After Bozeman leaders took sides on what to do with a nearly $300,000 budget shortfall, longtime Commissioner Jeff Krauss took his frustrations to the airwaves to claim the local government didn’t follow the letter or spirit of the law.

Bozeman officials overestimated two things that tilted the city’s $118.5 million budget out-of-whack. First, how much Bozeman would be able to bill for and collect from property taxes and, second, how much money the city would carry over from last year.

City commissioners passed Bozeman’s budget in June. On Monday, the leaders faced three options to respond to the shortfall: further increase taxes, find places to cut spending or leave both as planned and allow staff to try to make up the difference.

With a 4-1 vote, commissioners went with the latter. Commissioner Krauss had the vote in opposition.

On a morning talk show the next day, Krauss said the city should have cut the money from its spending. Going further, Krauss listed ways in which he thought the decision risked breaking laws.

“We passed a levy that unbalanced our budget knowingly last night,” he said. “In addition, we have a charter which says we have to keep a minimum amount in reserve.”

Krauss said that on his regular appearance on Dominick in the Morning for an episode called, “9/11 and did the Bozeman City Commission break the law last night.”

When host Dominick Brascia asked Krauss whether he was saying the city broke a law, Krauss repeated what he had said the night before in City Hall: He wanted to know what laws he was being asked to break.

“State law says balanced [budget], it’s not balanced. [City] charter says reserve, we’re not meeting the reserve requirement,” Krauss said.

Montana law mandates that Bozeman has a balanced budget. Assistant City Manager Anna Rosenberry said even with the shortfall, city staff estimate Bozeman will have roughly $5 million at the end of the spending year.

“State law requires that we have a positive budget, and that’s all that is required,” Rosenberry told commissioners Monday.

Rosenberry repeated on Friday that Monday’s decision doesn’t break Montana law.

Like Krauss said, the city charter requires Bozeman leaders to adopt a budget with a plan to have a cushion at the end of the year. To be exact, the charter calls for 16.67 percent of the general fund revenue left in reserve. As is, Bozeman’s set to fall $266,726 short of that.

City rules say if commissioners “desire to adopt or amend” a budget below that, “they may do so after holding a separate public hearing.” The city hasn’t voted on a budget that lets Bozeman dip below its requirement.

Rosenberry said Bozeman’s dealing with estimations. The city’s two months into its 12-month budget cycle.

The shortfall is 1 percent of the general fund and 5 percent of the city’s reserve requirement. Rosenberry told commissioners nearly $300,000 would feel significant to immediately carve out of spending or ask residents to pay. City Manager Andrea Surratt echoed that on Monday.

“This is such a small amount, though significant, still a small amount and we’ll find it through good savings in the budget this year,” Surratt said.

On Tuesday’s radio show, Krauss said he didn’t think the shortfall was small. Krauss went on to say that the budget “gave commissioners their favorite charity money.”

“So why didn’t we adjust out the $266,726? Because maybe we needed some of that to give to a favorite charity,” he said.

After repeating ways he thought the city could have broken a law, Krauss said he didn’t know whether Monday’s decision actually did that. He said in the past, commissioners adjusted the budget to spend more money when it came up. He called the move to keep the budget as is with a shortfall inconsistent, “or it could be something more.”

“We’re just a small town. Can we not find in our minds and hearts to follow the spirit and letter of the law? How can we hold our state and federal government accountable when we won’t hold ourselves accountable?” Krauss asked.

Krauss said he was not available for an interview with the Chronicle on Friday.

Deputy Mayor Chris Mehl said commissioners wouldn’t support a potentially illegal plan. He added he stands by the city’s reserve requirements and if it looked like Bozeman risked not meeting that toward the end of the year, then it’s time for cuts.

“Any commissioner’s entitled to their opinion, but I defer to the professionals we have,” Mehl said. “Obviously four commissioners thought we were on solid ground.”

Rosenberry said if there’s a split on the commission about when a shortfall should trigger the city to officially adjust its budget, staff can work with commissioners to clarify that. On Monday, no formal request came from the commission for that to happen.

Katheryn Houghton can be reached at khoughton@dailychronicle.com or at 582-2628. Follow her on Twitter @K_Hought.

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