Itemized property tax bills were mailed out to Missoula County residents last month, just one week before ballots were due back for the municipal election.
Rising home values, expanding city and county services, and a statewide tax structure weighted heavily on the backs of local property owners — these were clearly among Missoula voters’ top concerns, and those concerns were reflected in the positions shared by recent Missoula City Council candidates.
The one point of agreement seems to be that the current system is not sustainable. Something needs to be done.
So it was encouraging to see a contingent of city councilors and state legislators travel to Helena last week, after the election dust had all but settled, to carry Missoulians’ concerns forward and lobby for change. It’s not a moment too soon to begin the difficult discussion about how best to pay for various government services.
A truly meaningful discussion should start with everything on the table. This means considering a local option sales tax, certainly, but it also means taking a hard look at other revenue-generating tools — such as tax increment financing.
Missoula taxpayers can prepare for these debates by studying their current tax bills, which are readily available online (www.missoulataxes.us) along with a detailed breakdown and handy pie chart.
It’s instructive to see, for instance, that for most taxpayers in the city, school taxes make up the bulk of the property tax bill. Local schools account for roughly 35% of the total and state schools make up another 10%. The city portion is the next-largest chunk, at about 30%, and county taxes account for another 20%. Special districts — such as for soil conservation, urban transportation and neighborhood parks — make up the remaining 5%.
That’s only a general breakdown, and it will vary from one homeowner to the next depending on whether a particular property is located within certain districts. But it provides a good starting point for any focused suggestions about what city and county budget-makers should be doing differently. After all, some of Missoula’s biggest expenses are due to voter-approved levies.
Nevertheless, in recent years Missoula residents and elected leaders alike have been pointing out with increasing urgency that average property taxes are rising too fast while average wages lag far behind. Booming development has spurred new construction and added to the overall tax base, but resulting tax revenues are then set aside for future projects in designated urban renewal districts.
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One proposed solution, to amend state law to allow municipalities like Missoula to collect a sales tax — was shot down in the legislative session earlier this year. But legislators are meeting again, and Missoula leaders are pushing a key committee to take up their cause and provide some relief to local communities.
State law currently allows smaller “resort towns” to collect a small sales tax — up to 3% at most — to help maintain infrastructure and services heavily used by visiting tourists, who don’t pay property taxes.
Last week, Missoula City Councilor Gwen Jones and Councilor-elect Amber Sherrill asked the Legislature’s bipartisan Interim Revenue Committee to allow other communities to adopt a local option sales tax as well. Former City Council member and current Rep. Marilyn Marler noted that a working group agreed a statewide sales tax would provide more revenue diversity and ultimately be more effective. However, it’s not likely to make much headway in a Legislature that’s historically been hostile to any sales tax proposals.
Missoula Mayor John Engen and other council members, as well as legislators representing the Missoula area, have argued in the past that a locally limited, carefully targeted sales tax is a sound way to take some of the burden off the shoulders of property owners — and may actually have a chance of gaining enough legislative to approval to pass. Then, communities that want to try the local option would have that opportunity, while others that didn’t like the idea wouldn’t be forced to go along with it.
Meanwhile in Missoula, others have argued that the city should provide tax relief by cutting spending, not raising more revenue. They are right to note that nearly every budget likely has some fat, or even some muscle, that ought to be considered for the chopping block. But after looking closely at an itemized tax bill, it’s clear that such trimming would not add up to substantially reduced taxes.
Further, a lot of these little costs represent smart planning that saves Missoula taxpayers a lot more money down the road. Consider, for example, this past week Missoula’s Public Works Committee heard a proposal to raise the stormwater utility rate for residential properties from about 75 cents a month to $4.21 a month. Other Montana cities, from Bozeman to Kalispell, already pay higher rates than those proposed for Missoula, according to consultants who spoke at the committee meeting.
The increase would allow the city to meet federal water quality standards and keep up with maintenance demands, which is why the utility was created in the first place about three years ago. The money not only keeps local water supplies healthy, it helps keeps rates low for homeowners with flood insurance. And if Missoula fails to meet federal standards, it could be forced to pay substantial fines.
On the other hand, the costs and benefits of TIF are often a lot more murky, especially for multi-million-dollar projects in areas no one would consider “blighted.” City leaders, working with the experts are the Missoula Redevelopment Agency, must do a better job parsing these projects to minimize the public costs and better explain the public benefits. Otherwise, they can plan on hearing more public outcry — and less support for any kind of new taxes.