Rachel Harlow-Schalk, City Manager

The City of Helena's Charter Article III, Section 3.02, 2. k) charges the City Manager with the responsibility of preparing and presenting the budget to the Commission for its approval and execute the budget adopted by the Commission. This meeting item represents achievement of the City Manager's Charter responsibility and is submitted for acceptance as the Preliminary Budget of the City of Helena for FY2022. 

Since fiscal year 2017, the City Manager has not submitted a Preliminary Budget and then the City Commission has not adopted a final budget that appropriately assigns revenues received in the correct fiscal year. Instead, the City Manager and the Commission have developed the Preliminary Budget with revisions made by the Commission at final adoption. Additionally, the City has been adopting the Preliminary as the City's Final budget prior to tax levy fix which can occur up to September of every year. It is understood this should not happen and Helena needs to restart this process.

Adoption of the Preliminary Budget represents the City Manager's budget and the Final Budget is intended to represent the Commission's budget. The need to distinguish between these two budgets lay in the expectations of the City Manager who is responsible, by City Charter, for administration of all City affairs required by charter, law, ordinance, and resolution. This includes appointment and management of all city employees. Preparation of the City Manager's budget ensures the Commission is made aware of organizational needs and efforts that will be implemented to achieve of the Commission's objectives for which budgeted funds are assigned.

This item is for the City Manager to present the budget for FY 2022, as is required in City Charter, to the City Commission.

Preliminary Budget

The City Charter requires the City Manager to prepare and present the budget to the City Commission for approval and execute the budget adopted.  State statute, MCA 7-6-4021, requires that the City Adopt a Preliminary Budget which is represented in this process as the charter directed City Manager’s budget.

The Commission can make amendments to the budget via motion following public hearing as part of the adoption of the Preliminary Budget. Once the Preliminary Budget is adopted, and in accordance with state statute, the City will begin spending on July 1, 2022 which is the official first day of the fiscal year.

City Commission Budget

State statutes, MCA 7-6-4024 and 7-6-4036, require the City Commission adopt a final budget and fix the tax levy by the later of the first Thursday after the first Tuesday in September or within 30 calendar days after receiving certified taxable values from the Montana Department of Revenue. The reason for this late legal finalization of the budget/tax levy is the timing of tax valuation information. Budget revenue estimates and tax levies are dependent upon tax valuation information. The budget is subject to revision, and not considered legally finalized until the tax levy is fixed by City Commission resolution.

Of greatest policy issue has been the need to arrive at the state requirement of a balanced budget and then going beyond the expectation within the General Fund by implementing a structurally balanced budget. The City Manager's budget as introduced meets the expectation of state budget law. It is the opinion of the City Manager that implementing a structurally balanced budget before budget finalizing would mean cutting operations necessary to build Helena's fiscal stability and ultimately, only gives the impression of structural balance and not true structural balance.

The Preliminary budget submitted is balanced which means total projected revenues equal expenditures. During working sessions, concern has been raised that in the General Fund there are roughly $900,000 of year over year, personnel-related increases which result in the use of excess funds to cover those expenses. 

Since the fiscal year 2017, the City has not adopted a budget that incorporates revenues in the budget year received which had been the practice up to that year. This budget submittal and process returns the City to the appropriate process of revising the budget to include actual revenues to the year in which they are received. Additionally, the team has not had sufficient time to appropriately charge administrative operations to funds within the City. By implementing these two actions during this budget process for adoption in the Final Budget, the City moves further toward true structural balance, takes the City beyond just meeting the State's budget law of balance, and ultimately returns the City to appropriate local government budgeting practices within its Home Rule Charter.

The City Commission has instructed the City Manager that fiscal stability is of greatest importance. Efforts to reduce or change the submitted General Fund budget to achieve structural balance will result in diminishing efforts by the Manager and the City team to achieve stability.

 Helena is not out of balance or over budget. Helena is fiscally unstable and needs to be striving for fiscal stability. As shared to the Commission at the April 28, 2021 Administrative meeting, fiscal stability is not about having money. Instead, fiscal stability is the implementation of base expectations that include financial policies, assurance of compliance with state requirements, implementation of management practices, and operations and planning activities within an organization.

These four base elements are not equally weighted. The greatest weight is on operations and planning, which transitions teams through years with consistent, repeatable methods. Since early 2018, the City has had seven different City Managers: four interim and three permanent including myself. Additionally, up to November of 2020, the City of Helena was without a Finance Director for nearly two years. Certainly, Helena is not alone in this lack of leadership stability. Often times, though, these organizations are smaller, rural communities with limited staffing and resources. As the state capitol, the City of Helena should meet the minimum, base expectations to be fiscally stable as a priority.

Helena lacks the financial policies, operations and planning needed to make it fiscally stable. It is the recommendation of the City Manager that the City Commission accept and adopt the FY2022 in compliance with the Montana State balanced budget law and work toward structural balance of the General Fund in future years. Fiscal stability, not structural balance, has been the charge of the City Manager who administers the City's operations.

The following is a summary of the process steps taken to get to this Preliminary Budget submittal:

1.      November 2020

•         Department work plan creation begins (Wildly Important Goals)

2.      December 2020

·         Book of Fees Review

3.      January 2021

·         City Commission Strategic Outcomes for the FY2022 Budget Established

·         Continued work with Departments on work plans to align with Commission Strategic Outcomes

4.      March 2021

·         Fiscal Stability analysis completed

·         Departments work with Finance to create budget submittals

5.      April 2021

·         Budget elements shared to the Commission

·         Departments continue work with Finance to submit requests

6.      May-June 2021

·         Working Sessions held with Commission on two drafts of the City Manager’s Preliminary Budget

(1)   May 10, 2022 Special Session Sidewalks;

(2)   May 12, 2022 Administrative Meeting Presentation of the DRAFT Preliminary Budget included overview by Finance Director supporting a Legally Balanced Budget;

(3)   May 17, 2022 City Commission meeting included a review of the Departments of Parks, Recreation and Open Lands including Golf and the Civic Center along with Transportation including Transit corresponding with all on-demand services that require a General Fund transfer along with the City Manager’s recommendation to achieve a Structurally Balanced Budget;

(4)   May 19, 2022 Administrative meeting included a presentation on the Housing Trust Fund, and from the Departments of Community Development and Public Works; and

(5)   May 26, 2022 to make final edits/revisions needed to reflect an appropriate Preliminary FY2022 Budget Submittal on June 7 along with presentations from the Municipal Court, Police and Fire Departments.

(6)   June 2, 2022 to make final edits/revisions needed to reflect an appropriate Preliminary FY2022 Budget Submittal on June 7

·         Finalization of manager’s proposed budget

·         Helena Citizens Council submits review of Drafted City Manager’s Preliminary budget.

7.      June 2021

·         Manager's proposed budget presented to the City Commission.

·         Public hearing scheduling and advertisement.

·         Proposed budget available for public inspection.

·         Formal public hearing on the proposed budget.

·         Annual budget resolution - City Commission adoption.

State statutes, MCA 7-6-4024 and 7-6-4036, require the City Commission adopt the final budget and fix the tax levy by the later of the first Thursday after the first Tuesday in September or within 30 calendar days after receiving certified taxable values from the Montana Department of Revenue. The reason for this late legal finalization of the budget/tax levy is the timing of tax valuation information. Budget revenue estimates and tax levies are dependent upon tax valuation information. The budget is subject to revision, and not considered legally finalized until the tax levy is fixed by City Commission resolution. 

This item is for the City Manager to present the budget for FY 2022, as is required in City Charter, to the City Commission.

Preliminary Budget

The City Charter requires the City Manager to prepare and present the budget to the City Commission for approval and execute the budget adopted.  State statute, MCA 7-6-4021, requires that the City Adopt a Preliminary Budget which is represented in this process as the charter directed City Manager’s budget.

The Commission can make amendments to the budget via motion following public hearing as part of the adoption of the Preliminary Budget. Once the Preliminary Budget is adopted, and in accordance with state statute, the City will begin spending on July 1, 2022 which is the official first day of the fiscal year.

City Commission Budget

State statutes, MCA 7-6-4024 and 7-6-4036, require the City Commission adopt a final budget and fix the tax levy by the later of the first Thursday after the first Tuesday in September or within 30 calendar days after receiving certified taxable values from the Montana Department of Revenue. The reason for this late legal finalization of the budget/tax levy is the timing of tax valuation information. Budget revenue estimates and tax levies are dependent upon tax valuation information. The budget is subject to revision, and not considered legally finalized until the tax levy is fixed by City Commission resolution.

Of greatest policy issue has been the need to arrive at the state requirement of a balanced budget and then going beyond the expectation within the General Fund by implementing a structurally balanced budget. The City Manager's budget as introduced meets the expectation of state budget law. It is the opinion of the City Manager that implementing a structurally balanced budget before budget finalizing would mean cutting operations necessary to build Helena's fiscal stability and ultimately, only gives the impression of structural balance and not true structural balance.

The Preliminary budget submitted is balanced which means total projected revenues equal expenditures. During working sessions, concern has been raised that in the General Fund there are roughly $900,000 of year over year, personnel-related increases which result in the use of excess funds to cover those expenses. 

Since the fiscal year 2017, the City has not adopted a budget that incorporates revenues in the budget year received which had been the practice up to that year. This budget submittal and process returns the City to the appropriate process of revising the budget to include actual revenues to the year in which they are received. Additionally, the team has not had sufficient time to appropriately charge administrative operations to funds within the City. By implementing these two actions during this budget process for adoption in the Final Budget, the City moves further toward true structural balance, takes the City beyond just meeting the State's budget law of balance, and ultimately returns the City to appropriate local government budgeting practices within its Home Rule Charter.

The City Commission has instructed the City Manager that fiscal stability is of greatest importance. Efforts to reduce or change the submitted General Fund budget to achieve structural balance will result in diminishing efforts by the Manager and the City team to achieve stability.

 Helena is not out of balance or over budget. Helena is fiscally unstable and needs to be striving for fiscal stability. As shared to the Commission at the April 28, 2021 Administrative meeting, fiscal stability is not about having money. Instead, fiscal stability is the implementation of base expectations that include financial policies, assurance of compliance with state requirements, implementation of management practices, and operations and planning activities within an organization.

These four base elements are not equally weighted. The greatest weight is on operations and planning, which transitions teams through years with consistent, repeatable methods. Since early 2018, the City has had seven different City Managers: four interim and three permanent including myself. Additionally, up to November of 2020, the City of Helena was without a Finance Director for nearly two years. Certainly, Helena is not alone in this lack of leadership stability. Often times, though, these organizations are smaller, rural communities with limited staffing and resources. As the state capitol, the City of Helena should meet the minimum, base expectations to be fiscally stable as a priority.

Helena lacks the financial policies, operations and planning needed to make it fiscally stable. It is the recommendation of the City Manager that the City Commission accept and adopt the FY2022 in compliance with the Montana State balanced budget law and work toward structural balance of the General Fund in future years. Fiscal stability, not structural balance, has been the charge of the City Manager who administers the City's operations.

The following is a summary of the process steps taken to get to this Preliminary Budget submittal:

1.      November 2020

•         Department work plan creation begins (Wildly Important Goals)

2.      December 2020

·         Book of Fees Review

3.      January 2021

·         City Commission Strategic Outcomes for the FY2022 Budget Established

·         Continued work with Departments on work plans to align with Commission Strategic Outcomes

4.      March 2021

·         Fiscal Stability analysis completed

·         Departments work with Finance to create budget submittals

5.      April 2021

·         Budget elements shared to the Commission

·         Departments continue work with Finance to submit requests

6.      May-June 2021

·         Working Sessions held with Commission on two drafts of the City Manager’s Preliminary Budget

(1)   May 10, 2022 Special Session Sidewalks;

(2)   May 12, 2022 Administrative Meeting Presentation of the DRAFT Preliminary Budget included overview by Finance Director supporting a Legally Balanced Budget;

(3)   May 17, 2022 City Commission meeting included a review of the Departments of Parks, Recreation and Open Lands including Golf and the Civic Center along with Transportation including Transit corresponding with all on-demand services that require a General Fund transfer along with the City Manager’s recommendation to achieve a Structurally Balanced Budget;

(4)   May 19, 2022 Administrative meeting included a presentation on the Housing Trust Fund, and from the Departments of Community Development and Public Works; and

(5)   May 26, 2022 to make final edits/revisions needed to reflect an appropriate Preliminary FY2022 Budget Submittal on June 7 along with presentations from the Municipal Court, Police and Fire Departments.

(6)   June 2, 2022 to make final edits/revisions needed to reflect an appropriate Preliminary FY2022 Budget Submittal on June 7

·         Finalization of manager’s proposed budget

·         Helena Citizens Council submits review of Drafted City Manager’s Preliminary budget.

7.      June 2021

·         Manager's proposed budget presented to the City Commission.

·         Public hearing scheduling and advertisement.

·         Proposed budget available for public inspection.

·         Formal public hearing on the proposed budget.

·         Annual budget resolution - City Commission adoption.

State statutes, MCA 7-6-4024 and 7-6-4036, require the City Commission adopt the final budget and fix the tax levy by the later of the first Thursday after the first Tuesday in September or within 30 calendar days after receiving certified taxable values from the Montana Department of Revenue. The reason for this late legal finalization of the budget/tax levy is the timing of tax valuation information. Budget revenue estimates and tax levies are dependent upon tax valuation information. The budget is subject to revision, and not considered legally finalized until the tax levy is fixed by City Commission resolution.