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The Butte-Silver Bow Courthouse is seen on Wednesday, July 20, 2022.
A newly proposed county budget would give most Butte-Silver Bow employees a 5% salary increase to help offset inflation, but the higher-than-usual pay hikes would still fall well short of the overall rise in prices.
Inflation is taking other hits on the county’s coffers, with $475,000 penciled in to cover higher diesel and gasoline costs, $275,000 for increased chemical expenses, $210,000 more for utilities and $125,000 more to cover higher food costs at the county jail.
But due to several factors, including anticipated increases in state-set taxable values, new construction and a windfall from an expiring tax-increment district, the plan is not expected to increase property taxes or residents’ rates for water, sewer, roads or the landfill.
That was a major goal, said county Chief Executive J.P. Gallagher, since “everybody is getting hit with inflation.”
The proposed 5% pay raises would at least offset some inflation, which has been surging for months and hit 9.1% year-over-year in June.
The county budget is still preliminary so changes can be made before commissioners enact a final version, probably sometime in August. The budget will be retroactive to July 1 and run through June 30, 2023.
The preliminary plan would authorize up to $173 million in spending from all revenue sources, an increase of $31 million over the fiscal year budget that ended June 30.
About $23.4 million of that increase is for capital projects being funded by the American Rescue Plan Act, a $1.9 trillion COVID-relief and stimulus package congressional Democrats and President Joe Biden approved in March 2021.
Many individuals got $1,400 checks from that package, and it’s paying for major upgrades to Butte dams and water and wastewater plants, a $1 million grant to Highlands College, possibly $1 million to rehab the Civic Center parking lot, and other projects.
The budget also includes a separate $7.9 million federal grant to reconstruct Roosevelt Drive and $3.7 million in projects under contract within the booming business park west of town and the expiring tax-increment district that’s been instrumental in its growth.
But many economists say the $1.9 trillion spending package also exacerbated the national inflation surge. In June, it hit 9.1%, a four-decade high, and wholesale inflation climbed to 11.3% compared to a year earlier.
Butte-Silver Bow budgets in recent years have included marginal pay raises for most county employees to keep pace with inflation. The raises were 1.5% last fiscal year and 2% in fiscal year 2020.
Under this budget plan, most county employees would see a 5% increase in wages and benefits, though some in unions negotiated for 4.5% pay raises that include other benefits, said Budget Director Danette Gleason.
She and Gallagher said Butte-Silver Bow has been losing a lot of employees to other government entities or private employers so they evaluated some of those salaries and proposed 5% pay hikes.
“I think that is the minimum that we could have went with our employees to retain the employees we have,” Gallagher said. “In every (union) negotiation, they came in with inflationary costs and a lot of them were looking at 9%, which they’re saying is the national inflation rate is right now.”
Nine-percent raises were not practical or possible, he said.
“If you look at any employers in the state, they’re all having to raise their salaries because of inflationary costs to employees, so for us to compete and retain the employees we have, we needed to look at the 5% range,” Gallagher said.
Personnel costs are the single largest chunk of the county budget at 29%, Gleason says. The increases in pay alone would cost about $2 million and the benefit increases would add about $705,000 to the annual budget and future budgets as well.
There are two primary reasons behind the higher fuel costs.
For years, there were underground storage tanks at the county shops next to the Civic Center and that’s where the county’s 400 or so police cars, fire engines, public works trucks and other vehicles fueled up. The county could buy diesel and unleaded gasoline in bulk at significant discounts.
The county moved its shops complex to a site off of Beef Trail Road that opened in early 2021 and for various reasons, did not install large fuel storage tanks there. Instead, employees now use an electronic fuel-card system to fill up county vehicles at Town Pump locations.
The county still gets discounts, currently 10 cents per gallon, but they are much smaller than the bulk discounts. That change increased costs significantly and the switch was also made in February 2021, when gasoline prices at the pump were rising.
The county’s cost per gallon of diesel in February 2021 averaged $2.35. It was $2.51 for unleaded. By June of 2021, it was $3.01 for diesel and $2.81 for unleaded.
Diesel went up in 10 of the 12 months of the fiscal year that ended this past June 30, and that month, it was $5.44 per gallon. Unleaded went up every month and the average county cost in June was $4.98 per gallon.
Usage of county vehicles has gone down in each of the past three fiscal years, with combined gallons of fuel totaling 269,030 in fiscal year 2020, about 240,870 in fiscal year 2021 and 233,724 over the 12 months that ended this past June.
The cost of fuel in fiscal year 2021 was $493,687 but even with less usage over the following 12 months, the tab was $810,273. The county has made moves to install above-ground fuel tanks at the new shops complex but it will be months before they’re in place.
The proposed budget would fund or partially fund several new positions that in total add up to 4.75 full-time employees. But some are being funded by eliminating other positions and one, an electrical inspector , would be funded through permits and enforcement fees.
Eleven new positions were authorized in the previous county budget, but only five fell directly to taxpayers, and property taxes tied solely to the county budget went down last year. The decrease was $20.25 for homeowners with houses worth $100,000, double that for $200,000 homes.
Property taxes can go up for many reasons, including higher assessments by state officials and local school budgets, but bills did not increase to support county spending. A final budget is still pending but Gleason and Gallagher do not expect increases in property taxes this coming year, either.
There are several reasons making that possible, including rosy news on revenues.
The state is again expected to increase taxable values, and new construction, including homes, has expanded the tax base. The tax-increment district for the industrial park sunset on June 30, giving the county about $2 million more in revenue, plus $1.3 million for local schools and the state.
And because of higher copper prices, Montana Resources is paying more in gross proceeds taxes and that should net the county about $2 million more in revenue to support the new budget.
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Mike Smith is a reporter at the Montana Standard with an emphasis on government and politics.
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The Butte-Silver Bow Courthouse is seen on Wednesday, July 20, 2022.
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