Spring Hill residents will pay slightly less in property taxes next year thanks to a transfer from an excise tax reserve fund to the general fund.
City officials presented council members with a proposed budget that reduces the mill levy rate slightly next year. If council approves the proposal at its next meeting, the mill levy rate will drop from 39.618 last year to 39.222 next year.
Melanie Landis, city finance director, said the lower mill rate will be coupled with a loss in revenue due to lower assessed property valuations. The assessed valuation of the city decreased 1 percent. Even with a steady mill levy, the city would be starting next fiscal year with less money than it had the year before.
“We started this budget by losing $35,000 right off the bat,” Landis said. “Every time that property value decreases, it means a revenue drop even if everything else stays the same.”
Landis described the final budget she will submit to the council for approval next week as a bare bones budget.
“City staff has been trying to come up with everything we can to save money,” Landis said. “We’ve taken our budget cuts to the max.”
In addition to capital delays and other cuts, a $154,000 transfer from an excise tax reserve fund will help allow the city to maintain the existing level of services without increasing the property tax rate.
Excise taxes are collected from developers when plats are approved.
Typically, they’re to be used for infrastructure improvements. However, Landis said legally they can be used for general operational needs.
“I think we all understand that it may not be the most proper thing to take those funds to cover a general fund shortfall,” Landis said. “But what’s the lesser of two evils – literally using this money or raising taxes or cutting services that we probably can’t live without?”
The transfer will also help allow the city to fund leases for three new police cars and a dump truck. However, the budget Landis will formally present to council during the next meeting will cut by the amount of money the city typically gives to outside agencies like the Chamber of Commerce and Fall Festival organizers. For example, last year, the city gave the Chamber $10,000. The proposed budget for next year only will provide $7,000 to the organization. The Fall Festival received $2,000 last year, but this year will only receive $1,000. The city will continue to fund utility assistance programs at existing or slightly higher rates.
Landis said she’s building next year’s budget based on very conservative revenue projections. However, council member Chris Leaton worried the estimates weren’t conservative enough. For example, next year’s budget assumes that sales tax revenues will remain flat.
“I’m not convinced of that,” Leaton said. “…We saw a drop of 6 percent this year.”
City officials estimated flat sales tax when figuring this year’s budget, which would finish the year more than $38,000 short without a transfer from the excise tax reserve fund.
Landis said if it appears that sales tax revenues will fall short again, council members will know revenues aren’t meeting projections as early as March so they will have time to plan contingencies.
“This year it was March when I told you about a deficit for this year,” Landis said.
City administrator Jonathan Roberts said city staff is aware that if the city appears to be headed for another budget deficit, positions could be cut.
“We’ve had that discussion with every staff member face to face,” Roberts said. “If you end up with a deficit next year, we’ll have the same options we had this year – maybe a few less.”
Council president Steven Ellis said he’s delighted that city officials have been able to hold the line on tax increases to date.
“We just need to continue to keep a keen eye,” Ellis said.
In other business, council members:
• appointed Jeff Bitner and Dan Richter to the Board of Zoning Appeals.
• authorized a change to a loan agreement the city of Spring Hill has with the Kansas Department of Health and Environment.
• reviewed information about a ballot question related to the old school building that city officials hope to submit to the county for inclusion on the November ballot.
The next city council meeting is scheduled at 7 p.m. Aug. 12 at Spring Hill City Hall.