It’s time for both the city and county of Missoula to get down to brass tacks.

Both governments are reviewing their proposed budgets for the 2026 fiscal year, spending plans they need to finalize before the end of August. There’s a lot in both documents, and the process is far from over. But initial presentations by city and county officials in recent meetings have offered a high-level overview of the financial situation for local government.

The big takeaway: Both the city and the county need to find more money to fund services and operations in order to balance their budgets, as required by law. In both cases, this looks like property tax increases, as it did last fiscal year. For the city in particular, this also means more cuts.

Missoula County officials are proposing a 7 percent tax increase. The increased tax revenue should work out to be about $5.7 million. In the city, Missoula Mayor Andrea Davis’ proposed budget calls for a 3.5 percent tax increase, which will generate about $4.4 million in new revenue.

The prospect of increased property taxes might be cause for concern for Missoulians in the throes of a housing crisis. That said, on an individual level, the increased property tax bill isn’t so staggering — the county increase would mean an additional $36.50 for a $300,000 home and $83.89 for a $600,000 home, for example. Every cent still matters, of course, especially for those on fixed incomes — but it’s also worth pointing out that local governments in Montana routinely face budget deficits regardless of individual spending decisions because of the way state property tax law is set up.

The law strictly limits the amount by which a government can increase property taxes without asking voters — and voters in recent years have viewed levy elections with a certain degree of skepticism. Even with that limitation, most local governments still get more than half their revenue from property taxes. Grants, fee revenue and other sources make up the rest, but that still leaves cities like Missoula in the red on a persistent, structural basis.

This all might seem a bit academic. Remember, though, that constrained city budgets affect the services a city can offer its citizens. This is only more true with the federal government yanking grants to local organizations left and right. Just look to the Johnson Street Shelter, which the city is closing because of the deficit. And of course, there are the hundreds of Missoulians whose livelihoods depend on fair compensation from local governments.

“When I presented my first city budget last year, I was candid about the challenges we faced — particularly the structural budget deficit I inherited in the city’s general fund.” Davis said in a cover letter introducing the 2026 budget. “Since then, our team has worked hard to right the ship. While we still have work to do, I’m proud of the meaningful progress we’ve made.”

In addition to the increased tax revenues, the proposed city budget anticipates money from increased fees, short-term rental registrations, remittance payments from the Missoula Redevelopment Agency, and an almost $2 million anticipated savings from the closure of the Johnson Street Shelter, which is slated to cease operations next month.

“The decision to close the temporary emergency shelter at Johnson Street was a difficult one, but it was necessary given limited resources and the need to protect core services,” Davis wrote.

Of the anticipated revenue increase, the vast majority — almost 80 percent — will go toward wage increases. The increased revenue would also reduce the city’s deficit from $3.1 million to $2.4 million. Still, that leaves Missoula $1.9 million short of meeting its cash reserve policy, which calls for 7 percent of ongoing revenues to be held in reserve, according to the mayor’s office.

The county’s new revenue — funded by a higher tax increase than usual — will also support wage increases and staff retention, in addition to addressing backlogged infrastructure projects, according to Chris Lounsbury, the county’s chief administrative officer.

“This year we will see a more substantial request to the commission for an increase than we have seen in previous years,” Lounsbury said during a meeting of the county commissioners this week. “Previous years we have tried to stay at or below the inflationary rate, and we have done a fairly successful job at that, but the continued pressures coming out of the pandemic and out of the last few years has meant that we are looking at a more substantial request.”

Of the new revenue, $1.1 million would go to the general fund, largely for wage increases. About $2.3 million will support pay bumps for jail staff while also paying for incarcerated people on county jail holds — generally, those convicted of a crime but awaiting placement in a state prison because of overcrowding, often at great expense to the counties that house them during this interim. (County jails also don’t have the same level of programming, education, medical care and other services for inmates that the state prison does.)

Nothing in these proposals is set in stone. In coming weeks, policymakers at the city and county will review the budgets and hear proposals from individual departments. Revised property values from the state, expected next month, will also affect revenue calculations.

The county has more information on its proposed budget here. Find the city’s proposed budget and other relevant information here.

City council inks Riverfront deal

The Missoula City Council this week voted unanimously to sell the Riverfront Triangle land to Averill Hospitality, paving the way for an anticipated $100 million hotel development on an (until now) city-owned parcel of redevelopable land that has long defied the ambitions of economic developers and hoteliers.

The city sold the land, located north of the river near the intersection of Broadway and Orange streets, to the Whitefish-based developers for $4 million.

Speaking after the council approved the deal, Missoula Mayor Andrea Davis said she’s pleased with the sale and called the project a “win-win” for the community.

Under an agreement with the city, the developers will donate 1 percent of hotel revenue to Missoula’s affordable housing trust fund over the course of a decade, which the city anticipates will work out to about $7 million. That said, the city is also paying for public-facing portions of the project — around $13 million — through the Missoula Redevelopment Agency, which oversees tax-increment financing for projects in the city’s urban renewal districts.

We have more details on the project here.

The ledger #️⃣

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Acreage of the Deer Creek fire in Pattee Canyon, which is now more than 60 percent contained, according to InciWeb. Firefighters are primarily in the mop-up phase, according to reporting from the Missoulian. Officials have said the fire was likely human caused.

The week ahead 🗓️

On July 29 at 5 p.m., the Lolo National Forest will hold a public webinar to introduce the new Forest Supervisor Ben Johnson and new Plan Revision Team Leader Stacy Allen.

Find a list of all upcoming city meetings here and county meetings here.