A tiff over the use of Tax Increment Financing dollars, and the city’s overall property taxes, lasted late into the evening Monday at the Missoula City Council meeting.
The debate was spurred in part by council member Jesse Ramos, who distributed a press release Friday asking people to come forward with their tales of Missoula’s tax burden overwhelming their incomes, and being “taxed out of Missoula.” The request came as the city considers raising property taxes by 3.85 percent and dipping into the Tax Increment Financing — or TIF — district funds to add an additional $750,000 to the $58 million budget.
“I think the TIF funds are totally out of control,” said Jerry Ballas, a former city council member and retired architect. “I’m taxed enough already … and am thinking of moving somewhere else.”
He said in 2012, he paid $3,181 in taxes and last year that increased to $4,276, a 34 percent increase. The proposed property tax increase this year would add about $40 to the tax bill of the median priced home in Missoula, which is $268,000.
“We are taxed too much money. I’m voting no on every single bond issue that’s coming up this year,” Ballas added.
Renee Mitchell, also a former council member, echoed his sentiments. She noted that she’s on a fixed income too, and is considering looking for a job in October to pay for the ever-increasing cost of living.
“Do I look like an ATM machine?” she asked the city council. “Do your job. Control expenses, use money wisely and don’t come asking for more every time you have a big finance item on your wish list.”
The problem arose about two weeks ago, when due to a variety of circumstances, the value of a “mill” actually decreased in Missoula. That surprised city staff and council members, who had anticipated the apparent construction boom would create an increase in the value of a mill. To offset the drop in value, city officials made a one-time request to the Missoula Redevelopment Agency, which manages the funds in the city’s six TIF districts.
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The TIF district funds are created when an area is designated as “blighted.” The baseline taxes in the district are noted and still distributed for citywide operations. But any increases in the taxes within the TIF district is put into a special fund and typically used only for projects within the district. The idea is that the TIF money will act as an incentive for increased development within the district, reinvigorating what previously had been a blighted area.
Many of the council members said that while they understand the concerns, the city’s budget is complicated and some noted that they appreciated being able to dip into the TIF fund this year.
Council member Stacie Anderson added that putting the blame for the city’s budget woes this year squarely on having the six TIF districts is misguided, and doesn’t tell the whole story of how they got into this situation. Lowered assessments to railroads, telecommunications, some air carriers and pipeline businesses also had an impact, as well as projects that only were partially finished — and so partially taxed — at the beginning of the year also played a role.
She added that there is “plenty of evidence to show revitalization of the town takes years to do” and they’re only starting to realize the value of the investment in the TIF districts.
“Plenty of cities’ downtowns are not viable and are dying and their property values are going down,” Anderson said. “So I don’t appreciate the narrative that it is one or the other.”
City council member John DiBari also noted that while people complained about their tax increases, they didn’t mention that the value of their homes also had increased. In particular, last year the state tacked on what might have been the first tax hike for many property owners in six years.
Ramos said he has some ideas on how the city may be able to lower this year’s budget, and plans to bring those thoughts to the Wednesday Committee of the Whole meeting, where creating the final budget will be discussed again. He noted that the TIF districts pulled in $8 million last year, and he’d like to pull more out of the fund this year to hire an additional police officer, on top of the two new ones already in the city’s Fiscal Year 2019 budget.
“We need to separate our needs from our wants,” Ramos said.