City budget 2023: Key things to know
During their July 19 meeting, City Commissioners will be asked to adopt the proposed budget and an intent to increase taxes.
City assessment increases proposed
Here’s some key things to know about the city budget:
What is the city budget year?
The city budget year runs July 1 through June 30.
Where can I see the budget documents and information?
All of the budget documents are posted on the city website. There’s also two budget tools to show where your tax dollars go and a budget balancing app to see what would happen if you moved money around in the budget and to send those suggestions to the city staff.
Why doesn’t the city adopt the budget before the budget year starts?
City staff typically presents their proposed budget around June and commissioners are typically asked to adopt the budget in July. The budget isn’t fully finalized until the city receives its certified taxable values from the Montana Department of Revenue. That typically happens in August.
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Can the city raise property taxes as much as it wants?
No. 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 rate 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.
The city did not take the inflationary factor for two budget years due to COVID but did take the allowable tax increases last year to maintain city services.
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This year, that is set by the Montana Department of Administration at 2.46 percent and equates to $451,129 of new tax revenue for the city.
Staff is also recommending using a 1.92 percent increase in the permissive medical levy, which will add $353,042 in new revenue for the city. The permissive medical levy is only used to cover city employee health insurance premium costs and is calculated under state law.
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Health insurance premiums increased 8 percent for the city for the new fiscal year, which began July 1.
Those two options would raise about $804,171 in additional revenue for the city.
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For comparison, a new firefighter costs the city about $100,000 and a new police officer costs about $110,000, according to the figures in the proposed public safety levy.
The total proposed allowable property tax levy increase is 4.38 percent.
The proposed tax increases would equate to an additional $10.51 annually on a $100,000 home and $21.02 on a $200,000 home, according to the city finance department.
How did the city offset the deficit last year, and again this year?
The city is still recovering from COVID and did not take any tax increases during fiscal years 2021 and 2022, using $552,502 and $1,300,466, respectively, of fund balance.
The city used the full tax increases during the fiscal year that ended June 30, but did not recoup all the lost tax revenue from the previous two years and used $1,205,000 of CARES Act funds to balance the budget.
For the proposed budget, the city is using the full allowable tax increase and $998,064 of CARES to balance the budget, according to city staff.
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City Manager Greg Doyon said that the commissioners knew the city was anticipating a revenue shortfall after COVID and had to use CARES funds to offset those deficits.
He said it will probably take a few years to come out of that deficit and the city was underfunded in the baseline budget.
Doyon said he’d love to use CARES funds for public safety but that the general fund isn’t healthy enough to do that right now.
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Doyon said the city has had a deficit since fiscal year 2021, when the city didn’t increase any taxes that year or the next, and is anticipating another deficit for fiscal year 2025.
Are there other revenue sources for the city?
Yes.
There’s the permissive medical levy, which the city is allowed to take to help fund employee health insurance premiums.
There’s also special assessments that apply to certain budget items or areas of the city. The assessments are set annually during the budget process and all of them include public hearings.
The boulevard district is a special assessment for the care and maintenance of more than 15,000 street trees, including pruning, removal, planting and streetscape design.
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The city assesses property owners within that district to cover the cost of those services performed by the Natural Resources Division of Great Falls Park and Recreation.
This year, city staff is recommending a six percent increase, or $5.77 for the average sized lot, to cover increased costs of maintaining the boulevard district trees for the upcoming fiscal year.
The last boulevard district increase was 12 percent in 2022, according to city staff.
There were no increases to the assessment in 2020 or 2021 due to COVID.
Staff is proposing $0.013581 per square foot, for a total of $481,875 and will equate to about $101.86 for an average size lot of 7,500 square feet.
The park maintenance district assessment is proposed to remain the same.
The park district was approved by voters in 2018 to cover operation costs for city parks and recreation facilities, particularly focused on needs identified in a 2016 park and rec master plan.
The funds can’t be used for programming.
Staff is proposing to keep the cost at $1.5 million, the same level set in 2018.
The park district assessment is citywide and based on last year’s property valuations, the assessment is annually $24.44 on a $100,000 property; $48.88 on a $200,000 property, and $73.32 on a $300,000 property, according to staff.
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The city has 27 special improvement lighting districts with about 9,429 total roadway lights.
Most of the lights are owned by NorthWestern Energy and the city pays a maintenance fee for the lights as well as a fee for electrical transmission and distribution.
The electrical supply for the street lights is from Energy Keepers on a city contract and the other three percent of roadway lights are city-owned, according to staff.
The lighting district assessment funds are used to maintain the light poles and cover electrical supply costs.
City staff estimates the district needs $1,325,660 for operations, a 14.1 percent increase over last year.
Not all of the districts will have an increased assessment as some have sufficient cash balance to cover operational costs, according to city staff. Some have been using fund balance to offset cost increases, but most don’t have enough to offset the city’s 200 percent increase in electricity costs, according to staff.
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The city maintains about 393 miles of streets and alleys and the street maintenance assessment covers those maintenance and traffic operation costs.
Staff is proposing a 10 percent increase for the new budget year, which began July 1.
The last street assessment increase was 10 percent in 2015 and since then, the cost of asphalt overlays have increased 38 percent, chip seal materials have increased 49 percent and winter maintenance material has increased 65 percent, according to staff.
The proposed 10 percent increase for this budget will allow for pavement preservation to continue at the same rate and account for inflation in material costs, according to staff.
The funds, coupled with state gas tax funds, will allow the street improvement program to continue at the same rate, according to staff.
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The Portage Meadows special improvement maintenance district assessment was established in 1977 to maintain the green belt of the Portage Meadows addition for materials, snow removal, water, mowing, fertilizer aerification and tree pruning as part of the original planned unit development, according to staff.
Staff is proposing a 5 percent increase, or $18.32 annually, for the average sized lot to cover those costs.
The last increase was five percent in 2022 and there was no increased in 2020 or 2021.
The district total cost is an estimated $71,941 for the new budget year, according to staff.
That equates to an estimated assessment of $0.085463 per square foot for an annual $384.67 assessment for an average lot of 4,501 square feet, according to city staff.
What is in the city budget?
The city has 58 funds. The general fund is the primary operating fund that includes property taxes and pays for public safety, administration, Municipal Court, city legal department, the animal shelter, and supports other areas such as the county health department, Park and Recreation, the library and more.
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Most of the city’s other funds are enterprise or special revenue funds, meaning they are funded for specific purposes by specific revenue. Enterprise funds are those designed to be self-supporting by fees for services, like the swimming pools fund, utilities, parking, sanitation and others.
What’s a fund balance?
The fund balance is how much the fund should carry throughout the year. City policy sets fund balance requirements that range from 17 to 22 percent. The city’s policy is a 22 percent fund balance for the general fund, which equates to about two to three month’s worth of operating expenses to absorb any cash flow issues since tax revenue comes in December and June, or any unanticipated expenses.
How does the city create the budget?
At the beginning of the calendar year, the City Commission meets with staff for their priority setting meeting.
The city manager uses those commission priorities to craft the budget each year.
Departments submit their budgets and make requests for additional funds over the existing funding in what’s called “above and beyond requests.” Those are submitted to the city manager’s office, which works with the finance department to develop the overall budget. The city manager makes recommendations on whether to fund those above and beyond requests.
The city manager and finance staff present the budget proposal to commissioners in June or July annually. Commissioners can direct staff to make changes to the budget and are then asked to vote on whether to adopt the budget.
The budget is the commission’s largest policy decision each year as it funds the city’s priorities, or makes cuts. In the past, the budget discussions have cut fireworks, the Christmas tree and closed the Natatorium or added public safety staff and made major facility improvements.
Once the budget is adopted, amendments can be made throughout the year as necessary and those changes are typically also discussed in public meetings.
How are employee wages determined?
Most city employees fall under a labor union and the city has collective bargaining agreements with six labor unions. Wages and raises are negotiated through those agreements, typically every two years.
