MISSOULA — The Missoula City Council on Monday passed a 2025 budget that increases taxes by nearly 17%, more than half of which was approved by fire levy voters in June. Four of the 12 council members voted against the budget for various reasons, including concern about rising taxes, frustration with their ability to amend the budget and lack of information about the performance of city programs.

The increase will increase property taxes by $71.31 per $100,000 of assessed value, meaning owners of a $450,000 home – the median value in Missoula – will pay an additional $320.88 annually.

Mayor Andrea Davis’ first budget proposed a 5.84% increase, including grants to the general fund and street and park districts and a temporary two per thousand levy made possible by the June 2023 homelessness emergency declaration.

“We were very prudent with this mayor’s budget and this executive budget, knowing that the fire tax that voters passed funds very important things for our community,” Davis said during the meeting. “We wanted to be very cautious with what the mayor’s budget added on top of that.”

On Monday night, the council unanimously approved the one-time levy, which is expected to raise about $414,000 to fund the Johnson Street shelter. Missoula County will cover half of the $1.8 million shelter cost, and the city will cover the rest of its share with remaining American Rescue Plan Act funds, Davis said.

The city had previously funded the shelter with federal pandemic relief funds that expire next year. If the levy did not pass, Davis had planned to increase the general fund budget by two per thousand to cover the cost of the shelter, which would mean a permanent tax increase.

Council members Sandra Vasecka and Bob Campbell — who supported a failed proposal to cut funding for the Johnson Street homeless shelter during a workshop Monday afternoon — opposed the levy, even though they voted for it. A unanimous vote was required for the emergency levy to pass.

“I am not very happy with the decision I will make tonight because I had to choose the lesser of two bad decisions and two that I do not agree with,” Vasecka said. “I am always skeptical when the government says it is temporary or one-off, but I do not want this to be endless and to be raised in future budgets.”

The emergency tax is one of the few ways the city can raise more money as inflation and budget priorities exceed property tax revenue, Davis said. State law limits the amount the city can raise property taxes, leading to a “persistent structural imbalance,” she said.

Despite Missoula’s recent growth, taxable property from new construction and annexations does not contribute significantly to the tax base, said Dale Bickell, the city’s top administrative official, during a budget workshop on Aug. 7.

To address the budget problems, Davis asked departments to inventory programs and identify savings totaling $1 million citywide, she said. The city saved $700,000 by switching accident insurance carriers and another $500,000 through other cuts, Davis said.

“We have tried to make savings in the budget, even though we knew we had budget increases,” she said. “A lot of that is related to … our ongoing obligations related to staff salaries and other contracts. We know those costs are going to increase.”

The city is currently negotiating with the police officers’ union, which will likely result in a pay increase of more than $1 million, said Leigh Griffing, the city’s finance director.

The city’s general fund will receive a $1.3 million tax transfer from the Missoula Redevelopment Agency to help fund essential services, Davis said. The agency, which receives tax increment financing from Missoula’s urban renewal districts, will send a total of $4.5 million back to the city and other taxing districts in prorated amounts.

The city’s operating budget is approximately $163 million, with total expenses – including the Missoula Redevelopment Agency, the Parking Fee Commission, special improvement districts and utilities – totaling $216.7 million.

In recent months, departments submitted new requests totaling $19.5 million, of which $15.2 million was included in the mayor’s budget. That includes pay raises and other costs that are not new, such as the Johnson Street homeless shelter, but are not part of the base budget.

The new costs include $4.2 million from the 34-mill fire levy voters approved in June to hire 20 new firefighters, build a sixth fire station and permanently fund the mobile response team that responds to mental health calls.

The city also plans to spend $350,000 to enforce its “crisis camping” ordinance, which limits the time and location of camping on city property, plus $360,000 for cleanup.

The budget also includes major projects, such as $1.8 million to renovate the John Engen Local Government Building, $6 million to purchase 10 acres south of Southgate Mall for redevelopment, $9.8 million for the Scott Street Ravara housing project and $8 million to improve the compost facility.

The council approved a 5% increase in parks and recreation fees, a 7% increase in public works fees, and a 7% increase in business license, engineering, and land use and planning fees by a vote of 8-4. Kristen Jordan, Campbell, Vasecka, and Carlino opposed.

During the budget workshop meetings on 14 August and Monday afternoon, the Council considered 16 amendments, of which only one was adopted.

Council member Eric Melson’s proposal to add the railroad rest area capital improvement project to the city’s list of top 20 projects passed by an 8-2 vote, with council members Stacie Anderson and Gwen Jones opposing. The project will not be funded in 2025, but the amendment directs staff to look into funding, said public works director Jeremy Keene.

Mayor Davis said she considered input from City Council and the public in finalizing her executive budget after completing presentations from each department.

“We are all very aware of the general increase in property taxes and the impact on citizens and I assume that these two things together are the reason why not many amendments have been passed,” she said.

Council member Daniel Carlino said that while he welcomed the move to priority-based budgeting, he voted against the budget because the council did not participate sufficiently in the amendment process. Five members – Carlino, Jordan, Vasecka, Campbell and Melson – proposed amendments, and aside from Melson’s proposal, no amendment received more than five votes in favor.

“I cannot in good conscience vote for these tax increases and this budget if the legislature has not exercised the necessary flexibility and has not found ways to cut or add to the budget that work in the interests of the electorate,” he said.

Other council members disagreed with Carlino’s description of the amendment process. Council President Amber Sherrill said members provided feedback to the mayor after department presentations, reducing the need for adjustments during the amendment process. The council discussed the proposed changes in detail during its last two workshop meetings, she said.

Jordan said she did not receive enough information about city programs and their performance to vote for the budget and would like to use metrics to determine funding in the future.

Vasecka and Campbell voted against the budget because they were concerned about the impact the tax increases would have on citizens, especially those with low incomes.

“I cannot in good conscience agree to this budget given that we had the opportunity to make significant cuts and that it will have consequences for working families, retirees and older people in the city who are on welfare and can only live off their pensions,” Campbell said.

Several council members noted that changes to the property tax structure are needed at the state level to reduce the tax burden on residents and businesses.

“It’s also important to recognize that more and more responsibility has been given to local governments,” said Council Member Gwen Jones. “The federal and state funds that come into our coffers have been getting smaller and smaller, and yet we still have to deal with housing and affordable housing, homelessness and mental health. … So it gets harder and more stressful every year, but I’m voting for this budget because that’s how we keep our city running and working for all of us.”

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