City considers lowering taxes or increasing reserves

The city of Whitefish’s preliminary budget is looking better than expected as more numbers are finalized.

The city is anticipating to increase its year-end cash balance by placing 12 percent of the budget into reserve, compared with the 10 percent anticipated for reserve during initial budget talks in June. The city is expecting to place $1.12 million into the cash reserve at the end of the 2014 fiscal year.

The city council held a work session July 29 taking a last review of the numbers in preparation for a vote on the final budget later this month.

The property tax rate is expected to stay steady at 120.4 mills. Historically, Whitefish has had low property tax mill levy rates because of the resort tax rebate and high property valuations.

The preliminary budget anticipates a 4.02 percent growth in the tax base over 2013. The city expected to have the final mill levy numbers this week.

City Manager Chuck Stearns said it’s possible that the percen age growth in the tax base could be higher than projections. This would give the city council the option to increase reserves, increase expenditures or decrease taxes, he noted.

The city council did not have the four members present at the meeting required to have a quorum and vote on the matter. Councilors absent were Phil Mitchell, Bill Kahle and Frank Sweeney.

However, the councilors at the work session, along with the mayor, voiced their preference on how to handle extra money should the tax base growth be higher than anticipated.

Councilor Chris Hyatt suggested that any additional funds gained should be split between a reduction in taxes and adding to the city’s cash reserves.

Councilors Richard Hildner and John Anderson said they would prefer to add the money to the reserve fund.

“I think we need to be fiscally prudent and put money in the reserve,” Anderson said. “It’s a nice story to say we’re lowering taxes, but it should just go to reserves.”

Mayor John Muhlfeld said lowering taxes by a small amount now could cause issues later.

“We don’t want to put a future council in the difficult position of having to raise taxes if times aren’t as good,” he said.

Included in the budget is a proposed 3.7 percent pay increase for city workers. This includes a 1.7 percent cost-of-living increase and a 2 percent longevity adjustment.

In addition, a 3.7 percent pay increase for the city manager and the same percentage increase for the police chief is listed. A cost-of-living increase of 1.7 percent increase in pay is planned for the city judge.

The council is expected to adopt a final budget on Aug. 19.