Council OKs $55.7 million budget

Whitefish City Council last week approved a budget totaling $55.7 million.

Total spending in the budget is $11.49 million or 25% higher than last year’s budget due to an increase in capital projects of $11.6 million compared to the prior fiscal year. The increase includes spending for significant water and wastewater projects, resort tax funded street reconstruction projects and other capital improvement projects.

The fiscal year 2019 budget totaled $44.2 million.

The increase in city taxes for the average residential home with 50 feet of frontage is $42.75 per year. This is roughly $2 less than was proposed in the city’s draft budget.

The city was forced to make last-minute changes to the budget this month after it received taxable valuations from the Montana Department of Revenue that were less than estimated in the draft budget.

The city had projected its mill value to increase by 8% based upon building permits in prior years, annexations and growth in the real estate market. However, when it received its taxable valuations from the state, the actual increase was only 6%.

Assistant City Manager and Finance Director Dana Smith said the lower than expected value continues to be investigated, but it created a challenge in balancing the budget as it meant a decrease of about $90,000 in property tax revenue for the city than was anticipated.

“We had significant building completed in 2018 that should have come in for 2019,” Smith said. “The Department of Revenue says it is still adjusting new taxable revenue, but that means were loosing out on revenue.”

During a reappraisal year, the growth or property tax revenue includes both newly taxable property from new construction, as well as the change in values of existing property for the past two years.

Once taxable property is no longer new to the tax roll then the city only gets an increase that is limited to half the rate of inflation, which is 1.02% for fiscal year 2020, Smith explained, thus meaning the city looses out on revenue if the new properties aren’t included in the first year. Municipalities can’t appeal the tax valuation.

“The real problem needs to be addressed by the Legislature,” Smith said. “This is a problem for all cities. It’s a lot for the Department of Revenue to get through by August [when valuations are due], but this is a problem.”

Council in discussing the budget, asked Smith to work with Mayor John Muhlfeld to write a letter to the governor requesting action to remedy the problem.

“I am concerned about our newly taxable value being rolled into the taxable value,” Councilor Andy Feury said. “We need to suggest future legislation to fix this.”

To address the issue, Whitefish in the budget chose to use 4.62 carry-over mills from prior years that were never levied. The budget levies a total of 117.636 mills, which is a decrease from last year’s 120, but total property tax revenue will increase by 3.5% over the prior year due to the higher mill value.

“The carry over mills are what’s saving us this year,” Smith said. “But we won’t be able to do that next year.”

Spending increases are being driven by capital improvement projects.

Toping the list of projects for FY20 is the construction of a new wastewater treatment plant with expenditures at $9.4 million. Also included in the budget is expansion of the water treatment plant at a cost of $1.4 million.

Improvements in Depot Park are set to run $1.6 million for the FY20 budget. Resort tax funded projects including the reconstruction of State Park Road are budgeted to increase by about $1.7 million.

The budget includes a 4 percent pay increase for city workers. In addition, the city is planning to cover 5.5 percent of an 8 percent increase in medical insurance premiums.

The budget adds one full-time police officer beginning Jan. 1, seasonal staffing for downtown maintenance and cleaning, and additional seasonal staffing for the aquatic invasive species boat decontamination station near City Beach.

The budget includes increases to assessments. An increase in the street maintenance assessment would result in an increase of about $3.89 per household, an increase in both street lighting districts of about 38 cents per household and $2.56 for commercial, and a parks and greenway assessment increase of about $3.14 per household.

While the draft budget called for no increase in the stormwater assessment this year, the lower than expected tax valuation prompted the city to include an increase in the budget of $15 per lot for the fee.

The budget is projecting an ending cash balance in property tax supported funds of 15% compared to last fiscal year’s budgeted amount of almost 14.7%.

City Manager Adam Hammatt says the city’s goal remains to increase cash reserves to stay between 20% to 25% of annual expenditures.

“Typically, we end up a little higher on revenues and a little lower on expenditures, which should yield even higher reserves at year end,” he said.

The entire adopted FY20 budget document is located under city news on the city’s website at http://www.cityofwhitefish.org/.