Trego's Mountain Ear

I’ve been looking at Trego School and how the school is funded. The state school levy is 95 mills. Then there’s a 6 mill levy for the university system. County-wide education gets another 23.7 mills. The high school gets 22.42 mills – and Trego school levies 40.87 mills.

The local board has input into 22 percent of the school taxes our residents pay. True, Trego has a single representative on the high school board (so does Fortine), but that board consists of the five member Eureka elementary board. Not complaining, mind you – just pointing out that most of our school taxes could be described as taxation without representation.

In 2014, Trego’s Real Property was assessed at 56 million dollars. The 2023 assessment is 140 million. The 2023 value is 2.5 times the 2014 value. I’ve seen a lot of comments about the rising cost of rent in Lincoln County – and most attribute it, without math, to the rising property values.

Incidentally, the Bureau of Labor Statistics calculator shows the change due to inflation (from October 2014 to October 2023) at 130 – just based on inflation, what cost one dollar back in 2014 costs $1.30 in 2023. It’s a good argument that low cost housing has disappeared from our area. If we take a hypothetical $500 rental from 2014 and adjust for inflation, we get $650. If we adjust for market value (multiply by 2.5), we get $1250.

It’s been quite a while since a realtor gave me the quick way to value property: take the monthly rent, and multiply by 100. I suppose you could work it backwards – take the market value and divide by 100 to determine the rent. Regardless, rent should be 1% of the property value.

Using that one percent rule of thumb, that $500 rental had a market value of $50,000. Applying the same to 2023 and the $1250 rent, we see a home worth $125,000. The same general math works for funding the school – except in Trego, a large amount of the tax base is railroad . . . carried on the roll as “Centrally Assessed.” In 2014, that category was roughly 20 million. In 2023, it’s 28.6 million. While privately owned property went up 250%, the “Centrally Assessed” values went up 144% – a lot closer to the inflation numbers I get from the BLS.

Simply enough, as real property values have increased, the share of the tax burden that was once on Burlington Northern has shifted more to the small private landowner. As the tax bill on real property owners has gone up 250%, Trego School’s tax-based budget has increased by 156%. The school’s receipts aren’t keeping up with the tax increases.

Back in 1965 and 1966 Trego’s school board – Dad, Yolanda Nordahl, and Earl Meier – were happy with the results they had achieved. A new school building, and with the railroad relocation, a tax base that could support it in style for years. Trego was in its boomtown phase – the construction jobs brought new housing, and when the construction ended that led to artificially low rents for a generation. A new state constitution in 1972 resulted in a Supreme Court ruling that sends the lion’s share of the district’s school taxes to Helena for redistribution. The trendline is the same for LCHS, though the specific numbers are a bit different.

Trego continues to have the lowest tax rates – but the largest percentage of our taxes have been removed from local control.

My most recent tax bill was for 305 mills – and the equalization ruling will bring that past 320. When mills reach 1000, taxes become equal to taxable value. The charts show that taxable value has varied from 1.77% in 2014 to 1.22% in 2023 (of market value).

This only seems like a new situation for us – I recall an old guy in Libby who had built one of the first homes on Bighorn Terrace while he worked at the mill. Then, as a retiree and on a fixed income, he had to face an uncompromising equation – taxes and other fixed expenses were increasing far faster than his sawmill retirement and social security. He came by the Extension office asking me to check his math. I checked it. He was correct. He put the place up for sale and moved to Chester. Today, I typed in “Bighorn Terrace, Libby, MT” and saw two places advertised- one for $819,000 and one for $745,000. That 1% rule of thumb would put those houses renting for $7,500 to $8,000 a month. Bighorn Terrace and river frontage is still at a premium – and Chester remains more affordable.