Hess releases FY24 executive budget, details funding priorities

Martin Kidston

(Missoula Current) Missoula Mayor Jordan Hess on Wednesday released his executive budget for the next fiscal year, one that invests heavily into social services, climate change and equity.

It also places $5 million into the Affordable Housing Trust Fund through the sale of city-owned properties, and it invests $11.5 million to continue fixing the city's water system.

In his first budget presentation as mayor, Hess maintained his criticism of the state's tax system and continued his call for reforms, saying municipal governments are finding it more and more difficult to fund vital programs.

The result has and will continue to place a greater burden on taxpayers, he said.

“Our property tax system in the state of Montana is fundamentally broken,” Hess said. “Our property values are soaring and we have nearly 4 million tourists annually. Our property tax system is based on an economy that doesn't exist anymore. As a result, we will continue to face fiscal challenges.”

While the city made strides last year in correcting what former Mayor John Engen described as a structural imbalance, this year's budget faces similar challenges, Hess said.

In Montana, general fund property taxes levied by local governments are capped by state law, so they can't grow any more than half the rate of inflation, plus the value of new construction. The value of new construction won't be known until August.

“Despite significant headway last year, our ongoing expenses continue to exceed our ongoing revenues,” Hess said. “Just like household budgets, our budget is squeezed when prices increase for things we have to buy. Unless or until we have more diversified sources of revenue, cities and counties around the state will struggle to fully fund local government, and this funding will be heavily dependent on property taxes.”

What's in this year's proposed budget?

In outlining his budget priorities, Hess said they adhere to the city's strategic plan, which places a heavy emphasis on climate, equity, housing and economic growth.

Boil it down and funding another year-round homeless shelter tops Hess' list.

“My top priority remains opening the Johnson Street shelter. It also remains the highest priority for our non-profit partners,” Hess said.

The city will partner with the county to cover the Johnson Street shelter's $1.7 million annual operating cost. The budget also maintains funding for the Crisis Intervention Team at $313,000 while the Mobile Support Team will be funded at $1.3 million.

Hess said the budget also includes a 3.5% cost of living increase for non-union city employees while negotiations continue with the police and fire unions. Wages there remain below the market average and must be addressed, Hess said.

“We anticipate depositing nearly $5 million into the Affordable Housing Trust Fund through the sale of the former Sleepy Inn site on West Broadway and the Riverfront Triangle,” Hess said, adding that the sale of both properties are expected to close this year. “This investment is over 50 times the minimum required by ordinance.”

Hess also looks to continue the city's lobbying efforts at the Legislature, particularly around tax reform, and to fund additional work to address the impacts of climate change.

That includes a program intended to boost job training in partnership with the National League of Cities and the U.S. Department of Labor.

“It'll develop a pipeline for clean energy and infrastructure workforce development in Missoula with an end goal of providing good jobs that pay well for disadvantaged members of our community,” Hess said.

State tax valuations uncertain

The state doesn't release the newly calculated tax values until early August, leaving the city and county's annual budget subject to change. In some years, the state's revenue figures have come in higher than anticipated while in other years they've been lower.

Both have impacts on the city budget and implications on any tax increase. The same holds true at the county.

“We have to figure out how all the pieces fit together,” said City Council President Gwen Jones. “But this helps start the conversation.”

The budget also looks toward growth and development by funding $425,000 in the city's efforts on code reform. Once finished, the reforms will see the city's codes match its growth policy, which is expected to streamline the construction of housing.

Infrastructure also plays into the city's housing efforts, and the Missoula Redevelopment Agency will invest $7.7 million into sidewalks, water and other transportation projects.

“Many of these goals will take years to implement, but this budget establishes the foundation for achieving these goals in the coming years and sets us up to take advantage of opportunities as they arise,” Hess said.