NorthWestern tax reduction forces city, county to make cuts to departments

Budget

By Martin Kidston

A $220 million reduction in NorthWestern Energy’s taxable value has left cities and counties looking for ways to cover the lost revenue, including the city of Missoula, which must shave roughly $140,000 from its budget in the next fiscal year.

Missoula County is facing a loss of $389,000.

Dale Bickell, the city’s chief administrative officer, said the Montana Department of Revenue broke the news last Friday after the state agency lowered NorthWestern’s taxable value from roughly $2.6 billion to $2.2 billion.

NorthWestern protested the original valuation, prompting last week’s negotiations between the company and the state agency. The reduction sent budgetary ripples through a number of cities and counties where NorthWestern’s assets are located.

It could also impact schools and fire districts.

“The reduction isn’t huge, but it’s still a reduction,” Bickell said. “It’s eating up about half the new revenue we were expecting in newly taxable property.”

The city recently passed its Fiscal Year 2017 budget, one based on the current number of mills. NorthWestern’s taxable property within the city contributed to that final figure.

Then DOR lowered NorthWestern’s taxable value. For the city, it amounts to roughly $489,000. That equates to a budgetary impact of $140,000, according to Bickell.

Given the timing of DOR’s reassessment, the agency has offered municipalities the option of recalculating their mill levies based on the new figure. The city of Missoula, however, has opted to absorb the loss by making cuts where it can.

“Based on the loss, we’d have to recalculate and increase our mill levies to meet our budget,” Bickell said. “The alternative to that is just to make budget cuts. We’re not cutting a particular line item. We’re working with all the departments to soak this up.”

Bickell said the adjustment represents a one-time event.

“We’ll keep our departments constrained to that level of spending,” said Bickell. “We’re going to reduce the amount of expenditures. We’ll work hard with the departments to make that up and not use reserves to do so.”

The reassessment of NorthWestern’s taxable valuation also left Missoula County facing a loss of $389,000. Commissioners will be briefed on the decrease on Thursday, and are expected to consider absorbing the loss through cuts to departments and expenditures.

Anne Hughes, the county’s communications director, said the county is also on the verge of sending out this year’s tax bills, which could be affected or delayed by the DOR’s reassessment of NorthWestern.

Missoula County has 39 taxing jurisdictions, and 32 of them are affected by the revenue reduction, Hughes said. They include schools and fire districts, among others.

“If any of those districts opt to recertify, we need to submit those forms to DOR so they can conduct their process,” Hughes said. “It could hold us up on printing tax bills. We’re hoping to hear from any of those jurisdictions by the end of the day on Monday. It’s one of our greatest concerns, ensuring those tax bills go out as soon as possible and before the election.”

Contact reporter Martin Kidston at info@missoulacurrent.com