Manhattan Finance Department Director Bernie Hayen says the city is going to have to find another revenue source going forward to shore up the city’s financial situation. He presented the information during the city department goal-setting session Tuesday.

The City of Manhattan had to make some tough choices in the 2018 budget, with plateauing revenues not meeting past growth projections. This has led some commissioners to raise the possibility of staff cuts this year. The city instituted a hiring freeze to help shore up ending cash reserves in the general fund, which Hayen says was successful. They ended the year with and ending cash balance of $3.6 million when their goal was $2 million.

“Probably one of the largest ending balances that i’ve seen in the last ten years. It goes back to those days when we really were doing quite well and had anywhere from $3.5 million to $4 million ending cash.”

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Despite those encouraging numbers, Hayen says this year’s situation isn’t going to be any easier. He says they may need to consider a new sales tax to shore up the general fund — though sales tax already makes up 36 percent of the general fund, a bigger portion of the general fund than Hayen says he’s comfortable with and would like to see better balance there.
“I don’t know where else it’s going to come from, but I think that’s where it has to come from,” Hayen says.
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He says that the sales tax already makes up a higher portion

Hayen pointed out that property taxes only provide about 12 percent of the general fund’s money to demonstrate how they cannot rely on new properties to provide enough tax revenue to be able to manage growing costs, salaries and manpower needs — especially with multiple community projects (such as the planned new recreation centers) that will need to be paid for from the fund.

“It’s something that I think is not well appreciated because it would seem that we ought to be able to run this city off of the new growth that we achieve every year,” says Hayen. “Doesn’t happen.”
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And as the city is up against the state’s property tax lid, they can’t just raise the mill levy without voter approval, either. The city has also helped out the fund using transfers and loans from the utilities fund, which Hayen says can’t keep happening forever as there are multiple planned water and sewer projects that will need the money.

He also cautioned that staff cuts could have “ramifications” as existing staff will have to pick up the slack and deal with increased work loads.
Hayen called on the department heads in the room, and especially commissioners, to develop a strategy and a vision forward on new revenue sources. He also says he’ll be working with the manager’s office on getting better future budget projections “than they have, perhaps, in the past.”

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