Wednesday, July 24, 2024

City's preliminary budget projects increase in expenditures

Whitefish Pilot | June 5, 2024 12:00 AM

The Whitefish City Council met last week for the first of two work sessions to discuss the proposed budget for fiscal year 2025. The Council will discuss the budget again June 10 and the final budget will be adopted in August.

Currently, the FY 2025 total appropriated budget is $50,850,004. Compared to the prior fiscal year, FY 2025 expenditures are set to increase $760,210.

“The FY 2025 budget presents some challenges as the city works to address lagging wages

compared to the market and a decrease in additional property tax relief from resort tax,” Whitefish City Manager Dana Smith wrote in her transmittal letter. “As a result, a 7.75 mill property tax increase is preliminarily budgeted.”

Smith said 2.75 mills of the 7.75 mills are a function of the market and the additional 5 mills are for a wage adjustment that has been proposed due to the recent market rate study.

A 7.75 mill property tax increase means a home with a market value of $800,000 would see an increase in property taxes of $83.65 annually.

“Overall, taxes are still going to be less than fiscal year 2020 and I think that's a very important thing to point out,” Smith said. “From a city tax perspective, you’re looking at increasing 10, even up to 11%, but when you look at what (homeowners) paid back in fiscal year 2020 … they’re paying less than they were paying back then.” 

The proposed budget report says with the exception of one year, the city has provided relief to property taxpayers in the form of reduced levies and assessments over the past five years. For the year that was an exception, the increase was small and the reduction the following year was larger than the increase.

Resort tax collections are estimated to be slightly below the FY 2024 budget, so it is expected the city will see a decrease of about $293,000 in property tax relief for FY 2025. 

Budgeted revenues and other financing sources for all funds total $35,895,399 which is $515,293 less than the FY 2024 budget of $36,410,692.

The budgeted payroll costs for FY 2025 to cover the wages and employer contributions for about 120 full-time city employees is proposed to increase about $726,000 to a total cost of $14.4 million. 

Reasons for the increase in cost include a wage increase for most employees spurred by a recent wage study, and increasing health insurance premium costs.

“With a Consumer Price Index increase of 3.6% and an estimated taxable value increase of

2.50%, most city employees in a normal year would receive a pay increase of 3.5%,” Smith wrote. “However, given the results of the city of Whitefish Wage Market Rate Study … and the need to retain employees to ensure we continue to deliver exceptional service to our community, a pay increase of 8.5% for most employees is budgeted for FY 2025.”

A discussion about how to go about bringing employee wages up to market rate will be continued at the next budget work session and Smith will bring more calculations for the council to consider. Nearly every department reported increased expenditures due to increases in personnel costs due to proposed wage adjustments.

Overall capital spending in FY 2025 is projected to increase $978,551 compared to FY 2024, mainly due to project costs for the South Water Storage and Production project getting underway.

The report says in property tax supported funds, capital spending is expected to decrease by $223,787 from the prior year due to the completion of equipment purchases in both the Law Enforcement and Fire and Ambulance Funds.

The FY 2025 proposed budget maintains the Residential Lighting Maintenance District, Commercial Lighting Maintenance District, Stormwater Maintenance District, Street Maintenance District, and Parks and Greenway Maintenance District assessments at the same rates as FY 2024.

The Law Enforcement Fund is proposing an increase in expenditures of about $80,000 compared to last year while the Fire and Ambulance Fund is forecasting a decrease in revenues of about $283,000.

The Parks and Recreation Department is holding steady with a slight increase in fund revenues while the Library expects its FY25 total revenues to be about $5,000 more than last year’s total. 

The next work session to review the proposed FY 2025 budget will be June 10 at 5:30 p.m. at Whitefish City Hall. The public is welcome to attend.