Council struggling with budget cuts
Questions about tax figures provided by the county assessor's office has confounded the Whitefish City Council's difficult job of finishing next year's budget under trying economic times.
When the council met Aug. 31 to discuss a budget strategy, they set two goals — reduce the budget by $234,900, equal to the amount of a federal grant used to fund additional firefighters, and set aside cash reserves equal to 12 percent of the general fund's total appropriations.
The first goal was political in nature — the council recognize that taxpayers approved a 24-mill levy so the city could provide 24/7 firefighter and ambulance service before the city received the five-year SAFER grant. It didn't seem right, councilors agreed, to keep the money from both the levy and the grant.
The second goal was based on good business sense — especially in light of current economic conditions. The preliminary budget had called for 9 percent cash reserves, which the city currently has, but the council didn't think wasn't enough.
Mill figure questioned
To help the council find cuts that added up to the $267,000 needed to reach those goals, city manager Chuck Stearns and city financial director Rich Knapp asked the department heads to prioritize cuts into A, B and C tiers.
Two external factors, however, muddied the budget process — the state's six-year re-appraisal cycle and an audit of the city's TIF district by the county assessor office. While the state revenue department struggled with the re-appraisal process, Stearns and Knapp expected the mill figure for Whitefish to increase by about $1,000 to $20,500.
Instead, the mill figure came in at $19,435, slightly less than in the previous fiscal year. The assessor's office explained that their audit showed a 50 percent increase in the incremental value of the TIF district. As the taxable value of the TIF district increases, the additional tax revenue goes into the TIF fund.
That was good news for the TIF fund, which is used for capital projects like the new Emergency Services Center, but not good news for the general fund, which uses property taxes to pay for police, fire and other city services. In fact, the taxable value of the rest of the city declined by 0.33 percent as a result of the audit.
The concern of councilors and staff was that if they raised the number of mills to the maximum allowed by the state, 117.83, in order to meet their budget goals, it would look like the city was raising taxes. If the mill figure was higher, however, a lower number of mills could be assessed.
Stearns pointed out to the council that local taxpayers will face about 555 mills when state, county, school and city taxes are added together, so lessening the impact of an overall tax increase is really beyond the city's ability. In addition, some properties likely will re-appraise at 40 percent higher, while others will only increase by 4 percent.
Stearns said the county assessor's office claimed it found numerous properties that had been accidentally left out of the TIF district during its seven-month, 600-page audit. But mayor Mike Jenson and councilor Nick Palmer felt strongly that the assessor's office had made an error.
The last word from the city was that city clerk Necille Lorang had found significant errors in the county audit after spending seven hours going through the paperwork. That would be good news for the city, but as of presstime, the city had not received word from the county assessor's office about Lorang's findings.
Layoffs and furloughs
Plowing ahead, the councilors looked at ways to reduce the budget. The subject of "furlough days' proved particularly contentious.
Stearns said having city workers and staff take one day off without pay could save the general fund about $18,000 and save the public works department about $8,000. He said the idea is used extensively across the U.S., and despite challenges by unions, he believed Whitefish could order furlough days to achieve budget goals.
Palmer promoted the idea of furlough days, saying he'd like to see the pain 'spread around." He said city workers should consider it a "blessing" they have a job, considering the current recession.
Councilor Nancy Woodruff noted that before she lost her job, the company she worked for cut salaries 10 percent across the board.
But police chief Bill Dial, speaking for three other department heads, said city workers in the police, fire, parks and public works departments were solidly against furloughs and in favor of layoffs.
The only layoffs seriously considered by the councilors, however, were not in those departments — they were in the planning and building departments.
Fire chief Tom Kennelly had proposed two paramedic-firefighter layoffs under the C level cuts, but the councilors quickly crossed that idea off, saying they just finished going through a 24-mill levy vote and SAFER grant to get seven additional firefighters.
In addition, there's the feeling among councilors, staff and workers that any city layoffs should take place in the planning and building departments because of the dramatic drop in development resulting from the credit crisis and recession.
City planning director David Taylor, however, explained to the councilors that good planning and building inspections promote health and safety by ensuring development is done in the proper way and buildings won't fall down.
He also pointed out that planning and building staff are supported by fees, while police and fire-ambulance personnel are paid out of property taxes. In better times, when Whitefish was booming, some of the money taken in by the planning and building department went to support the police department.
The consensus of the council, however, was in favor of layoffs, not furloughs. Jenson pointed out that mandated furloughs could create general morale problems while people who are laid off can always be hired back.
Stearns was directed to consider all the proposals for another council budget meeting.