City Commissioners set the annual tax levy during their Aug. 20 meeting.

The voted 4-0 to approve the tax levy and multiple assessments during the meeting.

Mayor Cory Reeves was absent.

They’d already approved their budget for the current fiscal year, which began July 1, and that budget included the tax increases staff proposed during Tuesday’s meeting.

Commissioners are required to set their tax levy annually.

The city received its taxable valuation from the Montana Department of Revenue on Aug. 5. City finance staff uses that valuation to calculate the annual mill levy.

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The city’s total mill levy for the current fiscal year is 210.35 mills, totalling $27,797,699, including previously and newly taxable property, the permissive medical levy and the Great Falls Public Library mill levy.

For comparison, the police budget this year is $17,612,949 and the fire budget is $11,575,536 for a combined public safety budget of $29,188,485, leaving a $1,390,786 shortfall between property tax revenue and those two budgets alone, according to city numbers.

The city’s total taxable value is $137,509,226.

The taxable value per mill increased slightly to $132,152 over last year’s $131,816, or 0.25 percent, according to city staff.

The DOR did not specify a project or development to attribute to that increase and changes to the tax base aren’t distinguishable, according to city finance staff.

This year wasn’t a revaluation year for DOR and residential properties. Those are on a two year cycle and will be reviewed next year.

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The city didn’t use any tax increases for two budget years during COVID, but has since used all available inflationary factor and permissive medical levy increases in an effort to stabilize the undesignated fund balance, which city policy requires to be about 22 percent of the budget to cover any unexpected expenses or dips in revenue throughout the budget year. The budget adopted by commissioners in July projects a 24.5 percent fund balance at the end of the year, which was recommended by city finance staff due to a large tax protest from Calumet Montana Refining.

This year’s newly taxable property reported by DOR equates to $710,064 of new revenue. City finance staff projected that newly taxable revenue would be about $400,000 based on a 23-year average for this year’s budget.

The increase isn’t attributed to any particular development or project, according to city staff, but the additional $310,064 will be used to offset any uncollected, protested or appealed taxes, and/or contribute to the unreserved fund balance.

Melissa Kinzler, city finance director, 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.

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.

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.

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The Calumet protest also impacts the county and Great Falls Public Schools budgets.

City and Cascade County officials are also reviewing a 2022 tax abatement granted to Calumet.

County Commissioner Joe Briggs said that DOR found some technical issues with the application and asked the city and county for a decision.

Briggs said that county and city legal staff were reviewing the situation and would brief city and county officials.

Depending on the outcome, Briggs said they may have to recertify the taxable values that they recently received from DOR that trended downward.

Briggs said that DOR indicated the largest reduction the issue could cause would be about $1.9 million in taxable value and likely come from the newly taxable category of property.

County Commissioners are still planning to set their levies on Sept. 5 and the impact of the $1.9 million reduction in taxable value would be about $300,000 to the county’s general fund, as well as an estimated $27,000 reduction to the public safety levy revenues, Briggs said.

City Manager Greg Doyon told The Electric after the Aug. 20 commission meeting that staff was reviewing the abatement issue and couldn’t comment further at this time.

The DOR has not yet responded to The Electric’s question about the Calumet abatement issue.

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The total 210.35 mill levy includes for the current budget year includes:

• permissive medical levy: 32.39 mills will generate $4,279,889, an increase over last year of $317,544 to cover health insurance costs in the general fund. That’s the maximum the city can take for the permissive medical levy under state law.
• Great Falls Public Library mill levy: 17 mills will generate $2,246,584. The levy of up to 17 mills, an increase of 15 mills, was approved by voters on the June 6, 2023 ballot for the operation, maintenance and capital needs of the library. The current master plan remodel is being funded through a separate capital campaign.

This year’s mill levy includes the following changes in revenue over last year’s budget:

• general levy
  • $710,064 for newly taxable property
  • $562,520 for the inflationary factor
  • $317,544 for the permissive medical levy
  • a $91,522 reduction due to a change in the state business equipment tax exemption
  • $126 for previous taxable value adjustments
• voted levy
  • $5,712 for the library levy
  • a $164,770 reduction for the general obligation soccer park debt paid in full as of July 1

For comparison, the City Commission approved the purchase of three new sanitation vehicles in June, totaling $1,188,960.

The tax impact to residential property owners is below, and very close to what city finance staff presented during the budget process due to the small change in the mill value:

State law requires that the city adopt a budget and set the mill levy on or before the first Thursday after the first Tuesday in September or 30 days after receiving taxable values from the DOR, whichever is later.

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.

In November 2022, county voters approved a local option tax for marijuana.

Going into that vote, information was included in public meetings and The Electric’s reports that under the local option tax, the county would retain 50 percent of the tax revenues, five percent would go to the Montana Department of Revenue and 45 percent would go to municipalities in the county.

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The remaining 45 percent is split among the incorporated cities and towns based on the ratio of their population to the total county population. That would include the City of Great Falls, Belt, Cascade and Neihart, according to the county.

The tax would go into effect on Feb. 6, 2023.

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City finance staff had estimated at the time that based on marijuana sales countywide, the city would receive about $200,000 annually and that has held true. In the current budget, city finance staff included $220,000 in marijuana tax revenue.

Kinzler told commissioners during a previous work session 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.

Commissioners made no cuts to the proposed budget during their July 16 meeting, when the adopted the budget 4-1 with Commissioner Shannon Wilson dissenting saying she believed the Legislature should have addressed several tax related issues.

Kinzler said earlier this summer that public safety wages make up about 74 percent of operational expenses in the general fund and the bulk of the tax increases were to fund public safety needs.

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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.

Commissioners will consider those assessments during Aug. 20 public hearings, but the increases were already included in their previously adopted budget.

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’s tax revenue based on DOR’s certified values is $27,797,699, leaving a $1,390,786 shortfall between property tax revenue and those two budgets alone, according to city staff.

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.

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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.

During the Aug. 20 meeting, three members of the public spoke against tax increases.

Jeni Dodd said that she believed commissioners had promised to reduce the park maintenance district after the first three years and thought there could be cuts made at the Park and Recreation Department or that there were management problems since several of that department’s enterprise funds are on the list of troubled funds, meaning their expenses exceed their revenues from user fees.

Commissioner Rick Tryon said that voters approved the citywide park maintenance district and assessment, which can be adjusted annually.

That assessment has remained at $1.5 million every year since it was established in 2018.

Tryon said he was happy that the assessment hadn’t increased and that the department needed money to maintain existing parks and facilities.

Dodd said that the city expanded the Park and Rec department by building the recently opened Scheels Aim High Big Sky aquatic and recreation center in Lions Park.

An indoor aquatics center, with a combined recreation center, was included as a recommendation in the 2016 park master plan that formed the basis for the creation of the park district.

Since opening the new indoor aquatic center, the city has shifted operations from the Community Recreation Center downtown into the new facility and is leasing out the rec center.

Cheryl Shearer, a local resident, said that she’s opposed to tax increases and felt that commissioners don’t listen to the people.

Tryon said in response to comments made by the public that “to suggest that this commission doesn’t care or doesn’t listen is absurd.”

He said they don’t get paid to serve as commissioners and “I listen very carefully to every comment that’s made.”

Tryon said commissioners have to maintain city services and “we don’t have much choice” other than to increase some taxes and assessments.

“We could just go no and let the city fall apart. I’m not going to let that happen on my watch,” Tryon said. “We have to do what’s responsible, not what’s popular. I am not going to participate in allowing our infrastructure, our parks, our city officials and our city employees to be insulted like I’m hearing sometimes at these city commission meetings and other places. You’re right, I don’t care. I don’t care what you think of me. We aren’t doing this to win popularity contests. There’s no many involved in this. None. I don’t get paid for this.”

City code sets the salary of each commissioner at $312 monthly and $468 monthly for the mayor.

Commissioner Shannon Wilson said she’d initially voted against the tax levy in July saying she believed it to be the fault of the Montana Legislature for lowering taxes for big business, putting the burden on small business and residential property owners.

Commissioner Joe McKenney said the city had to adjust within existing tax laws and that local taxes haven’t increased much and only just keeps the city level in funding to provide services.

Dodd responded to Tryon’s comments saying it was “ridiculous” to have him chastise citizens for their comments during public meetings.

“If you can’t take the heat then get out of the kitchen,” Dodd said.

She said she was tired of tax increment finance districts and believed more federal Community Development Block Grant funds to go toward public infrastructure rather than local nonprofits.

“You’re not gonna shame me Commissioner Tryon no matter how hard you try,” she said. “People are tapped out. I don’t understand why you don’t understand that. I will move as soon as I can. People can’t afford it.

Shearer responded to Tryon’s remarks saying she believed the unpopular thing to do would be say no to taxes.

“I don’t really appreciate being yelled at, raised voice at, and reprimanded. I don’t appreciate being treated that way,” she said.

Tryon responded again saying that he was passionate about things and it may come across as berating, which was not his intention, but that commissioners and staff are regularly berated by people during meetings and it “gets a little bit frustrating.”

“This isn’t the federal government, we’re not taking money from people and doing studies on the mating rituals of penguins,” Tryon said, and to have members of the public accuse staff and commissioners “of being no good, money grubbing, dishonest people who just want to take advantage of the citizens, it gets frustrating.”

He said that the property valuations used to determine taxes are set by the state and not the city so he suggested unhappy residents contact their state lawmakers to ask for change.

Commissioner Susan Wolff said that commissioners are also taxpayers and “my parents taught me that we pay taxes because they’re the dues we pay to live in a just society,” but she knows taxpayers feel it.

The city didn’t raise taxes for two years during COVID, putting them further behind on keeping up with infrastructure, capital and personnel needs, she said.

“We do hear you,” Wolff said, but the commissioners had “more information than most people will know” because they spend more time with departments and the city manager to know the needs of the city.

“It’s a tough place to be,” she said, but that they were open to good ideas on how to do things differently.