Archive for Tuesday, August 4, 2015

Baldwin City Council approves 2016 budget

Baldwin City government

Baldwin City government

August 4, 2015

Despite pleas from two residents, the Baldwin City Council unanimously approved on Monday a 2016 budget that includes a 4.57 mill levy increase.

The budget, which gives the city budgetary authority to spend $16.75 million in all its funds, establishes the 2016 mill levy at 42.34 mills.

Budget highlights

Among the planned general fund projects in the city's 2016 budget approved Monday are:

• $60,000 for city gateway entrance signage.

• $100,000 transfer to the city's general capital fund for possible future projects.

• A $15,000 shelter in Allen Park.

• $20,000 to update the city comprehensive plan.

A mill raises $1 of revenue for every $1,000 of assessed valuation. At 42.304 mills, the city share of property tax for each $100,000 of assessed valuation on a single-family home would be $486.50.

The 2016 budget increases spending in three of the four property tax supported funds of debt service, cemetery and general funds. The library fund mill levy remained unchanged. The general fund, which provides operational revenue for the city’s non-utility functions, such as the fire, police, streets and planning departments, has by far the biggest budget of the four mill levy supported funds with 2016 expenditures projected at $3.05 million.

In his breakdown of the budget, city financial director Brad Smith said general fund mill levy support increased by 3.13 mills, while the cemetery fund increased a quarter mill and the debt service fund by 1.28 miles.

It was the increased spending in those three funds and the corresponding mill levy increases that prompted residents Gerry Cullumber and Barbara Johnson to speak out at the public hearing on the budget held immediately before it was considered for adoption.

Both residents said they were concerned about what the tax increase would mean to retirees on fixed incomes. Cullumber, who said he had a career in local government, said he realized cutting spending meant reducing the city’s payroll. He said he found the city top heavy in administrative staff, and wondered if residents were getting an appropriate level of service for the taxes they paid.

Johnson said the mill levy increase would be an added burden on retirees and low-income residents now forced to pay a 9.1 percent sales tax on food.

Although Mayor Marilyn Pearse and council members expressed sympathy to the plight of retirees, they said the mill levy increase was needed.

“We have all worked very hard to keep the budget as low as we could,” the mayor said. “We did consider the effect it would have, particularly on the elderly.”

Helping drive the tax increase was the city’s slow recovery from the housing crisis that accompanied the recession, said Kathy Gerstner, who chairs the council’s budget subcommittee. The city’s overall assessed valuation declined for three straight years before registering a small $8,000 increase this year. The city’s valuation stands at $29.54 million this year, compared to $31.3 million in July 2008 on the eve of the recession. That meant the city had to increase the mill levy just to raise the same amount of tax revenue while the city’s own costs increased with inflation, Gerstner said.

Another consideration was a law the Kansas Legislature passed this session, which dictates city and county governments cannot raise property taxes by more than the rate of inflation without a referendum, Gerstner said. It was important the city have revenue to pay for needed services in place when the law becomes effective in 2018 rather than pay for an election that would cost at least $25,000, she said.

In his budget break down, Smith said the debt service mill levy increase reflected a decision to enter into aggressive three-year lease payment agreements for a backhoe and front end loader, Smith said.

As for the general fund, a big factor in the mill levy increase was a decision to raise $100,000 for future capital improvement projects, Smith said. That money would also serve as a cash reserve for the general fund, which currently has no reserves.

“As your financial officer, that seems prudent,” he said. “As a business model, $100,000 in reserves is not that much for a fund that size.”

In response to a question from Councilman Steve Bauer, Smith said the $16.5 million in total expenditures was misleading. The budget gives the city the authority to spend all money in its utility accounts so that it would be available in an emergency, but the intention is to spend only $13.5 million and kept the remainder as reserves, he said.

In her parting words on the budget, the mayor linked the future budget decisions to last month’s failed annexation of property on the city’s east side. Annexations and growth would expand the city’s tax base and help prevent future tax increases, Pearse said.

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