Budget reduces taxes by 12 mills

Total appropriations for this year's city budget are about 56 percent higher than last year's, but the net property tax levy will be about 10 percent less.

The Whitefish City Council approved the final budget at its Monday meeting. Total appropriations increased by $16.3 million to $45.4 million, but the number of mills levied will decrease from 112.216 to 100.28, which should be good news to taxpayers facing higher property reappraisals this year.

That figure does not take into account the property tax rebate from the city's resort taxes.

The higher appropriations figure results from how the budget is calculated. The total appropriations include a large capital project, the $7.7 million Emergency Services Center, as well as $4.1 million for refinancing two older tax increment bonds at a lower interest rate.

It also includes $5.6 million for the tax increment district, which doubled in value since last year as a result of growth and development, and $3 million donated by Michael Goguen to the A Trail Runs Through It project, since the city is the "landlord" for the recreational trail project.

The budget provides $645,963 in cash reserves for the general fund, which is more than 17 percent, a relatively safe figure considering current economic conditions. General fund appropriations, which primarily come from property taxes, increased by 0.051 percent.

During work sessions leading up to the final vote, councilors set a goal of cutting expenditures or increasing fees to reduce the property tax mill levy by an amount equal to the first-year revenue from a federal SAFER grant.

Voters had approved a 24-mill levy for 24/7 emergency services, but the grant provided a second source of funding for the same purpose. The councilors thought that was unfair to voters, which translated into a $234,090 budget cut.

Councilors set a second goal of increasing the general fund's cash reserves from 7.3 percent in the preliminary budget to 12 percent, or about $113,090.

Complicating the councilors' efforts was an unexpectedly low mill figure provided by the Flathead County assessor's office — 0.3 percent less than in the prior fiscal year. At one point, the councilors considered using a revolving fund for the JP Road special improvement district to cover the $118,000 mill levy adjustment.

All told, the councilors were looking at a general fund adjustment of $465,180.

The low mill figure problem, however, disappeared after city clerk Necile Lorang performed an audit of the county assessor's audit of the city's TIF district and located 70 questionable properties. The assessor's office agreed and upgraded the city's mill figure to $20,103, which is about 3.1 percent higher than in the prior fiscal year.

The re-coding of the 70 properties meant a loss to the TIF district, "but that is not where our problems are," city manager Chuck Stearns said.

To help the councilors assess expenditure cuts and fee increases, city department heads were directed to prepare options equal to about 6 percent of their total appropriations. Those options were then classified by difficulty into three levels — A, B and C.

Those hard decisions were softened by the mill figure adjustment, a $114,975 spreadsheet error and the departure of the city's neighborhood resource officer.

One person addressed the council during its Sept. 21 public hearing on the final budget proposal. John Murdock asked about figures for the Safer grant and the Emergency Services Center, and he asked if the city had set aside enough money to pay for the judgment in the Walton case.

William and Theodora Walton sued the city after former planning director Bob Horne denied their request for a building permit for a home overlooking Whitefish Lake on Houston Point. Horne cited the city's critical areas ordinance in denying the permit.

A jury in June 2007 unanimously agreed that the city had violated the Waltons' right to equal protection and awarded the couple $300,000 in damages.

In September 2008, Flathead County District Court Judge Ted Lympus awarded attorney fees to the Waltons. The Whitefish law firm Morrison and Frampton had asked for $88,074 in attorney fees, $7,920 in paralegal fees and $4,070 in costs and expenses.

Interest on both the damages and attorney fees acrues at 10 percent since the time of judgment. The city appealed the case to the Montana Supreme Court. Briefings and oral arguments have concluded, and a decision could come out during this fiscal year.