Layoffs and a small tax increase on horizon
Facing depleted cash reserves in an unsure economy, Whitefish's preliminary budget for the next fiscal year calls for four layoffs, a small tax increase and shifting money from one fund to another.
"As expected, the FY11 budget was probably the most difficult budget in many years," city manager Chuck Stearns said in his June 6 memorandum on the proposed budget. "The continuing economic slump in the nation, state, local area and in construction has continued to affect all sectors of the economy. We have depleted most of our reserves, and it is now time 'some would say beyond the time) to get our revenues and expenditures on a more sustainable basis."
Stearns said he will take responsibility for "at least two decisions' where, in hindsight, he probably should have taken different action — his optimism about a rebounding construction sector last summer and delaying layoffs this past February.
After discussing the budget with each department head and making 'some of the easier, preliminary reductions," Stearns and city finance director Rich Knapp found the city still needed to make $575,000 in expenditures reductions or revenue increases to balance the budget.
As a result, the proposed budget calls for several staff changes:
¥ A police detective and the city animal control officer would not be replaced when they retire. The detective would be laid off about five months before he planned to retire.
¥ Three full-time city workers would be laid off effective July 31 — a police officer, a firefighter and a parks worker.
¥ A public works project manager would go from full-time to half-time.
"There's no way to reduce costs without layoffs," Stearns told the Whitefish City Council at their Monday, June 7, meeting.
Stearns noted that the city hired seven firefighters when it went to 24/7 emergency service, which was one more than was covered by the federal SAFER grant, and one more than the original plan for 14 firefighters in three shifts.
The proposed budget also calls for levying the full 24 mills of the voter-approved levy for 24/7 emergency services. Last year, the council chose to levy only about half of the 24 mills in order to provide some tax relief to property owners.
By levying the full amount, Stearns estimates that a home appraised at $300,000 would see a $91.25 annual property tax increase. Without the tax increase, another four layoffs would be necessary, he told the council, although the proposed budget does call for hiring a building inspector next May if needed.
Stearns said he's begun talks with unions representing workers in the police, fire and public works departments about wage concessions. All city workers will see a 4.2 percent hike next year except for police, which will see a 6.2 percent increase.
While the unions have not yet agreed to concessions, Stearns said it's possible to force a pay cut on non-union workers. In the meantime, he proposes a pay freeze for non-union workers and a $10,000 pay cut for himself.
City councilors Turner Askew, Bill Kahle, Phil Mitchell and Chris Hyatt told Stearns they oppose increasing taxes on Whitefish property owners.
Mayor Mike Jenson reminded them that Stearns had just handed them copies of the proposed budget and they should take the time to read it carefully before committing themselves to a position.
Several firefighters and residents from both inside and outside the city asked the councilors to avoid layoffs for emergency workers.
Montana Sen. Ryan Zinke, R-Whitefish, also spoke to the council. With payroll taxes down across the state due to unemployment, lower oil and gas revenues from Eastern Montana, and reduced corporate taxes due to shutdowns — at the same time that state spending increased by 40 percent over six years — the legislature is looking at a $400 million shortfall for the next biennium.
Zinke pointed out that Whitefish benefits from numerous state grants that are now all at risk, and he advised the city council to begin planning for the impact of significant cuts in the state budget.