Missoula County: Understanding how your property tax bill is calculated

Missoula County Board of Commissioners

With property tax bills hitting mailboxes this month, many folks are experiencing sticker shock as they open them and see the amount they owe. We hear from residents regularly about the pressure of property taxes, and we know this will be a difficult tax year for many people.

We also know there is a lot of confusion and concern about property taxes and a lot of misinformation about how your tax bill is calculated. The number you see on your property tax bill is the result of complex combination of decisions made at the state and local levels, and we want to take the opportunity to provide a high-level overview of this process and which agency is responsible for what.

Property reappraisals: Every two years, the state Department of Revenue, not Missoula County or the City, calculates residential property appraisals and sends out notices to property owners across the state. The State determines the methodology for valuing your home for tax purposes. Local governments are not involved in this process.

2023 is a reappraisal year, and property owners in Missoula County experienced an average 36% increase in property values. This means that, even if the County brought in the same amount of revenue from taxes as last year, homeowners would still see their taxes go up due to this historic increase in appraised property values.

Tax rate: There are more than 16 different classes of property in Montana, and residential property is only one of those classes. Each of the classes pays a different tax rate. The state Legislature sets these tax rates, and historically has adjusted these rates when residential values increase substantially.

This year, the Legislature had the option to lower the tax rate on residential properties from 1.35% down to .94%, but chose not to, even with the substantial increase in residential property values. An example of how this impacts homeowners: if the tax rate had been adjusted to .94%, it would have saved the owner of a $500,000 house $350 in taxes paid to the County alone.

County budget: The County sets its budget, then determines what we’ll levy in taxes – not the other way around. Every year, Missoula County goes through an extensive public process to determine the budget for the following fiscal year.

Each department presents the costs of maintaining current operations and services, as well as any requests for new money that would improve these services. We then weigh the benefits of providing these new services with any impact on taxpayers. We also must work within the confines of state law that limits annual property tax increases to half the rate of inflation from the previous three years, and there are some services we are statutorily obligated to provide. Following public hearings, we vote on whether to adopt the final budget.

While the budget determines how much we will ask for in property taxes from the county as an entirety, it’s important to note that only about one-third of the County’s budget comes from property taxes, so an increase in the budget does not necessarily correlate to the same increase in property taxes. The County strives to leverage grants, fees and other outside revenue as much as possible to minimize the need for additional funding from property taxes.

You can learn more about the County’s FY 24 budget at https://missoulacountyvoice.com/missoula-county-fiscal-year-2024-budget.

Tax collection: While you may write a check to Missoula County, not all those taxes come to us.  Missoula County collects and distributes taxes for all taxing jurisdictions within the county, and much of the taxes you see on your tax bill support jurisdictions other than the County, such as the City and schools, as well as special districts that provide fire protection, public transit and other services. Each of these jurisdictions has their own budget process that determines how much they will levy in property taxes.

So what do all these taxes pay for, anyway?  While often invisible until you need them, county government provides a range of services, from protecting public safety and paving and plowing roads to running elections and answering 9-1-1 calls.  Each line item you see on the County portion of your tax bill helps fund these and other essential community services. If you’d like to see a breakdown of what each line item pays for, go to missoula.co/taxes.

While we hope this explanation is informative, we understand it doesn’t solve the problem if you’re wondering how you will pay your property tax bill. Please know your commissioners are also working hard to advocate for changes to the tax system at the state level to help ease the burden property taxes have on our residents.

Missoula County Commissioners Josh Slotnick, Juanita Vero and Dave Strohmaier