City holds first work session to create 2022 budget

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State of the General Fund
Manhattan officials discussed the state of the General Fund, which is the city’s main operating fund, during the city commission meeting Tuesday.
The meeting was the first of several that will be held over the next few months to create the 2022 budget.
Despite the pandemic, city manager Ron Fehr says the fund’s cash balance has increased over the past several months.
“In our general fund balance, we were able to save substantially because of all those cuts that we made and because of the hiring freeze and vacancies that we had,” Fehr said. “
Fehr acknowledged, however, that the balance could decrease as more staff positions are filled throughout the year.
Going forward, the city will have to navigate a number of other cost increases as it formulates the 2022 budget over the next couple months.
According to Fehr, Capital Improvements and proposed salary increases could have a total budget impact of about $2 million.
The next budget work session will take place on June 8, during which department heads will present 2022 budget requests.
Consistent revenue source
Manhattan administrators are hoping to establish a more consistent source of revenue for the General Fund, potentially through increased property taxes.
Officials would also like to strengthen the General Fund cash balance, which has nearly doubled from about $3 million to around $6 million with the help of federal stimulus money.
Mayor Wynn Butler says he would like to see the city strive to live within its means.
“If we take in ‘X’ amount of money, then we can spend that much,” Butler said. “If we don’t take it in, we shouldn’t be spending it – and that’s what the city has got to get used to operating. If that means tightening some belts, well we’ll have to see what the population thinks about that.”
Commissioner Aaron Estabrook says he wants to see how much it costs to operate the city at full capacity before considering changes.
“What does it take to fully fund the city – to do what we’ve already invested in or promised voters that we would do and how many mills is that or what’s the percent increase and then what can we stomach from that,” Estabrook asked.
The City of Manhattan’s mill levy has increased at an average rate of 1.76 percent per year since 2010.
Revenue Neutral Rate
The City of Manhattan will be required to maintain a revenue neutral mill levy rate this year or notify the public of its intention to do otherwise.
Passed by the Kansas legislature earlier this year, the policy is intended to make taxation more transparent.
Mayor Wynn Butler says he doesn’t believe the city will be able to reach the revenue-neutral threshold with its 2022 budget.
“I just can’t see it happening and do the things we have to do in the city,” Butler said. “Can we start by looking at the flat mill levy, which is still a flat increase? I think we can.”
He says the city could then potentially use federal stimulus money to supplement revenue.
If the city establishes a revenue neutral rate, it will hold its final public hearing concerning the budget in August.
Exceeding the rate will push the final hearing back to September.
To see an overview of the city’s budget presentation from the city commission meeting Tuesday, click here.
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