City presents FY 27 budget, proposes 3.8% tax increase

Martin Kidsdton

(Missoula Current) The administrative budget for Fiscal Year 2027 presented Wednesday by Missoula Mayor Andrea Davis seeks no new programs and only one new city employee, though it still results in a budget increase of roughly 3.8%.

Certified taxable values from the Montana Department of Revenue won't come in until August 3 and they could hold sway over the final budget, along with any amendments brought by members of City Council.

But for a home with an assessed value of $500,000, the city's proposed tax increase would rise around $72 a year, or $6 per month.

“The values of financial stability, responsible investment and responsible public service are at the core of our decision making, and these values are reflected in the prioritization of this budget,” Davis said. “While I wish we had no property tax increase at all, I'm committed to keeping these increases modest and predictable.”

The mayor's proposed budget is lean compared to budgets from years past. It continues the city's various housing initiatives, such as the Affordable Housing Trust Fund, and continues to invest in infrastructure.

Davis said her budget also advances her push to modernize the city's financial management system.

“This is a big deal,” she said. “The city has been using an antiquated financial management system for a long time. This will promote additional transparency and efficiencies and give us better tools for budgeting and forecasting.”

The administrative budget also makes improvements to the Public Works building on West Broadway, meeting what Davis described as the city's growing utility demand. The budget's only new employee adds an additional utility engineer, which would be funded by utility fees.

“The city has headwinds with the persistent issue of ongoing expenses exceeding our ongoing revenues,” Davis said. “This remains a high priority, to close this gap. High inflation continues to erode our purchasing power. Despite that, we have met the demands of the day with fair compensation for our employees.”

Broken down, the 3.8% budget increase would generate around $2.8 million in additional city revenue. Of that, 85% goes to wages while roughly 11% goes to baseline and operational costs, including increases in Northwestern Energy rates and software, among other things.

Davis said the city's investment in its employees is fundamental to service.

“We've been able to meet all of our union contracts, and we've been able to deliver a 3% cost-of-living increase for our non-union pay plan,” Davis said. “Because this budget is so tight, I'm proposing that all senior leadership and all elected officials have a pay freeze for Fiscal Year 27.”

The budget also adds $750,000 to the city's cash reserves, which remain below the targeted goal, and increases various impact fees, which represent around 9.3% of the city's general revenue, according to Davis.

It also takes a one-time remittance of $2.5 million from the Missoula Redevelopment Agency, which has been fundamental in advancing the city's housing goals and infrastructure needs.

Still, the city is fighting a structural deficit estimated at around $3.4 million. While members of City Council can still bring proposed amendments to the budget over the coming weeks, there's little appetite among some to add costs.

“Given the leanness of this budget, there's not a lot of ability to move money around,” said council member Stacey Anderson.

The city will adopt a final budget by the end of August. Missoula County will follow on Sept. 3.