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City may have to come up with $7 million if Billings special election levy doesn't pass

Billings Police Car
Posted at 6:41 PM, Jun 09, 2020
and last updated 2020-06-10 14:17:41-04

BILLINGS — If nothing is done to the 2021 Billings city budget, city staff say about $7 million will have to be found either through cuts or dips into the city reserves to balance the budget and keep up with the current level of police and fire services.

The Billings City Council voted 10-1 Monday night to approve the first reading of draft ballot language to amend a public safety mill levy passed by Billings voters in 2004. Council member Kendra Shaw was the lone dissenter.

If approved, the city would increase the amount of money brought in from the levy from $8 million to $12 million. That would bring in an additional $4 million in tax revenue to the city to pay for the police and fire departments.

If the levy is approved, the owner of a Billings home worth $200,000 would pay about $57 more in property taxes per year.

The amendment to the 2004 levy wouldn't completely bring the city out of financial trouble. It would still need to cut or dip into reserves to fill the remaining $3 million deficit, if the amendment were to pass.

"So if this gets passed tonight and voters approve it, $4 million of the $7 million (reserve dip) is resolved. Still though, you’ll have $3 million more in reserves that you’ll be using than revenue coming in," said Billings City Administrator Chris Kukulski ahead of the vote Monday.

Both chiefs of the Billings fire and police departments told the council in May that they can't afford to go backward when it comes to the current level of service expected from the departments.

Council Member Penny Ronning said there's a good chance that will happen if something isn't done to fix the deficit.

“What we’re doing is helping to keep what we’ve got now in place. Which, if we don’t keep what we’ve got in place, there’s a very good chance that we'll lose. So, not only is the next ask a bigger ask than what we were even talking about earlier of going after a public safety mill levy, it’s going to be a substantially bigger ask," Ronning said.

Some other council members agreed, saying it would be better for taxpayers to see incremental increases to their bill, rather than large jumps.

If voters pass the levy in a special all-mail election in the coming months, Kukulski said it essentially buys the city time. In the approval scenario, Kukulski anticipated the city would have until April or May of 2021 before it "will have spent all of our additional reserve above and beyond the minimum best practice.”

“If we don’t increase revenue, or we don’t cut costs, that’s where we will end up in March, April, May 2021. Then we would have to either go below those best practices of reserves or make cuts to better structurally fix the budget," Kukulski said.

The city likes to keep a minimum in its reserve fund, which attracts better interest rates on bonds and loans.

City staff have previously brought a proposal to shift or change some money used for the city parks out of the general fund and into Parks District 1, the larger funding mechanism for the city parks. This would have freed up around $4 million, but the council has yet to move forward with that proposal.

RELATED: Billings City Council directs staff for proposals to cut 2021 budget