Bozeman and the Highway to tax-hell
by Blake Maxwell for BozeHome
September means… the school buses circle our neighborhoods again, as parents explore free time anew. You might even hear a citywide “victorious breath” from yoga practitioners on weekday mornings. In Bozeman, September means beater trucks and college students return to the southside, while the profs and GTAs have free time no more. The month of the Harvest Moon conveys earlier sunsets, later sunrises and Carharrt days in between, with many looking up in hopes of snow over Main Street. Like those weather changes, September has in recent years also brought a drastic drop in the clamor for rentals and those affordable-housing rants about greedy developers and unconscionable contractors.
During summers of recent years, the Gallatin Valley’s periodicals, Facebook, social media and email list-servs have all been smoky with scandalous affordable housing articles. You know, the one’s with an illustrative example of those who think the housing marketplace should make special accommodations, just for them:
“Professional couple with pets can’t find a cheap 3,000 square-foot home downtown”; “Airbnb in peak demand just as vacationers arrive”; “Locals shocked to learn late-summer rental market is jacked up by college students.”
Jeering aside, it boils down to capital-D demand. Bozeman’s four-and-a-half percent population growth plus the return of 17,000 undergrads plus the Sweet Pea Festival plus the vacation-season crush equals… wait for it… a skyscraping spike of traffic to the rooms-wanted column on craigslist. Dog days, indeed.
Unfortunately, one aspect of Bozeman’s cost of living won’t cool down with the change in calendar: municipal taxes. After June’s annual review (increase) of the budget, city property taxes should be about $2,150 per year, according to Bozeman City Commissioner Chris Mehl (1.), who also wrote that’s about $180 per month, for the typical Bozeman homeowner.
As was confirmed in an email last week from Director of Finance Anna Rosenberry, the tax rate—the percentage at which property is taxed–has grown since 2007 a total of 28.4%. To back up a step, this tax rate is the percentage at which private property within city limits is taxed by the City of Bozeman.
What you’re about to read isn’t good news for homeowners or renters: $180 per month is just the beginning for the expanding City bills. Don’t overlook those “special assessments” tax bills when calculating the costs of housing. As one concerned resident pointed out this summer at a commission meeting, special assessments are really annual items that should be in the budget, but the City opts to tax them separately.
Special assessments currently include tree services and street services, but the list is growing in a scary way. Taxpayers should be aware of the three brand-new special assessment taxes, approved by commissioners just last year. Of just the new special assessments, commissioners turned around in July and approved a 25% increase and a 90% increase, respectively. In the ten years since 2007, Rosenberry provided information to this reporter showing that street and tree special assessments have escalated by 259%. Commissioners have forecasted that these assessments would all be going up next year, too.
Of the 4.5% property tax increase this year alone, Commissioner Mehl attempted to assuage local concerns in his column, stating the property tax is “roughly keeping pace with population growth and the construction inflation Bozeman experienced last year.”
Let’s take a closer look at that statement. As population goes up, the tax base locally has increased, greatly. According to reporter Eric Dietrich with The Bozeman Daily Chronicle (2.), the 2010 tax base in Bozeman was $49.6 million; last year it was $87.9 million—a 77.6% increase. Many residents of Bozeman have seen the taxable value, the “assessment,” of their property as much as double in value. If the tax rate stays the same, then this larger tax base results in more City revenues. But remember, the tax rate and the value of the property are jumping up, too. Also, as construction costs increase and new properties are built, the tax base for the City increases again.
Despite the shaky, if not disingenuous, justifications for spiking property taxes, Mehl has also written recently that Bozeman taxpayers are “below the max cap for property taxes, by a consider number of mills, but state law allows the max to increase by half the rate of inflation, so we will be approaching this cap sometime in the future.”
Translation: the tax rate will continue to climb, and soon.
It goes on. Despite the huge increases in municipal taxes via a higher tax rate, the leap in the tax base valuations, and altogether new taxes, the City of Bozeman administrators and some commissioners have lately expressed much interest in new “alternative” taxes. The campaign for a sales tax went public in the commissioner’s July 29th column (1.), which he also advocated to “expand the tax base” even more with an increase of current state gas taxes, the creation of a new countywide gas tax, as well as a resort tax/tourist tax. This not only demonstrates that our leaders lack the understanding of the tax burden they’ve fanned into a Bozeman inferno, but also they don’t appreciate the smoldering statistic that in 2015, Montana ranked 49th in nation for annual income. We just barely beat Mississippi.
In summary, then, the 10-year tax rate has gone up by 28% and a cache of new special assessments are rapidly increasing in number and have grown 259% in that period, atop a five-year tax base increase of 77%; in addition we will soon hit the cap for the highest taxes allowable by Montana law, and our civic leaders are advocating here and in Helena so that the city, county, and state may have altogether new taxes in our future, despite bottom-of-the-barrel income.
Even if one can, in a single breath, read aloud the previous paragraph, I doubt any local taxpayers will be feeling victorious. The truth is that while the hottest rental market month may be over, Bozeman got steered into the fast lane on the highway to tax-hell, likely to smash-up many family’s hopes of ownership of property within city limits forever.
And still it gets worse: county living may be looking a lot greener these days, but city and county taxpayers will all be asked this fall to fund a $71 million law and justice center in addition to a vote on an $80 million second high school, come spring. Don’t forget that these values are the face of the bond; they don’t include the costs we’ll owe for servicing the debt (3.). An estimate for the total amount taxpayers will be on the hook for, should both of these pass, is over $180 million—all atop a City budget and administrators who whistle along while spending $100 million a year on a community of 45,000. Whether you’re paying down the mortgage or paying rent to a landlord who is, who among us can afford $300 per month in local tax bills?
What to do
Call, write, email, text, SnapChat, smoke signals, flashmob, whatever, your local commissioners as soon as you can (4.). We need immediate tax relief. Only I-Ho Pomeroy and Jeff Krauss voted in June against this year’s budget, while some commissioners drone on in the delusion that we live in a “high-amenity” town. We don’t—the pool is geriatric and failing, the stormwater system is extremely outdated, and we’re still way behind the ball on streets and sidewalks. If you hear the “high-amenity” argument, ask for a list and be prepared to remind them that Main Street’s commercial buzz, the school system, the National Parks and public forests, and even the rising Sun aren’t City services. You may also choose to remind commissioners that they ran to serve voters, not cheer on high revenues like executives for City of Bozeman, Inc.
- “Bozeman’s budget builds for a better future”, by Bozeman City Commissioner Chris Mehl, The Bozeman Daily Chronicle, 29 July 2016.
- “Growth and taxes: Costs for governments and property owners add up as Bozeman expands,” by reporter Eric Dietrich, 5 June 2016, The Bozeman Daily Chronicle
- “Hiding the ball” by Blake Maxwell, 3 August 2014, http://bozeman-magpie.com/perspective-full-article.php?article_id=1267
- Emails for the entire Bozeman City Commission, plus City Manager Chris Kukulski and the city clerk, may be sent at any time to: firstname.lastname@example.org.