Missoula County approves 4.2% property tax increase

MISSOULA — The Missoula County commissioners Thursday passed a 2025 budget with a 4.2% property tax increase over last year, higher than anticipated because the county saw lower-than-expected growth in its taxable value.  

Inside city limits, owners of a $300,000 home will pay an additional $30.45 per year and owners of a $600,000 home will pay $60.90. County residents outside Missoula will pay an additional $38.61 on a $300,000 home and $77.23 on a $600,000 home. The county-only mills pay for county roads, the health department and animal control. 

“I live in the city, my taxes will be higher than if I was residing in a similarly priced home outside city limits because I’m paying for additional city services,” said Commissioner Dave Strohmaier. “So while it may look like more, it’s less.” 

Missoula County plans to spend about $256.8 million and generate $282.9 million in revenue. The revenue is higher in part because the county will be reimbursed in fiscal year 2025 for 2024 expenses, said Andrew Czorny, the county’s chief financial officer. 

One-time costs not paid by tax increases include $909,800 for the Johnson Street homeless shelter using a tax remittance from the Missoula Redevelopment Agency; $400,000 in stormwater upgrades at the Missoula Development Park; and $150,000 to upgrade the security entrance at the courthouse. 

Property tax expenses went up from about $70.6 million to $73.6 million. That includes a $1.8 million increase to the county’s contribution to the Sheriff’s Retirement System required by the state, Lounsbury said. 

Other new expenses include funding for the community justice crime victim advocate program, which is typically funded by a grant; a new community programs grant staff member; and money for DUI and domestic violence treatment courts.

The county finance staff found about $2 million in savings and worked with departments to keep new requests to a minimum, Lounsbury said. 

The county originally aimed to increase taxes by 3.4%, the average rate of inflation, but fell short because it didn’t see expected growth in the mill value or new construction, Lounsbury told Montana Free Press. 

Certified valuations provided by the Montana Department of Revenue are used to calculate property taxes that fund local governments, including the county.    

The county’s overall mill value went up by 0.8%, significantly less than the 1.5% to 2.5% growth usually seen in non-reappraisal years, Lounsbury said. The smaller increase “strikes us as odd” because the city of Missoula’s mill value went up by about 2%, he said.   

Since Missoula County only has one incorporated city, the city’s growth is also accredited to the county, Lounsbury said. But the county didn’t see the same proportional growth, even though it has a robust housing and commercial development market, he said. 

Not including the city, the county’s taxable value decreased 0.3%, Czorny said during the Thursday meeting. The decrease may have been caused by the annexation of some property into city limits, which doesn’t fully explain the minimal growth in countywide value, Lounsbury said. 

The numbers “defy logic,” Commissioner Josh Slotnick said. 

“It seems strange to me that this is a very, very small increase in taxable value,” he said. “When you go out in the world, it feels like every piece of real estate is soaring in value at a rate more than 0.8%.” 

The county also saw values decrease in a few of its Targeted Economic Development Districts, rather than the bump it expected, Lounsbury said. 

Some new construction in the county, including the Amazon facility near the Wye, doesn’t seem to be reflected in the county’s newly taxable value, Lounsbury said. 

The DOR told Missoula County it didn’t have the same problem as Gallatin County, where appraisers were overwhelmed by tax appeals and unable to account for a lot of new construction, Lounsbury said. 

“But we’re having a hard time ground-truthing that, for lack of a better term,” he said.   

Montana’s growth has added pressure on DOR offices working within tight deadlines, giving little time for the local taxing jurisdictions to dig into valuations provided by the state in early August before budgets are due at the beginning of September, Lounsbury said. 

Lounsbury said the state needs a uniform approach to the yearly valuation process to provide predictability for the DOR, local governments and taxpayers. 

Commissioners Slotnick and Strohmaier said they hope to see property tax reform from the Legislature during its upcoming session. 

“If that happens, all of this will be greatly improved,” Slotnick said. “I look forward to the state addressing this. I’m cautiously optimistic they’ll make some gains.” 

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