Kalispell ready to boost special tax assessments

A five-year string of property tax increases might be on the way for Kalispell residents and business owners as the city looks to shore up the finances of its street and light maintenance and urban forestry programs.

Without more money, greater efficiencies or cuts in services, the programs are projected to go into the red. Some of them soon.

“We do have a budget being presented without the increases. But it recognizes that if we don’t do something, we’ll be in some difficulty with special assessment funds, in some of them as early as 2015,” City Manager Doug Russell told the Kalispell City Council during a work session Monday.

Kalispell charges special assessment property taxes each year for its street maintenance, light maintenance and urban forestry operations. Those are in addition to its general fund, health insurance and general obligation bond property tax levies.

The last rate increase for light maintenance operations was in 2003. Since then, electricity, labor and equipment costs have continued to grow. So has the number of street lights Kalispell must keep lit and repaired.

“Next fiscal year we will start going into the hole,” Public Works Director Susie Turner said about the fund’s shrinking cash balance. “With that, we thought it was important to bring it forward to get an assessment increase.”

A series of 15 percent and 10 percent rate increases over the next five years would gradually boost the fund’s revenues by about $160,000 a year and keep light maintenance operations solvent through at least 2023, Turner said.

The existing assessment is projected to generate $236,000 this year. Of that amount, $161,000 is budgeted for electrical costs that on average grow by 3 percent a year.

With the full increase in place in five years, the owner of “a typical 8,632-square-foot residential lot” would pay $43.60 a year for Kalispell’s light maintenance operations while the owner of a 20,000-square-foot commercial property would pay $101.02 a year. That’s $17.70 a year and $41.02 a year, respectively, more than with the existing rates.

A similar approach is being proposed for street maintenance operations projected to go into the red by 2016. That special assessment was last increased in 2008.

The proposed increase would help pay for higher labor costs, some additional pavement replacement and roughly $200,000 a year in priority equipment purchases that are projected to be needed over the next five years.

With the full rate increase in place, the owner of an 8,632-square-foot residential lot would pay $153.44 a year for street maintenance while the owner of a 20,000-square-foot commercial property would pay $552.75. Those numbers are $47.95 a year and $172.75 a year higher than with the existing rates.

“We’re proposing a five-year increase again to try to break it into amounts to not have a big hit all in one year,” Turner said.

Kalispell’s Parks and Recreation Department is asking to temporarily increase the urban forestry assessment to buy a new wood chipper and chipper truck and implement a five-year, $187,500 program to cut down the last of the city’s American elm trees afflicted with Dutch elm disease. The disease appeared in Kalispell in 2006 and of the city’s nearly 390 elm trees, 240 have died and been cut down.

A $137,000 grant helped pay for some of the city’s early elm removals. But the trees have continued to die and removal costs are eating into other forestry operations.

“We plan to remove the remaining 150 trees in the next five years,” Director Mike Baker said.

Baker noted that the job of removing elm trees would be contracted out while city forestry crews turn their focus to a backlog of pruning, removal and replacement work related to the city’s 6,000-plus other boulevard trees.

The forestry maintenance program calls for city crews to prune up to 500 trees a year. Focusing on elm removals, this year they made it to 41 trees, Baker said.

The urban forestry rate would increase from .00171 mills per square foot to .00271 mills per square foot for five years before falling back to .00221 mills. With the full rate increase in place, the owner of an average residential lot would pay $23.39 a year for urban forestry — $8.63 a year more than under the existing rate.

Council members will weigh the proposed special assessment increases against their desire to keep a lid on city taxes.

The increases will be voted on in August with the rest of a $46.8 million municipal budget that otherwise aims to toe the line on spending and for the first time in years not levy the maximum amount of taxes allowed by Montana law.

That debate briefly played out at Monday’s work session among two council members who voted against last year’s $44.98 million budget. That budget increased Kalispell’s total tax levy from 175.93 mills to 187.4 mills when the city’s taxable values came in lower than expected. The lower value meant taxpayers had to pay a little more just to raise the same amount of money for the city to spend.

“I can’t afford a tax increase,” council member Tim Kluesner said at one point Monday. “The amount of money it costs to run my household has gone up and up. I need a break and I know other people do, too.”

Kluesner noted his “conviction of mind” to try and make that break happen as someone who sits on a governing body with some ability to control how much taxpayers are charged. “I have a conviction of mind I’m trying to stand by. I’ve never been able to win since I’ve been on council since we always seem to raise things all the time,” he said.

Mayor Tammi Fisher, who leaves office at the end of this year and has announced her intention to run for the Montana Senate in 2014, said the council has held the line on spending and taxes as much as possible.

“You’ve met your conviction,” Fisher told Kluesner.

“Maybe I don’t feel I have,” he replied.

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