BILLINGS — The rollout of Montana’s new property tax laws is creating new financial pressure for the city of Billings, leaving leaders to grapple with a projected $1.2 million budget shortfall.
Unlike most Montana cities, Billings cannot simply raise tax mills to offset declining revenue. Under the city’s 1977 charter, any tax increase requires voter approval.
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Because of that, City Council member Andrew Lindley is focused on coming up with solutions during a tough budget season.
The shortfall stems from recent changes passed by the Montana Legislature in 2025: Senate Bill 542 introduced tiered tax rates for homeowners and small businesses, while House Bill 231 lowers property taxes for primary residences and long-term rentals.
While many cities can adjust tax collections for inflation under state law, Billings’ charter restricts that action. The result is a projected $1.2 million reduction in revenue.
“We are just in a worse off position than most other cities at the moment,” Lindley said.
City leaders say that leaves limited options.
“When we see a reduction in tax revenue, it’s not like we can go and say kick up the landfill fees and we will switch it over... that’s not available to the city,” City Finance Director Andy Zoeller said.
Zoeller said nearly all the city’s general fund is already committed to essential services.
“About 95% of every dollar you pay goes to police and fire, so it’s natural to look there for cuts, but that’s also the City Council’s top priority,” Zoeller said.
Zoeller said final projections are still pending as the city awaits updated data from the Montana Department of Revenue, including a firm count of short-term rentals. He has been briefing council members as they consider a path forward.
Lindley outlines what he sees as three primary options.
“The three options are: one, the council passes a resolution to put it on the ballot,” he said, referring to a measure that would allow voters to consider changes to the city’s tax structure.
He noted that a ballot measure would not help close the current budget gap because the earliest it could appear is November, after this year’s budget is finalized.
“Option two is a citizen petition to get it on the ballot,” Lindley said. “Option three is staying where we are now, which makes it harder to pay for everything we need.”
City leaders could also choose to follow state law instead of the charter, effectively bypassing the voter-approval requirement, a move that could open the door to legal challenges.
Lindley said he would prefer to let residents decide.
“I’d like to see the citizens of Billings make a choice,” he said. “I don’t think staying where we are at and not doing anything makes sense, so I’d really like to see this in front of the voters.”
