Relying on a spike in resort tax collections that translates to a property tax rebate and a reduction in spending, Whitefish’s proposed budget anticipates a reduction in property taxes.

The preliminary budget looks to create an estimated annual savings of about $40 on the city’s portion of the property tax bill for a home with a market value of about $440,000.

The total proposed budget for fiscal year 2023 is $50.9 million compared with last year’s approved budget of $49.8 million.

City Manager Dana Smith said the last two years the city’s budget has tried to take into account the challenges facing the community from the pandemic by reducing the number of mills collected and this year’s budget follows that same intent.

“Careful consideration was made regarding the level of service expectations and the financial impacts taxpayers and residents already face with rising costs from inflation and residual supply chain issues from the pandemic,” Smith said.

City Council will hold a work session on the budget on Tuesday, May 31 at 5:30 p.m. at City Hall. The city starts its review of the budget in May, but it won’t adopt the final budget until property valuations come in from the state in August.

RESORT TAX collections have an impact on the city budget in terms of providing funding for certain areas like streets, parks and the Haskill Basin Conservation Easement, and also offer a tax rebate to property owners. The resort tax is a 3% tax collected on lodging stays, retail purchases and at restaurants and bars.

The resort tax collections for the last fiscal year are projected to be the highest amount collected since the inception of the tax at about 30% higher than the prior year. In FY22 collections were $4.79 million and the preliminary budget for FY23 is set at $6.2 million.

Smith said with projected collections significantly higher than expected, property tax relief is once again on the rise. 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.

Total property tax relief is estimated at $2.8 million, which is an increase of $1.1 million compared to FY22. The tax relief equals a reduction of mills of about 57 compared to the reduction of 35 mills in the prior year.

“The ability for the city to provide a reduction in property taxes is primarily due to the significant increase in property tax relief from resort tax collections,” Smith said. “Resort tax collected in excess of the budget must be returned to the taxpayers as additional property tax relief.”

The city anticipates a decrease in expenditures of 2.9% or $1.2 million.

The main area where the city expects to spend less is on capital projects. Total capital spending this year is projected to decrease by $5.2 million compared to the prior year as work wraps up on major construction projects — the wastewater treatment plant upgrade with $3.49 million in spending last year and the water treatment plant expansion project at $1.2 million.

“Amounts spent on capital projects fluctuate annually as projects change and needs are adjusted to meet demand,” Smith said.

IN TERMS of personnel, the city is planning to add staffing and increase salaries by 7%.

Most employees in a normal year would receive a pay increase of 3.5% made up of a cost of living adjustment and for longevity, Smith notes, but modest increases the past two years have not kept up with market conditions.

“Given the current market conditions, the city has seen an increase in turnover and difficulty filling positions,” she said. “The need to retain employees is of the utmost importance to ensure we continue to deliver exceptional service to our community.”

The budget factors in a health insurance premium increase of 3% for employees and the city plans to pay for the full increase. This is the third consecutive year that the employees have not had an increase in their portion of health insurance premiums, the city notes.

The budget includes adding seven new positions and increasing the hours of two firefighter positions. The new staff includes a police officer, a firefighter, a second assistant fire chief, a new human resources position, a code enforcement officer for the planning department, a building inspector and new facilities maintenance position in the parks and recreation department.

Smith notes that the additional staff is in response to continued growth. Some positions, like in the parks and recreation department, have been shifted as the city has been unable to hire seasonal staff.

The building department has more than adequate reserves to fund a new position.

“Building in Whitefish has reached record numbers and overall indications show there is no slowing in the coming years,” she said. “With the continued high demand, there is a need for an additional building inspector to support ongoing operations and reduce burnout of current staff,” she said.

For more information, visit the city’s website at https://www.cityofwhitefish.org/.

Features Editor Heidi Desch may be reached at 758-4421 or hdesch@dailyinterlake.com