is not limited to:
12 (i) cooling systems, cooling towers, and other temperature infrastructure;
13 (ii) power infrastructure for transformation, distribution, or management of electricity used for the
14 maintenance and operation of the facility, such as exterior dedicated business-owned substations, backup
15 power generation systems, battery systems, and related infrastructure; and
16 (iii) any other equipment necessary for the maintenance and operation of the facility.
17 (3) During construction, property not meeting the requirements of subsection (2) must be classified
18 as class seventeen property if, prior to March 1 of the first tax year for which the classification will be applied,
19 the taxpayer certifies to the department that the facility under construction will meet the requirements of
20 subsection (2) within 2 years of the date of the certification.
21 (4) The taxable property of a qualified data center must be locally assessed.
22 (5) (a) Class seventeen property includes centrally assessed interstate or intrastate dedicated
23 communications infrastructure that is owned or leased by the owner of a qualified data center and is composed
24 of telecommunication or data lines, equipment, and services, including but not limited to copper or fiber optic
25 lines or microwave, satellite, or other wireless communication systems.
26 (b) To qualify under this subsection (5), construction of the owned or leased interstate or intrastate
27 communications infrastructure must commence after June 30, 2017, and before July 1, 2027, and must satisfy
28 the criteria of this section.
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1 (c) Dedicated communications infrastructure provided for in this subsection (5) is taxed at the rate
2 provided for in subsection (6) for a period of 15 years from the time that construction commences. After the 15-
3 year period, the dedicated communications infrastructure is taxed as class thirteen property at the rate provided
4 in 15-6-156.
5 (6) Class seventeen property is taxed at 0.9% 1.5% 1.65% of its market value."
6
7Section 14. Section 15-6-163, MCA, is amended to read:
8 "15-6-163. Class eighteen property -- description -- taxable percentage. (1) (a) Subject to
9 subsection (1)(b), class eighteen property includes the land, improvements, furniture, fixtures, equipment, tools
10 that are not exempt under 15-6-219, and supplies, except those included in class five property under 15-6-135,
11 of a green hydrogen facility, green hydrogen pipeline, or green hydrogen storage system.
12 (b) Power generation primary fuel sources must be at least 25% by volume derived from green
13 hydrogen to qualify under this section.
14 (2) During construction, property not meeting the definitions in subsection (6) must be classified as
15 class eighteen property if, prior to March 1 of the first tax year for which the classification will be applied, the
16 taxpayer certifies to the department that the facility under construction will meet the definitions in subsection (6)
17 within 2 years of the date of the certification.
18 (3) The taxable property of a green hydrogen facility, a green hydrogen pipeline, and a green
19 hydrogen storage system must be locally assessed.
20 (4) Class eighteen property does not include a green hydrogen facility, pipeline, or storage system
21 for which, during construction, the standard prevailing wages for heavy construction, as provided in 18-2-
22 401(13), were not paid during the construction phase.
23 (5) (a) Except as provided in subsections (5)(b) and (5)(c), class (A) Class eighteen property is
24 taxed at 3% 1.5% 1.65% of its market value.
25 (b) Class eighteen property defined in subsection (1) or meeting the requirements of subsection (2)
26 is taxed at 1.5% of its market value for the first 15 years from the time construction commences.
27 (c) Class eighteen property defined in subsection (1) for which the owners have made an
28 additional investment of $25 million or more is taxed at 1.5% of market value for the first 15 years from the time
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1 construction commences on the additional investment.
2 (B) CLASS EIGHTEEN PROPERTY DEFINED IN SUBSECTION (1) OR MEETING THE REQUIREMENTS OF
3SUBSECTION (2) IS TAXED AT 1.5% OF ITS MARKET VALUE FOR THE FIRST 15 YEARS FROM THE TIME CONSTRUCTION
4COMMENCES.
5 (C) CLASS EIGHTEEN PROPERTY DEFINED IN SUBSECTION (1) FOR WHICH THE OWNERS HAVE MADE AN
6ADDITIONAL INVESTMENT OF $25 MILLION OR MORE IS TAXED AT 1.5% OF MARKET VALUE FOR THE FIRST 15 YEARS FROM
7THE TIME CONSTRUCTION COMMENCES ON THE ADDITIONAL INVESTMENT.
8 (6) As used in this section, the following definitions apply:
9 (a) "Green hydrogen" means hydrogen that is produced from nonfossil fuel feedstock sources and
10 does not produce incremental greenhouse gas emissions during its production. The term does not include
11 hydrogen produced using steam reforming or any other conversion technology that produces hydrogen from
12 fossil fuel feedstock.
13 (b) "Green hydrogen facility" means the land, improvements, and personal property of a facility
14 designed or modified:
15 (i) to produce green hydrogen through electrolysis technology;
16 (ii) to store or transport green hydrogen; or
17 (iii) to convert green hydrogen back to electricity through a hydrogen-capable power generation
18 source with construction commencing after July 1, 2021.
19 (c) "Green hydrogen pipeline" means a pipeline used for the transport or storage of green
20 hydrogen, with construction commencing after July 1, 2021.
21 (d) "Green hydrogen storage system" means the temporary storage of green hydrogen in a vessel,
22 pipeline, or geologic formation."
23
24Section 15. Section 15-10-420, MCA, is amended to read:
25 "15-10-420. Procedure for calculating levy -- definition. (1) (a) Subject to the provisions of this
26 section, a governmental entity that is authorized to impose mills may impose the fiscal year 2025 PRIOR YEAR
27 mill levy plus a mill levy sufficient to generate an inflation adjustment the amount of property taxes actually
28 assessed in the prior year plus one-half of the average rate of inflation for the prior 3 years. The maximum
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1 number of mills that a governmental entity may impose is established by adding the fiscal year 2025 mill levy to
2 calculating the number of mills required to generate the amount of property tax actually assessed in the
3 governmental unit in the prior year inflation adjustment based on the current year taxable value, less the current
4 year's newly taxable value, plus one-half of the average rate of inflation for the prior 3 years.
5 (b) A governmental entity that does not impose the maximum number of mills authorized under
6 subsection (1)(a) may carry forward the authority to impose the number of mills equal to the difference between
7 the actual number of mills imposed and the maximum number of mills authorized to be imposed. The mill
8 authority carried forward may be imposed in a subsequent tax year.
9 (c) For the purposes of subsection (1)(a), the department shall calculate one-half of the average
10 the rate of inflation for the prior 3 years year by using the consumer price index, U.S. city average, all urban
11 consumers, using the 1982-84 base of 100, as published by the bureau of labor statistics of the United States
12 department of labor.
13 (2) A governmental entity may apply the levy calculated pursuant to subsection (1)(a) plus any
14 additional levies authorized by the voters, as provided in 15-10-425, to all property in the governmental unit,
15 including newly taxable property.
16 (3) (a) For purposes of this section, newly taxable property includes:
17 (i) annexation of real property and improvements into a taxing unit;
18 (ii) construction, expansion, or remodeling of improvements;
19 (iii) transfer of property into a taxing unit;
20 (iv) subdivision of real property; and
21 (v) transfer of property from tax-exempt to taxable status.
22 (b) Newly taxable property does not include an increase in value that arises because of an
23 increase in the incremental value within a tax increment financing district.
24 (4) (a) For the purposes of subsection (1), the taxable value of newly taxable property includes the
25 release of taxable value from the incremental taxable value of a tax increment financing district because of:
26 (i) a change in the boundary of a tax increment financing district;
27 (ii) an increase in the base value of the tax increment financing district pursuant to 7-15-4287; or
28 (iii) the termination of a tax increment financing district.
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1 (b) If a tax increment financing district terminates prior to the certification of taxable values as
2 required in 15-10-202, the increment value is reported as newly taxable property in the year in which the tax
3 increment financing district terminates. If a tax increment financing district terminates after the certification of
4 taxable values as required in 15-10-202, the increment value is reported as newly taxable property in the
5 following tax year.
6 (c) For the purpose of subsection (3)(a)(ii), the value of newly taxable class four property that was
7 constructed, expanded, or remodeled property since the completion of the last reappraisal cycle is the current
8 year market value of that property less the previous year market value of that property.
9 (d) For the purpose of subsection (3)(a)(iv), the subdivision of real property includes the first sale
10 of real property that results in the property being taxable as class four property under 15-6-134 or as
11 nonqualified agricultural land as described in 15-6-133(1)(c).
12 (5) Subject to subsection (8), subsection (1)(a) does not apply to:
13 (a) school district levies established in Title 20; or
14 (b) a mill levy imposed for a newly created regional resource authority.
15 (6) For purposes of subsection (1)(a), taxes imposed do not include net or gross proceeds taxes
16 received under 15-6-131 and 15-6-132.
17 (7) In determining the maximum number of mills in subsection (1)(a), the governmental entity:
18 (a) may increase the number of mills to account for a decrease in reimbursements; and
19 (b) may not increase the number of mills to account for a loss of tax base because of legislative
20 action that is reimbursed under the provisions of 15-1-121(7).
21 (8) The department shall calculate, on a statewide basis, the number of mills to be imposed for
22 purposes of 15-10-109, 20-9-331, 20-9-333, 20-9-360, and 20-25-439. However, the number of mills calculated
23 by the department may not exceed the mill levy limits established in those sections. The mill calculation must
24 be established in tenths of mills. If the mill levy calculation does not result in an even tenth of a mill, then the
25 calculation must be rounded up to the nearest tenth of a mill.
26 (9) (a) The provisions of subsection (1) do not prevent or restrict:
27 (i) a judgment levy under 2-9-316, 7-6-4015, or 7-7-2202;
28 (ii) a levy to repay taxes paid under protest as provided in 15-1-402;
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1 (iii) an emergency levy authorized under 10-3-405, 20-9-168, or 20-15-326;
2 (iv) a levy for the support of a study commission under 7-3-184;
3 (v) a levy for the support of a newly established regional resource authority;
4 (vi) the portion that is the amount in excess of the base contribution of a governmental entity's
5 property tax levy for contributions for group benefits excluded under 2-9-212 or 2-18-703;
6 (vii) a levy for reimbursing a county for costs incurred in transferring property records to an
7 adjoining county under 7-2-2807 upon relocation of a county boundary;
8 (viii) a levy used to fund the sheriffs' retirement system under 19-7-404(3)(b); or
9 (ix) a governmental entity from levying mills for the support of an airport authority in existence prior
10 to May 7, 2019, regardless of the amount of the levy imposed for the support of the airport authority in the past.
11 The levy under this subsection (9)(a)(ix) is limited to the amount in the resolution creating the authority.
12 (b) A levy authorized under subsection (9)(a) may not be included in the amount of property taxes
13 actually assessed in a subsequent year.
14 (10) A governmental entity may levy mills for the support of airports as authorized in 67-10-402, 67-
15 11-301, or 67-11-302 even though the governmental entity has not imposed a levy for the airport or the airport
16 authority in either of the previous 2 years and the airport or airport authority has not been appropriated
17 operating funds by a county or municipality during that time.
18 (11) The department may adopt rules to implement this section. The rules may include a method for
19 calculating the percentage of change in valuation for purposes of determining the elimination of property, new
20 improvements, or newly taxable value in a governmental unit.
21 (12) For the purposes of this section, "inflation adjustment" means the difference between the
22 amount of property taxes actually assessed in the prior year ADJUSTED BY THE RATE OF INFLATION CALCULATED
23PURSUANT TO SUBSECTION (1)(C) and the amount of property taxes actually assessed in the prior year adjusted
24 by the rate of inflation calculated pursuant to subsection (1)(c)."
25
26 NEW SECTION. Section 16. Applicability. [This act] applies to property tax years beginning after
27 December 31, 2025.
28 - END -