The Unified Government Commission on Monday night set the maximum mill levy rate for 2019 at about the same as the previous year’s rate.
While the maximum city mill levy of about 40 mills was recommended Monday night by UG Administrator Doug Bach, it was also 2 mills above Bach’s recommended 38 mills for the city rate last Thursday. The county’s maximum mill levy rate was set at about 38.8 mills, almost no change from the current rate. The maximum amounts were approved unanimously Monday night.
According to UG officials, for the past few years the commission has set the maximum mill levy rate a little higher than the actual final amount it has approved in late July or August.
Bach said he recommended a higher maximum mill levy rate so that as the commission goes through the budget, if it decides on other items to fund, the commission could have the latitude to work with it.
Mayor David Alvey said he was concerned that if the maximum mill levy rate were set at 38, it could hinder the UG if the three-eighths cent dedicated sales tax on the August ballot is not approved.
The commission also set the Self-Supporting Municipal Improvement District (SSMID) for downtown Kansas City, Kansas, maximum mill levy rate at 12 mills, higher than the recommended 11.02 mills, and the county library maximum mill levy rate at 6.04 mills. The commission will be able to have some flexibility in setting the final budget figure, according to officials.
At Monday night’s budget workshop, Bach told the commission that his budget figures had included the renewal of the three-eighths cent sales tax for public safety and infrastructure, scheduled to go to a popular vote at the Aug. 7 election.
If the dedicated sales tax doesn’t pass Aug. 7, the administration and commission would have to go back to work again on the budget, according to Bach.
The sales tax is not a tax increase, but is a renewal of the same amount of the current three-eighths cent sales tax, he said. This sales tax raises about $10 million each year and funds 25 police, 25 Fire Department positions, plus equipment as well as some street improvements, according to Bach. It is divided into 35 percent for police, 35 percent for fire, and 30 percent for streets, sidewalks and infrastructure improvements.
The UG this year reported a 7.9 percent average increase in assessed valuations, according to officials, which results in more revenues. Officials said it is really a net increase of 3 percent in revenues because of one-time costs, the 6.9 percent delinquency rate, and the proposed 2 mill city tax rate reduction.
Kathleen VonAchen, the UG’s chief financial officer, said that the general fund reserves were at about 20 percent at the end of 2017, higher than the goal of 17 percent, and the five-year general fund reserves forecast reflects some one-time and reoccurring expenditures. If no corrective action is taken, the reserves would fall to 9 percent of the expenditures and transfers in five years, she said.
The UG’s financial situation has changed since the March revenue forecast, she said. The March estimate did not anticipate about $800,000 that has to be refunded to Hollywood Casino because of a Board of Tax Appeals case, she said. The Hollywood Casino refunds could be paid over several years. There is also a lessening financial performance in sales tax revenues, she said. The revenue source was eliminated for mortgage registration, she said. In addition, there are a half-million dollars for unanticipated workers compensation claims this year, she added. There are also higher retirement costs, she said.
Another unexpected expense to the UG was the potential $1 million cost of the prosecution for the Schlitterbahn case, according to UG officials. Those funds will come from the reserves, divided into two years, according to officials.
Commissioner Brian McKiernan said that every tax incentive they give, especially property tax incentives, affects the forecast model. He said the UG needs a way to account for the property tax incentives that the UG gives that put off paying taxes for a period of time.
Mayor David Alvey said next year, the UG could consider setting its target growth. If it decides to take corrective action, the action could be getting the rooftops to grow the tax base. He said they may consider the issues at their fall retreat.
Commissioner Jim Walters asked if the 2-mill reduction, which is in its third year, has become somewhat of an arbitrary number that they just fall back on.
Two years ago, a 2-mill reduction was proposed, he said, and when the commissioners talked about more than a 2-mill reduction, they were told they couldn’t because the budget was actually showing a reduction in the fund balance.
So, now the final information arrived for that year, and instead of a $3 million reduction, there was a $6 million increase in the fund balance, he said.
“That’s a $9 million swing, and we were talking about, could we do 2 mills or 3 mills,” he said.
He said he was wondering if the economic forecast estimates were too conservative, both concerning revenues and expenditures, keeping them from achieving the residents’ No. 1 priority, property tax reduction.
VonAchen said there was a $9 million addition to the fund balance at the end of 2017. Revenues were $3.5 to $4 million higher than the budget estimate, with expenditures $3.5 to $5 million lower than the budget estimate, she said.
“We do, on average, come in below our budgets,” she said. It usually averages $3 million a year.
She said they were concerned about the retirements of the baby boomers, but the rate of retirement slowed down more than she expected in 2017. She also underestimated the effect of the new rate adjustment to the Board of Public Utilities P.I.L.O.T. (payment in lieu of taxes), she said, so they collected more than they thought.
Also, S.T.A.R. (sales tax revenue) bonds were paid off in December 2016, but the state couldn’t remit the money until April, so it showed up in the 2017 budgets instead of 2016, when it was expected, she added. They were one-time events, she said.
For this year, she said she had to adjust the figures in May, and she didn’t think they were overly conservative. She said she didn’t anticipate the changes to workers’ compensation, the Hollywood Casino refund and the Schlitterbahn court costs.
Commissioner Harold Johnson asked if the 2-mill city reduction was being built into future years’ plans as well as the 2019 budget.
VonAchen said it was continued the past few years. After it is reduced 2 mills for 2019, it will remain at that amount, she said.
Commissioner Tom Burroughs discussed the unemployment rate, which is around 4.8 percent, and how it affects delinquencies. He also was concerned if estimates were too conservative, and pointed out the cost of some projects could be funded or bonded today at a lower rate than in the future. He asked for a presentation from a state staff member on an overview of economic impacts here.
Commissioner Mike Kane requested that the Piper fire station be included in a future workshop. He said he would like a month-by-month breakdown of what has happened to this project, and more details about what will be done this fall, and when it will be done.
The fire station was approved in last year’s budget, about a year ago, and UG officials said work will be done on it in the fall.
Commissioner Kane said he was very frustrated about the lack of information on the project, and would have liked to go on a trip with UG staff to see how fire stations are built had he known about the trip. UG Administrator Bach said updates should have been done, and they will provide updates on it.
Commissioner Kane also asked for more specific details about where neighborhood infrastructure work was done, with more information than the graphic already provided online.
Commissioner Melissa Bynum agreed that she wanted more specific detail on projects in the last three to four years. Kane was wondering about the past eight years. A future UG committee meeting was suggested on this topic.
Commissioner Angela Markley agreed that having some information about the specific projects for neighborhood infrastructure work in a district in a printout, not just online, would be good to distribute when meeting with neighborhood groups.
“I believe it’s extremely important that the community sees what they’re getting for their investment,” Commissioner Burroughs said.
Bach said there is a schedule for future budget workshops. Most of the workshops will be held in the fifth floor meeting room at City Hall.
At 5 p.m. July 19, budget workshop topics may include the Wyandotte County District Attorney’s office, a discussion of the Schlitterbahn prosecution costs, the SSMID or Downtown Improvement District, a discussion on debt, benefit districts and the parks master plan.
On July 23, after the Standing Committee meetings, the budget workshop topics may include Capital Maintenance Improvement Plan update, street preservation program, K-7 and Parallel, building security, and the Kaw River Levee.
At 5 p.m. July 26, budget workshop topics may include economic development, the State Avenue corridor, K-32, Rosedale Master Plan and the Northeast Master Plan, and department special funds.
At 5 p.m. July 30, there will be the final budget public hearing in the Commission Chambers, and a budget workshop after the hearing, if needed.
At 5 p.m. Aug. 2, a budget workshop is scheduled with other topics, followed by the budget adoption at 7 p.m. at the Commission Chambers.
For more details on the budget meeting July 16, visit the video of the meeting online at https://www.youtube.com/watch?v=CIosPTvDLJQ.
An earlier story on the budget is at https://wyandotteonline.com/kck-city-tax-rate-to-decrease-2-mills-under-proposed-ug-budget-while-assessed-valuation-goes-up/
More budget details are online at the 680-page UG budget book, https://www.wycokck.org/WycoKCK/media/Finance/Documents/Budget/2018-Amended-2019-Proposed-Budget.pdf.