The City of Missoula kicked off the annual rite of adopting a new fiscal year budget on Wednesday with an overview of mayoral priorities that range from housing to infrastructure.
But city officials cautioned that this year’s budget will face a variety of headwinds including inflationary costs, retention of employees and a structural imbalance in the budget itself.
“Inflation is a story you’ll hear from all of us, as well as hiring and staffing. Those issues will present some headwinds for the city as we develop our budget,” said Eric Hallstrom, the city’s chief operating officer. “The choices that have been made to hold the line on taxes throughout the pandemic continues to exacerbate as we see some of those pressures around structural imbalance.”
The city last year saw its FY22 budget padded by an influx of federal funding tied to the American Rescue Plan Act. The city split its $14.3 million share of funds over two fiscal years and, in the first year, it applied that revenue to a number of needs.
Last year’s budgetary allocations included $1.1 million to grow the Mobile Support Team, $2.7 million was placed into the Affordable Housing Trust Fund, and $78,000 went for an after-school program. Other allocations included a daycare program, veterans housing, sheltering the homeless and other services the city described as “critical community challenges.”
Without new revenue, some of those programs propped up by the federal infusion of cash could be in jeopardy unless the city diverts funding from another source or raises taxes on property owners.
“Looking ahead, the structural imbalance is in part because we’ve been able to use one-time funding to defer choices about service levels that would have been hard choices in the absence of one-time funding,” said Hallstrom. “That will not be sufficient to address our structural imbalance. We’ll look at opportunities where those funds will be deployed.”
Hallstrom added that the city won’t likely launch any new programs this budgeting season. What’s left of the ARPA funding will be directed toward one-time projects while the city looks for ways to keep some programs afloat.
“We’ve had a lot of successes and want to continue programs and activities that have been successful today,” said Hallstrom. “We’ll look at ways to support those successful programs, but we’ll have less capacity to look at the introduction of new programming.”
While the budget hasn’t taken shape, it will be crafted on four pillars that include organizational excellence, access to quality housing, investments in safety and wellness, and investments in the built environment, such as infrastructure.
During Wednesday’s unveiling, the city hit on a number of challenges achieved in the current fiscal budget, including progress on the affordable housing front and the lead-in to the heavy lift of reforming city building and zoning codes.
It also made strides on police training and developing a strategic plan for the department. It expanded the Mobile Support Team, created more winter shelter, and tipped up an authorized camping site for the homeless.
Some of those programs will require “increased and permanent funding,” according to this year’s budget priorities. The Montana Department of Revenue will release final tax valuations in August, which also carries sway over the budget’s final outcome.
“We’ll have the final numbers to work with, and final budget will be presented to us approximately the second week in August,” said council member Gwen Jones.