Under Section 19-18-503, MCA, cities and towns are required to soundly fund disability and pension funds for firefighters. The fund is deemed soundly funded if either the assets in the fund are at least 0.21% but not more than 0.52% of total assessed value of taxable property, or at a value determined by an actuarial valuation. The cities and towns are allowed to levy an annual tax to keep the fund soundly funded under Section 19-18-504, MCA; however, that special tax levy is restricted by the mill caps in Section 15-10-420, MCA, of ½ of the average rate of inflation for the prior 3 years. The current funding requirement based upon a percentage of total assessed value of taxable property can result in requiring a municipality to have to increase taxes to an unrealistic, unnecessary and expensive amount in order to adequately fund a reserve for disability and pensions for firefighters. This was especially exacerbated by major changes during the 2015 Session in the property tax assessment laws that reduced taxable valuation but did not affect the total assessed value. These changes made the percentages of total assessed value arbitrary with no precise nexus to the actual liability exposure. In some cases municipalities were legally unable to levy an amount equal to 0.21% of total assessed value and to do so would unnecessarily overfund the disability and pension reserve. The Montana Department of Revenue is drafting legislation that would make the funding requirement for a disability and pension fund reserve be 3 to 5 times the actual liability. Using this formula would set the reserve fund at a realistic amount based upon liability of the fund.
MLCT will sponsor legislation that changes the funding requirement for disability and pension fund reserves to be a realistic multiplier of actual liability exposure.