Amid fiscal uncertainty, the Great Bend City Council Monday night held its budget work session. It was a three-and-a-half-hour meeting dominated by the impacts of changes in state property tax laws and disgruntled first responders seeking changes to their retirement plans.
Taking place in the new council chambers at the Events Center, this was the first step in an arduous journey towards a budget. A spending package should be finalized by October, instead of the traditional August due to new state taxing guidelines.
“The purpose of tonight is to walk you through the meat of the budget,” City Administrator Kendal Francis said. “We still have time to make some adjustments.”
He then launched into an overview of the 105-page document. Council members nipped and tucked it along the way, basically sticking to what was proposed.
Tax law woes
Before talking about mill levies and deadlines, Francis explained the impacts of Kansas Senate Bill 13, the Revenue Neutral or Truth in Taxation statute approved the Legislature late in the 2021 session. The aim was to make the state’s complex tax system more transparent.
Basically, he said, SB 13 prohibits all taxing entities from increasing their tax collections by more than they did the year previous. This means, if an entity’s valuation (the total value of all property) goes up, the mill rate would have to go down to collect the same amount of taxes.
In addition, it establishes a requirement of notices to taxpayers and public hearing for municipalities seeking to collect property taxes exceeding their revenue-neutral rate.
He recommended the council approve a 2022 budget that adheres to this mandate. This means the mill levy would be 54.684 mills for a total of $27,584,500 ($5.6 million from property taxes).
This is up a tad from the previous year, but, in keeping with the law, the total taxes levied remains unchanged. The reason for this is the loss in valuation.
The city’s valuation, the net value of all property, declined about $134,000 to $102,247,431. Each mill represents $1 in taxation per $1,000 of valuation.
This marks the second year of a valuation decrease. It is down roughly $3,000,000 since the 2020 budget year.
“Our intention is to stay within the revenue-neutral rate,” Francis said. However, “I recommend we go ahead and set a revenue-neutral hearing.”
Why? It is matter of timing.
The city will receive only its preliminary property tax totals from Barton County this week. The deadline to notify the County Clerk’s Office with the intent to hold a hearing is July 20.
The problem lies with the valuation numbers. The early figures come out next week, but the finalized one won’t be available until
October, and possible fluctuations could impact the city’s budget one way or the other.
Under the statute, should the city over charge taxpayers, it must refund the amount. And, should it be less than anticipated, the city loses out on that revenue.
So, just in case, Francis suggested setting a hearing which must occur between Aug. 20 and Sept. 20. Great Bend will hold its at the Sept. 7 council meeting, the same night as the regular public hearing and budget adoption by the council.
The budget must be certified to the County Clerk’s Office by Oct. 1.
SB 13 law replaces the property tax lid put in place by the legislature in 2016. It, among other things, imposed a restriction on the amount that municipal property tax levies could rise.
The property tax lid required municipalities to obtain a majority vote of residents in order to pass property tax levies that increase more than the rate of inflation in the previous year.
Francis said lawmakers had good intentions, but perhaps there were some oversights that need to be corrected.
A balancing act
There are a lot of moving parts, Francis said.
The budget included pay raises for employees from $1 per hour up to 5%. There is also a 2% cost of living increase built in and up to 3% for merit pay.
It also factors in possibly not filling the city attorney’s position after Bob Suelter retires, but continuing to fund the hiring of an assistant city administrator (this remains open). In addition, there are projects like renovations to Heizer Park, street repairs and the basic needs of other departments.
“It’s complicated,” he said.
Besides funding basic city services, the city funds several outside agencies, such as the Golden Belt Humane Society, Barton County Historical Society, Commission on Aging, Great Bend Public Library and Sunflower Diversified Services. Not all got what they were asking for, but all received something.
Packing the chamber were members of the Great Bend Fire and Police departments. They attended en masse to voice concerns about retirement plans.
Currently, City of Great Bend employees retirement plans are with Mission Square Retirement, a non-profit independent financial services corporation providing retirement plans and related services for those in the public sector, Francis said. The city is not a part of the Kansas Public Employees Retirement System, although for the past several years, the city has upped the city’s contributions to Mission Square to better align with KPERS.
Under KPERS is Kansas Police and Fire which is specifically for uniformed firefighters and police officers. Great Bend is one of four cities in Kansas not using KPF, which is seen as the industry standard, Francis said.
For their part, local fire and police personnel see their departments continually understaffed with revolving doors. People are hired, trained and then leave.
“It’s hard, isn’t it,” said GBPD Sgt. Gary Davis. “We want to do what’s best for everybody.”
But, he pointed to the lack of the KPERS retirement. Not having this, he said, chases people away and deters potential recruits from applying in the first place.
Being a cop or a firefighter is a tough, stressful job that take a sever toll on a person, he said. It trims life expectancy making the ability to retire earlier (possible under KPF) a welcome relief.
“We’re not asking for the world,” said GBFD Capt. Michael Reifschneider. “We want us to be competitive.”
Some on the council brought up the past issue of workplace culture as a problem at GBPD, citing past concerns over morale.
“We’ve made changes,” said Police Chief Steve Haulmark. He’s been in the post since January.
“Culture doesn’t change over night,” he said. But, “I think it’s a different department than it was six months ago.”
However, “it doesn’t come cheap,” Francis said of making the change for fire and police. The additional annual cost is over $550,000.
Both Haulmark and Fire Chief Luke McCormick said they will make spending cuts to help offset the difference. But, there was concern among council members about the stainability of this.
“This is a long-term decision,” Ward 2 Councilwoman Jolene Biggs said.
If approved, this would have to be implemented by Jan. 1 of 2022.
The balance of the city staff would stay with Mission Square, Francis said. For them, that is a better plan.
Paying for it all
While the budget is holding steady, there are additional projects the city would like to see happen, such as park and other improvements.
Being discussed is seeking a sales tax for these and other quality of life issues, as well as for servicing the city’s debt.
They are looking at .25% for the quality of life and .15 for debt servicing. This .4% total brings the city to 8.75%, still in the middle of the pack compared to similar cities.
But, there is another rub – the proposed fire and police retirement plan.
Francis said the $550,000 is the equivalent of 6 mills in property taxes. Or, it would take about .15% in sales tax.
The council struggled with this. While supporting the first responders, it is tough to swallow this kind of increase.
“I say put it in the hands of the voters and see if it passes,” Ward 3 Councilman Cory Urban said.
In upcoming meetings, the council will decide how to word the sales tax questions and whether to group them as one question or break them into two or three. Whatever the decision, they would be on the Nov. 2 general election ballot.
There is also the chance to tap federal COVID-19 stimulus funding to help with some city initiatives.