City Commissioners supporting tax increase in proposed budget
City Commissioners told staff during a special budget work session on June 29 that they would support the recommended tax increases in the proposed budget.
Those include the full inflationary factor and permissive medical levy, as well as using CARES Act dollars and a portion of the fund balance to balance the budget for the upcoming fiscal year, which begins July 1.
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 $8.36 increase on a house with a $100,000 taxable value, according to the city finance office. It’s a $16.72 increase on a house with a $200,000 taxable value.
City staff are also proposing to take the full permissive medical levy, which would add $248,305 in new revenue, with an impact of $3.23 on $100,000 house and $6.47 on a $200,000 house.
For comparison, the city is projecting $22.9 million in tax revenue for the upcoming budget in the general fund, the proposed police and fire budgets are $27.4 million.
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.
Staff said that of a resident’s total tax bill, about 26 percent goes to the city. The bulk goes to the state and school district.
Doyon is recommending using about $1.6 million in CARES Act funds and a portion of the undesignated fund balance to balance the budget.
Mayor Bob Kelly said, “I think the staff has made it pretty apparent if we don’t take the two increases we’re allowed to take…we continue to dig a deeper and deeper hole.”
Commissioner Susan Wolff, in her first term, said that, “if we don’t do this, we’re not going to be able to move our city forward, we’ll go backwards and we don’t want that.”
Commissioner Joe McKenney, also in his first term, said he spent several hours with finance staff asking questions about the budget.
He said that after reviewing the budget, “I’m struck by our funding restraints. We’re operating in a straight jacket.”
The state limits revenue sources for municipalities, he said.
“The budget before us is bare bones. The budget does not meet the needs of our community,” McKenney said.
He said the city is growing, but it takes time for new construction to reach the tax rolls and in the meantime, the city needs to address health and safety issues.
“I’m afraid that going three years without the increases, is not realistic,” McKenney said. Having to cut staff or services is a “nonstarter,” he said.
Commissioner Rick Tryon said he’s heard from members of the public that they’re unhappy with tax increases, but that he will support the proposed increases in the budget.
The first reason, Tryon said, was “I trust our city manager and I trust our department heads. I trust what they put forward as being a fiscally responsible and I think fairly conservative budget.”
His second reason was that the city had gone two years without raising taxes or fees and “we can’t continue to do that.”
The city needs to get back on a fiscally responsible footing, he said, “so I think this is the responsible thing to do.”
Without it, Tryon said, it was clear the city would have to cut staff or services to balance the budget.
“I don’t think we can do that in the environment that we’re in right now,” when the city is competing with every other municipality to get and keep good employees here, Tryon said.
The budget has been developed with $5.6 million worth of ARPA funds for prioritized capital improvement projects and some equipment for Great Falls Fire Rescue, according to finance staff.
Commissioners will further discuss the use of CARES and ARPA funds during their July 5 work session.
Commissioners will formally consider the budget during a July meeting, which will include a public hearing.