The City of Manhattan may be on the verge of either tax increases or certain city services being eliminated.
Deputy City Manager Jason Hilgers told commissioners Tuesday that forecast revenues for the General Fund are not enough to maintain the needed cash balance.
“We’re obviously realizing a point here where that upward trend of cash balances in the General Fund is starting to level off and potentially showing a downward trend after six years of upward trends from 2017 to 2022,” he said.
Alternatives consist of increasing taxes or finding services within the General Fund to cut. At Tuesday’s work session, a majority of commissioners said they favored putting a sales tax increase on the August primary going to voters in the August primary.
“I’m in favor of at least a 0.5% increase in that sales tax. I’m not sure if we can go all the way to 1, but 0.5 or maybe 0.75%. Now it doesn’t necessarily solve the whole pool issue, but step one is probably go ahead and put it on the ballot and see if the population will support that,” said Mayor Wynn Butler.
City staff say increasing the 1% sales tax up to as much as 2%, could generate anywhere between $7.5 to $15 million dollars annually.
“I think it makes sense to put it on the ballot and see if people support it. I think we need to do a good job communicating with the people of Manhattan, what it takes to run the city,” said commissioner Susan Adamchak.
Commissioner Peter Oppelt agrees but says he’d like to see more data on how the sales tax would benefit the city’s bottom line.
“Obviously I want to see some more details, some projections on how it might affect our bottom line and things like that long term but I’m definitely open to having that conversation moving forward,” said commissioner Peter Oppelt.
Commissioner Karen McCulloh says the problem with a sales tax increase is that most people don’t realize it until they’re at the grocery store.
“We sit here as commissioners and say OK to this parking structure and that cemetery business and don’t stop and think that these things are going to cost money. We better be willing to face the public and say that we’ve approved these and we’re also going to have to ask you for $100 more in property taxes,” she said.
There is a potential for a ballot question on the sales tax to be followed by a question later to extend the quality of life tax set to sunset in 2027 to utilize for helping fund a proposed indoor aquatic center.
“I would like to see those separate because to me the quality of life is the referendum on the pool and seeing if we’re going to get that support. I think we’re still going to debate that,” said Commissioner John Matta.
City officials would need to have the ballot language finalized by June 1 for a sales tax question to be on the August primary.
