In accordance with a memorandum from the Montana Department of Revenue dated May 10, 2011, the inflation factor for FY 2012 is 0.72%.

Per 15-10-420, MCA, “a governmental entity that is authorized to impose mills may impose a mill levy sufficient to generate the amount of property taxes actually assessed in the prior year plus one-half of the average rate of inflation for the prior 3 years.”

Additionally, the Department of Revenue shall, “calculate one-half of the average rate of inflation for the prior 3 years by using the consumer price index (CPI), U.S. city average, all urban consumers, using the 1982-84 base of 100, as published by the bureau of labor statistics of the United States department of labor.”

One-half the average rate of (compounding) inflation was determined by dividing the (U.S. All items, 1982-84=100 - non-seasonally adjusted) CPI for December 2010 (219.179) by the CPI for December 2007 (210.036), cubing the quotient, subtracting one, and multiplying the result by 50%.

One-half the average rate of inflation = (((CPI ₂₀₁₀ / CPI ₂₀₀₇) ^ (1/3)) – 1) * 50%

(((219.179 / 210.036) ^ (1/3)) – 1) * 50% = 0.72% 

If you have any other questions, please feel free to contact Jerome Patton, Economist with the Department of Revenue by way of email at JPatton(at)mt.gov or by phone at 406-444-2715.  (Posted 05/11/2011)

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