Whitefish’s nonunion city employees likely won’t get the 4.7 percent pay increase promised in the city’s preliminary budget.

At a work session on Wednesday, the council agreed to a more conservative approach, directing city staff to shave a full percentage point off the proposed pay raise and instead pencil in a 3.7 percent raise.

Official decisions can’t be made a work session, but the change will show up in the final budget that will be adopted later this summer following a public hearing.

The consensus to scale back the pay raises comes on the heels of a 4-2 vote Monday on the preliminary budget. Council members Phil Mitchell and Chris Hyatt voted not to accept the preliminary budget largely because of the pay-raise issue. Council member Bill Kahle voted in favor of the budget but noted he had “serious reservations” about the proposed pay increases.

The city had proposed a 2.7 percent cost of living increase and a 2 percent matrix step increase for those who are not topped out in the pay matrix.

Because step increases are made in 2-percentage-point increments, the council agreed to a 3.7 percent raise across the board for nonunion workers, City Manager Chuck Stearns said.

Both Stearns and Municipal Judge Bradley Johnson also will get the proposed 3.7 percent raises. A contractual $10,000 pay increase already is budgeted for the city attorney.

Negotiations for union pay raises will fall within the same parameters, Stearns said. The city is negotiating this year with all three unions representing city employees, including fire, police and public works labor organizations.

The council also agreed during the work session to stagger three-year labor contracts.

The city had set aside a salary reserve for the 4.7 percent pay raises based on a slowly improving economy and increased revenue from building permits. The proposed budget of $36.99 million is 2.3 percent lower than last year’s budget.

Stearns told the council Monday he believed the raises were warranted because the budget proposes no property tax increase.

Whitefish’s property tax base is estimated to increase by more than 4.3 percent in the coming fiscal year. If the actual valuation announced in August is higher than projected, the council will decide whether to funnel the increase into year-end reserves or use it to decrease the property tax levy.

The preliminary budget calls for keeping the tax mill levy rate at the current level of 120.4 mills. By comparison, the mill rate for Havre last year was 236; Missoula’s mill rate was 226. Whitefish’s 2 percent resort tax, which provides a rebate to property owners, has kept the city’s property taxes low since the resort tax began in 1996.

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