City of Whitefish budget faring well so far

Halfway into Whitefish's budget year, the city's finances 'remain in generally very good condition," Whitefish City Manager Chuck Stearns said.

But there are a couple of trouble spots city officials are watching closely.

The biggest problem is a substantial decrease in revenue generated by building permits and related fees. With construction all but halted by the recession, reserves in the building-codes fund have evaporated, Stearns said.

Stearns prepared a six-month budget snapshot for the mayor and City Council that shows how Whitefish fared at the end of 2008 and compares those figures to the halfway point of the 2006 and 2007 budget years.

Building-codes revenue collected as of Dec. 31, 2008, was $174,297, just one third of what the city anticipates collecting during the fiscal year that ends June 30. In 2007, only 32 percent of anticipated building codes revenue had been collected by midyear, indicating the early effects of the building slowdown.

But in 2006, with the Flathead economy still robust, collections from building permits were running slightly higher than what was anticipated.

This fiscal year, Whitefish put $79,731 from its general fund into the building-codes fund to buffer the economy-induced revenue loss.

Stearns said he has talked to department heads in the Planning and Building Department about how to address a current $73,000 deficit in the building-codes operating cash balance.

"All options are on the table," Stearns said.

No Planning and Building Department employees have been laid off yet, but layoffs are among the options. So are furloughs, raising fees or putting more general-fund dollars into that fund.

Whitefish general-fund revenue exceeded expenditures during the first six months by $187,568.

"This level is very good considering the economic downturn of the last six months," Stearns said. "General-fund operating cash balances are maintaining solid, high levels."

The unreserved fund balance is lower than last year, however, because the auditor reserved $400,000 for the Walton lawsuit once the jury trial judgment was entered. That case, which challenges the city's decision to deny a building permit for a home planned on a steep slope, is on appeal to the Montana Supreme Court.

General-fund expenditures were higher at the end of 2008 than in past years, both in dollars - $1,863,724 - and in percentage spent - 52 percent.

"Administration is very highly spent," Stearns said, "although some of this may be re-allocated when the auditor catches up on the allocation of administrative costs."

The city already has spent 84 percent of its administrative services budget because of former City Manager Gary Marks' payoff of vacation and sick leave accruals, hiring Dennis Taylor as interim city manager, the costs for the city manager search process and the payoffs for former Finance Director Mike Eve's accruals.

Fine and forfeiture revenue is up by $132,670 compared to last year, indicating that a backlog in City Court deposits is getting caught up, Stearns said.

Property tax collections, the city's most important revenue source, Stearns said, are tracking fairly well even though collections have decreased. At the end of 2008, the city had collected $772,958 in property taxes, compared with $848,694 the same time in 2007.

Investment earnings in the general fund have decreased both in monetary terms and in percentage collected. The decrease - $56,146 earned at the end of 2008 compared to $88,190 at the end of 2006 - results both from lower cash balances and from lower interest rates, Stearns said.

Whitefish expects to have a fiscal year-end reserve of about $485,000. Whitefish's total budgeted reserves are $8.2 million.

Features editor Lynnette Hintze may be reached at 758-4421 or by e-mail at lhintze@dailyinterlake.com