On Wednesday August 15, 2018 Mayor Engen presented his executive budget to the city council. The budget itself proposed a 3.85% tax increase. Here are some key takeaways and things to look at. First and foremost, we need to look at the special assessments on your property tax bills.
The park special district and the road special districts were created in 2010 and were $200,000 and $300,000, respectively. Yesterday, what was proposed was levying the park district at $2,056,723 and the road district at $4,289,935. These are ENORMOUS increases in just 8 short years. They are a tax added onto your property tax bills. So why would the city do this?
The state legislature sets a cap that restricts how much money cities can raise through property tax mill levies. The special assessments are NOT subject to these caps. This allows the city government more room to raise your taxes over and above the general tax cap.
However, let me also be clear that we are seeing a 10-mill reduction in the general tax this year and most of your tax increase is due to the drastic increases within the special districts. I was able to obtain the cap calculations from city staff and we are indeed nearly 19 mills below our cap. We are also taking a one-time remittance from the Missoula Redevelopment Agency which is funded by Tax Increment Financing. All in all, I think this is a net positive for our over-burdened property tax payers.
Tax increment Financing money raised within a specific geographic area that is above and beyond what the tax base was at the time it was created. This money cannot be spent for police, fire, schools etc. Instead it is used to pay for special projects within the district.
A prime example is the walking bridge over South Reserve Street. We were able to take a one-time remittance with a portion going to the county, to the schools, and some to our general fund. Instead of raising mill levy taxes which we could have done, the Mayor opted for the remittance. This “claws back” money paid by taxpayers in past years from MRA, so the city can spend it in FY2019.
The mayor originally wanted to add three new police officers but due to “low property valuations” he had to reduce that number to two. After speaking to our police officers on many occasions and listening to the citizens of the Westside neighborhood, I believe this is a reduction we should not make. So, I suggested that we take more of a remittance from TIF to pay for the additional officer. This idea is being studied by city staff and we will be voting on it next Wednesday.
In my opinion, there are three key things to watch for in future years. The first thing to look for is rising property valuations. If your property valuation rises you will be paying more money even if the city does not raise mills. If the pattern of the two-year valuation cycle holds, we will see a dramatic increase in residential and business appraisals in 2019. Second, we need to be cautious of special districts. Third, we must address the key issue which is city spending. If spending increases above what new development will fund, your taxes will increase.
In conclusion, we are hitting the taxpayers with another unacceptable tax increase. The city of Missoula does not have a revenue problem, we have a spending problem. I campaigned on better roads and lower taxes and was always asked how that was possible. The answer is simple, if we reduce our spending we will have more than enough to repair our roads and lower taxes. During our committee meeting on Wednesday I will be proposing cuts to our budget.
There are enormous numbers of folks being taxed out of Missoula as we speak, including many of my constituents who have reached out to me. The tax burden has become too heavy for those on a fixed income, single parents, young families, and many others to bear.
I believe we all want Missoula to be an egalitarian place where everyone can afford to live, but unfortunately, we are fast becoming a city for the elite. With every pothole we forgo to fund another park, with every acre of open space we maintain in leu of funding another police officer, with every dollar we overspend we are taxing people out of their homes and denying them basic city services.
We need to start budgeting the city like we all must budget our lives, by living within our means.
Jesse Ramos is a member of the Missoula City Council represented Ward 4.