Missoula city tax rates will fall this year, Mayor John Engen announced Wednesday.
A spike in property values, new development and annexed property provided the city with plenty of money to fund the budget, even with some additions from the original draft budget.
“We had the largest increase of newly taxable value that I’ve seen in my 14 years serving as mayor,” Engen told the Missoulian after making the announcement at a budget committee meeting. “We are able to fund everything in my preliminary budget plus a few additional items, not only without raising property taxes, but Missoula city taxpayers will end up paying about 5% less in taxes.”
While that sounds like great news to homeowners and other taxpayers, it’s not realistic to suggest residents will dole out less money.
Due to the spike in property values seen across the city, homeowners will likely still see an increase in their property tax bills, despite the city’s tax rate dropping by about 5%.
Additionally, the Open Space bonds voters approved last year, in addition to other voter approved bonds, will also add to the tax rate, making the total decrease in tax rate about 3.9%.
For context, total residential property value in Missoula County saw a 12.12% rise, according to the Montana Department of Revenue. That number includes new property built, not just increased value to existing residential property. This means the average increase in residential property values would be higher than that 12.12%. One residential assessment shared with the Missoulian showed an 18.5% increase.
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With property value growth outpacing the drop in tax rates, property tax bills will still rise for the vast majority of homeowners and commercial property owners. The only properties that have the potential to see a decrease in their tax bill are those with properties that stayed the same or lost value since the last assessment two years ago.
While the mayor heralded the increased tax base, he also wrote in a letter to the Missoula City Council there was more work to be done in lowering property taxes.
“While we’re reducing our [tax rate] this year, I still believe that new revenue, in the form of a tourist tax, makes sense for Missoula and Montana,” Engen wrote. “I’ll continue working with you, the Montana League of Cities and Towns, the Montana Infrastructure Coalition and any and all supporters to make such a local-option tourist tax a reality so Missoula residents’ property-tax burden is reduced.”
Total taxable property value in Missoula, which includes residential, commercial, industrial and personal business property, grew by 18.6%, according to numbers provided by Missoula City chief administrative officer Dale Bickell. Newly taxable property value in Missoula city limits grew by 334.9%, or a little over $8 million. While newly taxable properties generally refers to new construction and other developments, this huge increase stems at least in part from property the city annexed in the past year.
The growth in land mass of the city has meant more area for police, fire and road crews to service. That increased service area has led those departments to request growth in personnel to keep up. This year, the Missoula Police Department requested a total of six new patrol officers, in addition to multiple office staff positions. The streets division requested six new employees for road maintenance like plowing. In total, the mayor’s preliminary budget includes 18 new city employees.
In his letter to the council announcing the increased tax base, Mayor Engen said he would be adding a police office staff position, replace grant funding for the city’s Internet Crimes Against Children program that was lost, and will fund contracts with outside help for the city’s climate change and zero waste initiatives to his final budget proposal.