Polson looks at $17M budget proposal

Revenues and expenditures are expected to balance out in Polson’s proposed $17.3 million budget for fiscal year 2023, but not without some maneuvering in the general fund.

In his preliminary budget message to the City Commission, City Manager Ed Meece noted the structural imbalance in the city budget’s general fund.

“Simply put, the city does not have enough general fund revenues to consistently sustain an appropriate level of General Fund expenditures that allows for staff compensation levels that assure the attraction/retention/development of quality people resources and maintain an acceptable level of operational effectiveness,” Meece stated.

According to the message, revenues and expenditures for the general fund are balanced after the elimination of $200,000 in road project expenses that were allocated but unspent in fiscal year 2022.

Due to the budget imbalance, Meece said the city is looking for ways to diversity its revenue stream, including through the city’s share of the local-option marijuana tax, estimated at $30,000 annually for Polson. Other revenue could come from a proposed Safety Inspection Certificate program, Meece said.

On the revenue side, rate increases are not proposed in 2023 for city water or sewer, however Meece said a rate hike may be needed in 2024 due to the impacts of inflation.

Meece said budget expenditures are focused on “people, operations and capital.”

The 2023 budget includes a 3% cost of living wage bump for General Fund employees, “and a few specific, but small, compensation increases.”

“Long-term, this approach to staff compensation will inhibit the city’s ability to attract and retain quality people.” Meece warned in his budget message.

He said significant wage increases for water and sewer department workers are included in the 2023 budget, in an attempt to bring compensation closer to comparable market rates.

The budget also accounts for $282,000 in one-time capital expenditures from CARES Act funds, including $135,000 for two new fire department command vehicles, $65,000 for a new police department vehicle, $30,000 to remodel in the fire station, $35,000 to repave the City Hall parking lot, and $17,000 for police equipment.

The Water and Sewer fund has $5.8 million in expenditures, which will be funded with a mix of enterprise funds, American Rescue Plan Act allocations, and state grants.

While not included in the 2023 budget, Meece said he intends to present the commission with the option for a special property tax mill levy to fund road projects going forward. He also will evaluate the city’s impact fees, and develop a policy and fee schedule for false alarm calls.

The fiscal year 2023 budget ends with a reserve balance of $1.87 million, which is about 36% of the budget. City law requires a reserve balance of 16%.

Meece said unallocated CARES Act funding accounts for a portion of the large reserve.