What does it mean?
MANHATTAN – The Kansas State University’s Fiscal Conditions and Trends 2013 report’s main purpose is to be useful to county elected officials as they prepare the budget for the next year. The county-by-county report, released this week, details the economic health of each county.
But, it can benefit all Kansas citizens, said economist John Leatherman, director of the Office of Local Government, a K-State Research and Extension outreach program.
“It all starts with having access to basic data,” Leatherman explained. “We’re simply trying to give county commissioners tools that can help them monitor their financial situation.
“At the same time, though, the report can provide average citizens with unbiased, independent information about local government finance. So, it can serve as a starting point for dialogue between elected officials and their constituents.”
The report contains the information for 34 expenditure categories and 20 revenue categories for Kansas counties. By adjusting this data for inflation over time, K-State’s local government economists could also identify and evaluate any underlying trends.
Even so, Kansans must take care when attempting to draw their own conclusions from the data, warned Rebecca Bishop, lead author of the report and the Office of Local Government’s public finance program director.
“You need to look beyond the numbers to understand the local situation. You also need to consider any part of the broader context that may be affecting local finances, such as the current economic environment or trends in state aid programs,” Bishop said.
This augmented approach is particularly important when counties are examining major capital expenditures, she said. For example, infrequent but often costly investments might include a new jail, major road project or courthouse renovation.
Office of Local Government staff now are working to develop a similar, targeted financial trends report for Kansas’ cities. (Due to a unified county-city governing structure, some communities within the greater Kansas City area may be excluded.) The staff’s goal is to distribute a copy of this cities’ report to each of the state’s county seats next spring.
Free access to the Barton County Fiscal Conditions & Trends report is available online at the Office of Local Government’s website, www.ksu-olg.info.
Three local lessons can be gleaned from a new Kansas State University report outlining the fiscal health of the 105 counties in the Sunflower State.
First, despite swelling property values and sagging revenues, Barton County has maintained one of the lowest mil rates in Kansas.
Second, the county has maintained a tax policy that should make taxpayers happy.
But, third, in opting not to tap all its taxing potential, the county has spent down its reserves to keep the mill levy in check.
This sums up the complex KSU Fiscal Conditions and Trends 2013 study released this week. The 14th in a series, the report’s customized analyses detail each county government’s budgetary trends from 2003 to 2011, based on data from the counties’ own budget documents, submitted to the Kansas Department of Administration.
“This means that for the last eight years the Barton County commissioners have been conservative and prudent relative to levying taxes on the citizens of Barton County,” said County Administrator Richard Boeckman. “Barton County has increased real expenditures at less than the county average while actually decreasing real revenues during the same period.”
For the taxpayer, this is good news, he said. “I know the commissioners have been very concerned, especially in recent years given economic uncertainties to keep the tax burden on county citizens as low as possible.”
However, “the county has been able to decrease revenues by spending down reserves, and that is a trend that cannot be sustained in the long run.”
By the numbers
According to the report, per capita revenues (adjusted for inflation) in Barton County decreased 22 percent between 2003 and 2011 to $675. The County’s per capita expenditures increased 19 percent to $837.
Meanwhile, real per capita revenues in the average Kansas county increased 26 percent to $1,417 and expenditures rose 32 percent to $1,471.
The Barton County Commission in 2012 raised the levy two mills to 34.865. A mill is equal to one dollar taxed on each $1,000 in assessed value.
A Barton County taxpayer’s total tax statement would have listed a much higher mill levy, but it includes all the taxing entities, such as the county, cities, Barton Community College, school districts and State of Kansas. The county makes up only about 20 percent of the total.
“This stopped the bleeding,” Boeckman said of the hike. Since the economic downturn in 2008, the county has also cut spending.
In this nine-year span, Boeckman said the county’s real general fund expenditures have decreased 8 percent. Law enforcement expenditures likewise decreased 8 percent, while road and bridge expenditures increased 44 percent.
The study notes that local property taxes remain the major source of revenue for county governments, accounting for 56 percent of total revenue in the average Kansas county in 2011. Thus, trends in property values can significantly impact county revenues and expenditures.
Declining property values push tax rates up and force counties to either find alternate revenue sources or cut spending. Changes in population, business conditions, and state mandates may affect local property values.
But, Boeckman said, real valuation in Barton County increased 25 percent from 2003 through 2011, from $192,643,502 to $242,343,325. The average county increase was 3 percent. Barton County’s real expenditures in this period increased 20 percent while the average county increase was 32 percent.
The county’s real per capita tangible assessed valuation increased from $7,014 in 2003 to $8,752 in 2011, a change of 25 percent. The Kansas county average real per capita assessed valuation increased 3 percent over the same period.
A balancing act
“Perhaps the most interesting discussion in the report involves ‘fiscal performance,’” Boeckman said. Fiscal capacity measures the county’s ability to raise revenues (mostly from property taxes) and fiscal effort compares this capacity with actual revenue. High capacity and with low effort make for a good situation.
This is the case in Barton County, Boeckman said. Increased valuations mean there is more potential revenue the Commission could be taxing, but it has decided not to for now.
“Barton County has increased real expenditures at less than the county average while actually decreasing real revenues during the same period,” the county administrator said.
Boeckman said that for 2012, Barton County’s mill levy was the 97th lowest of the 105 counties in Kansas. The 2012 levy per capita was $337, the 92 lowest in the state.
At the same time, Barton County’s assessed valuation in 2012 was the 20th highest in the state.
In other words, Barton is the 20th wealthiest county in Kansas, but it has the 97th lowest tax rate. “These figures demonstrate the commissioners have kept the mill levy in Barton County quite low compared to other Kansas counties.”
In real, inflation-adjusted terms, Barton County’s expenditures (2011 dollars) increased 20 percent, and per capita expenditures increased from $705 in 2003 to $837 in 2011. Meanwhile, real per capita expenditures in the average Kansas county increased 32 percent.
As a side note, Barton County’s population increased 1 percent between 2003 and 2011 to 27,690. Over the same period, the population of the average Kansas county increased 6 percent to 25,975. From 2003 to 2011, the county’s real, inflation-adjusted per capita personal income increased 6 percent, and the Kansas county average real per capita income increased 23 percent to $40,889.