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Billings proposes $447 million FY27 budget; staff recommend shifting marijuana tax to public safety
Summary
City finance staff presented a proposed FY27 spending plan that assumes $465 million in revenues and $447 million in expenses, a $1.1 million planned draw on reserves and a recommendation to move roughly $500,000 in marijuana excise tax into the public safety fund to balance operations.
City finance staff on Monday outlined a proposed fiscal year 2027 budget that projects $465 million in revenues against $447 million in operating and capital expenditures and asks the council to adopt fund-level spending authority ahead of a June adoption date.
The overview presentation, led by Andy Zeller, described the proposal as ‘‘balanced’’ at the fund level but acknowledged it relies on a $1.1 million planned use of general‑fund reserves and several assumptions that will be finalized in August, including expected construction-related property tax revenue. Zeller said the budget assumes a 2.95% inflationary increase in property tax revenue and estimated but did not include roughly $1,000,000 in unconfirmed new‑construction revenue.
Why it matters: the packet mixes long‑lived capital commitments and ongoing operating costs. Zeller pointed to a suite of large capital projects already in the capital improvement plan — landfill cell expansion, transmission-line work for the water system, airport ticketing and baggage improvements — and noted the budget includes cash or debt plans for those items. He also flagged several one‑time items that staff recommend funding from reserves, including $250,000 for new payroll software and $80,000 for contract‑management software.
A separate revenue decision drew sustained attention: Zeller recommended shifting about $500,000 in marijuana excise tax revenue from the city’s substance‑abuse and mental‑health fund into the general public safety fund to cover an operational shortfall. ‘‘There’s not a programmed expense in the substance‑abuse mental‑health portion, so move it over here for operations,’’ Zeller said, adding that opioid settlement dollars and mill levies still support several programs historically paid from that fund.
Council members asked for more detail on what programs, if any, would lose funding and how long the city would draw on reserves if revenues fall short. Kendra Shaw said she worries that moving the marijuana excise tax into operations would ‘‘never come back’’ to the program areas it previously supported; Zeller agreed that some council members would be uncomfortable and recommended staff provide a history of prior uses.
Process and schedule: staff asked council to use the online FY27 proposed budget (billingsmt.gov/finance) and noted a series of budget work sessions this month, with a target adoption on June 8. Zeller reminded the council that formal budget adoption sets a legal, fund‑level spending limit and that any increase beyond those adopted fund limits will require council‑approved budget amendments.
Looking ahead, Zeller warned that a police records management system request arrived late in the process and is not fully funded in FY27; he estimated a year‑one cost of about $1.1 million and an annual operating increase of roughly $350,000 if the council decides to proceed. He asked council to expect future budget work on that item.
The council did not vote on the budget; the packet presentation opened a multi‑week review and amendment period leading to the adoption vote expected in June.
