MT Supreme Court rules against counties in school equalization mill dispute

The ruling settles a months-long dispute between local officials, school advocates and Gov. Greg Gianforte's administration that set off splintering legal challenges in Montana. Counties will soon begin the process of sending out supplemental tax notices. Lewis and Clark County Officials previously estimated a $50,000 cost locally for re-printing additional tax notices if the counties lost their case. 

As counties grappled with booming property tax increases following the state's reappraisal process, commissioners in all but seven of Montana's 56 counites had approved resolutions to levy 78 mills for the mechanism rather than the 95 as requested by the Montana Department of Revenue since the measure went into place 20 years ago. 

The school equalization mills, also referred to as the 95 mills, are collected from each county and redistributed by the state in a fashion that levels out funding for school districts in richer and poorer counties. Counties have argued they have the authority to lower, or float down, those mills at the local level. 

Education advocates argued doing so would put a dent in public school funding, and the revenue department has contended its interpretation of the state law that created the school equalization mechanism required it to mandate the full 95 mills. The state department filed legal challenges in October seeking a judicial ruling to that effect, although the counties' moved ahead with their lower rates and then took the question to the state Supreme Court. 

Chief Justice Mike McGrath authored the unanimous opinion, writing that the law gives Department of Revenue exclusive authority to calculate the 95 mills and that counties must abide by that calculation. Regarding the calculation in question, McGrath wrote the court would defer to the department's interpretation which had been unchallenged for more than two decades. 

"Counties have the authority to levy mills according to local interests," McGrath wrote, citing the 1972 constitutional delegation's foundation for tax powers among different government bodies. "In cases of statewide mills, however, that authority rests with the state."

The ruling covers this and future tax cycles.

A timeline for those supplemental tax notices was not immediately clear Thursday. Lewis and Clark County Chief Administrative Officer Roger Baltz said Wednesday officials will being working out the process ahead. 

"This just happened," he said. "We'll be following up with our elected officials to thoroughly review what happened and what we need to do to meet our legal obligations."

Gianforte on Wednesday applauded the court's decision.

"I appreciate the Montana Supreme Court bringing clarity to the law around the 95 public school mills which the state collects and returns in full to school districts," Gianforte said in an emailed statement. "Today’s decision reaffirms what has guided us: we have an obligation, both constitutional and moral, to ensure each Montana child has access to a quality education, and we won’t defund our public schools."

Helena Independent Record reporter Nolan Lister contributed to this report.