Kalispell staff present FY2026–27 preliminary budget; council weighs pay, staffing and reimbursement risks

City staff presented the Kalispell City Council with a preliminary FY2026–27 budget on May 11, saying the document maintains current service levels while carrying forward major capital projects and beginning facility planning for utilities.

Jared Nigron, who led the presentation, said the general fund is relatively small—about $17 million—compared with the city’s total reported budgetary activity, which reflects multi‑year capital projects. Nigron told council that the public sees headline totals such as $189 million but should understand much of that sum is multi‑year capital spending and does not equate to a single‑year property‑tax increase.

The budget proposes modest increases for salaries and benefits to reflect recent market‑rate adjustments, Nigron said, and includes two firefighter full‑time equivalents proposed within an EMS levy. He also noted prior hiring funded in earlier years has already contributed to about a 25% reduction in fire response times.

The $120 million in capital projects cited in staff materials includes water and sewer facility planning, street and storm improvements and city‑owned building maintenance. Staff said much of the capital work carries across fiscal years because large projects can take multiple years to design, procure and construct.

Nigron flagged state policy changes—referred to in the meeting as Senate Bill 542 and House Bill 231—and ongoing lawsuits challenging those laws as a key source of uncertainty. Those changes reduced effective residential property tax rates and shifted some burden to commercial property, meaning the city may see different revenue mixes than in prior years. “There’s just still some moving parts here that you don’t necessarily want to be overly aggressive on appropriations until we really know how these state law changes are going to affect the city,” he said.

Staff also described a $1.1 million portion of a state‑administered “pro‑housing” grant that Kalispell expects to use for facility plans and a housing study; staff said the award is in hand but administrative details for reimbursement remain under negotiation with the League of Cities and the state, so portions may be spent with later reimbursement.

On reserves, staff noted the city’s fiscal policy calls for a 20% general‑fund reserve; the preliminary budget projects a 21.3% reserve level and anticipates year‑end cash carryover that could be used for deferred maintenance or to adjust mill levies.

Councilors pressed staff on a range of tradeoffs, including whether small adjustments to council compensation would affect final appropriations, the timing of water and sewer rate studies that will influence future revenue needs, and whether certain capital items should be delayed until the outcome of state litigation is clear. The council will consider these issues as the budget process advances toward adoption in August.

What’s next: staff will return with the finalized preliminary budget and additional detail at future meetings and will conduct rate and facility studies for water and sewer later this year that will inform the final FY2026–27 budget.