Missoula County approves agreement with state, schools to correct taxation error

Missoula County commissioners voted Wednesday to pay more than $307,000 to the state and nearly $150,000 to the county superintendent of schools from an expired tax increment district to correct errors made by the Montana Department of Revenue between 2009 and 2017.

The payments are part of a total of $2 million in tax increment to be withdrawn from Missoula County and passed on to the area’s taxing jurisdictions.

Commissioners David Strohmaier and Josh Slotnick voted in favor of the payments. Commissioner Juanita Vero was out of state attending a conference. 

“This is just a step toward cleaning up the sunsetting of that district, and correcting past mistakes made by the state from misclassifications of properties and related taxation issues,” Strohmaier said. “We’re just giving back what they should have had all along.”

The Missoula County Airport Tax Industrial Infrastructure District, west of Missoula near the airport, was created in the 1990s on vacant land that has since been developed into commercial and industrial businesses. Tax revenue generated by those businesses was reinvested in the district through tax increment financing.

In 2006, the county filed an amended map to remove several properties from TIF portion of the district, including the Wingate Hotel, Lithia Motors and Harley Davidson. While the state initially removed them, the Department of Revenue inadvertently placed them back in the next year, diverting tax revenues back into the TIF and away from the taxing jurisdictions. 

“We can only guess it was a bookkeeping error,” said Dori Brownlow, the county’s development director. “It means some of the taxes paid were in the increment when they should have gone out to the taxing jurisdictions.” 

She said the error was discovered when the county prepared to sunset the tax increment financing district at the Missoula Development Park.

She placed the cost of the error at roughly $2 million, though the county is working to calculate the exact amount. The money will go to DeSmet Public School and the Missoula Rural Fire District, among other taxing jurisdictions.

Brownlow said other payment requests are pending, though the county will need to recalculate how much money the district has remaining after it withdraws what’s owed to the taxing jurisdictions.