Mayor proposes 5.9% tax increase, or 11% when added to fire levy

Martin Kidston

(Missoula Current) Saying she inherited a budget deficit on Day One, Missoula Mayor Andrea Davis on Monday night unveiled her first proposed executive budget, one that still relies on dwindling ARPA funding but also includes cuts she described as “difficult” to make.

As proposed, the budget pours additional dollars into social services and the public safety net, but it also finds savings by taking from the city's primary tool to grow jobs and economic development at the Missoula Redevelopment Agency, and by changing the provider who handles the city's worker's compensation program.

Boiled down and Davis's budget calls for a tax increase of 5.96%, or 11.08% when added to the fire levy approved by voters at the request of the city in June. A home with an assessed value of $450,000 – roughly the median price – will see a city-tax increase of $307 a year if the budget is adopted as is.

That doesn't include any tax increase proposed by the county, the state or schools.

“Running for office, I knew how important this budget discussion was, knowing some of the challenges that we face as a community, where we have increasing debts and requirements for delivering core services, and a challenge with our revenue structure,” Davis said. “We're in a situation where I've inherited a very challenging budget structure. It's inheriting a budget deficit, quite frankly.”

The city has passed on tax increases to local residents in each of the last several years. In 2023, the City Council adopted a tax increase of roughly 9.7%, which included an “experimental weed program” and $6.7 million new revenue. The year before, it adopted a budget with a tax increase of nearly 12%.

The city has blamed the state for a “broken tax system,” and the current budget includes funding to lobby the legislature in hopes of achieving tax reform. This is the last year the city budget will include federal funding from the American Rescue Plan Act.

“This budget is really about meeting our most crucial needs and also continuing to innovate on our strategic plan,” Davis said. “This is moving a large ship. We are moving a ship here, to get to a place where we're doing more of a priority-based budget.”

More Social Spending

A number of the mayor's proposed investments lie within social programs, including those voters declined to fund in a levy request in 2022. Among them, Davis's budget includes $1.8 million to continue funding the Johnson Street Shelter, and spending around $700,000 to deal with trash, needles and garbage services for the homeless population.

Voters this June did approve the fire levy, giving the city $4.2 million for protective services. That included hiring a new fire company, building a new fire station and equipping it, and funding the Mobile Support Team.

But despite the spending increases, Davis said she made difficult cuts to other programs.

“I didn't approve some things,” she said. “An example is in our human resource department. It's an area in which there's a request for a full-time employee which I didn't approve in their budget. It's an example of the hard decisions we had to make moving forward to keep our tax increase as low as possible.”

Davis's proposed budget also includes funding to decommission a number of dams in the Rattlesnake Wilderness, to make $8 million in improvements to the city's compost facility, and to add more solar power to city facilities.

It also includes $1.8 million for the restoration of the John Engen Local Government Building – which the county is also contributing to – and to carry out a number of road and infrastructure projects.

Davis said she pledged to focus on next year's budget immediately to address several outstanding structural issues. Among them, the city will work with its lobbying firm to look at state taxation, local government revenue reform, and assessing “community-based organization funding.”

The county also has proposed a tax increase with its FY 25 budget, though it has pledged to keep those increases under the rate of inflation, or roughly 3.4%. However, it may ask voters to levy more mills for road and bridge maintenance.

Davis said inflation was posing challenges to the city's finances.