Martin Kidston

(Missoula Current) Missoula County on Thursday unveiled its preliminary budget and is proposing a 5.4% tax increase, or roughly $3.6 million in new revenue, much of which addresses wages, union contracts and inflation.

While the budget proposes a number of one-time expenses that aren't tax supported, it's also proposing a number of ongoing expenses supported by taxes, including $218,000 to continue improving the fairgrounds and $105,000 to maintain and operate of Marshal Mountain.

But Chris Lounsbury, the county's CAO, said the bulk of this year's budget increase is rooted in wages, union contracts and cost-of-living adjustments. The county continues to face “extreme pressure” around recruiting and keeping employees, he said.

“It's probably our biggest challenge, like it is with most employers in Missoula County,” said Lounsbury. “Those are some of the real budget concerns we're looking at.”

Earlier this year, Lounsbury said the sheriff's department was down as many as eight deputies. The detention center remains short 19 positions while the dispatch center is four employees short of staffing needs.

The county attorney's office is also short on staffing, as are other departments.

“We've had to reduce hours for the Clerk of District Court due to staffing concerns,” Lounsbury said. “We've had high turnover in Justice Court, and our Clerk and Recorders Office, as seen across other Missoula County departments.”

The county has attributed its struggle to keep employees to wages, which remain lower than the wages offered by competing agencies. In Missoula County, a probationary deputy starts at 8% less than the same position at the Missoula Police Department.

The higher the rank, the wider the disparity becomes, Lounsbury said. At the rank of lieutenant, an employee at the county earns 20% less than the same employee at the city. Other department comparisons show similar disparities in pay.

“We've had to make some significant changes to our rates of pay for law enforcement, detention and some of those other things,” Lounsbury said. “But we've tried to keep those costs as reasonable as we can.”

Nearly 85% of county employees are covered by a union and, as a result of collective bargaining, will see an increase of around 4%. Nonunion employees will see a 2.5% increase under the proposed budget, which is less than inflation, county officials said.

State tax structure complicates budgeting

As have city officials, county leaders point to the state's current tax structure and its heavy reliance on property taxes as being problematic.

The state's property assessment, conducted every two years, increased countywide assessed values by more than $6 million this year. The county's total taxable value also jumped from $298 million to $382 million.

While residential property increased by as much as 37% under the state's “equalization formula,” centrally assessed properties, which include railroads, pipelines and telecommunication – decreased by 10%. The state also cut the business equipment tax.

County Commissioner Josh Slotnick described the state's tax shift to residents as inherently unfair.

“If we want to see real change, we're going to need our Legislature to ask those other property tax valuations to pay their share and lighten the load on homeowners and renters,” said Slotnick. “Yes, the budget starts and stops with us, but the state writes the laws on tax policy. We've kept our revenue under the rate of inflation.”

County CFO Andrew Czorny added that while cities and counties are required under state law to cap the number of mills they levy based on various factors, the state is not required to do the same.

Nor did the Legislature heed warnings from the Department of Revenue regarding this year's large jump in appraised values and the impact it would have on property taxes. The Legislature had an opportunity to reduce property taxes but declined to do so. Instead, if offered property owners a $650 rebate, though the county didn't mention that on Thursday.

“They're jerking a lot of money out of here annually that goes to the state, and they're having counties make up the difference,” Czorny said. “Property tax reform is needed. They need to stop shifting the property tax burden to residential housing.”

Taxes going up

Residents in the City of Missoula will see a 9.7% tax increase this year as a result of the city's new budget. City residents will also see a 5.4% increase in county taxes while county residents who live outside of the city will see their county taxes increase by a little more.

Those who live in the city will pay an additional $67 in county taxes for every $100,000 in the assessed value of their property. Those who live in the county will pay an additional $82 for the same property.

Residents who have addressed the city and the county during the budgeting process called the annual tax increases untenable. And while the state writes the tax laws, the city and county should do more to hold down costs, even if that requires cutting some beloved programs, some have argued.

“Setting ourselves up for more expenses in the future is unconscionable,” said resident Mike Paterni. “In my view, it's important you focus on things that are within the reasonable focus of local government. I can't help but notice the county budget has increased substantially over the last five years.”

Others offered similar remarks on Thursday.

“What I'm asking you to do is cut some expenses,” said Keith Koprovica.