In a 3 to 2 vote, the Manhattan City Commission approved a first reading of their 2019 budget and the 2019 to 2023 Capital Improvements Program at their meeting in City Hall Tuesday. They also approved an amendment of the 2018 budget necessary as a result of revenue shortfalls and some additional costs that ran higher than anticipated.
Mayor Linda Morse, Mayor Pro Tempore Mike Dodson, and Commissioner Usha Reddi voted in favor. Commissioners Wynn Butler and Jerred McKee opposed, though they approved the 2018 budget amendment.
The budget amounts just under $156 million, a jump of about $7 million from 2018. $4.8 million of that is committed to the new Recreation and Trails fund added by a sales tax approved in 2017. $1.5 million is a loan from utilities funds to shore up the city’s general fund starting reserves and is not intended to be spent. The approved budget would also raise the mill levy by one mill.
Director of Finance Bernie Hayen said in his presentation that the city saw a 2.7 percent increase in property valuation. Between that increase in valuation and tax increases by the city, county, state and USD 383, the owner of a home valued at $205,400 would see an annual property tax increase of $162.
Despite that, Hayen said not all residents should expect to see such an increase.
“Anecdotally what we’ve always found is about a third are going to see a decrease because their property values went down, about a third don’t really change and about a third go up,” Hayen said. “It simply doesn’t mean that everybody has a property tax increase.”
The commission held a public hearing prior to the vote. Manhattan Area Chamber of Commerce Board of Directors member Dean Thibeault used the opportunity to request that the commission ring-fence $4 million of revenue from the half-cent sales tax dollars for job producing activities.
“Although the immediate needs of the community are always pressing, i would ask that you preserve these funds in the long term interest of our community,” said Thibeault. “Expanding the top line revenue of the city budget by creating quality jobs is really every bit as important — if not more important — to managing our annual expenses.”
Chamber Chairman Matt Crocker also spoke on the issue, saying they would be flexible with the commission on the use of economic development funds considering the revenue situation the city is in.
“The Chamber recognizes the current budgetary situation of the city and in a sign of good faith cooperation it is willing to recognize a potential need to use those funds for other purposes which still meet the criteria in the original ballot question approved by the voters,” said Crocker.
After the hearing, the commission expressed their thoughts on the budget as it stood. Commissioner Butler was happy to see $20,000 budgeted for road materials returned to the general fund, though he did note that it came at the sacrifice of keeping a part-time position at the Flint Hills Discovery Center from being bumped to full-time. He also said he was supportive of the commission keeping Conference Center debt out of general fund expenditures.
Even so, Butler did not approve of the amount being given to outside agencies under the 2019 budget.
“My goal this year was to keep payments to outside agencies to one mill — and that’s $575,000,” Butler said. ” That’s quite a bit, and we’re $74,000 over that and I think that can still be cut out of this budget.”
Butler also said he wanted to see more cut from the commission’s travel budget.
“The city manager has really slashed all travel budgets for city staff but we still have $10,000 in the travel budget for the city commission,” he said. “We could at least cut that in half.”
Mayor Pro Tempore Dodson said he believes they would have been able to bring the mill levy even lower had the city not been experiencing a plateau in revenues from sales taxes and other sources.
“We started out at 2.6 mill increase and we’re at 1,” said Dodson. “Looking at all the piece parts we had to cut and the things that remain, I’m fine with the one mill increase.”
Mayor Morse was uneasy about borrowing utilities funds to shore up the city’s general fund reserves, but said she doesn’t “know any other way around it this time.
“I’ve watched the state of Kansas not pay back the funds that they borrow from their own funds — I don’t want to go there,” said Morse. “That’s this year’s solution and we may bump up against another problem next year.”
She said she supported the 1 mill increase — though she regretted that it was necessary to raise the levy — and anticipates growth in Manhattan to pick up in the future. Even so, Morse said that it’s hard to anticipate what will happen in the national or even state economies. As a result, she said she’d be much more critical in the future about spending on non-essential things.
“I’m concerned enough about the future budget to even begin taking a look at some administrative salaries, which is not what I want to do but I would consider that,” said Morse.
Commissioner Reddi supported the budget and was adamant during the work sessions that she did not support cutting any city jobs. Despite that, she said that they might have to look into that depending on the city’s future revenue situation.
“Though I haven’t indicated any cuts to staff or salaries or COLA [cost of living adjustments]or anything of that sort, if we continue on this trend [of plateauing revenue]I think that is something I’d like to look at a little bit closer,” Reddi said.
Commissioner McKee repeated previous statements that an increase in properties on the tax rolls is vital to decreasing the mill levy in the future, and that requires the commission to seriously consider what they want to do with development in East Manhattan. He also said the city could reduce some of the funds going toward outside agencies if the state were to return prior levels of support for municipalities.
“Some of the commissioners advocate cuts to agencies that equates to roughly a little more than one mill and that’s about the same amount of revenue we lost from the state when they stopped doing state revenue sharing,” McKee said. “The state has an advantage in where they can set up a tax system that’s much more equitable than the city can. The state has to become a partner for us again.”
McKee also talked about one of the arguments against the flat mill levy option that was presented at a previous meeting. McKee said that even though it would cut 6 employees, more than a dozen positions are already currently unfilled due to the hiring freeze.
“I do think there are some areas there we can evaluate — I have no interest in seeing anybody from the city laid off, but right now were providing city services with 18 full time positions open,” said McKee. “Us cutting up to 6 I don’t think is something that we’re in a position not to look at a little more closely.”
The budget will return to the commission at their August 21st meeting for a second reading and final approval.
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