Whitefish Approves Budget With Large Cash Reserves

By Beacon Staff

After a period of uncertainty over a county assessor’s valuation of the city’s tax base, Whitefish officials were able to set the record straight and complete a budget that passed unanimously on Sept. 21. The approved budget achieves the city council’s two main goals of reducing the mill levy and providing a general fund cash balance of greater than 12 percent of appropriations.

The budget outlines $45.47 million in total appropriations, which is a 56.2 percent increase from last year. This total is attributed to several large capital expenditures, including the city’s new emergency services center ($7.75 million), a tax-increment bond ($4.2 million) and the Trail Runs Through It project ($3.1 million.) None of those expenditures are paid for by an increase in property taxes. The general fund is slightly over $3.6 million, only $1,842 larger than last year.

Originally, a county assessor had handed the city an audit that showed a diminished tax base from last year along with a 50 percent swelling of the tax-increment financing district’s property valuation. Considering this is a property tax reappraisal year, City Manager Chuck Stearns was expecting a boost in the tax base and was “shocked” by the assessor’s count.

With the diminished tax base, as well as residual effects from the economic downturn, city officials discussed the possibility of cutting an employee or implementing furlough days. But City Clerk Necile Lorang checked the assessor’s findings and concluded that 70 properties were incorrectly included in the TIF district, thus contributing to the huge spike in the district’s valuation. Upon Lorang’s findings, a revised report was issued, which stabilized the city’s general tax base.

City council had asked staff to address two main areas of the budget. First, councilors requested that the property tax mill levy be reduced to an amount equal to the first year’s worth of a federal grant called Staffing for Adequate Fire and Emergency Response (SAFER). The SAFER grant was acquired to help pay for expanded 24-7 emergency service operations.

Since taxpayers had already previously voted for a mill increase in their property tax levy to help pay for emergency service operations, council felt it was appropriate, with both the grant and mill increase in hand, to reimburse the taxpayers. So councilors directed staff to cut the levy. Stearns and Finance Director Rich Knapp were able to reduce it from 112.22 mills to 100.28, a 10.64 percent reduction.

The council’s second request was to maintain cash reserves at a level of at least 12 percent of the general fund’s total appropriations. Staff took the request a step further and left a reserve that will total 17.9 percent of the general fund by the end of the fiscal year 2010. That equals out to $645,963.

Council acknowledged that the robust reserves could be needed in the event that the Montana Supreme Court upholds a 2007 district court decision that ordered the city to pay William and Theodora Walton $300,000 for violating their equal protection rights. The jury ruled that the city had unfairly denied the couple a permit to build a home on their property overlooking Whitefish Lake.

To achieve the council’s goals, staff made a number of considerable expenditure cuts, as well as creating revenue gains such as increased fees in the parks and recreation department. And a spreadsheet error was found in the transfer of funds from the general fund to the law enforcement fund. Correcting the error freed up additional dollars for the general fund.

Also, Dru Dennison recently resigned as neighborhood resource officer. City officials decided not to fill her position, keeping open the option of re-hiring in the spring. After paying Dennison’s sick and vacation payouts, the revenue gained from her open position is roughly $45,000.

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