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A result of growth, city and county of Missoula see increase in newly taxable property

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Posted at 9:43 AM, Aug 09, 2021
and last updated 2021-08-09 11:43:10-04

MISSOULA — Newly taxable property as a result of new construction could help pad the city and county of Missoula’s Fiscal Year ’22 budgets, which are on track for adoption later this month.

Officials from both sides of Pine Street believe the figures have returned to pre-recession levels, which bodes well after a years-long slowdown. Growth is back on track, plans are in place, and Missoula continues its transition to a small metropolitan area.

Newly taxable property helps expand the tax base to fund services.

“The short version, apart from the outlier year when we did that large annexation, we’re back at pre- Great Recession numbers,” said Missoula Mayor John Engen. “We had good growth both inside and outside urban renewal districts.”

The city’s newly taxable property increased by around $5 million this year, according to early figures. An increase in newly taxable property and reappraisals conducted by the state – combined with one-time funding from the American Rescue Plan – may bode well for this year’s budgeting cycle.

The county saw its newly taxable property increase by about $6 million this year, according to county CAO Chris Lounsbury, with $1 million taking place outside city limits.

The county’s previous mill value was $248,456, though it increased to $275,805 this year.

“What that means is the county will be looking to hold our number of mills levied flat, while still covering the costs of increased services, as the increased value of the mill will be used to cover these costs,” Lounsbury explained.

While the city and county saw newly taxable property increase, it doesn’t necessarily correlate to the amount of revenue available for budgeting, Lounsbury added.

“These are properties that previously were not paying taxes, not the amount of money the county will receive from those properties, as each property pays a portion of its value based on the number of mills levied,” he said. “Of that $6 million, about $1 million of that was outside the city limits.”

Each year, the city and county budgets hinge on the figures released by the state, and the numbers have in the past come in lower than officials had expected. But this year they’re strong, though officials still believe the state should take a closer look at revamping the tax system.

Local governments, they maintain, rely too heavily on property taxes. Few other tools are available to fund local services.

“It’s infuriating that our tourists are outnumbering us 10-1 and don’t pay for any of the services they enjoy. And we have renters who don’t make a lot of money who are covering the cost of roads for fairly wealthy people to enjoy on their vacation,” said Commissioner Josh Slotnick. “We have nothing but the state Legislature to thank for it.”

Lounsbury agreed. “Property taxes as a sole form of funding local government is a broken model.”

The City Council will discuss the FY22 executive budget this Wednesday at 1:30 p.m. while the county will unveil its preliminary budget on Wednesday at 2 p.m. Both governments must adopt their budget this month in accordance with state law.