Tonight, City Council is scheduled to approve the FY 2024 budget. With 11 amendments to discuss and a packed agenda, they also have the option to punt final budget adoption to June 26th. As we highlighted last week, the proposed budget with amendments totals $380 million in expenditures and a $100 annual tax increase on the median homeowner.

One of the items on the consent agenda is the awarding of a contract for a cost of services study, which is intended to help inform local government about the costs of development growth, including needed infrastructure, staffing levels, public safety services, recreation opportunities, and which types of development and what areas of the city are providing the tax revenue to cover those costs.

The request for proposals (RFP) for the cost of services study went out on February 10th and 17th. After being open for one month, the request received one applicant, the tax and assurance firm, Baker Tilly. The bid from Baker Tilly came in at $162,900 which is $37,900 over what City Council budgeted, requiring a reduction in spending elsewhere in the General Fund.

The proposed agreement outlines that the cost of services study will project the fiscal impacts of growth, including, “the cost of providing services (police, fire, street infrastructure, public parks and public transit) and maintenance of infrastructure in already developed areas of the city and in areas of the city that will be developed over the planning period and the cost of constructing capital facilities to support the anticipated growth and development.” After gathering information on Billings’ funding, operations, and growth projections, Baker Tilly can develop an impact model and analyze projected impacts for each of eight different areas in Billings, identifying how growth in those areas of Billings differs in infrastructure costs, capital improvement costs, services costs, staffing costs, and the anticipated revenue from the development to offset the added costs. If you’re familiar with Chuck Marohn’s Strong Towns organization and concept (he actually gave a presentation in Billings during last year’s Downtown Conference), you’ve likely heard about the Growth Ponzi Scheme, the hypothesis that the American development pattern of growth through low-density suburban sprawl, which requires massive infrastructure costs/upkeep and receives limited tax revenues over the long term, eventually leads to a situation where there isn’t enough new growth to cover existing liabilities. Mike Pasternock at Strong Towns explains it in under 6 minutes far better than I can. (Click on the image below)

It’s important to point out, as the article linked above does, that it’s not about pointing fingers, but merely acknowledging that the growth pattern we all know is in stark contrast with hundreds of years of human city building, and we may need to reconsider the merits of what had already worked for generations.

“There’s a major difference between a Ponzi scheme perpetrated by someone like Bernie Madoff and what we at Strong Towns call the ‘Growth Ponzi Scheme.’ And it’s this: we don’t think the people in your City Hall are fraudsters. No one is being nefarious. This is just the status quo approach every one of us has inherited. While the North American development pattern is about five-minutes-old in the long history of city building, it’s all any of us have known.”

— John Pattison, Community Builder at Strong Towns

Previous cost of services analyses for other cities back up the growth ponzi scheme hypothesis. The firm Urban 3 performed a cost of services study for Lafayette, LA, a city of roughly similar size to Billings, and found, “At current spending rates, roads were going bad faster than they could be repaired.” When they visually mapped the data from the cost of services study, it was abundantly clear, Lafayette’s wealth came from it’s downtown core and older, established neighborhoods where tax revenues more than covered what they required in infrastructure expenses and cost of services. Whereas, newer growth in low density, suburban areas provided a drain on the city, requiring subsidies to cover infrastructure and services costs. (see graphic below…despite not likely being familiar with Lafayette)

Billings may not be in dire straits yet, and we’ll have to see what more we learn from a cost of services study, but a couple issues should give us pause. A staff presentation to council last July highlighted the fact that Billings is far short of the funding required to cover the recommended cycle for resurfacing and chip seals to keep current roads maintained. Absent an additional $4 million annually, Billings’ funding cycle for resurfacing and chip seals is 30 and 25 years respectively, while the recommended cycle to avoid serious degradation and increased repair costs is 15 and 8 years respectively, about twice as often as Billings has funding to complete. Additionally, our tax bills keep going up ($100 increase proposed this year) and Billings’ budget consistently outpaces growth and inflation as demonstrated in the Frontier Institute’s Real Local Budget’s analysis.

Ultimately, a cost of services study will provide our elected officials with additional data to assist their decision making. Do they budget monies for new infrastructure and additional services in areas that are very expensive to maintain? Or do they focus on taking care of what we already have and incentivizing growth where services exist? The answer isn’t a simple either/or, but hopefully information from a cost of services study can provide the data to help answer: how does Billings balance both over the long term? Just think what the city could do with additional revenues if more growth was realized where infrastructure and services existed…. ⬇︎⬇︎⬇︎⬇︎⬇︎


At council’s work session meeting next week, June 19, they will be discussing the possibility of asking the voters to approve a bond issue to build a Billings Sports & Recreational Center and several other parks and recreation projects. The plan has been thoroughly discussed over the last couple years, with many councilmembers voicing their preference that, “if we’re going to build it, let’s build it right.” In February of this year, City Council voted 8-1 to adopt the final report of the Conceptual Design Phase.

The current design locates the facility adjacent Amend Park, providing the possibility for collaboration and use of that open park space for activities and events. The approved concept design is for a 213,500 square foot facility with two sheets of ice, a 50-meter indoor swimming pool, up to eight basketball courts, and much more! While Visit Billings already markets Billings as a sports events destination and assists with nearly 30 events annually, this recreation center would provide needed facilities to grow the sports tourism segment and build the sports identity for Billings. The efforts being made with Landon’s Legacy Foundation for Landon’s Miracle Field, School District #2 planning to better accommodate high school sports events at Daylis Stadium, TrailNet’s plans for the Skyline Trail, and finishing the marathon loop among many other projects all build on Billings’ capacity to be a competitive destination for sports events, for sporting enthusiasts, and fosters outdoor recreation. With so much potential to provide additional sports opportunities for locals and bringing customers to Billings for our local hotels, retailers, and restaurants, we encourage City Council to continue moving forward with this project.


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