Whitefish City Council last week approved a roughly $49.8 million budget for fiscal year 2022 that includes a decrease in spending of about 27% over the prior fiscal year budget.

The decrease in spending is mostly due to a $15.1 million decrease in capital expenditures as construction wraps up on both the new wastewater treatment plant and the water treatment plant expansion project.

Total revenue for the budget is about $37.5 million, which is 28% lower than the FY21 budget mostly due to the decrease in loan proceeds that were used to finance the wastewater and water plant projects.

The budget continues a 10 mill decrease that was included in the FY21 budget and maintenance assessments are being held even. While total mills levied are down, total property tax revenue is estimated to increase by 2% or about $87,800 in the budget.

City Manager Dana Smith said that the city’s taxable value was adjusted this year as the Montana Department of Revenue completes a reappraisal of all taxable property every two years, and newly taxable property was added.

“During the past two years the price of property sales have significantly increased and the building boom continued without pause during the pandemic,” she said. “These factors have resulted in a 17.49 percent increase in taxable value compared to FY21.”

The city portion of tax bills should increase by only about 1.31% as a result of the reappraisal.

Smith said by decreasing its mill levied, the city’s budget takes into account that the community is still feeling the effects of the pandemic.

“While the city is seeing significant growth in taxable value, some members of our community are still recovering from the impacts of the ongoing COVID-19 pandemic,” she said.

Resort tax collections also have an impact on the city budget and provide a tax rebate to property owners. The resort tax is a 3% tax collected on lodging stays, retail purchases and at restaurants and bars.

Resort tax collections of $4.8 million in FY21 significantly exceeded the FY21 budgeted revenue of $4.25 million. As required by the resort tax regulations, the collections in excess of the budget must be returned to property taxpayers as additional tax relief in the following year.

As a result, there is an increase for property tax relief in FY22 at $482,000 more than FY21. The total property tax relief is about $1.6 million returning to tax payers. This is a 35 mill reduction.

The budget includes a 3.5% pay increase for most employees. Police officers will receive a one-time pay adjustment of 5% and firefighters will receive a total increase of 4%.

The budget includes adding new staff positions, including, an administrative assistant for the building department, the increase of a part-time position to full-time for utility accounts, adding two firefighters, increasing hours for library staff and adding a new position for the new wastewater treatment plant.

Capital purchases in the budget include purchasing a new fire engine, brush truck and ambulance for the fire department.

In terms of reserves, the fund balance reserves for property tax-supported funds are $4.9 million, which represents almost 40% of the total budgeted expenditures. This is an increase from 21% in FY21.

“During a public health crisis like the COVID-19 pandemic, economic downtown or a recession having adequate reserves for each fund is essential to maintaining expected levels of services for our citizens and ensuring a timely response to emergencies,” Smith said. “While a possible delay in collection of property tax and other charges for services can be expected due to uncertain economic times, reserves will help the city manage any cash flow issues that may arise.”

One of the reasons the reserves have increased is through CARES Act funding of about $2 million for the city that is used for reimbursements for unexpected expenses in response to the pandemic.