Whitefish residents could be facing a significant increase in property taxes this year based upon the city’s proposed budget.

The city of Whitefish last week released its preliminary budget, which includes a 63 percent increase for the coming fiscal year and expects to raise property taxes for the first time since 2009.

City Manager Chuck Stearns explained the budget in a memorandum sent out to Whitefish City Council members.

“The proposed fiscal-year 2016 budget was probably the most difficult budget in over five years,” Stearns said in the memo. “Resumption of growth has put additional demands on staff resources and there were many proposals for new staff. Some I could recommend in this budget and some I could not.”

The overall budget of $65.9 million is up $25.4 million over last year. Under the proposed budget, the owner of a $275,000 residential home would pay $97.61 more per year.

The increase in the budget is largely because of the planned $14.4 million City Hall and parking structure being included in the budget.

In addition, the budget includes $8.5 million from a state revolving fund loan to provide funding of about $8 million for the Haskill Basin conservation easement purchase from F.H. Stoltze Land and Lumber Co. Whitefish voters recently approved a 1 percent increase in the resort tax to pay for the easement.

The proposed tax increase is the first significant property tax increase since 2009 when the city changed to full-time fire and ambulance service.

Complicating the proposed property tax rate increase, according to Stearns, is the Montana Department of Revenue’s six-year reappraisal of property-tax valuations which takes effect in the coming fiscal year.

The city is projecting a 10 percent decrease in its tax base following depressed tax value growth for six years. The state Department of Revenue is projecting a decrease of 13.75 percent in the tax base, however, Stearns said that projection doesn’t account for new construction and other newly taxable property.

“This projected loss of value meant that we had to increase property tax mills by 13.4 mills just to raise the same amount of property tax revenue as in the current year,” Stearns said.

The budget calls for a 18.57 percent increase in the number of mills levied.

“The reappraisal will also cause significant variations in the impact on each property owner,” Stearns said.

Some property owners whose valuations go down because properties were valued too high six years ago, will have less of a tax increase or even a decrease, he noted. While property owners whose values go up because of reappraisal, their tax bills may go up by an even higher percentage.

As part of the budget, the city anticipates adding the equivalent of five full-time employees and proposes a 2.3 percent pay increase for city workers.

Stearns said one of the budget cuts he had to make was a decrease in the normal pay increase from 3.3 percent to 2.3 percent.

Kalispell and Flathead County will likely have increases in pay that are similar to the proposed Whitefish pay increase, while Columbia Falls will likely see a 3.5 percent increase, according to Stearns. Whitefish has been higher than those other jurisdictions in annual increases in recent years, he noted.

The city also faces collective bargaining negotiations with the police/fire and public works unions this year.

Under revenue, the city estimates an increase in building permits and licenses. The city expects to end the current fiscal year on June 30 with about $469,000 in fee revenue once the building permits for two new hotels under construction are included. A total of just over $500,000 is estimated in building licenses and permit fees for the coming fiscal year.

City Council has scheduled its first budget work session for May 26 at 5:30 p.m. at City Hall. A second work session is tentatively set for June 8. A public hearing and approval of the preliminary budget is planned for either June 1 or June 15, with final budget approval on Aug. 17.