City Commissioners get a preview of 2017 budget Publication to be considered during Tuesday's regular meeting

Friday, July 15, 2016

The proposed 2017 city of Fort Scott budget does not include a property tax increase, city officials said.

The Fort Scott City Commission and other city officials and staff met Monday at City Hall for a special meeting of the commission. The purpose of the meeting was to hold a first discussion on the city's budget before the budget has to be published in August.

Director of Finance Jon Garrison said Tuesday discussion took place on mill levies, the state of the city's finances heading into next year, and state issues facing the city and commissioners, such as a property tax lid law that takes effect in 2017.

Garrison said commissioners have decided not to increase the mill levy for the 2017 budget. The city's overall mill levy is 48.192 mills -- the same as in 2016 -- and is expected to generate about $2.1 million in tax dollars, according to the proposed 2017 budget.

"They decided on no tax increase," Garrison said. "The budget is balanced without a tax increase. We feel we can accomplish everything we can without it. And no one wants higher taxes."

Garrison said less than 11 percent of the city's total budget is property tax dollars.

Mayor JoLynne Mitchell said Tuesday's budget discussion "went pretty good" and the consensus among commissioners was not to raise the mill levy.

"Our city has done very well in budgeting our money so we are allowed not to increase the mill levy," she said.

The property tax lid law passed by the Kansas Legislature requires municipalities to hold elections for any planned mill increase beyond the Consumer Price Index. It will affect only expenditures funded using property tax dollars, Garrison said.

"This is the last year spending can go beyond (the CPI) without an election," he said. "Next year, any increase in the mill levy beyond (the CPI) requires a public vote."

Garrison said there are some exemptions in the law. One of those exemptions is debt service, which funds items through the issuance of bonds.

"It's anything we would use bonds to pay for," he said.

Garrison said the start of the budget process would be moved up about a month next year to June 15 to accommodate any proposed plans for a tax increase and election. Otherwise, the time frame for publishing the budget would remain the same, with the budget due by Aug. 15.

Garrison said there was some discussion on the property tax lid law and "hypothetically, do we raise the mill levy to build up reserves?" He said the city is trying to build up cash reserves and the "only way to build up reserves" without a tax increase is "to have money and don't spend it."

Mitchell said discussion took place on the property tax lid law and how to raise funds for reserves without a tax increase.

"Our standing was with not increasing the mill levy," she said. "I'm confident our budget is good, and that says quite a bit for our finance people who seem to be able to manage very tight spots without increasing the taxes."

Mitchell said commissioners learned there are "reserves in the budget to use at least for this year."

"If something unexpected happens, we've planned ahead enough to be able to conquer that," she said.

While talking about mill levies, Garrison said there was some discussion on computing the impact of a mill increase. As an example, residential real estate with an appraised value of $100,000 would have an assessed value of $11,500, as assessed value for residential real estate is 11.5 percent. To determine that one mill results in a tax of $11.50 annually, divide the assessed value of $11,500 by 1,000. One mill is $1 per $1,000 of assessed value. A two-mill increase would result in a $23 increase in property taxes per year for the $100,000 property, according to information Garrison provided.

According to the proposed 2017 budget, there is $775,000 budgeted for reserves and transfers in 2017. Total assessed valuation increased slightly from about $43.4 million in 2016 to $43.5 million in the proposed 2017 budget.

The city's proposed 2017 budget includes general fund expenditures of $6.2 million, a total of about $12 million in budgeted revenues and $16.2 million in expenditures, and about $4.2 million in beginning unencumbered cash, minus about $3 million in interfund transfers.

Other components of the 2017 budget include savings in various areas; about $12,000 in Kansas Public Employees Retirement System (KPERS) costs, $78,000 in Kansas Police and Fire costs and about $14,000 in unemployment insurance costs.

Also budgeted for 2017 is a 3-percent wage increase for staff and a 3-percent increase in utility rates. Garrison said sales tax revenue is up 4.4 percent when compared to June 2015.

"That doesn't necessarily mean an increase in actual revenue," Garrison said regarding the utility rate increase.

Regarding planned city spending next year, Garrison said planned purchases include a new ladder truck and pumper truck for the Fort Scott Fire Department. There are also plans to make improvements to the city's river intake structure, a project which is currently in the engineering phase.

Garrison said the hope is that low-interest loan money would be available from the state to fund the river intake project.

"We would borrow money from the state and raise (utility) rates to pay that money back to the state," he said.

Next up for commissioners during their Tuesday meeting is to consider publication of the 2017 budget. A public hearing and final adoption of the budget is planned for Tuesday, Aug. 2. Garrison said after the budget is published, commissioners can elect to lower, but not raise, expenditures.