Whitefish City Council on Aug. 20 approved a $44.2 million budget for fiscal year 2019.
Total appropriations in the budget are $3.2 million or 8 percent higher than last year’s budget.
This is mostly due to an increase in capital projects, the addition of new staff positions, increases in wages and health benefits and a significant increase in interfund transfers, according to City Manager Adam Hammatt.
The budget includes adding four full-time positions in the city along with adding additional seasonal workers in the Parks and Recreation Department. The budget includes a 4 percent increase in wages for all city employees and increased costs of medical insurance as the city will cover 3.4 percent of the 3.7 percent increase in premiums.
Under the budget, the average home valued at $350,000 can expect an increase of about $57 per year, according to the city. While the city is levying the same number of mills as last fiscal year, increases in collections from the city’s maintenance districts is driving the increase in the total tax bill.
Councilor Katie Williams thanked city staff for their work on the budget.
“Thank you to staff for working so diligently to make sure that you followed Council’s direction that we did not have large impacts this year to residences,” she said. “We voted not to increase the tax levy and I’m very happy that we ended with an increase of less than $5 per month per household.”
The resort tax rebate to tax payers was higher than projected during the draft budget. The city collected nearly $4 million total in resort tax last fiscal year, resulting in a tax rebate of $1.3 million.
Councilor Richard Hildner praised the resort tax for providing a tax rebate to Whitefish property owners.
“This illustrates the importance of our resort tax to keep property taxes down,” he said. “It’s the envy of many of the communities our size across the state.”
Assistant City Manager and Finance Director Dana Smith said because of the resort tax rebate many property owners would see a net zero increase in just their property tax portion of their bill. However, an increase in maintenance assessments to address capital needs in some city departments will result in the slight increase to the total bill.
“While the property tax levy resulted in no increase for the average tax owner increases in the city’s maintenance districts will actually increase the property tax bill,” she said.
To keep up with the annual Consumer Price Index increases and continue to address capital needs in some departments, the budget increases some assessments. The street maintenance assessment would result in an increase of about $3.78 per household. An increase in both street lighting districts for residential about 50 cents per household and about $2.48 per lot for commercial. A increase in the parks and greenway assessment is at about $2.86 per household.
A large increase is planned for the stormwater assessment of $50 per lot.
The budget is balanced with the same number of total property tax mills levied by the city as last year. The only growth in property tax revenue is from newly taxable property.
Smith said the city’s taxable value increased by 2.18 percent compared with the prior year. During a non-reappraisal year, the only growth of property tax revenue is restricted to only newly taxable property that results from new construction or annexations.
“We had projected a growth of 3.2 percent, but the [Montana] Department of Revenue said that new construction coming on is delayed by two to three years,” she said. “Many communities around Montana are reporting unexpected decreases in value, and there are communities struggling because of this.”
To compensate for the change, the city is projecting less cash reserve than originally planned. The budget calls for a cash balance in the property tax supported funds to be higher than FY18 by $40,000. However, the percent of the budget is 14.76 percent compared with last year’s at 15 percent.
This decrease in cash reserves is mostly due to increased capital expenditures and keeping the number of mills levied the same as the prior year, according to Hammatt.
“While the goal of the city is to increase cash reserves against a future day of need, this year’s reduction in the cash reserves is due to the one-time increase in capital expenditures in the Parks and Recreation fund to address the immediate needs of our urban forestry program,” Hammatt notes in his budget memo.
Hammatt said it will be important to build cash reserves back up to maintain service levels during the next recession. Hammatt says he recommends the city establish reserves in the 20 percent to 25 percent of annual expenditures range.
The ending cash balance for the FY19 budget is $1.3 million. That number should be about $1.8 million to $2.3 million, he says.