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Roll delivers first 'State of the City' address

by Canda HarbaughWestern News
| January 14, 2009 11:00 PM

Though revenues have been sluggish for years, Libby’s city budget is keeping up with expenses, Mayor Doug Roll said during his first “State of the City” address on Wednesday.

“The revenue is stable at this time,” Roll told members of the Libby Area Chamber of Commerce. “The city is doing OK financially. We just want to keep things on an even keel because (financially) things are getting pretty ugly.” 

Roll pointed out how Libby’s situation differs from Kalispell, a city he says is battling a budget crisis and considering cutting fire and police positions.

Kalispell experienced a “building boom” last year, and now the current recession is yielding less building tax revenue than anticipated, Roll said.

“We’re not really doing better than (other cities),” Roll said during an interview. “We’re just maintaining right now.”

Most of Libby’s general fund revenue is derived from property taxes, which have stayed constant, and gaming taxes.

“For the last six years, at least half of our revenues have come from gaming,” Roll pointed out, “and most of the rest from property taxes.”

Though the recession may have caused people to gamble less at Libby casinos, under House Bill 124, the tax money that the city receives stays the same except for inflation adjustment.

The state divvies out all gaming tax revenue to cities based on 2001 figures, adjusting the amount each year to add half of the inflation rate.

“The only way of losing revenue is if people quit paying property taxes,” Roll said. “Revenues in most cities have not kept up with their growth rate, but Libby hasn’t grown all that much.”

The city’s general fund is about $1.1 million, said Roll, and revenue from property and gaming taxes has only increased by about $140,000 in the past seven years, not even keeping up with inflation.

“We have fewer employees than we did then,” said Roll, “because our revenue hasn’t changed and all of our costs have gone up.”

Roll pointed out that the city should have a cash reserve that is at least 25 percent of the budget. There was $170,000 in reserve at the beginning of the fiscal year, which is about 15 percent.

During his speech, Roll stated that the city must find new sources of revenue, since the only way to raise money currently is through voting for tax increases or levees.

Roll mentioned that the Montana League of Cities has proposed that the state allow individual cities to vote to implement a “local option tax.”

If such an option existed, Libby could vote to place a tax on alcohol, restaurant purchases and lodging – much like Whitefish’s resort tax – without having to be state-designated as a resort.

If a local option tax were to be implemented, Roll said, property taxes could be reduced to offset local residents’ expense.