City budget balancing economic impacts

Whitefish Pilot

“Overall, the city’s finances remain in generally good condition with some problem areas continuing,” Whitefish city manager Chuck Stearns’ third quarter financial report begins.

The building slowdown caused by the economic recession has forced the city to dip into its cash reserves more than usual.

“The general fund cash balance continues to decrease as we spend more than we are receiving in revenues,” Stearns said in his report, “however, the imbalance through the third quarter this year was much less than a year ago, providing some hope.”

Stearns presented his preliminary budget proposals to the council on May 18. When asked by councilor Nancy Woodruff what level of cash reserves is recommended, Stearns called 25 percent “very healthy and 5-10 percent “too low.”

“Right now, we’re at about 19 percent,” Stearns said, noting that a lot of property tax, building permit fees and other receipts were expected to come in at this time of the year.

One of the points of his presentation was to learn how the council wanted to address several budget policy issues:

• Whether to raise water and sewer rates.

• How to address loss of revenue in the planning and building department.

• How much salaries and wages should be raised for city workers.

• How to proceed with negotiations for the rural fire service contract.

• Whether to trade force reductions and furloughs for loans from the general fund.

• And whether money collected from the 24/7 emergency services mill levy should be used to address shrinking cash reserves.

“I don’t think we should use the 24/7 levy revenue for other purposes,” Woodruff said. “We need to deal with the losses at the planning department.”

Mayor Mike Jenson agreed with Woodruff.

“We made a commitment on the 24/7 levy,” he said.

Stearns reminded the councilors that it could be in the city’s best interest to hang on to qualified personnel rather than lay them off. He suggested a building inspector’s job could be saved with the $600,000 savings that came with a low bid for construction of the city’s new emergency services center.

Lower construction bids are one benefit of what is otherwise grim economic times. Other good news for the city budget includes a low 1.29 percent projected increase in health-insurance costs and zero percent inflation, which means a zero percent cost-of-living adjustment for the city’s 94 full-time-equivalent workers.

Stearns noted that a 2 percent step increase is included in collective-bargaining agreements with some city workers and was city policy for other workers.

The seven new firefighter-paramedics that will enable the city to provide 24/7 emergency services will cost $535,000, but much of that can be paid for in the first year by the federal Safer grant awarded to the city last December. The rest of the money could come from the 24-mill levy approved by voters last fall.

Firefighters will work in 24-hour shifts followed by 48 hours off. A total of 100 hours of overtime is built in, Stearns said, for a total cost of $1.4 million for department personnel.

Building isn’t all that’s slowed down in the local economy — a drop in retail sales means a 0.71 percent decrease in year-to-date resort tax revenue. Resort tax revenue for this past March was 17 percent less than for March 2008, Stearns said.

Property taxes are tracking normally, Stearns said, and fines and forfeitures are up $136,626 as the city court continues to clear its backlog.

While money continues to accumulate in the resort-tax and tax-increment financing (TIF) funds to pay for the downtown street reconstruction and parking projects as well as the new emergency services center, the administration account was already 3 percent over budget.

That account was used to pay off vacation and sick-leave accruals for former city manager Gary Marks and former financial director Mike Eve, hiring interim city manager Dennis Taylor and paying for a headhunter to find current city manager Chuck Stearns.

Stearns also noted that the wastewater fund shows a cash-balance deficit for the third quarter, which could force the city to raise sewer rates.