HELENA — Property tax relief has been a major goal during this year’s Montana legislative session, and on Wednesday, one lawmaker presented a pair of bills that would ask voters whether they’d support a statewide sales tax if it meant lower property taxes.
Rep. Brad Barker, R-Luther, is sponsoring House Bills 841 and 842, which both received hearings in the House Taxation Committee on Wednesday.
Neither would actually implement a sales tax on its own, but together, Barker said they would give the Legislature direction about what the public wants.
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HB 842 would put a statutory referendum before voters in the November 2026 election, asking them whether the Legislature should have authority to enact a statewide sales tax of up to 4% and use the revenue to reduce the property taxes that fund public schools and universities. The referendum would say any sales tax “should minimize repeated taxation by taxing final goods and services” and exempt necessary purchases like housing, groceries, fuel and health care.
HB 841 is a constitutional amendment that would go on the ballot at the same time. It would propose adding language to the Montana Constitution, guaranteeing that any revenue from a sales tax could only be used to pay down property taxes unless three-quarters of both houses of the Legislature voted to appropriate it to something else.
Montana voters rejected statewide sales taxes in 1971 and 1993, but Barker says Montana’s economy has changed significantly since then, and it makes sense for the public to weigh in on whether the state’s tax system should change to go along with it.
“We've lost mills, we've lost mines, we've lost the revenue associated with that production and extraction of our natural resources,” he said during Wednesday’s hearing. “At the same time, we've seen a significant increase in the amount of tourism coming to this state.”
Barker said a 4% sales tax could raise $1.3 billion a year — enough, he estimated, to eliminate well over half of the current property taxes funding education in the state.
While the state constitution already allows for the implementation of a sales tax, Barker said he didn’t believe leaders could justify the tax to the public without adding a guarantee that the money would go to property tax relief.
During the hearing, those supporting the bills said a sales tax could be another tool to help relieve the property tax burden, and that HB 841 in particular could help keep guardrails on it.
Ross Butcher, a Fergus County commissioner representing the Montana Association of Counties, spoke in favor of HB 841. He said MACo has been supportive of the idea of a general sales tax, but had concerns that the public would simply see it as adding taxes.
“The question is, how do we ensure that the that the local taxpayer isn't just getting taxed again?” he said. “And this defines a way of doing that.”
Those in opposition warned that a sales tax would have a bigger impact on lower-income Montanans and that it could make education funding more volatile in comparison to property taxes.
Amanda Curtis, president of the Montana Federation of Public Employees, said these bills were setting up a “false dichotomy” — pitting a sales tax and property taxes against each other as the only options for funding schools.
“I feel it really does put the voter in a very nasty position of loving their schools and wanting to fund them and feeling this terrible property tax burden and having to make this false choice,” she said. “We urge the committee to not put the voters in that position.”
Barker said he specifically chose not to put the details of a sales tax into the proposed ballot measure because it would have required dozens of pages of language. Instead, he said the Legislature could work out the specifics if voters indicated it was something they wanted.
“Think of this ballot initiative as a poll of the voters,” he said.
Barker argued the exemptions on necessary items would limit the impact a sales tax would have on people with lower incomes, and he said the Legislature could consider other ways to address those concerns when implementing the tax.
A constitutional amendment needs to get two-thirds support in the Legislature — 100 votes between the House and Senate — while a standard referendum just needs a majority in each chamber.
That means it will be a tougher task — and require bipartisan support — to get HB 841 onto the ballot. However, Barker said it would be hard to make the case to voters for a sales tax if the guarantees in HB 841 aren’t also on the table.
“I personally, and I think that most members of the legislature, would not support implementing a sales tax without the protections,” he told MTN after the hearing.
