Thursday, July 30, 2015



Commissioners’ responses to ‘I Wonder’ questions



Here are the full responses of Manhattan city commissioners on three questions, as part of the “I Wonder” column from page A1 of tonight’s Mercury. Commissioner Karen McCulloh did not respond in time for inclusion. We will endeavor to get her response and publish it as soon as possible.

1. Is the city budget too big?

 

John Matta: Yes, the budget is too big but reducing it to any significant degree is very difficult because so much of it is to pay for past decisions. The proposed 2014 budget is about $131 million. Using the 2014 budget as a starting point the bond and interest fund has gone up 131 percent over the past six years. A lot of this had to do with the North & South End redevelopment projects and the Discovery Center. We are paying for those over time. Much of the funds will come from taxes on the developments themselves as well as state STAR bond money, but a portion does fall on the general property tax payer. Plus there is a big new line item in the budget for running the Discovery Center which did not exist a couple of years ago.

The recent pool upgrades, which are supported by a special tax passed by the voters, also add to the bond fund number. Also the hourly costs of running the pools are much larger than before, due to the water features. This adds cost to the general fund, which is not covered by the voter passed tax for the pools. In addition most developments in town are financed by special assessments. These days it seems like the government provides most of the financing in the country -– in this case it is the city government. The special assessment taxes pays for the debt but it is still added to the city budget.

 

Rich Jankovich: Most would argue that it is too big. However, the understanding of what encompasses the budget is rarely understood by most people. The most common villain is the debt. However, much of the overall debt has specific revenue sources that cover the debt service. Next is personnel, which in all levels of government is normally the largest single item. Compensation will always be questioned but there are items such as the state retirement fund that have required additional funding due to state shortfalls, which fall on the local governments to bolster. Something that I see missed is improvements that have been voted in by the citizens, like the improved pools. With the improvements come additional costs in staffing and other operating requirements. RCPD gets a rap but is our law enforcement adequate or too much? Same with fire protection. Our rating for insurance purposes has been very good holding premiums down for property owners. Or federal mandates that have caused improvements in the water treatment and wastewater plants or the expense to ensure our levies were adequate? Also, can some city-owned property be sold and placed back on the tax rolls for revenues? Maybe but it also requires the evaluation of the property and the overall plan for the same.

 

Wynn Butler: The only reason I got involved in the city government is because it is too big and it spends way too much money. In general the reason we spend too much money can be narrowed down to five major categories.

a. Outside agencies. We tend to give away money to outside agencies that are either not part of what can be called core services or we empower committees and/or outside agencies to spend our money. Specifics: The library board spends 6 mils a year plus the employee benefit fund. The board is not elected, the charter ordinance gives them authority to spend up to 6 mils plus the benefit fund. As a result the board will expand the library and increase taxes. Their mission is to spend 6 mils not to save it. The library request is more than $2.2 million this year and that does not include the expansion plans. RCPD is another example. We have an agency that is supervised for 12 hours a year. The law board meets for about 1 hour a month. RCPD plays off the county and city governments; they are in fact an independent agency. We have very little control over operations and expenses. At least we can say that RCPD and the Library fit under most definitions of functions that a city should perform. The agencies like SSAB Committee, MAC, aTa and the Wolfe House are examples of non-core functions that have traditionally been funded by the city. These are expenses that total more than 482,000 this year. The SSAB asked for a 7 percent increase over 2013. aTa a 5 percent increase. One of the social service agencies was given a 26 percent increase (Kansas Legal Services) by the SSAB board. Boards like SSAB are appointed and make requests for money without a budget. It is open-ended. All of the money they request is tax dollars. The Special Alcohol board, on the other hand, is limited to the funds collected by the sales tax. They only increased by less than 1 percent. The outside agencies that make requests have no limits, guidelines or constraints; after all, it is not their money. The people on those boards are true believers that government tax dollars should be used for all matter of improvements. They are not focused on reduction of cost or efficiency, they are focused on spending. Government officials fear denying special interest groups like SSAB, aTa, MAC or Wolfe House funding. But in all four of these examples the funding should not be through city or county government. aTa operations are funded 97 cents on the dollar through federal, state, county and city grants. The city has also shot itself in the foot on other items like adding a day care center operated by the city at the zoo. This should be private enterprise. The city could rent the space and let somebody else run the center. A day care center handling 25 kids is not serving the greater good of the majority of the citizens.

b. Fund fencing with narrow constraints. Examples –- we created a City University Fund with a sales tax that is supposed to benefit the university and city. But this year the lion’s share of the fund is requested to build a new WC in McCain Auditorium. Last year they used it to redo the running track at the old stadium. Seems like this is a KSU building maintenance fund and not a joint city-university fund. The $1.2 million collected and given to the chamber is another case in point. That money is handed over to the chamber to push tourism, the CVB. It has almost no constraints. They can give away money for studies like the fieldhouse. We need to take a hard look at what return we are getting of a $1.2 million investment. Those funds could be better used if directed at several other items. We are using some of those funds to handle the subsidy of the Discovery Center. Why not direct more to similar projects, Wolfe House, MAC etc. That would not drive down total budget, but just redirect away from property tax. The use of the 1/2 cent sales tax is another point. At least the new tax allows for use of the money for infrastructure and not just eco devo. About 20 percent of the city budget is due to debt service, much of which was caused by eco devo. We need to drive down the debt. About $25 million is expended each year on debt service. The debt at present June 2013 is $274,594,108. It has increased million since January. We need to take funds like eco devo infrastructure and CVB and figure out a legal way to use them more effectively to benefit everyone.

c. Poor management of debt. The Commission simply needs to stop issuing debt. The general obligation portion of the city debt is more than $135 million. We need to retire twice the amount of debt that we issue. In other words $2 million should be retired before we issue $1 million on new projects. We will continue to need to finance new projects, but we should not just keep refinancing our mortgage. If we handled our home mortgages like the city does debt we would never pay off our homes.

d. The city has four pages of assets/property. These include a home at the Bluemont traffic circle and three houses at the airport. Sell off excess property.

e. Consultants. We spend thousands of dollars on consultants, but we have a large city staff. Either the consultants or some of the staff should be reduced.

The city budget is 25 percent enterprise funds (water department primarily), 20 percent debt service, 34 percent special revenue and 21 percent general fund. My focus has been on removing as much from the general fund as possible –- as that is property tax-supported. I favor user fees and sales tax over property tax.

 

Usha Reddi: I think the budget is big, but it is difficult to say if it is too big.

The budget is made up of four primary categories with the general fund being the primary area for most city departments. The largest 34 percent is the Special Revenue funds, which have a variety of sources and uses. The biggest share of Special Revenue Fund is RCPD (35 percent) with city funding about $14.2 million or 80 percent of their operating budget. This would be part of a city’s general fund as police departments are typically a regular department. The sales tax fund is about $5.9 million or 14 percent of Special Revenue. This fund was approved by voters to have a half-cent sales tax enacted specifically to transfer to property tax supported funds to reduce property taxes. The economic development sales tax of about $4.6 million or 11 percent of special revenue. There are several in the $2.6 million range including the Library, Downtown Redevelopment TIF and Employee Benefit/Retirement contributions each comprising about 6 percent. The Bond and Interest Fund pays for the city’s debt service, most of which has its own sources of dedicated revenue and makes up about 20 percent of the budget. The last are the Enterprise Funds, which make up about 25 percent of the budget. Of that, about 47 percent is the Water Utility, 44 percent is the Wastewater Utility and the remaining 9 percent is Storm water.

General Fund $25,993,571 (21percent), Special Revenue Funds $40,809,665 (34 percent), Bond & Interest Fund $24,495,886 (20 percent), Enterprise Funds $30,505,020 (25 percent).

Our community continues to grow and with growth come new challenges such as infrastructure, adequate personnel in administration, economic development and providing sufficient services for our residents.

 

2. If so, by how much?

 

John Matta: As far has how much should be cut –- enough to not burden the taxpayer with any increase above the rate of inflation while providing sufficient resources for core city services. That increase includes both change in the mill levy and appreciation excluding new construction.

 

Rich Jankovich: Not entirely sure. There are areas that can be trimmed, but it is rare within the city that budgets are overspent. And as revenues are not coming in as expected, city management has carefully worked to ensure that funds are not spent that may not be available.

 

Wynn Butler: The growth of the budget should be limited to assessments plus inflation. This year the assessments went up about $11 million, most due to growth. So the growth of the budget should be the same as the growth of the city. When assessments go up due to growth, we can increase budget. But if assessments go up due to the formula used by the state, we should lower the mil levy to compensate. For this year we should have a levy of minus at least .3 mil. Anything else is inflated. The city budget should be based on needs, not wants. It is tough to put a dollar number on what the budget should be, but if we eliminate many of the wants, and get rid of debt due to building desires, the budget should be closer to $100 million than $125 million.

 

Usha Reddi: I feel my job, as an elected representative, {is} to make sure we take care of our businesses and residents without burdening them with too many taxes. At the same time, we feel more financial pressure from the lack of funds from the state and federal leave, so we need to find a balance without sacrificing services and without increasing the mill levy.

 

3. What should be cut?

 

John Matta: In my mind the key to the budget is to look for efficiencies, concentrate on core services, more than offset any new general obligation (GO) debt with GO debt we are retiring , and make sure we do not get over-extended on city sponsored debt (special assessment debt). In the current proposed budget there are administrative increases and positions that can be trimmed, outside agency requests and increases that can be cut back, a day care business the city should not even be in reviewed, as well as revenue streams such as the recently passed sales tax and the transient guest tax that need to be strategically used to not only foster growth but keep the tax rate manageable.

 

Rich Jankovich: Not entirely sure. There are areas that can be trimmed but it is rare within the city that budgets are over spent. And as revenues are not coming in as expected, city management has carefully worked to insure that funds are not spent that may not be available.

 

Wynn Butler: 1.Outside agencies, including the library –- eliminate or at least control growth. Instead of a 7 percent growth in SSAB and 5 percent in aTa, limit it to 1.7 percent –- the COLA for city employees. 2. Personnel cost and/or the use of consultants. We have three city managers, but still need consultants. We have an MPO but still need to do transportation planning? 70 percent of the general fund is personnel. We need to take a hard look at the number of folks on staff. The MFD wants to add $80,000 in personnel cost for a training officer. Why not let the current leadership handle the training role?  3. Get rid of some city property, like three houses at the airport and one at the traffic circle. 4. Retire more debt than we issue. 5. Focus funds like eco devo tax, CVB and city-university on projects that provide a bigger bang for the greater good.

 

Usha Reddi: We are looking at some ways not to increase the mill levy or to keep it as low as possible. I would leave the decision where the cuts should come from to the city manager and the department heads. I do not want to get into micromanaging the budget.

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