City property owners could see tax hike

Whitefish property owners will likely see an increase in their city tax bill this year after a one-time increase in the resort tax rebate caused a reduction in tax bills last year.

The city of Whitefish recently released its preliminary budget, which shows an increase in property taxes of 8.65 percent, but also a decrease in overall spending.

City Manager Adam Hammatt explained the budget in a memorandum last week sent out to City Council. He said the budget includes a reduction in the resort tax relief of 6.24 mills.

“This reduction stems from a false increase in resort tax relief last year when only one debt payment had to be made in 2016,” he said. “The money set aside for the other debt payment had to be returned to the taxpayers, thus a one-time increase in resort tax relief [last year].”

The city’s 3 percent resort tax collection results in a property tax reduction based on 25 percent of the tax revenues collected during the preceding fiscal year. The resort tax increased from 2 to 3 percent on July 1, 2015 to fund the city’s portion of the conservation easement in Haskill Basin.

City Finance Director Dana Smith said the additional funds collected following the increase in the resort tax were set aside to make bond payments for the conservation easement. However, the city only made one bond payment that year instead of two as originally planned, she said, causing the additional funds to be returned to homeowners in the form of a one-time tax relief increase.

Smith said while there has been growth in the resort tax it wasn’t enough this year to make up the difference causing the amount of the property tax reduction from the resort tax to decrease. This year’s proposed budget has resort tax relief at about 47 mills, while the 2017 number was about 53 mills.

“We are where we should be now,” she said. “There is growth happening in the resort tax.”

In his memo, Hammatt points out that Whitefish’s property tax mills were the third lowest in the state in fiscal year 2016 when compared with other Montana cities with a population over 4,500.

“Whitefish has historically had very low property tax mill levy rates because of our resort tax rebate for property tax reductions, high property valuations, and maintenance district assessments.”

Spending for fiscal year 2018 is expected to be 24 percent lower than last year’s budget. The city expects to spend about $12.5 million less this year. The bulk of that decrease in appropriations — $10 million — is as a result of the completion of the new City Hall and parking structure set to open this month.

While the proposed budget calls for an increase in net property mills levied compared with last fiscal year, the amount for fiscal year 2018 is below that levied in 2016. The proposed budget calls for levying 127 mills for 2018, compared with 119 in 2017 and 134 levied in 2016.

Hammatt is projecting an increase of 8 percent in the city’s tax base.

“This year is a reappraisal year so we have projected growth for both newly taxable property and for increased values of existing property during the past two years,” he said.

The budget proposes a year-end cash reserve of 12.13 percent or a slight increase over last year’s 11.57 percent.

Hammatt is recommended the city establish even higher reserves of 20 percent to 25 percent or up to $2 million.

“The goal of the city is to increase cash reserves against a future day of need,” he said. “In past years, our reserves have been reduced and it will be important to build them back up if we are to maintain service levels during the next recession. These reserves are also important for emergencies.”

To fund the city’s capital improvement program, some assessment increases are proposed in the budget. A parks and greenway assessment increase of $60,000 is planned, which would result in an increase of about $7 per household. A street maintenance assessment increase of $95,000 would result in a $13 per household increase. While an increase in both street lighting districts is planned, which would result in about $1 increase per household and about $3 increase per commercial lot.

As part of the budget, the city anticipates adding a few staff members and moving a few positions from seasonal or part-time to full-time staff. The budget proposes a 4.5 percent pay increase for city workers. Last year’s increase was 3.8 percent.

The increase in staffing calls for a full-time long range planner to tackle planning goals established by City Council. The budget estimates the cost of the position at $84,000, but Hammatt estimates that will save the city almost $150,000 by not hiring consultants to do the same work.

Two seasonal park employees will move to full-time to cover the loss of the Parks Superintendent position.

The parking enforcement position will move to full-time with the addition of the new parking structure. The city anticipates the increased revenue from citations will cover at least half of the $28,000 needed to increase the position.

The budget calls for adding a part-time administrative assistant for the Fire department, which previously did not have administrative help.

Also included is an increase in the part-time staff budget for the Police department at just over $11,000. The Police department has seen a 40 percent increase in calls, according to Hammatt, and if the trend continues it may need to add additional full-time officers. In addition, an increase of just under $37,000 is expected for the school resource officer as a COPS grant that helped pay for the position has run out.

The budget calls for staffing two positions for the full fiscal year 2018 that were hired mid-way through the previous year. The facility maintenance technician position and the IT support positions will now be budgeted for the entire year.

Staffing will also be added to handle aquatic invasive species inspection program at Whitefish Lake State Park. The increase in cost is just over $40,000 for that addition.

Under revenue, the budget anticipates a 6.3 percent decrease in revenue at $27 million. Hammatt said this is also caused by the completion of the City Hall project and temporarily delaying the financing of a new wastewater treatment facility design and engineering.

Council will hold budget workshops on May 30 and June 12. During its regular meetings, Council will hold a public hearing on the preliminary budget on June 19 and adopt the final budget on Aug. 21.