Taxes on the average Missoula home will increase by about $40 this year under the final proposed budget from Mayor John Engen.
That increase on the average $268,000 home will maintain the level of current services provided by the city, but won’t fill many of the new requests put in by department heads, Engen told the City Council on Wednesday.
“Given the state of revenues, many legitimate and appropriate requests from staff to fund personnel and programs that enhance our services are not funded,” Engen said. “To the degree fiscal constraints allow us to address what’s important to the folks we serve, we’ve tried to do that in this budget.”
Among the items the mayor's proposal cut are:
• A new full-time technician to maintain the growing traffic signal network and other public works and public safety communications equipment.
• A new prosecutor in the city attorney’s office.
• A new municipal court administrative assistant.
The police chief’s plea for three new officers was pared to two, and the public works request for the equivalent of 4.25 full-time employees, including two to increase snowplowing services, was cut to 0.25.
Union salaries will increase for a total of $1.1 million as part of a negotiated agreement from four years ago, but those employees also will see an increase in their health care deductions from $470 to $750, and their premiums will increase by an amount unknown at this time.
In addition, $2.5 million from urban renewal districts, also known in some cases as Tax Increment Financing districts, will be pulled from those areas and redistributed this year. Missoula County Public Schools will receive about $1 million in revenue from the TIF coffers, while Missoula County and the City of Missoula each will receive about $750,000.
“The 3.85 percent overall increase I’m recommending in this budget meets the needs already noted, while addressing a couple of additional critical issues …” Engen said.
“So we’re relying on property taxpayers to fund the increases essential to maintaining services. And I’m relying on information gathered through our budget process that tells me that while citizens are concerned with property taxes, they are still willing to tolerate increases to meet service demands.”
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Overall, the total general fund in Missoula will increase by about $675,100, with a $433,000 increase in the fire department, $373,000 increase in police and $116,000 increase in parks and recreation. Those are offset by decreases in other departments. An additional $412,000 is being carried forward from the previous year’s budget.
The total general fund increase is 1.9 percent; the general fund budget was $58.1 million last year, and is proposed to be $58.8 million this year.
The proposed increase in property taxes comes on the heels of last year’s reappraisal cycle, in which some homes saw a 400 percent increase in their value, according to Chief Administrative Officer Dale Bickell. The new appraised values increased property taxes substantially.
Many of those homeowners appealed their 2018 tax bill, which Bickell said may have contributed to a $1.9 million drop in certified taxable value for newly taxable property this year. That drop, in turn, reduced the value of a mill slightly, which was opposite of what the city anticipated; they believed that due to all of the increased construction in Missoula, that the value of the property — and the mill — would increase.
The city council had months of budget meetings and presentations based on the anticipated increase in the value of the mill. When city officials learned of the lower mill value last week, they scrambled to figure out why the change occurred as well as how to deal with it in the nearly completed budget. If more mills are levied, which is anticipated, property owners pay more in taxes.
At this point the budget is increasing the number of mills levied over last year by 10.88 mills.
“In a nutshell, unusual expenses are driving this budget at the same time unusual revenues are tempering our ability to pay for much of what we’d like to do to improve services,” Engen said. “… Essentially we start with no new revenue.”
Bickell said they were expecting the $600,000 drop in taxable value because the city purchased the Mountain Water utility, which took it off of the tax rolls. Along with the appeals, the Department of Revenue recalculated the centrally assessed tax burden for railroads, pipelines, air carriers and the telecommunication industry, which also dropped the property values in Missoula County.
While the number of new building permits being issued has doubled since 2011 to about 400 in 2018, it still is far fewer than the 710 issued in 2005. In addition, most of those projects are located within the boundaries of the six Tax Increment Financing districts in Missoula. That means those improvements aren’t included in the taxable values, through which the value of a mill is calculated.
TIF districts usually are “blighted” areas where cities want to direct improvements. The base value of a TIF district is noted, and any increases in property values and subsequent taxes collected don’t go into the general fund; instead, the tax dollars go into a separate pot for investment back into the district until the district expires.
Bickell said a special provision in the TIF statutes allows the money to be distributed back to municipalities if the money is unencumbered within the district.