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Council directs staff to develop FY2027 budget under floating-mill option after legal and budget debate
Summary
Following a detailed presentation on recent state property-tax changes, the council directed staff to develop the FY2027 budget under the dollar-based/floating-mill approach (Option 4a) — a move projected to restore roughly 2.95% revenue authority (about $1.6M) compared with a potential cut under the alternate approach.
By a majority vote, the Billings City Council directed staff to develop the FY2027 budget under the floating-mill / dollar-based approach described in new state legislation, a direction staff and the budget committee said preserves revenue authority compared with a legislatively imposed alternative.
Staff outlined the statutory background: the state—loating-mill framework (15-10-420 and implementing sections) reduces the value of a mill in some jurisdictions and requires local taxing entities to select a transition path. The staff presentation explained two principal options: (A) transition charter-authorized mills into the dollar-based/floating-mill framework (staff recommendation, referred to as Option 4a), which is projected to provide roughly a 2.95% increase in tax-revenue authority (approximately $1.6M) compared with the baseline; or (B) set a new mill cap tied to FY2025 revenues, an approach projected to reduce revenue authority by about 2% (approximately $1.1M).
Council members debated legal risk and policy trade-offs. Several expressed concern that either path could invite legal challenges (from the state or unions) but concluded the city needs a defensible approach that preserves core services, noting the disproportionate impact of revenue reductions on public safety. City legal counsel said certain statutory provisions are mandatory and that subsection choices must be implemented carefully; other staff cautioned about longer-term volatility as the state framework and short-term-rental valuations evolve.
After discussion, Councilmember Kendra Shaw moved to approve a resolution directing staff to build the FY2027 budget under Option 4a and to present balanced-budget drafts for budget hearings; the motion carried with one recorded dissent. Staff will prepare the draft budget, present details in May and June, and the formal mill-setting remains an August/September action when council will finalize levy decisions.
Council members emphasized that the direction is not irrevocable and that later budget reductions or different levy choices could be made before final adoption; however, staff said the earlier direction is important to provide clear guidance as planning and departmental budget work proceeds.
