Staff costs drive spending increase in city budget

A plan to add new staff positions, along with increases in wages and health benefits, seem to be pushing an increase in the city of Whitefish’s proposed budget.

The draft budget for fiscal year 2019 shows an increase of about $1.6 million or 4 percent increase in spending over last year’s budget. The draft budget released last week includes plans to add four new year-round employees, along with some seasonal staff, and calls for a 4 percent wage increase for employees.

The total budget is $42.6 million compared to the fiscal year 2018 budget of $40.9 million.

“The increase in expenditures is mostly due to additional staff positions and increases in a wages and health benefits,” City Manager Adam Hammatt said in his budget memo.

The budget factors in a property tax mill levy increase of 3.27 mills or a 5.7 percent increase in property taxes. The increase in the mill levy is mostly in the permissive medical levy totaling 3 mills due to the increased costs of health insurance benefits, Hammatt says.

“During a non-reappraisal year, the growth of property tax revenue is restricted to only newly taxable property, which is currently estimated at 3.2 percent,” Hammatt said. “The actual mill value will not be received until the first Monday in August from the Montana Department of Revenue.”

The proposed budget calls for levying 123 mills, compared with 120 in 2018 and 119 levied in 2017.

In the memo, Hammatt points out that Whitefish’s property tax mills were second lowest in the state in fiscal year 2018 when compared with other Montana cities with a population of more than 4,500.

The increase in staffing calls for a full-time information technology administrator to address the increasing IT needs for all city departments. The position is budgeted for a partial year at a cost of $77,616. The IT work had been handled by the city’s GIS coordinator, but that has caused the GIS needs to be “extremely behind.”

“With the recent cyberterroism attacks on Columbia Falls schools, we recognize the need to make improvements, set more robust security policies and protect the security of our vital information,” Hammatt said.

A full-time housing program coordinator is included in the budget to assist with the implementation of strategies identified in the Whitefish Strategic Housing Plan and address the need for affordable workforce housing. The position is budgeted to begin in September and is estimated to cost $93,581 for 10 months during the fiscal year.

In addition, a full-time police officer is called for to backfill a vacancy created when an officer joined the Internet Crimes Against Children Task Force program. This is slated at a cost of $58,000 for a partial year.

A part-time customer service clerk to assist in the cashier and information desk and finance department at City Hall is also budgeted for a partial year at $17,730. Additional seasonal staffing is included at a cost of about $20,900 to provide staffing for the aquatic invasive species check stations at State Park and City Beach on Whitefish Lake, as well as additional park maintenance help.

The budget proposes a 4 percent pay increase for city workers. Last year’s increase was 4.5 percent.

Hammatt notes that the three city employee unions have agreed to a 4 percent ceiling for pay increases, and it was decided it was in the best interest of the city to also set a ceiling of 4 percent for non-union staff despite an increase in the consumer price index and taxable value that could have resulted in a 5 percent salary increase for non-union.

“This ceiling for all employees creates consistency and provides us some predictability since the days of a CPI less than 2 percent appear to be behind us for now,” Hammatt said. “Pay increases of 4.5 percent or 5.1 percent each year is not sustainable.”

In addition, the budget factors in the city covering 3.4 percent of a 3.7 percent increase in medical insurance premiums.

The proposed budget is projecting an ending cash balance in property tax supported funds 15.67 percent or a slight increase over last year’s 15.24 percent.

Hammatt says the goal of the city is to increase cash reserves to prepare for a future day of need. He is recommending higher reserves of 20 percent to 25 percent of annual expenditures or up to about $2 million.

“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,” he said. “These reserves are also important for emergencies.”

The city’s capital improvement program is expected to have a slight increase in spending of $119,046, which is mostly due to improvements at the wastewater treatment plant.

To keep up with the annual Consumer Price Index increases and continue to address capital needs in some departments, the budget proposes increases to some assessments. An increase in the street maintenance assessment would result in an increase of about $3.78 per household. An increase in both street lighting districts of 3 percent or for residential about 37 cents per household and about $2.48 per lot for commercial. A increase in the parks and greenway assessment is proposed at about $2.86 per household.

A large increase is planned for the stormwater assessment of $50 per lot, from $12.53 to $62.53.

The stormwater assessment was slashed in the last recession and has not been adjusted since, Hammatt notes. Stormwater personal costs were allocated to other departments and since 2010 other departments have been subsidizing the stormwater fund. Prior to the recession, the fee was $72 per lot and based on CPI should be at $86.37, Hammatt said.

“We need to begin to undo these subsidies so that stormwater can be the self-balancing fund it should be,” he said.

Under revenue, the budget anticipates an 18 percent increase in revenue at $32 million for the 29 budgeted funds.

Hammatt said most of the increase, which is about $4.8 million total, is the result of a $2 million loan to finance a portion of the new wastewater treatment plant design.

In addition, increases in revenue are expected from the increase in the stormwater assessment at $285,000, increase in the water service charges of $393,000, new gas tax allocation estimated at $200,000 and an increase in property tax revenue.

City Council is set to hold its first budget work session on May 29 and a second session on June 11. It will hold a public hearing on the adoption of the preliminary budget on June 18, and hold a second hearing on Aug. 20 when it is expected to approve the final budget document.