With Budget Crunch, City Feels Pressure From All Sides

By Beacon Staff

The slumping economy is backing Kalispell City Council members into a corner where they must determine how to keep the government’s finances solvent while trying to avoid making any job cuts to the fire and police departments. At the same time, Kalispell’s developers are renewing their opposition to the proposed transportation impact fees, with several new corporate voices adding to the chorus of objection. Council members sat at the intersection of these forces Monday night in a chamber filled with developers, city firefighters and police officers.

Reluctant to lay off any city employees, the council directed Interim City Manager Myrt Webb to continue operating with a stripped down budget for another two weeks, and the city will revisit whether job cuts are necessary at its Dec. 8 work session, at which no formal votes are allowed.

Webb is recommending further cuts to the city’s annual budget due to expenditures that continue to outpace revenue and a cash reserve that has dropped too low. Kalispell’s present cash reserve is $474,000. With $10.755 million in projected expenditures set to exceed revenues by $466,000, given current spending levels, the city would have $8,000 left in the cash reserve at the end of the fiscal year, next summer. The city’s general fund would go broke about a month after that. Webb believes a city of Kalispell’s size should have $1-1.5 million in cash reserve.

Since 2002, Webb wrote in a memo to council, too much of Kalispell’s core general fund expenses, like employee salaries, benefits and insurance, have become dependent primarily on volatile sources of revenue like growth fees – which have dropped off with the economic and construction slowdown. He has asked city department heads to cut an additional 5.6 percent out of their budgets. But since the biggest portion of the general fund goes to the payroll of the fire and police departments, the biggest cuts would come out of those areas of public safety.

A memo Webb gave to the council proposes cutting an additional $568,000 out of the budget by cutting two police officers and leaving two currently unfilled positions vacant. It would also cut a dispatch officer and an animal warden. In the Kalispell Fire Department, three firefighters would be let go and the currently vacant chief position would remain that way. Spending cuts would also come out of every other city department except for the city manager’s office, which requires an additional roughly $100,000 to pay former city manager Jim Patrick’s severance package and recruit a new manager.

For the fire department, the cuts would reduce each shift by one man.

“We’ve always been run as a lean department, no frills, just lean,” Stever Herman, a captain who has served 22 years on the Kalispell Fire Department, said. “We’re just barely hanging on in our ability to respond to current calls between fire and E.M.S. (emergency medical services).”

The recommended cuts would exact a similar toll on the police department.

“It is very difficult right now to keep officers on the street,” Wade Rademacher, a patrol lieutenant for the Kalispell Police Department, said. “We have times where we may only have two or three police officers covering the whole city … right now, if we were to face any layoffs it would really hurt us manpower-wise and I really feel strongly that the safety of the city would be jeopardized.”

The developers present used the tense circumstances of the work session to point out that a fragile economy is no time to discourage business and growth from moving into Kalispell by enacting traffic impact fees. These fees, which have been under deliberation for almost two years, are meant to pay for the road improvements surrounding a new development to accommodate the increase in traffic that new development will create.

Local attorney Scott Hagel spoke on behalf of Wal-Mart, which is widely expected to open a new store in Hutton Ranch Plaza.

“The prospect of major transportation impact fees are quite troublesome and problematic,” Hagel said. “Major retailers are closing stores and not opening planned stores, so the timing of this is quite troublesome.”

Richard Filler, executive vice president and chief operating officer of Chicago development firm Harlem Irving, also spoke out against the proposed impact fees. Filler’s firm plans to bring Kohl’s and PetSmart stores to Spring Prairie Center.

Mark Goldberg, the developer of Spring Prairie, told the council the city would lose valuable property tax base if it allowed these prospective retailers to slip away.

“We’re all trying to hang on, and to have this police and fire department hang on means that you have to encourage business, not discourage it,” Goldberg said. “I hope that you decide not to have impact fees or make them reasonable.”

Council members made clear they did not want to cut public safety jobs, nor discourage businesses from moving to Kalispell amid such dismal economic conditions.

“This council also needs to look seriously, in my estimation, at the economic times that are before us,” Mayor Pam Kennedy said, noting the recent layoffs at some of the Flathead’s biggest employers. “Right now, in these times, we should be knocking on other people’s doors to bring new jobs into this community.”

“We are going to have devastation in this community with regards to unemployment if we don’t do something to turn this around,” she added.

The proposed traffic impact fees are currently at an impasse with questions as to the methodology used to estimate traffic generated by development, as well as the amount of the rates charged, whether developers with projects underway should pay them, and which infrastructure improvements the fees should pay for, among a host of other issues. Most council members indicated they were not ready to vote on the impact fees anytime soon.

On the budget, council members praised the city’s public safety employees and inquired about any possible cost savings that might be derived from the dropping cost of fuel, or cutting down on city employees’ travel and training. But the reality persisted that bigger cuts would be necessary to bring the budget under control. Councilmen Jim Atkinson and Hank Olson questioned whether, by simply waiting for another report in December, the council was delaying making a tough decision while the budget situation grows even worse, potentially resulting in deeper layoffs than were initially suggested.

“In order to fix the budget we’re going to end up getting rid of four firemen and three policemen,” Atkinson said. “That’s what we’re asking Myrt (Webb) to give us reports on until we finally make a decision.”

“That’s just reality,” he added. “I’m afraid we’re in for looking at more people the longer we put it off.”