Budget pros and cons
The forecast for the city’s budget in
10 years looks good, Whitefish city manager Chuck Stearns told the
city council on April 6, but there are serious budget issues now
that need to be addressed.
The city’s tax-increment financing
(TIF) district will expire in 2020, freeing up a wealth of property
tax revenue for the general fund, he explained. Two years later, in
2022, the city can consider annexing Whitefish Mountain Resort and
the Big Mountain Village, dramatically increasing the city’s tax
base.
The bad news right now, Stearns said,
is that recent property-tax appraisal reviews and protests have
reduced forecasted growth in the city’s tax base from 1.6 percent
to 0.8 percent; the city will lose $52,000 for firefighters as the
federal SAFER grant continues to be phased out; medical insurance
costs are increasing by 10.5 percent; and union contracts call for
1.3 percent cost-of-living increases and 2-4 percent step increases
for city workers.
The good news is that resort tax
revenue has improved significantly, providing $99,500 in direct
relief for the next fiscal year and growth for the following
years.
“The resort tax could save us,” he
said.
Resort tax revenue can cover the
unusual extra $122,000 expense of having 27 two-week payrolls in
the next fiscal year instead of 26, which happens every 11 or 12
years, Stearns said. Some cities save for this eventuality, but
Whitefish has already “burned through its reserves,” he said.
The combined cost-of-living and
step-pay increases for some city workers adds up to 3.3 percent,
which adds up to $122,400 from property taxes and $184,000 for all
funds. The police union, which negotiated to delay its step
increase three years ago, will receive a 5.3 percent combined pay
increase.
On top of that, dispatch fees to the
county’s new 911 center could increase because of the 2010 census
results, revenue from municipal court fines is down about $40,000,
and “the fire and ambulance budget is getting worse and is the main
problem area among tax-supported funds,” Stearns said.
The SAFER grant, which the city
received after voters approved a 24-mill levy for 24/7 fire and
ambulance service, is phased out over four years.
Stearns called pay steps of 2 percent
“unsustainable” if the tax base grows at only 0.8 percent. One
option is to go to the voters at some point and ask for an increase
in the resort tax to pay for emergency services. He said the idea
makes sense because the large number of tourists that come to
Whitefish drives up emergency-services costs.
Other positive changes exist, Stearns
noted. The building department could benefit from three new homes
that could be built in the Iron Horse subdivision, the Don K
dealership expansion, the new Casey’s Bar and a Habitat For
Humanity project in Columbia Falls. The new prosecution contract
will also save the city $35,000.
Looking at the options, Stearns said
the city could reduce costs by program or service reductions,
layoffs or furloughs, or by negotiating benefit reductions, pay
reductions or pay freezes.
Options to increase revenue include fee
or fine increases, particularly for ambulance service; going to the
voters for a property tax or resort tax increase; leasing out parts
of City Hall and the old fire hall; annexation; or selling city
land and assets.