City budget 2024: Key things to know
During their July 2 meeting, City Commissioners will be asked to set a public hearing to adopt the proposed budget and their intent to increase property taxes.
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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. The documents for the proposed budget will be posted on July 3, according to the city finance office.
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 the last two years to maintain city services.
The allowable inflationary factor this year is 2.8 percent, according to the Montana Department of Administration, which equals $562,520 of additional revenue for the general fund.
Staff is also recommending a 1.58 percent increase for the permissive medical levy, which will generate an additional $317,544 in the general fund, according to city staff.
The permissive medical levy is only used to cover city employee health insurance premium costs and is calculated under state law.
Health insurance premiums increased 12 percent for the city for the new fiscal year, which began July 1.
Those two options would raise about $880,064 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.
If approved, the annual tax impact for a residential property with a $100,000 taxable market value would be $5.76 for the inflationary factor and $3.25 for the permissive medical levy for a total of $9.01.
The total impact would be $18.02 for a $200,000 home; $27.03 for a $300,000 home; and $54.06 for a $600,000 home.
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, 2023, 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.
City staff have proposed using $444,405 of fund balance to balance the general fund for the new fiscal year in their proposed budget.
The general fund is projected to have a $9,912,051, or 24.5 percent of expenditures, by the end of the fiscal year that will end June 30, 2025.
The city’s policy is to maintain a minimum of 22 percent fund balance in the general fund.
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City staff said during the June 18 work session that they were recommending the higher fund balance since they’re anticipating a continued significant tax protest.
During the fiscal year that ended June 30, the city didn’t collect about $1.1 million in property taxes due to protests and appeals. The process to resolve tax protests and appeals can take years.
City Manager Greg Doyon has 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.
Last year, the city increased that assessment by six percent, or $5.77 for the average sized lot, to cover increased costs of maintaining the boulevard district trees.
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.
The park maintenance district assessment 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.
The city has kept that cost at $1.5 million, the same level set in 2018.
The park district assessment is citywide and based on 2022 property valuations, the assessment was 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.
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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.
Last year, that assessment was increased 10 percent.
Before that, the last street assessment increase was 10 percent in 2015 and since then, the cost of asphalt overlays increased 38 percent, chip seal materials increased 49 percent and winter maintenance material increased 65 percent, according to staff.
The proposed 10 percent increase last year was to 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.
Last year, the city increased that assessment by five percent, or $18.32 annually.
The last increase was five percent in 2022 and there was no increased in 2020 or 2021.
All of those assessments will be reviewed as part of the budget process.
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, Civic Center events, and more. The city previously subsidized the Great Falls Public Library through the general fund, but cut that support after voters approved the increase in library mills last year.
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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.
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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.
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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 seven labor unions. Wages and raises are negotiated through those agreements, typically every two years.
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