Gardner residents will likely pay a city lower tax rate in 2015 than they did in 2014. During an Aug. 11 work session, council members appeared to reach a consensus for a 2015 budget that will drop rates by approximately 1.728 mills.
It will save the owner of a $167,000 Gardner home approximately $33.19 annually. Those savings will be offset by increased water and wastewater rates. Under the proposed budget, water rates will increase by 8 percent and wastewater rates will increase by 4 percent. The upped rates will amount to about 20 cents per day, or $6 more per month for the average Gardner consumer. Electric rates will remain flat.
Public entities in Kansas, like school boards and city councils, are required to submit their 2015 budgets to the county no later than Aug. 25.
The city’s budget process was not without controversy.
City staff, at council’s direction, first proposed a 2015 budget that maintained the 2014 mill levy rate. Council member Steve Shute requested that staff prepare a 2015 budget with a lower mill rate.
The originally proposed budget included several one-time expenditures that council members scratched in order to reduce 2015 expenditures by approximately $235,000.
Opponents of reducing the city tax rate voiced concerns that the lowered rate will result in reduced reserves in outer years.
Council member Heath Freeman said the 2015 budget cuts were all one-time projects.
“We’ve only reduced for a single year,” he said. “You can’t recover that.”
Laura Gourley, city finance director, presented council with anticipated reserves in future years during an Aug. 11 meeting. According to her projections, reserves would drop to about 30 percent of annual expenses in 2015. That’s down from an anticipated 43 percent remaining balance at the end of 2014. By 2018, Gourley estimated that reserves would drop to 20 percent of annual expenses.
Best practices suggest that municipalities should maintain reserves of between 20-25 percent at the end of each year.
Gourley said the projections don’t really contain any detail.
“You can’t just say you’re going to have an expenditure,” she said. “You know you’re going to have something.”
Council member Larry Fotovich said it’s a great defensive strategy for those who oppose cutting taxes to suggest that it will damage the budget in out years. He supports lowering the mill rate, and requested that council dig further into the budget for policy changes and spending decreases in future years.
“It’s a one-year budget,” he said. “Things could get grossly worse or they could get much better, but we’re going to have to be brave.”
Gourley said the future projections were really just place holders. For example, they have a good idea of what it will cost for employees, but she isn’t able to say for certain what maintenance projects may need to be funded in outer years.
Council member Tory Roberts said the future year fund reserve balance projections don’t scare her.
“There could be some other cuts. This is an ongoing process,” she said. “I feel comfortable with the reductions we’ve done here.”
Council cut several projects including the funding of a $50,000 downtown district plan, a $50,000 infrastructure study for 175th Street and Interstate 35 corridor, and a $50,000 marketing and rebranding initiative.
While council member Kristina Harrison agreed to cut some of the projects, she said she will not vote to approve a budget that includes a mill levy rate cut.
“I personally believe that money could be better spent on capital projects,” she said.
She proposed that instead of cutting tax rates now, council set a goal edging expenditures down 1 or 2 percent over time with a goal of cutting tax rates in 2017. By that time, some of the city’s debt should drop off the rolls, and the Walmart TIF — an agreement for which all of the sales and property tax from the Walmart development are used to pay off the infrastructure for the project – is also set to expire.
Though Freeman also opposed dropping the mill levy rate, he said he will support the proposed budget with the tax rate decrease.
“I wasn’t on that side, but (staff) has done what’s been asked,” he said. “I think it’s our responsibility to approve a budget.”
Council is set to formally adopt a 2015 budget during an Aug. 18 city council meeting. The meeting will be at 7 p.m. at city hall.
City plans to decrease property tax rates in 2015