Low Cash Reserves Still Plaguing Whitefish

By Beacon Staff

A third-quarter financial report shows that the city of Whitefish is still running low on cash reserves, with the greatest concerns occurring in the city’s property tax-supported funds. But an upcoming round of property tax collections is expected to provide some relief to the beleaguered budget.

The city’s general fund had a cash balance of $44,579 as of March 31, compared to $783,850 at the same time last year and $767,256 the year before. The cash balance is down from the mid-year total – calculated on Dec. 31 – of $295,746, which was nearly $700,000 lower than at the same point the year before.

City Manager Chuck Stearns and Finance Director Rich Knapp will provide a budget review with a PowerPoint presentation at the May 17 city council meeting. They will discuss budget impacts, as well as possible options for revenue increases and expenditure cutbacks.

Following the Dec. 31 mid-year report, Stearns released a memo calling the city’s financial situation “dire.” He blamed the shortfalls on three primary reasons: payment of nearly $400,000 in losses stemming from a Montana Supreme Court decision against the city; a higher number of property tax protests and delinquencies; and the continued decline in revenue from planning and building permits and fees.

According to the third-quarter financial report, prepared by Knapp, property tax-supported funds separate from the general fund are running low cash balances as well. These funds include the operating cash balances for parks and recreation, fire and rescue and law enforcement. The building fund, hurt by a lack of construction, is running a nearly $124,000 deficit.

Combined, property tax-supported funds – excluding the general fund – have $37,146 in cash reserves. That compares to $413,959 on March 31 last year and $805,212 the year before. Factoring in the general fund, the cash reserves for property tax-supported funds are $81,725, about $1 million less than the year before.

Knapp’s report notes that despite a 3 percent increase in property tax mill valuation from last year, general fund property tax collections are down 3 percent. Collections were anticipated to be nearly $90,000 higher at this point of the year. Knapp said some of the shortfall is explained by protested property taxes, which total $81,000.

Stearns anticipates that the second round of property tax receipts, scheduled for this month and June, will improve the revenue outlook. Also, recently approved rate increases should boost cash balances in the worrisome wastewater and solid waste funds. The rate increases were implemented on May 1. Knapp is also researching reasons why tax-increment fund revenues are $190,000 lower than anticipated.

Revenue sources tied to construction continue to struggle. Planning fees are 27 percent of budget, while zoning fees are down even more at 36 percent of budget. By June 30, Knapp anticipates the combined shortfall in these fee collections will be $106,000, which impacts the general fund’s revenue.

The general fund’s cash balance carries particular importance because the city uses it to pay for unbudgeted expenditures, such as the $400,000 court payment and loans to other funds in need.