Manhattan city administrators presented a lower 2020 budget at the city commission meeting Tuesday, but commissioners want more options detailing what further budget cuts might look like.
Bernie Hayen, finance director, updated the commission with a new proposal that calls for a 3.06-mill increase. A mill is $1 in tax for every $1,000 in assessed, taxable property value.
A property tax rate of 52.415 mills would bring in $30.7 million in property taxes for the city.
Based on a 0.4% increase in the average value of a home in the city, the 3.06 mill increase means that a homeowner paying $567.59 in city taxes for a $100,000 home in 2019 would pay $605.18 for a $100,400 home in 2020. That’s an increase of $37.59 or 6.62%.
Of the 3.06-mill increase, 1.037 mills would go to the city’s proposed $32.4 million general fund. Hayen said the city has increased the mill levy rate in recent years due to stagnation in the general fund’s non-property tax revenues.
Excluding property tax revenue, the general fund’s other revenues have hovered around $24 million in the past half-decade, increasing only slightly from $23.8 million in 2016 to an estimated $24.7 million in 2020, or an increase of about 3.81%.
In contrast, total general fund revenues, including property taxes, have increased by 6.63% to $32.4 million over that same time period. As a result, citizens have had to pick up that slack through property taxes.
“That is troublesome, commissioners, because it makes it extremely difficult to get away from either leaning more heavily on our utility funds or on property taxes,” Hayen said. “And again, if you look at why we’re looking at an increase of 1 mill in the general fund, this tells you why.”
Hayen said much of the increase in this year’s general fund is due to $1.4 million in higher personnel costs.
As part of the 2020 budget, city administrators are recommending the commission fund $327,000 for nine new positions from the general fund, including two code services officers, two human resource technicians, an engineering aide, a maintenance worker, animal shelter intake coordinator and technician, and an asset management analyst.
Four other full-time positions — including a water distribution maintenance crew leader, two equipment operators and an assistant city attorney — and three part-time Sunset Zoo educator positions will be funded from other sources, including utility revenues.
The city is also looking for a 1.6% cost-of-living adjustment of about $224,000 and a 2% step adjustment for most city employees amounting to $153,000. The remainder of the $1.4 million in increased personnel costs comes from seasonal position, overtime and allowance expenses, as well as a $200,000 buffer the city is seeking for variance in personnel costs.
The budget proposal also includes a new equipment reserve fund to go alongside the city’s general fund capital improvement program. The capital improvement program has fluctuated in past years, and administrators said an equipment reserve fund could help provide some stability for some of the city’s equipment needs.
“Revenues will pick up commissioners, and when they do, whoever is in my position would hopefully recommend that we move some of those monies over to this equipment reserve fund and hopefully help pick that up,” Hayen said.
Commissioner Jerred McKee said he was not as optimistic about future revenues, and that without additional revenue sources, the commission will be forced to raise the mill levy each year unless it starts to cut staff.
“It’d be nice to fund all of the projects we have, but at the end of the day, there’s a much more fundamental issue that we’re dealing with,” McKee said. “I appreciate your optimism of the future, Bernie, but I’m not as optimistic as you are. I think the markets are going to go down nationally, and I think it will get worse before it gets better. We have to figure out a way to solve this.”
To commissioner Wynn Butler, the requested increase is a symptom of a spending problem in the city. With recent increases, the city will get way beyond 50 mills, Butler said — something he could not support.
“To me, maybe you just limit those step increases and everything else to $310,000 and live within the budget, instead of asking people to raise the mill levy,” Butler said. “If you’re running a household, and you get a pay raise of X-amount, you spend that, not double that.”
Mayor Mike Dodson said he was frustrated with the budget presentation and wanted city adminstrators to come back with a clearer explanation of their budgeting process.
“You’ve got great snapshots here, but I cannot connect the dots, and I actually know a lot about budgeting,” Dodson said. “You should be able to walk from where you start to where you end up and find out where you’re getting there.
“Just to automatically say, ‘this is our budget’ — to me, you can’t do budgeting that way,” Dodson continued. “You have to say how much you expect to get, how much you expect to spend and then figure out what you have to do to resolve those two numbers. We’re being presented almost with a fait accompli here.”
Commissioner Usha Reddi said the city has to really consider when to give pay increases, since she said it seems the city tends to set cost-of-living adjustments and step increases for employees based on of what the Riley County Law Board and fire department union set.
If Kansas State University hasn’t given those kinds of pay increases in recent years, then maybe the city should be more willing to keep pay the same, she said.
“We haven’t always had declining revenues, but when that has been the case, we need to be a little bit more cautious about raises,” Reddi said. “We do have excellent staff, and we want to keep them and be competitive, but at the same time, we want to make sure they stay and that we have the budget to keep them.”
Commissioner Linda Morse said she also had trouble matching expenditures and revenues in the budget proposal. She also expressed concerns on how the city is relying on utility funds for some of the proposed new positions, particularly the new assistant city attorney position.
Last Tuesday, the commission approved a ballot initiative that will ask citizens to approve raising the sales tax rate by three-tenths of a percent to 9.25%.
That permanent tax increase would raise $99.9 million over the next 30 years to help pay for several city projects, including raising the levee, airport runway reconstruction, Aggieville redevelopment, the city’s contribution to North Campus Corridor, the Joint Maintenance Facility and the Douglass Park recreation center. The projects and their debt service are estimated to cost the city $90.9 million over 30 years.
“I think the general fund is pretty predictable, and I think the property tax is predictable,” Morse said. “I think sales taxes are the variable here for us and anticipating what our sales taxes will look like next year, I don’t feel comfortable holding the line. I think what we’re missing in the community right now, related to (decreases at) Fort Riley and K-State, is that there’s a serious sales tax debt coming, and I don’t know if we’re prepared for that.”
The commission instructed city administrators to return to the next budget work session with a proposal that outlined scenarios where the mill levy is kept flat and increased in smaller amounts than Tuesday’s proposal, as well as what impacts those scenarios would have on city operations.
Dodson also requested city staffers to provide insight into the city’s fee structure at its recreation facilities, as well as a long-term estimate of what the city’s bond and interest fund might look like beyond 2020.
The next budget session is scheduled for 5:30 p.m. June 25 at City Hall. Outside agencies will make their 2020 funding requests.