Missoula residents pay lower taxes, per capita, to the city than people in Bozeman, Helena and Kalispell, and slightly more than taxpayers in Billings and Great Falls, according to the city’s Finance Department.
Jessica Miller, the city’s citizen services manager, gave a presentation recently on the city’s taxes to a Citizens' Academy, part of a series to educate people on city issues. It was organized by Missoula City Council members Heather Harp and Gwen Jones. The event was recorded by Missoula Community Access Television and reviewed by the Missoulian.
“Despite all the headlines you’ve seen in the paper and various other news media that Missoula has the highest property taxes, what a lot of those folks are commenting on is the number of mills that we assess,” Miller told the crowd. “That can be kind of misleading.”
The number of mills Missoula assesses is higher than every city in Montana except Bozeman, but Missoula’s special district assessments are smaller than every larger city in the state. So, in total, Missoula collects $479 per person in tax revenue compared to $661 in Bozeman, $605 in Kalispell and $512 in Helena. Billings collects $451 per capita, and Great Falls collects $465.
“Our road and park district are comparatively small compared to other towns in Montana,” Miller said. “They’ve got a lot more special districts. They have a larger percentage of their budgets in their districts.”
From fiscal years 2008 to 2017, city mills paid by Missoulians have gone from 212 to 286. The total mills from all jurisdictions — including local schools, the county (including Fort Missoula and Open Space bonds), state schools and special districts — have gone up from 735 to 904 in that time period. That is for people who are in the Missoula County School District and inside city limits. In fiscal year 2019, the mill rate in that area was roughly 923.
As Missoulian reporter Eve Byron explained last year, a mill is a tax rate that is applied to the assessed value of a property. One mill equals 1/1,000th of the taxable value of all the property in a community, so one mill will generate $1 for each $1,000 in taxable value.
If your property has a taxable value of $2,000, and you’re assessed a 923-mill tax rate, you’ll pay $1,846 in taxes per year. Special assessments, such as road and park districts and open space bonds maintenance mill levies, are in addition to that.
The taxable value of a home is determined by the Montana Department of Revenue, which calculates the amount based on its assessment of a property’s market value. That's often much different (usually lower) than the hypothetical price a home could get in a hot seller’s market in Missoula if it was listed for sale. The state will be sending out property assessments in June, and there is a 30-day period in which property owners can protest their assessment.
Meanwhile, the percentage of the city’s tax base that comes from residential property taxes climbed from 42% in 1999 to 60% last year, due in large part to the state Legislature cutting taxes on commercial property and business equipment taxes. In the same time period, the taxes on commercial property fell from 37% to 30%, and the taxes on business equipment fell from 8.4% to 2%, according to Miller.
“Residential property owners are starting to see a little bit more of a property tax increase over the last couple of decades,” Miller said. “And the reasons for that are changes in the overall tax base. Some of our industrial has gone away; some of those industries we used to have, have kind of disappeared."
She said the loss of those industries was combined by a shift at the state level to lower property taxes on businesses.
"And in addition to that, the state has shifted some of those burdens towards residential properties, so they’ve reduced the amount of business income and equipment tax and personal taxes and stuff like that," Miller explained. "So you can see over the last couple of decades residential owners are paying a higher percentage of property taxes.”
Prior to the Great Recession, Miller said the City of Missoula saw $5 million in new tax revenue every year, on average, due to new construction.
“Since the Recession, our four-year average is just under $2 million a year, so we are getting $3 million less in new revenue than before the Recession,” she said. “So as our costs go up, some of that new revenue we were expecting is not coming in even though there’s new construction around town everywhere.”
In the last fiscal year, the city had about $165 million in revenues and about $170 million in expenditures because some money was carried over from the previous year.
Public safety including fire and police services is the largest portion of the budget at about 20 percent, followed by public works at 17 percent. The city’s general fund had about $56 million in revenues in fiscal year 2018, with 57 percent of that coming from taxes and assessments.
The largest portion of the city’s general fund expenditures, about 30 percent, is for police and criminal justice, followed by the fire department at 23 percent, administrative services at 14 percent and the City Council and mayor’s office at 1.62 percent.
One person in the audience wanted to know if the city’s Urban Renewal Districts pay higher or lower property taxes than everyone else. In those districts, all the new property taxes generated since the day the districts were formed is administered by the Missoula Redevelopment Agency. That money goes back into those districts in the form of Tax Increment Financing and not into the general fund.
The city’s chief administrative officer, Dale Bickell, explained that everyone pays the same.
“Personal property pays the same in an Urban Renewal District,” he said.
Most numbers in this story have been rounded to the nearest full number for simplicity's sake.