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Home My WebLink AboutProperty Taxes-FINAL for LFResolution to Affix Property Tax Mill Levies Melissa Hodnett, Finance Director August 26, 2025 Where does my tax dollar go? APPLY NOW –Homeowner Tax Rebate Eligibility: •You must have owned and lived in your home for at least 7 months in 2024 •The property must be your principal residence •Homes held in LLCs, corporations, or irrevocable trusts are not eligible How to Apply: •Apply online at:getmyrebate.mt.gov •Application window:August 15 –October 1, 2025 Tax Related Legislative Changes TAX YEAR 2025 (FY26) •Modified tax rates for different property types •Lower tax rates for residential homeowners and small businesses •Tiered rates based on the total assessed value •For the median homeowner, the tax rate is expected to reduce from 1.35% to 0.99% in FY26 •Regardless of Commission Action tonight, these changes mean the annual property tax for a median homeowner will decrease from year to year TAX YEAR 2026 (FY27) •Tiered rates will be based on median state assessed values •Higher rates for second homes and short-term rentals •Changes will result in unpredictable changes to certified values for FY27 Annual Cost Snapshot –Budget ORIGINAL BUDGET FY25 FY26 Inc % Inc Property Tax 1,393.17$ 1,469.03$ 75.86$ 5.4% Street Assessment 292.85 301.64 8.79 3.0% Arterial Street Assessment 61.89 63.75 1.86 3.0% Tree (Forestry) Assessment 31.46 32.40 0.94 3.0% Parks & Trails Assessment 214.94 221.39 6.45 3.0% Water service 535.11 588.62 53.51 10.0% Wastewater service 629.07 666.81 37.74 6.0% Stormwater service 55.99 57.67 1.68 3.0% Garbage service 214.63 227.51 12.88 6.0% Total 3,429.11$ 3,628.82$ 199.71$ 5.8% Single-Family Residential Home on 7,500 sq ft lot with 7.5 HCF of water use with a median assessed value of $671,800 FY25 Actual and 2025 Biennium Budget Annual Cost Snapshot –“Worst Case” MINIMIZE BUDGET SHORTFALLS –SIDEBOARD B FY25 FY26 Inc % Inc Property Tax 1,393.17$ 1,292.68$ (100.49)$ -7.2% Street Assessment 292.85 301.64 8.79 3.0% Arterial Street Assessment 61.89 63.75 1.86 3.0% Tree (Forestry) Assessment 31.46 32.40 0.94 3.0% Parks & Trails Assessment 214.94 221.39 6.45 3.0% Water service 535.11 588.62 53.51 10.0% Wastewater service 629.07 666.81 37.74 6.0% Stormwater service 55.99 57.67 1.68 3.0% Garbage service 214.63 227.51 12.88 6.0% Total 3,429.11$ 3,452.47$ 23.36$ 0.7% FY25 Actual and FY26 Scenario A Tax Levies Single-Family Residential Home on 7,500 sq ft lot with 7.5 HCF of water use with a median assessed value of $671,800 Certified Values Modified tax rates result in an overall decrease in taxable value of 8.9% Newly taxable at $9.4 million $4.7M $4.4M $5.3M $5.7M $13.5M $6.2M $9.4M FY20 FY21 FY22 FY23 FY24 FY25 FY26 Newly Taxable Value –City of Bozeman $133.6M $138.0M $166.8M $171.8M $269.0M $266.3M $242.6M FY20 FY21 FY22 FY23 FY24 FY25 FY26 Total Taxable Value –City of Bozeman Certified Mill Value $104,321 $125,423 $129,537 $155,353 $159,782 $247,166 $245,208 $218,946 3% 20% 3% 20% 3% 55% -1% -11% -20% 0% 20% 40% 60% 80% 100% $- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 Taxes Generated from 1 Mill & Percent Change Types of Mill Levies •Discretionary City General Fund dollars •Subject to “15-10-420” –revenue can increase by ½ the rate of inflation, plus newly taxable All-Purpose •Health Insurance Permissive •2007 Public Safety Mill Levy •2000 Senior Transportation Levy •Debt Service on General Obligation Bonds (Trails & Open Space Bonds, BPSC, Recreation Bonds, Fire Station #2) Voted All Purpose General Fund 60%Permissive 8% Voted Bonds 10% Voted Levies 22% Current Property Tax Revenue FY26 Budget Fixed Mill Levies All other mill levies are “dollar based”. Voted Fixed Mill Levies – Existing Law Voted Fixed Mill Levies – 31 total •14 mills for Police staffing •12 mills for Fire staffing •4 mills for Fire Capital Equipment •1 mill for Senior Transportation (Galavan) Under previous law, revenue tracks directly with the mill value City would see an 11% decrease in revenue between FY25 and FY26 $7.7M $7.6M $6.8M $2.0M $4.0M $6.0M $8.0M $10.0M $12.0M FY24 Actual FY25 Actual FY26 Under Prior Law Value of 31 Mills Voted Fixed Mill Levies – Options Calculated Option 1 – Convert to Dollars Option 2 – Reset Mills Same methodology as all-purpose General Fund revenue for all future years City-wide voted fixed mills permanently adjusted to 34.72 mills Future revenues are dependent on the mill value AmountsSteps $7,601,440Convert the FY25 levy to dollars $160,390+ Inflation rate (2.11%) $7,761,830= FY26 Tax Assessment AmountsSteps $7,601,440FY26 Tax Assessment = FY25 $ Recalculate mills $7,601,440FY26 Assessment / $218,946FY26 Mill Value 34.72= New Fixed Mills Voted Fixed Mill Levies – Recommended Budget, $9.5M Prior Law, $6.8M Option 1, $7.8M Option 2, $7.6M $2.0M $4.0M $6.0M $8.0M $10.0M $12.0M FY26 Revenue FY26 Value of 31 Mills Option 1 Benefits •Minimizes shortfall in FY26 tax revenue •Consistent with calculations of all-purpose mill levy •Consistent with all future voted levies •More predictable revenues – tied to inflation •Mitigate potential impacts of FY27 legislative changes on mill values Voted Fixed Mill Levies – General Fund Impact Tax Levy Mills FY26 Shortfall Police Staffing 14.0 $712,700 Fire Staffing 12.0 611,500 Total General Fund 26.0 $1,324,200 General Fund All-Purpose Mills •Mills are “floating” instead of fixed or “dollar based” •Base is the amount assessed in the prior year •Limits are based on total revenue Calculating Maximum Ad Valorem Tax Revenue FY25 Assessment $24,143,154 Add: Inflation adjustment (2.11%)+ 509,421 Add: Newly taxable adjustment + 1,101,998 FY26 Maximum Assessment $25,754,573 Backing Into Maximum Mills FY26 Maximum Assessment $25,754,573 Divide by: Mill Value / $218,946 FY26 Maximum Mill Levy 117.63 GF All-Purpose Levy - Sideboard A Maximum Budget Reductions •Requires a minimum budget reduction of $1.77 million in the General Fund •Reductions will focus on holding vacant positions or delaying non-essential expenses •No change to the 9.0 mills previously dedicated for 911 services •$151.59 annual decrease in median homeowner property taxes Sideboard A – Maximum Budget Reductions Mills under maximum 9 mills General Fund shortfall $1.77 million Median homeowner impact -$155.59 annually All purpose mill levy 116.76 mills GF All-Purpose Levy - Sideboard B Minimize Budget Shortfall •Eliminates General Fund shortfall to fund all positions, projects, and priorities included in the FY26 Annual Operating Budget •Involves repeal of resolution dedicating 911 mills •Still results in a $100.49 annual decrease in median homeowner property taxes Sideboard B – Maximize Revenue Mills under maximum 0.71 mills General Fund shortfall None Median homeowner impact -$100.49 annually All purpose mill levy 116.76 mills GF All-Purpose Levy - Recommended Middle Ground – Staff Recommendation •Requires a minimum budget reduction of $810,000 in the General Fund •Reductions will focus on holding vacant positions or delaying non-essential expenses •Involves repeal of resolution dedicating 911 mills •No change to the 9.0 mills previously dedicated for 911 services Staff Recommended Middle Ground Mills under maximum 4.5 mills General Fund shortfall $810,000 Median homeowner impact -$125.68 annually All purpose mill levy 121.26 mills General Fund Impact – Recommended Tax Levy Mills FY26 Shortfall Police Staffing 14.0 $712,700 Fire Staffing 12.0 611,500 Total General Fund 26.0 $1,324,200 All-purpose levy 4.5 $985,300 GF All-Purpose Levy - Scenarios Additional Scenarios Table – including Sideboards Mills Under Max Authorized General Fund Shortfall Anticipated Annual Impact on Median Homeowner Total Mills 0.71 $-($100.49)194.50 2.25 $329,100 ($110.73)192.96 4.50 $810,000 ($125.68)190.71 6.75 $1,290,100 ($140.63)188.46 9.00 $1,770,500 ($155.59)186.21 Staff Recommendation Annual Cost Snapshot - Recommended Recommended estimated taxes, assessments, and rates FY25 FY26 Inc % Inc Property Tax 1,393.17$ 1,267.49$ (125.68)$ -9.0% Street Assessment 292.85 301.64 8.79 3.0% Arterial Street Assessment 61.89 63.75 1.86 3.0% Tree (Forestry) Assessment 31.46 32.40 0.94 3.0% Parks & Trails Assessment 214.94 221.39 6.45 3.0% Water service 535.11 588.62 53.51 10.0% Wastewater service 629.07 666.81 37.74 6.0% Stormwater service 55.99 57.67 1.68 3.0% Garbage service 214.63 227.51 12.88 6.0% Total 3,429.11$ 3,427.28$ (1.83)$ -0.1% FY25 Actual and FY26 Recommended Tax Levies Single-Family Residential Home on 7,500 sq ft lot with 7.5 HCF of water use with a median assessed value of $671,800 Impact to Single-Family Homeowner $1,087 $1,336 $1,490 $1,149 $1,413 $1,575 $1,006 $1,251 $1,430 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 Property A (FY26 AV = $553,400) Property B (FY26 AV = $664,500) Property C (FY26 AV = $745,100) Recommended Scenario Sample Single-Family Residential Properties Annual Property Taxes FY24 FY25 FY26 Public Hearings & Motion Language •1. I move to approve the resolution converting voted fixed mills to dollars. •2. I move to approve the resolution repealing section 3 of Resolution 3954. •3. I move to approve the resolution establishing and affixing property tax mill levies for fiscal year 2026.