Montana State Legislature

Department of Revenue

1
Agency
Overview
2
Organizational
Chart
3
Historical
Overview
4
FY 2020
Deep Dive
5
Studies, Audits
& Legislation
6
Governor's
Budget
7
LFD
Budget Analysis
8
Agency
Materials

The Department of Revenue (DOR) administers state taxes except for gasoline and motor fuel taxes administered by the Department of Transportation, insurance taxes administered by the State Auditor, and video gaming tax administered by the Department of Justice. DOR administers and enforces Montana’s tax laws, appraises all property subject to state and local property taxes, administers the Montana Alcoholic Beverage Code, enforces the Montana Cigarette Sales Act, and administers abandoned property. The primary statutory references defining duties and responsibilities of DOR are found in 2-15-1301, MCA, 15-1- 201, MCA, and Title 15, MCA.

DOR collects and distributes revenue from and enforces regulations for 40 state taxes and fees through five divisions. It also regulates the sale and distribution of alcoholic beverages in Montana by buying, importing, storing, selling, and delivering liquors to agency liquor stores.

In addition, DOR:

Administers and enforces Montana’s tax laws
Appraises all property subject to state and local property taxation
Administers the Montana Alcoholic Beverage Code
Enforces the Montana Cigarette Sales Act
Administers abandoned property

Below is an organizational chart of the office, including full-time employee (FTE) numbers and the HB 2 general fund expenditures and the total expenditures from all funds. Unless otherwise noted, all phone extensions are preceded by (406) 444.

This report includes a series of charts that compare expenditure growth to the growth in the economy and growth in inflation adjusted for population. Montana statute, 17-8-106, MCA, recommends using growth in personal income for comparison purposes. Personal income is a measure for growth in the economy. Comparing growth allows financial planners to consider past and future demands in services or changes in revenues.

In general, all funds growth in total expenditures for the Department of Revenue has been lower than the rate of inflation adjusted for population.

The following list discusses in more detail the inflection points on the charts:

HB 9 from the May 2007 Special Session provided $0 million in general fund for a property tax refund of up to $400 of the 2006 Montana property taxes paid on principal residences;
Department of Revenue (DOR) provides revenue distributions to local governments including local assistance for oil and natural gas distributions. The largest component of oil and natural gas distributions is the oil production tax. In FY 2008 distributions for oil production tax increased $51.8 million from $97.9 million in FY 2007 to $149.7 million in FY 2008 due to increased activity in the Bakken oil fields. Subsequently these distributions have declined as oil production in Montana has declined;
Oil and natural gas production declined between FY 2014 and FY 2016. Oil production taxes distributed to local governments dropped from $96.7 million in FY 2014 to $63 million in FY 2015 and $39.2 million in FY 2016.
Liquor purchases and freight, licenses and excise taxes, and liquor licensing increase in total by $12 million in FY 2020

General Fund

The annual growth rate for general fund expenditures between FY 2002 and FY 2019 was 2.3%. About 70% of the general fund appropriation in the Department of Revenue is for entitlement share payments to local governments. HB 124, passed during the 2001 Legislative Session, revised laws governing local and state government revenue collection and allocation. The state would assume control of alcohol, vehicle, and gambling taxes as well as district court fees; in return, the state would reimburse local governments for the lost revenue in the form of an entitlement share payment and assume the costs associated with district courts and local welfare offices. In FY 2007, the passage of SB 146 created the Office of the Public Defender (OPD) and the state assumed control of district courts and local welfare office costs. As a result, local governments’ entitlement share payments were slightly decreased to account for the increased costs to the state.

State Special Revenue

State special revenues supports statutory appropriations for local assistance distributed to local and tribal governments including:

Beer, wine, tobacco, and cigarette taxes
Oil and natural gas production taxes
Metal mine taxes
Bentonite production taxes

Over 80% of the distribution is for oil production taxes in any given year.

It should be noted that between FY 2002 and FY 2009 this also included coal gross proceeds taxes. Changes in statute eliminated this distribution in subsequent years.

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Legislative Studies

Revenue Interim Committee work

Audit Reports

Performance Audit: Tax Increment Financing Administration and Impact - Feb 2018

Financial Compliance Audit - For the two fiscal years ended June 30, 2018

Performance Audit - Short-Term Lodging and Rental Vehicle Taxes - April 2020

Information Systems Audit - Data Security and Operational Performance of Montana's Computer-Assisted Mass Appraisal and Tax System (Orion) - April 2020

Legislation:

HB 2

HB 13

HB 191, Revise residential property tax credit for elderly

HB 190, Revise tax rate for golf courses