=20

Permission to reprint or copy this article or = photo, other=20 than personal use, must be obtained from The Seattle Times. Call = 206-464-3113 or=20 e-mail resale@seattletimes.com with = your request.

Montana's big-sky views become bigger tax burdens

By Kim Murphy

Los Angeles Times

WHITEFISH, Mont. =E2=80=94 Charles Abell grew up here in the Flathead = Valley in a=20 rustic log cabin his parents built during their honeymoon out on = Whitefish Lake.=20 When he married, Abell bought a small house on another part of the lake, = leaving=20 the old family cabin for his brother.

He paid $35,000 for the house in 1967, raised his two boys there, and = until=20 lately figured he'd probably die in the same tidy house with the metal = awning=20 over the porch, the collection of souvenir spoons and beer steins = hanging like=20 sweet memories in the small kitchen.

That was until the tax bill came this fall.

Abell already knew that property values in the Flathead =E2=80=94 a = new romping=20 ground for Hollywood celebrities, sports stars and international CEOs = =E2=80=94 far=20 exceeded what they were when he graduated from Whitefish High School. = His=20 70-year-old house in the tax appraisal in 2002 was worth a stunning = $553,900,=20 thanks to its location right on the lake.

Now, though, the Montana Department of Revenue says Abell's property = is worth=20 $2.64 million. The old cabin his brother's living in? That one, because = it sits=20 on 4 acres, is worth $4.2 million.

Abell, who recently retired as president of the Whitefish Credit = Union at the=20 age of 70, just wrote a check for $9,200 for this year's property taxes. = He=20 expects to owe at least twice that amount every year when the new = appraisals=20 take full effect in 2014 =E2=80=94 an obligation that will quickly empty = his modest=20 retirement account.

His brother faces an annual tax bill of $30,462, which exceeds his = entire=20 annual income.

Abell can be forgiven if he sometimes feels like roadkill on the = highway to=20 the New West.

"There's no relationship between these tax bills and your ability to = pay.=20 It's just that we're the beginning of the food chain," said Abell one = recent=20 afternoon, sitting in work shirt and suspenders. "They tell us, 'You're = sitting=20 on a couple million dollars; why don't you sell it?' But this is where I = raised=20 my children. It's not for sale. It's my home."

Desirable areas

What is happening in northwest Montana, along with other newly tony = areas of=20 the state like Bozeman and the Paradise Valley, has transformed the = country=20 since frontier days: New money moves in, older homes get bulldozed.

What has been unsettling in Montana this year has been the speed with = which=20 tax bills in the most desirable parts of the state have hit the=20 stratosphere.

Some homeowners around Flathead Lake and the many surrounding = waterways have=20 seen valuations =E2=80=94 undertaken by state law every six years = =E2=80=94 as much as 1,000=20 percent over last year's rates.

Most Montanans are getting relatively small property-tax increases = this year=20 =E2=80=94 some, in declining areas like eastern Montana, are actually = seeing their tax=20 bills go down.

But nearly 36,000 property owners have protested increases in their = tax=20 valuations based on the skyrocketing land values that have turned much = of=20 western Montana into a real-estate gold mine over the last decade.

Across Montana, residential property values are up 54 percent over = the last=20 six years, state officials said.

Northwest Montana, once an outback for hunting, fishing and family = trips to=20 Glacier National Park, in recent years has seen celebrities including = Kiefer=20 Sutherland, Julia Roberts, John Lithgow, Emilio Estevez and Charlie = Sheen drop=20 occasional anchors. Lakers coach Phil Jackson has spent most summers of = the last=20 30 years at his vacation home on Flathead Lake.

Longtime residents say it's not unusual to see three or four old = houses along=20 the lake razed and replaced with a massive private lodge. Wine bars,=20 gourmet-pizza bistros and boutiques now sit between the saloons at the = base of=20 the ski slopes in rustic downtown Whitefish.

"We saw an influx 15 years ago of the Hollywood elite, celebrities = and=20 athletes. They sold out and started moving away about seven or eight = years ago,=20 and the real money started moving in right after that. The ones that = have=20 multiple vacation homes, the investment portfolios," said Scott = Williams,=20 regional manager for the Department of Revenue in the Flathead = Valley.

Though the out-of-state millionaires probably won't even think about = their=20 tax bills, those who have considered the Flathead home for much of their = lives=20 now face the prospect of mortgaging to pay the taxes =E2=80=94 if they = can =E2=80=94 or=20 moving.

"There's a neighbor of mine, she's close to 90. Her property went = from=20 $540,000 to $2.1 million. And her tax bill is going from $5,500 to = $14,200 in=20 2014," said Arthur Buckley, who inherited an old three-bedroom house on = Flathead=20 Lake from his parents and moved there from Chino, Calif., to retire in = 1998.

Buckley's house was assessed at $649,000 in 2002, but its value rose = to $2.8=20 million with the new appraisals. That means an increase in his taxes = from $6,500=20 last year to about $18,400 in 2014. Buckley's only income comes from = Social=20 Security and withdrawals from his individual retirement account.

"That's probably 25 percent of our spendable income," he said.

Many here worry that long-term, year-round residents will disappear, = and=20 Whitefish will become another Jackson Hole, Wyo., or Vail, Colo., = catering to=20 tourists and part-time homeowners.

"We have a business here. We raised four kids here. What happens to a = community when people like us go?" said Debbie Biolo, who also faces a = big tax=20 increase. "I'll tell you: You turn into a facade. You turn into a Vail. = You turn=20 into one big Disneyland."

Legislative action

There have been widespread calls for a California-style measure like=20 Proposition 13 to limit annual increases, or tie taxes to what owners = paid for a=20 property. But six-year reappraisals are mandated by the Montana = Constitution,=20 which requires the state to regularly appraise and equalize assessments = on=20 property based on market value.

Some homeowners are preparing to gather signatures for a ballot = measure to=20 amend the Constitution; others are circulating ideas for a lawsuit.

Going to the Legislature for a quick fix doesn't appear to be an = option.=20 Montana's lawmakers meet only once every other year, and after much = debate=20 before they recessed last April, they passed a bill that provided only = limited=20 taxpayer relief, largely because many residents, especially easterners = with=20 shrinking tax bills, have little sympathy for multimillion-dollar = property=20 owners in western resort towns.

"It's an east-west battle," said state Sen. Verdell Jackson, whose = district=20 straddles the counties of Flathead and Lake.

Democratic Gov. Brian Schweitzer ordered that the new assessments = should not=20 result in a windfall for the state. Tax rates were lowered to make sure = of that.=20 In addition, the Legislature adopted a mitigation package that provides = partial=20 exemptions for homeowners and phases in the tax increases over six = years.

Dan Bucks, director of the Department of Revenue, said the state was = also=20 beginning to implement programs that would help low- and middle-income = taxpayers=20 and senior citizens on their property taxes.

"The full effect of these programs has not yet been seen," Bucks = said.

State officials are quick to point out that Montana, which also gets = revenue=20 from robust oil and gas development, has weathered the economic downturn = with=20 far less turmoil than most other states. And even some of the most vocal = foes of=20 the new tax reappraisals say they don't want to follow blindly in the = footsteps=20 of California, whose property-tax rollbacks have been singled out as one = of the=20 culprits in the state's current fiscal crisis.

But even if additional aid does come, for some it may be too = late.

"People have already been selling their homes because they can't = afford to=20 pay the taxes, and that has been happening since the assessments in = 2002," said=20 California transplant Dudley Mahler, who moved from Woodland Hills to = Whitefish=20 in 1995 and saw his appraisal go up this year from $331,875 to $2.39=20 million.

His taxes will increase from $5,616 to $13,996.

"What we're faced with is making a decision. I could probably pay it. = I can=20 manage it," Mahler said. "But I'm not sure I want to. If you're living = in a=20 state that doesn't care about their people, and are willing to force out = the=20 longtime homeowners, is this really where you want to be?"