City to consider budget, tax increase on July 16
City Commissioners are scheduled to conduct a public hearing on July 16 on their intent to raise property taxes.
Commissioners and city staff have been discussing the proposed budget since May during their work sessions.
Commissioners will also be asked to adopt the budget on Tuesday.
The fiscal year began July 1 and runs through June 30, 2025.
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The proposed budget is $40,370,294 in revenue and $40,814,699 in expenses, using $444,405 of fund balance, according to staff.
City policy is to have a 22 percent fund balance in the general fund, which equates to about a two and a half month’s worth of operating expenses so the city can ensure cash flow in the event of a major unanticipated expense.
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In the upcoming budget, city staff is recommending a slightly higher fund balance at 24.5 percent, since they’re anticipating a continued significant tax protests.
In the proposed budget, the city would end the next budget year with a $9,912,051 fund balance, above what would be a 22 percent fund balance of $8,979,234.
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Staff is proposing taking the full property tax increases available to the city, which is a 4.38 percent increase between the inflationary factor and permissive medical levy.
Under state law, counties and municipalities can only raise property taxes by half the average rate of inflation for the previous three years.
This year’s inflationary factor is 2.8 percent, which would generate $562,520 in new revenue for the city.
State law also allows municipalities to use the permissive medical levy, which helps offset the cost of employee health insurance premiums.
City staff are recommending using that levy to generate $317,544 in additional revenue for the upcoming budget.
During the July 2 work session, Melissa Kinzler, city finance director, told commissioners that the majority of that levy funds health insurance for police and fire.
City finance staff are also projecting about $400,000 in newly taxable property, based on the historical average.
That’s an increase of $1,280,064 of new revenue.
For comparison, the City Commission approved the purchase of three new sanitation vehicles in June, totaling $1,188,960.
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If approved, the tax increase would have the following impact on homeowners:
- $5.76 increase per $100,000 taxable value for inflationary increase
- $3.25 increase per $100,000 for permissive medical levy
- $9.01 total increase per $100,000 taxable value total
The total impact for a $200,000 home would be $18.02; for a $300,000 home, it would be $27.03 and for a $600,000 home, it would be $54.06.
The city won’t receive its certified taxable values until August from the Montana Department of Revenue, so those estimates are based on last year’s valuations and could change.
City staff is estimating $220,000 in marijuana tax revenue for the upcoming budget year, as well as an additional $319,511 in the entitlement share from the state, which is funds from alcohol and casino revenues, among other revenues collected by the state.
That brings the total of new revenue for the upcoming city budget to $1,819,586, according to city documents.
Kinzler said during the June 18 work session that she was recommending the higher fund balance in this budget due to “a lot of uncertainty” with the tax protests, primarily the large protests from Calumet Montana Refining and Montana Renewables appealing the Montana Department of Revenue determination that their entire facility was not tax exempt under state law.
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Kinzler said most of the tax increases were to fund public safety needs.
City Manager Greg Doyon said during the July 2 work session that city officials understand that people are concerned about tax increases, but “we’re trying to maintain the minimum service level that we have,” with the exception of adding the new aquatics facility.
He said the city is facing tax appeals, deficit recovery from COVID, collective bargaining agreements, inflation and rising costs.
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“What we don’t want to do, we don’t want to put the city in a worse position next fiscal year,” Doyon said, and that the city is taking a strategic approach this year hoping that the tax appeal will be settled by next year.
“We wouldn’t ask for it if we didn’t need it,” he said of the tax increase proposed in the budget.
Kinzler, city finance director, said in June that she was recommending the higher fund balance in this budget due to “a lot of uncertainty” with the tax protests, primarily the large protests from Calumet Montana Refining and Montana Renewables appealing the Montana Department of Revenue determination that their entire facility was not tax exempt under state law.
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When Calumet protested in 2018, it took several years for that protest to be resolved and the city did not receive all of the tax revenue originally assessed to the refinery, Kinzler said.
Kinzler’s office is also projecting about $400,000 in newly taxable property, based on the 23-year average of $444,054.
In the budget year that ended June 30, the city was set to receive $1.5 million in newly taxable property revenue, but due to the Calumet protest, had only received about $400,000, close to the typical amount annually, Kinzler said in June.
Kinzler told commissioners that if they don’t take the permissive medical levy increase the city is required under collective bargaining agreements to pay 80 percent of insurance premiums for employees, who pay the other 20 percent.
“There is no option as I understand it on the surface to not take that permissive medical levy,” she said, and if they didn’t commissioners would either need to look for cuts or take more of the fund balance.
Commissioner Rick Tryon asked Kinzler during the July 2 meeting where they’d look first to make cuts.
Kinzler said they’d likely look at operations first, “but then it’s going to be a political decision about where you would like us to look.”
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Doyon said during the July 2 meeting other expenses in the general fund are administration, commissioners, Civic Center events, the animal shelter and some park and recreation activities.
An option could be to reduce park maintenance through personnel cuts or changing watering and mowing operations, but that the public would likely have a negative response to those changes.
“In all fairness, I appreciate the hypothetical,” Doyon said, but department heads would need the opportunity to discuss the impact of those potential cuts.
Tryon said he wasn’t suggesting going through the budget with a fine tooth comb looking for cuts, but, “I don’t think a lot of people understand what the alternative is.”
He said that cutting personnel would be an alternative to tax increases, but that he wasn’t suggesting doing that.
Kinzler said that public safety wages make up about 74 percent of operational expenses in the general fund.
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Commissioners previously approved utility rate increases and staff is proposing the same percentage increases for streets, Boulevard District and Portage Meadows assessments this year, which are:
- streets assessment: 10 percent
- Boulevard District assessment: 6 percent
- Portage Meadows assessment: 5 percent
Some lighting districts will also see an increase this year.
Doyon said during a June work session that the city has often been unable to fund needs until the situation is dire or there’s a catastrophic failure of public infrastructure.
That’s also been evident in the city’s inability to make major investments in public safety, Doyon said.
To illustrate that disparity, Doyon and Kinzler said that the police budget for the proposed budget is $17,612,949 and the fire budget is $11,575,536 for a combined public safety budget of $29,188,485.
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The city is projecting $26,018,186 in tax revenue for the general fund, leaving a $3,170,299 shortfall between property tax revenue and those two budgets alone, they said.
The city has multiple other funding sources, including enterprise funds, which are those operations supported by fees for service such as the water and sewer systems and street assessments, among others.
City departments are asked to present level funded budgets most years and then make requests for additional budget items in what’s known as above and beyond requests.
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In this year’s above and beyond requests, Great Falls Fire Rescue asked for $217,614 in additional funding for a new deputy fire marshal and associated office costs, certification pay for two additional paramedics, a 10 percent market adjustment for administrative staff to address compression issues, office furniture to replace hand me downs, a concrete pad for burn cells at the training center and proximity dispatching.
Doyon’s budget funds none of those requests.
The Great Falls Police Department requested $386,874 in additional funding to include three sworn officers for the investigations bureau and associated training and equipment costs for $346,588. Doyon’s budget does not funds those additional positions but does fund $40,286 for recruiting and increasing costs for the state law enforcement academy tuition costs, additional funds for towing of abandoned and recreational vehicles, more funding for an online investigative tool, and additional funds for travel for training needed due to turnover.
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The budget funds $40,000 for a case management software in the city prosecutor’s office and $1,000 for office supplies in Municipal Court.
Doyon’s budget doesn’t fund the jury clerk or court office clerk for Municipal Court, that was requested in the public safety levy.
The budget does include funding to keep the three GFPD officer positions added with a federal grant that the city accepted in December 2021.
The city received a $375,000 grant that covered 38 percent of the total cost of hiring those three officers the first year, requiring city match of $607,645, or 62 percent of the total cost.
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The grant has a four year timeframe to allocate all funding requirements. The grant further specifies the matching funds are spread over the first three years of the grant, with the fourth year being the responsibility of the city. The four year breakdown includes:
Doyon said in June that public safety was a top priority set by commissioners earlier this year, followed by housing, economic development, the growth plan and discussing ties between economic development to infrastructure and public safety.
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Doyon said that in recent years, the commission had approved 869 units of housing and during a future work session will again discuss how to address the city’s tricky soils in a way that promotes growth.
Doyon said city officials are awaiting recommendations from the public safety advisory committee that’s set to meet twice a month through August, but in the meantime will continue working on other needs and efforts to address public safety with available resources.
He said that there’s been some discussion of cutting other city services or programs to move funding to public safety but wanted the commission and community to understand the impact those changes could have.
Commissioner Rick Tryon asked in June what the process was for earmarking marijuana tax money for public safety.
Kinzler said commissioners could “just tell us” that they wanted to do so, “but it isn’t even enough to cover the three officers” from the federal COPS grant.
Doyon said there’s already a shortfall for public safety since the city can’t generate enough in property taxes to cover police and fire needs.
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