City officials begin budget development discussion, tax increases likely
City staff walked City Commissioners through the basic mechanics of the budget during a special meeting on May 9.
City Manager Greg Doyon had initially planned to do full presentations from each department, a format for budget development the city used years ago, but scheduling issues caused that plan to morph into a video briefing with information from the departments for commissioners to watch in advance of the meeting.
Commissioners didn’t ask for a follow up meeting on May 10 though staff had blocked out time and said they were fine to wait for the formal budget presentation that will likely be during the June 21 meeting.
Doyon said the budget for the upcoming budget year, which begins July 1, will likely include tax increases.
The city did not include any tax increases during the last two budget years in consideration of the COVID-19 pandemic.
“We’re not going to be able to not take that inflationary factor another a year,” Doyon said.
He said that the city passed on the tax increases as long as possible but the city’s costs are also rising as are needs to be able to provide services.
City officials are looking at a 3.75 percent inflationary factor this year, which would generate an estimated $641,691 for the general fund. For comparison, the cost of a new fire engine is about $750,000.
Municipal governments are limited by state law on how much they can raise taxes annually and the rate is half of the three year average of inflation. That typically doesn’t generate much in terms of new tax revenue for the city, but as the national inflation levels rise, those figures could also increase.
If the commission approves taking the full inflationary increase, that’s an $8.40 increase on a house with a $100,000 taxable value, according to the city finance office.
If the city takes the full inflationary factor, plus the estimated $400,000 in newly taxable property and an estimated $294,004 in the entitlement share from the state, the city is looking at about $1.3 million in additional tax revenue, according to the finance office.
That’s about 3 percent of the general fund and less than 1 percent of the overall city budget, according to the finance office.
In the current city budget, the public safety portion is $27.7 million. The city’s property tax revenue is $22.4 million.
The finance office is still calculating their health insurance costs and the potential permissive medical levy it can use to cover those costs.
Earlier this spring, commissioners approved three tax abatements for $2.77 million over 10 years for Calumet and about $700,000 over five years for the Great Falls Clinic and the renovation of the former Greystone Inn downtown. Staff didn’t make recommendations on any of those requests but encouraged commissioners to weigh the benefit to the businesses against the impact to the city budget.
Doyon said that the challenge is balancing the city’s needs for public safety and other areas, catching up in Municipal Court, increased development and more with available resources.
“There is a lot of stress across the organization,” Doyon said. “There’s a lot of resources where people are struggling to keep their heads above water. We can’t run it as lean as we used to and expect people to keep performing.”
Doyon said that there’s been an uptick in development and people have been moving in during and since the pandemic, which means a need for more housing, but also more public services and he said the city has to plan for how it will meet those needs.
“There’s no doubt people are discovering a thing we’ve known for a long time and that is that Great Falls is the most affordable large city in the state,” Doyon said.
The city has some non-voted general fund debt, for public safety radios and two fire trucks, and those debt payments total about $300,000 annually, according to Melissa Kinzler, the city’s finance director.
The city has a high capacity for voted debt, but that requires sending the question to the voters and commissioners have started very general discussions of a possible public safety levy.
Doyon reminded commissioners that they voted to accept a federal COPS grant to hire three new police officers, but in a few years, the city will bear the full cost of those officers or be faced with cutting those positions.
Kinzler told commissioners that they were only talking about the city’s general fund during the May 9 meeting and there were many city operations that function using enterprise funds, meaning they are funded by fees for services such as the utility divisions, parts of Park and Recreation, parking and some other portions of the planning department.
She said they haven’t done increases for awhile either and are feeling budget pressures.
“They’ve held the line for a long time and I just don’t believe it’s possible for them to do it again this year,” Kinzler said.
Mayor Bob Kelly asked if there was a plan to address staffing and resource needs.
Doyon said that departments would be asking for those resources in their budget requests that the commission adopts in the summer.
The city had planned years ago to add a second Municipal Judge, which previously could be done by appointment but the Legislature changed that law last year and now it requires an election.
City staff said that first the city needs to update its charter to have a second judge and charter amendments must go to the voters on the ballot. There’s a rough plan to send those updates to the November ballot and also update city ordinances around that time.
Jeff Hindoien said that if the charter updates are approved by voters, they might be able to appoint a part-time judge to serve until the following general election when the position would go to the ballot for a two-year term and sitting Judge Steve Bolstad would also be on that ballot for a four-year term.
Staff said that they had budgeted in the current fiscal year for about six-months of a second judge and a clerk with the plan to have hired someone but since the law change, those positions weren’t filled. Staff said they could budget for the new positions for the second half of the next fiscal year in the event that the positions are approved and filled.