4.
Council Work Session
- Meeting Date:
- 05/18/2020
- TITLE
- Discuss Possible Public Safety Mill Levy Charter Amendments and Changes to Park Funding
- Department:
- City Hall Administration
Presentation:
Yes
RECOMMENDATION
Staff recommends the Council proceed with a 2020 Public Safety Mill Levy Ordinance and related ballot language to repeal and replace the 2004 Public Safety Levy 2 and continue discussing ideas on how best to fund parks, recreation, cemetery and public lands.
BACKGROUND
On May 12th, the Council discussed several ideas to advance the City’s commitment to improve the safety of Billings and also resolve the General Fund budget's structural imbalance. The result of the conversation was to pursue replacing the revenue capped 2004 Public Safety Mill Levy (PSML) with a 2020 PSML and also the possibility of replacing the Park District 1 assessment with a voter approved mill levy. In order to repeal and replace the 2004 PSML, the Council would proceed with amending the City Charter. The following procedural steps are necessary when amending the City Charter.
First, by State statute, an amendment to a Charter may only be made by submitting the question of amendment to voters, Sec. 7-3-103(1), Montana Code Annotated (MCA). When the local governing body is proposing a Charter amendment, it must pass an Ordinance which describes how the Charter will be amended, Sec. 7-3-103(2)(b), MCA. Pursuant to Council direction during the May 12, 2020, work session, a draft Ordinance proposing a Charter amendment and PSML election in 2020 is attached.
Second, related to the Ordinance, proposing a Charter amendment, is a companion Resolution which provides the actual ballot language to be placed on a ballot prepared by the Yellowstone County Election Administrator. The most important functions of the Ballot Language Resolution is to refer the Charter amendment question to the County Elections Administrator and clearly and succinctly explain the nature of the proposed Charter amendment and the impact on voters.
The Council has directed staff to provide ballot language that describes how the current public safety mill levy in Section 1.05.1 approved by the voters in 2004 will be replaced by the new, proposed 2020 levy. The draft ballot language explains that if approved, the proposed mill levy will replace the 2004 levy and provide 60 mills per year for public safety funding. The proposed new mill levy will be permanent and assess 60 mills each year generating approximately $12,240,000 in the first year. The draft Resolution also explains that the current 2004 PSML will remain in effect if the proposed new levy in 2020 is disapproved by voters. A first draft of such a Resolution containing this ballot language is attached.
The last PSML approved by our voters generated $8.2 million, annually. In 2004 the levy anticipated that it would take 60 mills to generate the $8.2 million. Today 40.17 mills are levied to generate the $8.2 million public safety investment. If this 2004 levy were replaced by a 2020 levy of 60 mills it would generate approx. $12.2 million. The benefit of setting a mill cap vs. a revenue cap in the PSML is that each year growth in taxable values across the City helps to offset inflationary cost thus retaining much of the levy’s purchasing power. On the flip side, the 2004 capped revenue levy of $8.2 million loses purchasing power annually.
On May 4, 2020, the City Administrator and Finance Director presented their proposed fiscal year 2021 (FY21) budget. The proposed budget reduces the structural imbalance from nearly $7 million in FY 2020 to ~$3 million by shifting all of parks, recreation, cemetery and public lands budgets from the City’s General Fund (GF) into Park District One (PD1). The decision to shift costs to PD1 prevents the GF budget from dropping reserves below the recommended minimum in the proposed FY21 budget. The decision also makes it easier to see exactly how much it costs property owners to pay for parks, recreation, cemetery and public lands and is no longer directly competing with public safety for funding.
The alternative to shifting costs to PD1 is to either ask voters to approve a mill levy in 2020 or to cut approximately $4,000,000 from the proposed FY21 GF budget. As identified above and discussed on May 12th, a 2020 PSML of 60 mills will generate $4 million additional dollars to continue investing in public safety. If the Council were to take both actions of replacing the 2004 mill levy and shifting Parks' budget to PD1 the proposed FY21 budget structural imbalance is resolved.
To place the potential cuts into context the adopted FY20 and proposed FY21 City’s GF and Public Safety Fund (PSF) budgets are as follows:
Very little capital is included in the GF and PSF therefore most cuts would need to come from personnel. In simplistic terms, $2,000,000 in budget cuts is equal to 25 full time GF positions.
If the Council decides to move forward with a ballot measure in 2020, June 8th is the latest date the City can adopt a ballot measure increasing revenues for Public Safety and/or Parks for FY21. With only three weeks left to this deadline, clear direction must be given during this discussion.
First, by State statute, an amendment to a Charter may only be made by submitting the question of amendment to voters, Sec. 7-3-103(1), Montana Code Annotated (MCA). When the local governing body is proposing a Charter amendment, it must pass an Ordinance which describes how the Charter will be amended, Sec. 7-3-103(2)(b), MCA. Pursuant to Council direction during the May 12, 2020, work session, a draft Ordinance proposing a Charter amendment and PSML election in 2020 is attached.
Second, related to the Ordinance, proposing a Charter amendment, is a companion Resolution which provides the actual ballot language to be placed on a ballot prepared by the Yellowstone County Election Administrator. The most important functions of the Ballot Language Resolution is to refer the Charter amendment question to the County Elections Administrator and clearly and succinctly explain the nature of the proposed Charter amendment and the impact on voters.
The Council has directed staff to provide ballot language that describes how the current public safety mill levy in Section 1.05.1 approved by the voters in 2004 will be replaced by the new, proposed 2020 levy. The draft ballot language explains that if approved, the proposed mill levy will replace the 2004 levy and provide 60 mills per year for public safety funding. The proposed new mill levy will be permanent and assess 60 mills each year generating approximately $12,240,000 in the first year. The draft Resolution also explains that the current 2004 PSML will remain in effect if the proposed new levy in 2020 is disapproved by voters. A first draft of such a Resolution containing this ballot language is attached.
The last PSML approved by our voters generated $8.2 million, annually. In 2004 the levy anticipated that it would take 60 mills to generate the $8.2 million. Today 40.17 mills are levied to generate the $8.2 million public safety investment. If this 2004 levy were replaced by a 2020 levy of 60 mills it would generate approx. $12.2 million. The benefit of setting a mill cap vs. a revenue cap in the PSML is that each year growth in taxable values across the City helps to offset inflationary cost thus retaining much of the levy’s purchasing power. On the flip side, the 2004 capped revenue levy of $8.2 million loses purchasing power annually.
On May 4, 2020, the City Administrator and Finance Director presented their proposed fiscal year 2021 (FY21) budget. The proposed budget reduces the structural imbalance from nearly $7 million in FY 2020 to ~$3 million by shifting all of parks, recreation, cemetery and public lands budgets from the City’s General Fund (GF) into Park District One (PD1). The decision to shift costs to PD1 prevents the GF budget from dropping reserves below the recommended minimum in the proposed FY21 budget. The decision also makes it easier to see exactly how much it costs property owners to pay for parks, recreation, cemetery and public lands and is no longer directly competing with public safety for funding.
The alternative to shifting costs to PD1 is to either ask voters to approve a mill levy in 2020 or to cut approximately $4,000,000 from the proposed FY21 GF budget. As identified above and discussed on May 12th, a 2020 PSML of 60 mills will generate $4 million additional dollars to continue investing in public safety. If the Council were to take both actions of replacing the 2004 mill levy and shifting Parks' budget to PD1 the proposed FY21 budget structural imbalance is resolved.
To place the potential cuts into context the adopted FY20 and proposed FY21 City’s GF and Public Safety Fund (PSF) budgets are as follows:
| Department | FY20 Adopted Budget | FY21 Proposal Budget | ||
| Mayor and Council | 261,042 | 0.4% | 264,919 | 0.5% |
| City Administrator | 906,846 | 1.4% | 1,930,702 | 3.3% |
| Municipal Court | 1,493,143 | 2.4% | 1,479,095 | 2.5% |
| City Attorney | 1,891,799 | 3.0% | 2,092,530 | 3.6% |
| Human Resources | 826,205 | 1.3% | 825,565 | 1.4% |
| Finance | 1,527,061 | 2.4% | 1,552,163 | 2.7% |
| Code Enforcement | 564,362 | 0.9% | 575,602 | 1.0% |
| Parks and Recreation | 5,617,665 | 8.9% | - | 0.0% |
| Police Department | 27,017,423 | 42.9% | 26,195,458 | 44.9% |
| Fire Department | 20,973,126 | 33.3% | 21,561,438 | 36.9% |
| Non-Departmental | 1,864,686 | 3.0% | 1,895,897 | 3.2% |
| Total General & Public Safety Fund | 62,943,358 | 58,373,369 |
Very little capital is included in the GF and PSF therefore most cuts would need to come from personnel. In simplistic terms, $2,000,000 in budget cuts is equal to 25 full time GF positions.
If the Council decides to move forward with a ballot measure in 2020, June 8th is the latest date the City can adopt a ballot measure increasing revenues for Public Safety and/or Parks for FY21. With only three weeks left to this deadline, clear direction must be given during this discussion.
ALTERNATIVES
Council may direct staff to:
1. Proceed with an Ordinance and ballot language Resolution in similar form to that attached; or,
2. Not to proceed with an Ordinance and ballot language Resolution in similar form to that attached; or,
3. Direct staff to modify the attached draft Ordinance and ballot language Resolution; or,
4. Create any alternative the Council sees fit.
1. Proceed with an Ordinance and ballot language Resolution in similar form to that attached; or,
2. Not to proceed with an Ordinance and ballot language Resolution in similar form to that attached; or,
3. Direct staff to modify the attached draft Ordinance and ballot language Resolution; or,
4. Create any alternative the Council sees fit.
FISCAL EFFECTS
As discussed above, an alternative to relying completely on reserves, or significantly cutting the City’s public safety investments is to replace the 2004 PSML with a 2020 PSML along with shifting parks, recreation, cemetery and public lands budgets out of the General Fund and over to Park District 1. These decisions (if approved by the voters) would increase property taxes for the typical homeowner by ~ $57 per year. This decision will increase the PD1 assessment by ~$60 per year for the typical homeowner and make available $4.1 million to help pay for public safety services. This does not solve the City’s structural imbalance long term, but would allow the public safety levy to be postponed until 2021 (2022 fiscal year). There is no fiscal effect in drafting and Council ultimately approving the attached Ordinance and Resolution.