City officials in Great Falls on Tuesday revealed a $183 million draft budget proposal for the city’s 2027 finances, a key step in the process for city commissioners tasked with finalizing the budget over the next month.
Cities wait every year for the Montana Department of Revenue to release updated property values that dictate how much tax revenue cities can raise from homes and businesses. But this year presents more unknowns, Great Falls officials said, because new laws passed during the 2025 Legislature significantly changed how properties are taxed.
“We actually pushed the budget process back so we could see what the Department of Revenue would provide us,” Great Falls City Manager Greg Doyon said at Tuesday’s commission meeting, noting the “uncertainty” created by last year’s legislation.
In addition, Great Falls will dip more deeply into its general fund reserves to cover a persistent budget gap — a practice that Doyon warned will need to end quickly.
Tuesday’s budget meeting was a preliminary step, and there will be more opportunities for public input over the next month. Here’s what you need to know about the current proposal.
#1: New legislation has delayed budget planning
Great Falls officials are waiting a bit longer than usual to anticipate tax revenues because changes to the property tax structure have created many unknowns.
That includes Senate Bill 117, which changed how cities could raise property taxes without voter approval to keep up with inflation. The bill also changed how much revenue cities could collect from new properties. Previously, cities reaped all of that new revenue. SB 117 introduced a framework to collect portions of that “newly taxable” property based on certain scenarios.
While local governments have been planning budgets for months, SB 117 took effect little more than a week ago.
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Regional projects in various stages include large residential developments, a major commercial center, a growing higher education sector and a massive upgrade to Malmstrom’s missile field, all of which suggest that the long-awaited momentum is building.
“SB 117, frankly, just went into effect on July 1,” Jennifer Olson, executive of the Montana League of Cities and Towns, told MTFP in an interview this week. “So when you combine the work that the Legislature did and put it into the timeframe, July 1, 2026, was an extraordinarily important day for local governments.”
In addition, two bills from the 2025 legislative session changed how residential properties are taxed. The so-called “second-home tax” bills had a tiered implementation period, with the 2027 fiscal year marking the second phase.
All those changes are calculated at the state revenue department, so local officials are waiting to see what the impact will be. The piece with the biggest unknowns — newly taxable revenue — can represent hundreds of thousands of dollars, according to Great Falls officials. But Doyon told Montana Free Press that, because of the caps on newly taxable values, he fears the net result could be a reduction.
“We just expect that there’s going to be less revenues,” he said.
#2: Notable developments won’t translate into tax revenue for years
Great Falls is poised for a growth spurt amid announcements of major development deals. Janicki Industries, the Air Force, the Little Shell Tribe and others have significant projects in the works.
But that doesn’t mean the city can cash in right away on fresh tax revenue — even after projects are completed.
“There’s a lag time for when it actually hits that tax rolls from when it’s actually completed,” city Finance Director Melissa Kinzler told commissioners Tuesday.
It could be at least five years until local governments start seeing revenue boosts if the current promises of growth reach fruition, Doyon said. In the meantime, officials have tried to prepare the city’s infrastructure for growth without pulling from reserve funds. To fund infrastructure improvements, the city created a “strategic capital investment fund” that’s supported by increased utility assessments.
Those assessments passed the city commission in 2025, though not before difficult public discussions about the financial burdens the added utility costs had on homeowners.
#3: City will dig deeper into reserves as COVID aid runs dry
The city’s general fund, which is where property tax revenue ends up, has operated at a deficit for years. An infusion of federal COVID aid that began arriving in 2020 boosted the fund’s reserves and covered those deficits, but that has been spent down in years since. The fund balance is about $9.2 million, down from the 2020 peak of $13.5 million, city documents show.
For the 2027 budget, Doyon proposed using about $632,000 in general fund reserves to help cover an estimated $46.2 million in expenses. That would bring the reserve down below the city’s longstanding savings target of 22% of total general fund revenues for the first time in about a decade. The reserve balance isn’t in immediate danger of disappearing, but that could change in a few years.
“Continuing to use fund balance is not sustainable,” Doyon said.
Great Falls has had pressure on its general fund from multiple fronts. The fund has spent millions to subsidize other areas of local government — like the operations of the Scheel’s Aim High Big Sky recreation center — that are supposed to cover their own expenses. At the same time, the general fund’s primary function, covering the costs for public safety departments, has been strained following the failed 2023 public safety levy.
Other factors, like the multi-year tax protest from Calumet, further reduced the city’s general fund reserve, officials said. Calumet is the city’s largest taxpayer and represents millions of dollars in proceeds.
Given those factors, the proposed budget suggests approval of the allowed inflationary and permissive medical levy increases on property taxes for 2027. The medical levy is allowed by statute without voter approval to support public employees’ health insurance costs. While these estimates are preliminary, the proposal would add about $61.21 to the annual tax bill of a $600,000 home.
The city commission expects to set a budget public hearing for Aug. 4 and consider a final budget for approval on Aug. 18.
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