Personnel and overall operating costs are driving an increase in the proposed Whitefish city budget, which in turn is expected to bump property taxes.  

The total proposed budget for fiscal year 2026 is $58 million, which is an increase of about $4.8 million in expenditures over the previous budget.  

City Manager Dana Smith said the difference is mostly due to an increase in personnel costs and a significant increase in capital expenditures, which are offset by a reduction in operating materials and services.  

“While the decision to increase property taxes is never taken lightly, the proposed increase ensures the spending-down of reserves is reasonable and will not result in a significant increase in property taxes in a few years,” Smith said in a memo.  

Whitefish City Council holds a work session on the budget at 5:30 p.m. on May 28 at City Hall, 418 E. Second St. 

Under the draft budget, a market value home of about $600,000 could see an annual increase in city taxes of about $45.  

But Smith cautions that the budget “will change and should be considered a preliminary draft” since it's based on the current property tax system and several bills passed by the Montana Legislature will impact the system. The state releases final tax valuation numbers to cities in August.  

As part of the budget, resort tax collections will provide a tax rebate that is 7% higher than the prior year. The total property tax relief is estimated at $2.4 million.  

Capital improvements in the budget are expected to increase by $4.5 million primarily due to the South Water Storage and Production project moving into the construction phase and significant resort tax funded street projects. 

The budget calls for an increase in wages for employees of 4%, which includes a 2% cost of living adjustment plus longevity. However, the wage increase is based on the assumption that the city's taxable value will grow by 2%. If it does not, then the wage increase will also decrease.  

The Montana Department of Revenue reappraises taxable property on a two-year cycle. As fiscal year 2026 is a reappraisal year, the city’s taxable value will be adjusted to account for newly taxable property and the market value of taxable property.  

Given the uncertainty with state legislation, Smith said, the taxable value is projected to increase 2% from newly taxable property only.  

Whitefish, Smith noted, has provided relief to property taxpayers in the form of reduced levies and assessments over the past six years with the exception of last year. This was made possible through the resort tax collections, sunset of the city’s tax increment financing district and increases in the city’s taxable value due to newly developed property.  

“However, even with the property tax increase in FY 2025, many property taxpayers are still paying less to the city than they did in FY 2020,” she said.  

The proposed budget for fiscal year 2026 levies 62 mills as compared to the previous year of 56.3 mills and fiscal year 2024 at 47.6 mills.

Deputy Editor Heidi Desch may be reached at 758-4421 or [email protected].