Bozeman commission converts voted mill levies to dollars, sets FY2026 property tax rates to fill budget gap

The Bozeman City Commission on Aug. 19 approved a three-part package to respond to changes in state property‑tax law that reduced the city’s mill value and created a projected general‑fund shortfall.

City Manager Winn and Finance Director Melissa Huttman told the commission the legislature’s recent tax changes reduced the value of a mill in Bozeman from roughly $245,000 to about $218,000 and that the shift produces an estimated $1,770,000 shortfall affecting city services—principally police and fire staffing.

“The bottom line is that the value of a mill in the city has decreased from about $245,000 to about $218,000 due to the changes made by the legislature,” Finance Director Melissa Huttman said. She presented two treatment options for long‑standing voted fixed mill levies: convert the levies to dollar amounts (the staff recommendation) or reset mills under the new law. Staff recommended converting to dollars to create more predictable revenue and to use an inflationary adjustment consistent with other city levies.

Commissioners debated tradeoffs between honoring prior commitments to keep certain mills unlevied and responding to the immediate fiscal impact. Commissioner Fisher said the plan should balance fiscal discipline and continuity of services, while other commissioners emphasized the practical effects of the changed rules.

The commission voted 4–0 to:

- Convert the city’s voted fixed mills to dollar‑based levies (first motion approved).

- Repeal section 3 of a 2006 resolution that had constrained future commissions from levying certain mills (second motion approved), a change staff said was necessary because legislative rules and mill valuation methods have changed since 2006.

- Establish and affix FY2026 property tax mill levies (third motion approved). The adopted approach holds back some mills as a cushion while directing staff to identify roughly $800,000 in general‑fund reductions in the remainder of the budget process; the package was presented as a compromise that would produce an estimated $126 annual decrease for the median homeowner under the staff‑recommended scenario.

City Manager Winn and Huttman cautioned that the conversion and levy choices carry risk: if taxable values fall again under future legislative action, fixed dollar amounts could produce larger relative revenue losses over time. Huttman noted the legislature also changed indexing, allowing increases tied to the rate of inflation up to 4 percent, which may mitigate some longer‑term pressure but does not eliminate uncertainty.

The motions passed on unanimous voice votes. The commission instructed staff to return with detailed budget adjustments and the technical steps required to implement the conversion in the city’s billing and capital plans.

What’s next: Staff will quantify the proposed operating reductions and present implementation options in the city’s budget process. The finance office also plans to publish the detailed levy calculations and to explain the effects on median and representative tax bills.