Missoula City Council Adopts Budget With $2.5 Million Deficit, Claims Tax Relief for Most Homeowners

MISSOULA, MT — The Missoula City Council adopted a fiscal year 2026 budget that includes a $2.5 million deficit while city officials claim most homeowners will see property tax reductions.

Mayor Andrea Davis announced the budget adoption Wednesday, calling it “meaningful progress” toward financial stability. However, the budget still authorizes the city to spend $2.5 million more than it expects to collect in revenues.

“In my first City budget last year, I was candid about the challenges we faced—particularly the structural budget deficit I inherited in the City’s general fund,” Davis said in a prepared statement. “Since then, our team has worked hard to right the ship.”

The deficit represents what Davis calls a 19% reduction from a $3.1 million shortfall, though the city is still authorizing deficit spending in its general fund operations.

Tax Impact Claims

City officials project that a median-priced Missoula home assessed at $507,000 will pay $257 less in city property taxes—a claimed 14.3% reduction. However, the budget simultaneously increases overall city property tax revenues by 3.39%, or about $2.4 million.

The apparent contradiction suggests that while some homeowners may see decreases, others will face increases large enough to generate millions more in total revenue for the city.

City communications director Ginny Merriam did not respond to questions about how many properties will see increases versus decreases, or what percentage of the tax base each group represents.

Ward 5 Councilman Bob Campbell and Ward 6 Councilwoman Sandra Vasecka, both considered conservative voices on the council, did not respond to questions about their votes on the budget or concerns about adopting a deficit budget.

Both were asked whether they had concerns about the timing of the budget announcement, coming just weeks before the September primary election where Davis faces challengers and several council seats are contested.

Spending Priorities

The budget includes continued funding for the city’s Housing and Houselessness Program as the temporary Johnson Street emergency shelter closes. The city did not respond to questions about how much federal or state grant funding these programs rely on, or contingency plans if grant funding decreases.

Other spending includes:

• New street maintenance positions funded through gas tax revenues
• Infrastructure projects including Grant Creek restoration and Animal Control facility expansion
• Construction start for voter-approved Fire Station #6
• The Orange/Cregg signal project and Scott/Philips Roundabout

The budget also includes what the city calls “fair, market-informed wages” for police officers through a newly ratified collective bargaining agreement.

City officials did not respond to questions about any new grant administrator positions or climate-related spending, including whether a Climate Action Coordinator position was funded. Western Montana News previously reported on Missoula County’s plans to create multiple grant administration positions and increase funding to climate activist organizations.

Financial Outlook

The city projects ending fiscal year 2025 with $3.3 million in cash reserves—$1.3 million more than originally projected. Davis said this results from spending $2.4 million less than budgeted and stronger-than-expected revenues.

However, Davis acknowledged the city remains “$1.8 million short of meeting our cash reserve policy” and must continue working to eliminate the remaining budget deficit.

The timing of the budget announcement coincides with the September primary election, where fiscal responsibility and property tax burdens are key voter concerns.