{ "article_title": "Bozeman Levies Maximum Tax Mills as Budget Process Concludes", "headline": "Commission adopts maximum property tax mills and utility rate increases totaling 5.5% for fiscal 2027", "dek": "The City Commission approved levying the maximum statutory mill rate for fiscal 2027 and adopted utility rate increases for water, sewer, stormwater and solid waste, bringing the total monthly increase to $14.89 for a typical homeowner. One commissioner voted against all four special assessment districts, citing concerns about equitable assessment methodology.", "tags": [ "budget", "property tax", "rates and fees", "assessments", "utilities" ], "article": "The City Commission advanced the final steps of its fiscal 2027 budget on August 18, approving maximum statutory property tax mill levies and a series of rate increases on utilities and special assessments that collectively will raise the typical homeowner's monthly costs by $14.89 in fiscal 2027 and $19.89 in fiscal 2028.\n\nDeputy Mayor Douglas Fischer presided in the absence of Mayor Joey Morrison, whose absence was authorized by motion. The commission struck one item—a kennel license revocation appeal—after learning the appellant had withdrawn.\n\n## Property Tax Mill Levies\n\nFinance Director Melissa Hodnett presented the core budget decision. The state Department of Revenue certified taxable values on August 4, showing a 6.9% overall increase in the city's taxable value, but the amount of newly taxable property fell short of projections. Staff had forecast $6.4 million in newly taxable value; the actual figure was $3.3 million. The shortfall left the general fund's six-year operating margin negative under baseline assumptions.\n\nHodnett explained that the city's levy cap is set in dollars rather than mills—the prior year's authorized amount plus inflation plus a share of newly taxable property. Because the cap is formula-based, an increase in taxable value actually constrains how many mills the city can levy. Despite that constraint, staff recommended levying the maximum statutory authority to establish a recurring revenue base that could support future operations without requiring catch-up later.\n\nUnder the recommended levy, a typical primary residence valued at $652,100—approximately the median—would pay about $101 less in city property taxes than in fiscal 2026, driven by state legislative changes that reduced taxes on primary residences. Hodnet said the city would maintain required operating reserves of 16.67% of revenues, equivalent to two months of operating expenses, under the recommended scenario.\n\nCommissioner Alison Sweeney moved adoption and spoke in support, citing the state's constraints and the one-time opportunity to levy at the statutory maximum without burdening homeowners further. She also raised concern about the city using general fund dollars for what she characterized as philanthropic endeavors—the $1 million annual community housing allocation, $400,000 to Streamline bus service, and roughly $350,000 to HRDC, Family Promise and Haven. Sweeney said those programs should be funded through dedicated revenue streams approved by voters.\n\nCommissioner Jennifer Madgic disagreed, characterizing the allocations as essential needs the city has a responsibility to meet. \"If we don't, we pick up the bill in other ways,\" she said. Commissioner Emma Bode noted that the $400,000 to Streamline qualifies the service for more than $2 million in federal matching funds and noted that police and fire contracts plus operating costs consume more than 50% of the general fund.\n\nFischer said the 16.67% reserve requirement gives him pause, acknowledging that many families paying the taxes do not maintain a comparable emergency reserve. \"We're taking money out of taxpayers' bank accounts and putting it into a reserve fund as a just-in-case,\" he said. Nonetheless, he supported it as best practice and said he wants to ensure every tax dollar funds an essential service.\n\nThe resolution establishing property tax mill levies passed unanimously.\n\n## Planning and Engineering Permit Fees\n\nThe commission also approved two fee increases. Planning fees rose 15% following similar increases in the prior two years, pending results of a comprehensive fee study due this winter. Hodnett said the primary driver of the planning fund's increasing costs is staffing, not a need to adjust the revenue base. She outlined which planning functions can be charged to applicants—application review, site plan review, applicant meetings—and which cannot, including growth policy, historic preservation and regional planning, which she said must be supported by general fund subsidy.\n\nFischer questioned the cumulative effect of three consecutive 15% increases on larger development projects. Winn noted that larger developers have not complained about Bozeman's planning fees and that the city is sensitive to impacts on smaller projects like residential additions and decks. He said staff is exploring whether fees should vary by project type to encourage development the city prioritizes.\n\nThe planning fee resolution passed unanimously. A companion resolution raising Transportation and Engineering permit fees by approximately 15%, with a larger increase to the floodplain permit reflecting about four hours of staff review time, also passed unanimously.\n\n## Water, Sewer, Stormwater and Solid Waste Rates\n\nHodnett presented rate increases for fiscal 2027 and fiscal 2028 for the city's major utilities, tied largely to debt service for the shops complex, a $84 million capital project. Environmental assessment work began the week of the meeting; final design was scheduled to kick off in September.\n\nStaff refined financial models after the budget was adopted in June, reducing the projected impact. A typical homeowner's combined monthly increase in fiscal 2027 would be $14.89, compared to the over $20 projected in June, with water service rates up 11.5%, wastewater rates up 18%, stormwater rates up 9% and garbage collection rates up 7%.\n\nHodnett said the city completed a cost-of-service analysis for water, wastewater and stormwater but recommended delaying any customer-class adjustments until rates stabilize. She noted that tier-based billing creates incentives for conservation, with Tier 1 billed at the lowest rate per 100 cubic feet and higher tiers reflecting higher water usage.\n\nNo public comment was offered on the utilities. The resolution establishing rates and fees for water, wastewater, stormwater and solid waste services passed unanimously.\n\n## Special Assessments\n\nFour special assessment districts—arterial and collector streets, tree maintenance, street maintenance, and parks and trails—each drew individual resolutions. Hodnett presented all four together and fielded questions on all items before public comment.\n\nThe special assessment districts fund specific city services through property assessments based on square footage. The assessments rely on a manually maintained Schedule A listing each parcel's assessed square footage and whether it is capped. The Unified Development Code update earlier in 2026 changed zoning designations on many parcels, altering which caps applied.\n\nHodnett said the city published a revised Schedule A the day of the meeting, with every parcel showing an increase above 18% reviewed for accuracy. She said any remaining discrepancies would likely increase total assessable square footage, potentially offsetting some rate pressure in future years.\n\nPublic comment on the assessments was extensive. Vicki Danhoff, a resident since 1972 on a fixed income, said she has paid the tree assessment for 20 years and objected to ongoing increases. Paul Johnson said his neighborhood has no boulevard trees and described city vegetation management as inconsistent. Another resident asked why he received notice only of the tree assessment, not the others.\n\nEmily Talego offered a detailed fiscal analysis, noting that if staff corrections to the Schedule A increase total assessable square footage, the per-square-foot rate could decline. She suggested the commission consider authorizing assessments \"up to\" a given rate to give staff flexibility without requiring an amended resolution. City Attorney Greg Sullivan said he could not advise on that approach without further research but recommended specifically authorizing the city manager to adjust Schedule A after adoption. Each subsequent motion was amended accordingly.\n\nDanielle Smith urged the commission to challenge the basis for the increases rather than accept staff projections as given. She noted that annual increases, while individually modest, compound over time and discourage property ownership. She also asked about alternative revenue sources.\n\nWinn responded that the tree maintenance district funds the entire publicly owned urban forest—parks, open space and boulevards—not individual property trees. He committed to responding personally to any resident not getting timely responses from the city.\n\nFischer and Sweeney both noted that the state legislature bars Bozeman from even asking voters about a local option sales tax, limiting alternative revenue options.\n\nSweeney voted no on all four assessment resolutions. She said the current methodology, based on square footage, dates to an era when Bozeman was primarily single-family homes. She cited the example of a 100-unit apartment building in a residential zone paying roughly what two average single-family homes pay, while the same building in a commercial zone would pay 47 times more. \"I can't in good conscience raise rates on people when I don't know the answer to—if we just assessed equitably, would we be able to keep rates steady?\" she said.\n\nBode said she shares the concern but that voting no would leave the city unable to deliver committed services. She called a no vote \"a bit performative\" given the task of governing. Sweeney replied, \"I assure you my no vote is not performative.\"\n\nWinn told the commission that adopting less than presented would affect service levels but that staff could not quantify the impact immediately. He asked the commission to allow time for a methodology review scheduled as a work session on January 26, 2027. Madgic said she agreed on the need to review methodology but would not hold back rate increases pending that review.\n\nThe arterial and collector street assessment resolution, establishing a 3% increase and an assessment rate of $0.008755 per assessable square foot, and authorizing the city manager to adjust Schedule A, passed 3-1, with Sweeney opposed.\n\nThe tree maintenance district assessment resolution, establishing a 20% increase and an assessment rate of $0.005184 per assessable square foot, and authorizing the city manager to adjust Schedule A, passed 3-1, with Sweeney opposed.\n\nThe street maintenance district assessment resolution, establishing a 15% increase and an assessment rate of $0.046250 per assessable square foot, and authorizing the city manager to adjust Schedule A, passed 3-1, with Sweeney opposed.\n\nThe parks and trails special district assessment resolution, establishing a 23% increase and an assessment rate of $0.036308 per assessable square foot, and authorizing the city manager to adjust Schedule A, passed 3-1, with Sweeney opposed.\n\nFischer and Bode both suggested renaming the tree maintenance district to reference urban forest management, given that many residents misunderstand the assessment as covering only trees on individual properties.\n\n## Water and Wastewater Impact Fee Agreement\n\nEarlier in the meeting, the commission approved an updated agreement with Montana State University on the water and wastewater impact fee declining balance program, first established in 2018. Chris Saunders of Community Development explained that impact fees cover the city's incremental costs from new development. MSU has reduced its water demand through fixture upgrades and conservation measures, allowing the university to construct new buildings while drawing less water than before.\n\nSaunders said MSU has built 10 buildings under the program since 2018. The update removes catch-up language from the original resolution and clarifies reconciliation procedures, including what happens if either party ends the agreement. The resolution included added staff language on reconciliation.\n\nCommissioner Bode moved approval. No public comment was offered. The resolution passed unanimously.\n\n## Transportation and Strategic Plan\n\nThe commission also amended its strategic plan to add transportation safety as a goal. Commissioner Madgic presented the item, saying the current plan dates to 2018 and that the city's transportation master plan update provided an opportunity to sharpen priorities.\n\nThe amendment adds the word \"safe\" to language on the well-planned city; separates transportation from housing as a distinct goal; and adds new subsections on Vision Zero principles, street design prioritizing pedestrian and cyclist safety, and updating the transportation master plan to four specific priorities: prioritizing human life and safety over car speed and convenience; street design promoting safety of pedestrians, cyclists and micromobility users; promoting active living through improved pedestrian, bicycling and transit spaces; and adequate, sustained and dedicated funding for active transportation.\n\nMadgic presented historical context on transportation deaths, noting that although the 1920s saw over 200,000 pedestrian deaths annually from cars, modern improvements in street design and enforcement have reduced that to 700 to 7,500 annually—though 2022 and 2023 saw modern record highs in deaths and injuries.\n\nBode proposed adding language supporting an efficient and effective public bus system. Fischer and Sweeney said transit is the responsibility of the Urban Transportation District, which the city should not overshadow. The amendment drew two ayes and two noes—short of the three votes required by the commission's own rules. Bode withdrew the amendment after