City beginning budget process
City Commissioners were introduced to this year’s budget process during their May 21 work session.
City Manager Greg Doyon reviewed the goals and priorities commissioners identified during their February retreat.
He said every year they’ve done a commission retreat during his tenure, some of those have translated into the budget document.
Those priorities included:
- public safety
- housing: encouraging/facilitating infill development; explore options to facilitate affordable housing and housing at all price points
- economic development: streamlining zoning and permitting; attracting primary sector businesses; discuss ties between economic development, infrastructure and public safety
- growth policy update
Earlier in the meeting, commissioners were briefed on the Business Improvement District’s role and work.
During the budget presentation, Doyon said that “people are noticing the downtown.”
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He said he’s been hearing that regularly and when he recently presented at a Leadership Montana panel, participants who hadn’t been to Great Falls in awhile said it the downtown was great and they’d come back to visit.
Doyon said whatever support the city is giving to downtown “is really paying off.”
City departments are submitting their budget requests this month and will meet with Doyon and the finance department on those requests in June.
From there, city staff will finalize the budget proposal and are tentatively scheduled to present the general fund budget to commissioners during their June 18 work session. A second budget proposal presentation is scheduled for July 2 and the public hearing on July 16 to adopt annual tax levies and assessments in August.
Melissa Kinzler, city finance director, reviewed the budget drivers for the current fiscal year, which included collective bargaining agreements; health insurance increases and workers compensation claims; a 200 percent increase in energy costs; a federal grant running out; general fund balance below city policy; and COVID recovery.
She presented the budget drivers influencing the upcoming fiscal year, which begins July 1.
Salary increased through collective bargaining agreements are among those drivers.
Kinzler said those increases ranged from three to six percent, depending on the union, and totaled about $1.3 million in additional compensation.
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Health insurances costs continue to rise and the anticipated increase for the city is $1 million in the next budget year.
The city added a new Municipal Court judge position in January, which is the midpoint of the budget year. The city will have to cover the full cost, which is an estimated $83,000, in the next budget, plus costs for renovating the Missouri Room into courtrooms.
Some good news, Kinzler said, is that the city awarded a new energy contract, which decreased costs by about 17 percent, or $500,000.
Staff are also projecting a deficit for the first year of operation of the new indoor aquatics center while facing a significant tax appeal from Calumet Montana Refining.
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The federal COPS grant funding has run out so the city will have to cover the cost of those additional police officers entirely.
Commissioner Rick Tryon asked why the budget drivers didn’t include the roughly $700,000 in public safety costs those chiefs had mentioned in previous meetings.
Kinzler said the budget drivers were citywide and that she and Doyon hadn’t yet met with departments to discuss their above and beyond requests, which is anything over what would be level funding from the previous year within a department budget.
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“I think we’re going to have an issue before we even get to the $700K,” for public safety, Kinzler told commissioners.
Doyon reminded commissioners that under state law, the city is only able to increase property taxes by half the average rate of inflation for the previous three years.
For the current budget year, that increase totaled $446,080 in additional revenue.
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 failed public safety levy proposal.
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He said it’s good for homeowners, but has made it difficult for the city to keep up with the cost of providing services, since the rate of inflation has driven up costs of supplies and materials, as well as trying to increase wages to retain personnel.
During COVID, the city didn’t increase property taxes or assessments and used federal COVID relief funds to help cover budget shortfalls, adopting budgets with more expenses than revenues, but Kinzler said “this is not sustainable.”
The current budget, without using reserves and COVID relief funds, had a $998,064 deficit.
In the current budget, the citywide total property tax revenue is $30.17 million.
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For comparison, the public safety expenses in the budget are $30.8 million.
Total projected citywide revenues are $144.3 million, or 14.2 percent over last year, but citywide expenses are $162.45 million, or 9.16 percent over last year, according to city figures.
Property tax revenue only makes up about 20 percent of the total city revenues. The largest revenue source is fees for services which is projected at $53,524,601, or 37.09 percent of the total revenues in the current budget. Those funds largely support the self-sustaining enterprise funds for water and sewer and other funds, some of which still receive general fund support.
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Going into the next budget, city finance staff are projecting about $1.5 million of new revenue in the general fund, but staff cautioned commissioners that figure was up against roughly that much in known increases for compensation and insurance.
Kinzler said that there’s been new construction in the city, but that doesn’t necessarily translate into tax revenue for the city since it could be nonprofit property, in a tax increment financing district or have a tax abatement.
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Doyon said it’s important for the city to have a mix of development types since the state classifies those tax levels differently.
“Relying on residential property taxes is very difficult to do,” because of how state assesses those taxes, it doesn’t generate significant revenue for the city, Doyon said.
