City budget reflects turning economy

Whitefish’s 2013 city budget reflects an economy that is showing signs of modest improvement. No increase in the property tax rate is proposed, revenue from building permits is projected to be up and the property tax base should expand by more than 4 percent.

The proposed budget, which begins July 1, totals $36.99 million of transfers and expenditures — down 2.3 percent from the fiscal year 2012 budget. City Manager Chuck Stearns says there are many different factors that play into the budget’s final outcome.

The main changes this year, he said, are caused by almost $1.5 million more in expenditures in tax increment funds, including $1 million toward the high school reconstruction project. The change is also partially due to the Second Street reconstruction project wrapping up. Last year’s budget included a $3.37 million grant for the project. This year $1.5 million is anticipated.

“As construction winds down, that figure might decrease further,” Stearns said.

Also, most of the $3 million donation for the Whitefish Trail project has been spent or transferred to the Whitefish Legacy Partners at Mike Goguen’s request, Stearns said.

The property tax rate will stay steady at 120.4 mills.

Whitefish has historically had very low property tax mill levy rates because of a resort tax rebate and high property valuations, Stearns said.

Compared to other Montana cities with populations more than 4,500, Whitefish’s rate is less than Columbia Falls, Kalispell, Bozeman and Missoula. Stearns cautions that comparing tax rates, while interesting, can be somewhat misleading.

“Cities use property taxes to support similar, but not always the same mix of public services,” he said. “For example, some cities support libraries, public transportation and other such services with mill-rate levies while others do not.”

Revenue from building permits for the current budget year is projected at $245,902, up from $203,188 the previous year. Further improvement is anticipated in 2013, with a $311,000 projection for revenue from building licenses and permits. The $19 million high school reconstruction figures into the increased building permit revenue.

The city also annexed four properties last year that had fairly high valuations, Stearns said.

“Overall, I believe that the property tax base will increase by more than 4.3 percent, but we decided to estimate at a fairly conservative level for the budget,” Stearns said.

While Stearns says the 2013 budget was not as difficult to prepare as the past two years, there are still some tough decisions ahead for city council to mull over.

The budget proposes a 4.7 percent pay increase for city workers. The increase would include a 2.7 percent cost-of-living increase and a 2 percent step increase for employees who aren’t topped out on the pay matrix.

Stearns says the raises are warranted because the budget proposes no property tax increase. The pay increase is still subject to union negotiations and council approval.

Last year city workers received a 1.3 percent cost-of-living pay raise and 2 percent step increase.

Council must also consider pay raises for Stearns — who took a voluntary pay cut two years ago — and a pay increase for Municipal Judge Bradley Johnson. A contractual $10,000 pay increase already is budgeted for the city attorney.

Total personnel costs in the 2013 budget are proposed to go up by 2.1 percent, or $152,239, compared to 2012.

Other big expenditures in the budget will come from capital outlay projects.

The fire and ambulance budget anticipates borrowing from the State Intercap Loan program, soliciting a contribution from the Rural Fire District and the WFFA, and using some of the $300,000 given to the city from the Rural Fire District a couple of years ago to replace aging equipment.

Parks and recreation’s budget proposes $140,000 to repair the Stumptown Ice Den ice rink system.

“This proposed [budget] accomplishes a lot in regards to resuming important operating and maintenance, and capital outlay expenditures, especially for fire apparatus,” Stearns said.

A new building inspector and code enforcement officer is proposed to be hired to help handle the projected increase in work load due to construction of the new high school.

“Because of the nature of this project and its demanding time requirements for plan review and inspection, we are proposing to re-hire the last building inspector laid off two years ago,” Stearns said. “We are proposing that this inspector be used 60 percent in building inspection and 40 percent in code enforcement.”

The proposed budget would decrease year-end cash balances to $929,221 or about 11 percent of expenditures. Last year’s budget estimated the city would end 2012 with a cash balance of 12 percent of expenditures.

“Just two years ago, the year end cash balance was $169,789 or 2.4 percent of expenditures,” Stearns said.

Final approval of the budget is set for Aug. 20.