Kalispell council OKs $44.98 million budget

The Kalispell City Council on Monday adopted a pared-back, $44.98 million budget for fiscal year 2012-13. But because of a drop in the city’s overall taxable value, it’s expected to raise taxes slightly.

The budget passed 6-2. Councilman Bob Hafferman was not present and Mayor Tammi Fisher and councilman Tim Kluesner voted against it.

“I don’t feel good about raising taxes for residents and property owners, so I will vote against this,” Kluesner said. “It’s unfortunate we didn’t know [about the lower taxable value] sooner to adjust the budget to have a somewhat lesser impact.”

The budget will increase property taxes by $30 a year for the owner of a home that was reassessed in 2008 with a $200,000 taxable value, Finance Director Rick Wills said.

The total city budget was trimmed down from the $46.75 million preliminary budget adopted earlier this summer before the Montana Department of Revenue released its taxable value figures for the city.

That trimming was done mainly by reducing appropriations in the city’s Westside and airport tax increment finance district special revenue funds and through various grant and carryover adjustments.

But the budget is up from the $42.8 million the council adopted for the last fiscal year, which ended on July 1.

The increase is driven in part by spending in the police and fire departments, raises for union employees, “me-too” raises for non-union employees and by significant increases in capital improvement spending in Kalispell’s water, sanitary sewer and treatment and storm sewer enterprise funds.

A roughly $1.2 million year-over-year decline in Kalispell’s overall taxable value to $40.5 million means property owners must pay more just for the city to levy the same amount of revenue.

Two main factors contributed to that decline: A reassessment of utility company land and infrastructure reduced Kalispell’s overall taxable value by about $786,000 and a statewide reduction in the personal property tax rate from 3 to 2 percent amounted to another $352,000 loss, an official with the Department of Revenue said.

Kalispell’s total city tax levy is increasing from 175.93 to 187.4 mills as city officials continue to levy the maximum amount allowed. State law lets the city levy as much revenue as it did the year before, plus revenue for new growth and annexations and enough to cover a limited inflation factor.

That total tax levy does include a one-mill reduction to 12.5 mills for Woodland Water Park and Fire Station 62 because those voter-approved projects were combined and refinanced at a lower interest rate, saving about $50,000 a year in debt service payments.

Kalispell’s health insurance levy is increasing by 1.95 mills to 18.5 mills. That’s to cover a 5 percent increase in premiums.

Council members also adopted a string of resolutions to authorize the city’s usual special assessments for urban forestry, solid waste, the City-County Health Department, street, storm sewer and street light maintenance and the downtown and tourism business improvement districts.

“There are no increases in any of the city specials,” Wills told the council. “All of the rates are essentially the same as last year.”

IN OTHER business, the Council adopted 8-0 a fiscal policy that has the city aiming to maintain an “unassigned” general fund carryover balance equal to 20 percent of the fund’s annual revenues.

Kalispell’s general fund carryover balances have improved significantly. The city is ending fiscal year 2011-12 with about $1.6 million or 18 percent of its annual revenues. That’s up from just $244,122 at the end of 2008-09.

The unassigned portion of this year’s carryover is slightly less, about 14 or 15 percent of annual revenues, City Manager Doug Russell said.

A 20 percent carryover target amounts to just under $2 million for fiscal year 2012-13, with the city projecting to collect about $9.8 million in revenue, most of it coming from local property taxes.

The fiscal policy is only a target and is not binding. Boosting reserves to that level may take several years depending on budget priorities, Russell said.

The reserves are intended to give Kalispell more financial stability, leaving the city with cash on hand for unexpected costs and opportunities and various short-term cash flow issues that may arise as its operates with two annual property tax disbursements.

Asked by Mayor Fisher, Russell said building reserves up to 20 percent would not increase the burden for taxpayers. That’s because Kalispell continues each year to levy the maximum amount that’s allowed by the state and build its reserves up through what it doesn’t spend.

Reporter Tom Lotshaw may be reached at 758-4483 or by email at tlotshaw@dailyinterlake.com.