Budget pros and cons

The forecast for the city’s budget in

10 years looks good, Whitefish city manager Chuck Stearns told the

city council on April 6, but there are serious budget issues now

that need to be addressed.

The city’s tax-increment financing

(TIF) district will expire in 2020, freeing up a wealth of property

tax revenue for the general fund, he explained. Two years later, in

2022, the city can consider annexing Whitefish Mountain Resort and

the Big Mountain Village, dramatically increasing the city’s tax

base.

The bad news right now, Stearns said,

is that recent property-tax appraisal reviews and protests have

reduced forecasted growth in the city’s tax base from 1.6 percent

to 0.8 percent; the city will lose $52,000 for firefighters as the

federal SAFER grant continues to be phased out; medical insurance

costs are increasing by 10.5 percent; and union contracts call for

1.3 percent cost-of-living increases and 2-4 percent step increases

for city workers.

The good news is that resort tax

revenue has improved significantly, providing $99,500 in direct

relief for the next fiscal year and growth for the following

years.

“The resort tax could save us,” he

said.

Resort tax revenue can cover the

unusual extra $122,000 expense of having 27 two-week payrolls in

the next fiscal year instead of 26, which happens every 11 or 12

years, Stearns said. Some cities save for this eventuality, but

Whitefish has already “burned through its reserves,” he said.

The combined cost-of-living and

step-pay increases for some city workers adds up to 3.3 percent,

which adds up to $122,400 from property taxes and $184,000 for all

funds. The police union, which negotiated to delay its step

increase three years ago, will receive a 5.3 percent combined pay

increase.

On top of that, dispatch fees to the

county’s new 911 center could increase because of the 2010 census

results, revenue from municipal court fines is down about $40,000,

and “the fire and ambulance budget is getting worse and is the main

problem area among tax-supported funds,” Stearns said.

The SAFER grant, which the city

received after voters approved a 24-mill levy for 24/7 fire and

ambulance service, is phased out over four years.

Stearns called pay steps of 2 percent

“unsustainable” if the tax base grows at only 0.8 percent. One

option is to go to the voters at some point and ask for an increase

in the resort tax to pay for emergency services. He said the idea

makes sense because the large number of tourists that come to

Whitefish drives up emergency-services costs.

Other positive changes exist, Stearns

noted. The building department could benefit from three new homes

that could be built in the Iron Horse subdivision, the Don K

dealership expansion, the new Casey’s Bar and a Habitat For

Humanity project in Columbia Falls. The new prosecution contract

will also save the city $35,000.

Looking at the options, Stearns said

the city could reduce costs by program or service reductions,

layoffs or furloughs, or by negotiating benefit reductions, pay

reductions or pay freezes.

Options to increase revenue include fee

or fine increases, particularly for ambulance service; going to the

voters for a property tax or resort tax increase; leasing out parts

of City Hall and the old fire hall; annexation; or selling city

land and assets.