Manhattan approves 1st reading of ’21 budget, takes another step on EcoDevo sales tax question


Manhattan Tuesday unanimously passed a 1st reading of its 2021 budget featuring a flat mill levy.

The full budget amounts more than $166 million, up about $3 million due to about half a million dollars in property valuation increases — to be in-part directed to the city’s bond and interest fund and to fully fund the approved RCPD budget — and sales taxes collections earmarked for Manhattan’s new two voter-approved middle school recreation centers. Additionally, all city employee salaries are to be held flat going into the next year.

Read more on requested Manhattan Area Chamber of Commerce funding here. You can find more on outside agency requests here.

If approved on second reading August 18, the city’s general operating fund will rise from $31.79 million to $32.06 million in fiscal year ’21 — though the budget published in the Manhattan Mercury held the property taxes to 2020’s level of 49.79 mills, with one mill amounting to $1 per $1,000 in assessed property value. A published budget can be further reduced, but by statute cannot be increased.

If passed as is, owners of residences valued at $200,000 can expect an annual property tax bill in 2021 of about $388. Commercial properties valued at $500,000 can expect an annual property tax bill of about $2,112 per year. That doesn’t factor in bills from Riley County and USD 383.

But further reductions are likely as the city faces continued revenue impacts as a result of the COVID-19 pandemic. Manhattan’s 2020 budget has been expected to see $3 million to $8 million shortfalls and projections for 2021 lead city administration to anticipate a $2.7 million shortfall.

Utility rates are also proposed to rise as part of planned annual increases, with extra one time additions to fund the approved levee improvement project. Read more on that here.

Administration has looked to make up that difference with a split of departmental cuts and fund transfers at $1.5 million and $1.2 million respectively. Commissioners have seen options for targeted cuts focused on Parks and Recreation due to its high number of seasonal and part-time employees and because it oversees numerous programs that do not bring in enough revenue to cover operating costs. Manhattan subsidizes the department to the tune of $6.9 million per year.

Receiving opposition from the commission, administration returned at their request with prospects for what across the board cuts would look like in each department. Reductions of between 5 and 10 percent were presented, with department heads detailing how they would have to cut full-time employees and reduce services to reach those cuts. Identified fund transfers would draw from economic development as well as water, waste water and storm water funds.

Courtesy of the City of Manhattan

Deputy City Manager Jason Hilgers says the 5 percent cuts are what is necessary to bring forward a budget that balances revenues and expenditures, though if revenue falls shorter than expected they may need to implement the 10 percent cuts to keep things level.

Commissioners Tuesday, though, did not dive too deeply into the specifics of cuts.

“This gives you, gives [the]city manager, the flexibility to move throughout the uncertain times ahead, to shift things around, to meet some of those strategic decisions,” says Commissioner Aaron Estabrook.

Estabrook did not want to nitpick too closely at this point, though expressed a desire to leave the Legal and Fire Departments as untouched as possible by 2021’s cuts. Additionally, he says the difficulty the city has collectively had in identifying what services are least essential and should be targeted first for cuts lends support for the necessity of a strategic plan. Administration has supported such a move, saying the plan would help prioritize where to cut first in economic downturns.

Commissioner Linda Morse agreed, saying the commission sits at more of a policy level than an administrative one and calling on City Manager Ron Fehr and staff to make a balanced budget that meets the organization’s and the community’s needs. Even so, she says the city has to face the issue and make a decision and voiced support to not cut too deeply into Parks and Recreation — particularly their aquatics operations.

“I truly want the pools open in the summer,” says Morse. “Our community has spent a ton of money on sales tax — we even had a special one to build the three wonderful pools we have. I just have a horrible time denying our citizens that.

“I understand it this year, I don’t want to have the coronavirus issues — and if it’s still around next year we may have to not offer the pools again — but it’s something that makes our community a wonderful place to be.”

Mayor Pro Tem Wynn Butler agreed with Estabrook on Fire and Legal, though disagreed on getting involved with budget specifics. He doesn’t think the commission does a good job of providing guidance to staff on budgetary issues, adding that it ‘troubles him’ to give administration discretion and then find their choices unsatisfactory. Butler provided administration with a four page document detailing his perspective, in which he reiterated past support to utilize economic development funds to assist with the shortfall.

“I’m not in favor of, even though Parks and Rec. may have the largest budget, taking a huge chunk out of there,” Butler says. “And I really don’t like the idea of across the board 5 or 10 percent cuts. I think you can target them to certain departments and we can live with it that way.”

He proposed drawing the $1.2 million in transfers from EcoDevo dollars as the fund is projected to have a $4 million balance by 2025 and leaving utility funds untouched — justifying the use with the intent to replace the current half cent Riley County economic development sales tax with a Manhattan-specific tax that collects revenue from the Pottawatomie County side of town.

Commissioners did express majority interest to cut around $20,000 in travel funds for the 2021 budget for commissioners and the City Manager’s Office. Commissioner Mark Hatesohl was open to retaining some of the funds, though capping their use to around $1,000 per commissioner. He says the funds would not be sufficient for a whole trip and would just assist with things like registration fees at a conference while requiring attendees pay in out of pocket as well.

“If there’s something fairly important that they feel like they want to go to, I would like there to be a small amount of money,” says Hatesohl. “Before we just completely zero that out, at which time we never go anywhere again because it’ll be hard to get that stuff back into the budget, I would be interested in trying to maintain a small amount there knowing that’s not going to be enough to pay the whole way for something.”

Hatesohl’s fellow commissioners were not supportive of the idea at this time amid the budget cuts being discussed throughout the city organization.

Mayor Usha Reddi was hopeful for future revenue growth as construction projects continue around the city, though still wanted to see public projects slow down. Stopping new projects wouldn’t have an immediate impact on the city’s finances as debt service payments typically take three years to hit the bond and interest fund, though Reddi has repeatedly expressed uncertainty regarding how long they should expect to feel the economic impact of COVID-19.

“There are some obligations we’ve already made. But in those areas where haven’t obligated yet but we made a verbal commitment, I think it’s worth taking a second look and moving those timelines a little bit further,” says Reddi. “Not that they’re not on docket anymore, but just considering the timeline — extending that.”

Commissioners will discuss the budget for the final time at their August 18th meeting.

Manhattan is coming closer to approving an economic development sales tax ballot question for the 2020 election. A majority of commissioners Tuesday supported the tax and a specific revenue breakdown.

Read previous discussion here.

No vote was held, but most commissioners supported splitting the funds 70-20-10 for public infrastructure and debt payments, job creation and employee retention, and housing initiatives respectively. City officials see it as a replacement of their portion of the existing Riley County sales tax, which expires in 2022. If passed, the new tax would raise rates in Manhattan businesses on the Pottawatomie County side by a half cent from 8.95 percent to 9.45 percent and increase the city’s annual takeaway from $3 million to $6.5 million.

City officials are eyeing the new tax in-part to assist with rising debt costs related to city projects and in an effort to compete with larger markets around Kansas that offer higher salaries. The city approved additional economic development funding for the Chamber in a paradigm shift, and ensuring a revenue stream could allow them to continue it if Manhattan city commissioners find their progress satisfactory.

The question as proposed Tuesday reads:

“Shall a retailers’ sales tax in the amount of one-half of one percent (0.5%) be levied within the city limits of Manhattan, Kansas, for the purposes of stimulating recovery from the COVID-19 pandemic and reducing the ad valorem property tax burden on City taxpayers; to achieve such purposes, the revenue from the additional tax shall be used as follows:

I. approximately 10% of the funds shall pay for workforce housing initiatives;

II. approximately 20% of the funds shall pay for job creation, recruitment or retention initiatives; and,

III. approximately 70% of the funds shall pay for outstanding city debt and the costs related to public infrastructure.

With the means and methods to accomplish said purposes to be determined in the sole discretion of the Governing Body of the City; such additional tax, levied pursuant to K.S.A. 12-187, if approved by a majority of the electors voting thereon, to take effect January 1, 2023, or as soon as thereafter as permitted by law and notice requirements allow, and to expire ten years from the date the tax is first collected?”

Mayor Usha Reddi reiterated opposition to bringing the tax to voters this year, though didn’t oppose the tax in principle — though preferred a 60/30/10 split to earmark more money for job creation and employee attraction and retention initiatives.

“I don’t know where August and September are going to take us with this outbreak,” Reddi says. “I don’t want to be insensitive to the needs of community members that may or may not have a job or if they have to go home and start teaching their children while working remotely and the last thing they want to talk about is a sales tax initiative.”

Reddi and Morse also raised the idea of including an additional resolution to further identify the tax’s intent for future commissions as well as the public. Multiple commissioners put importance on good marketing of the tax’s intent and impact on the city’s mill levy and other initiatives, noting the failure of last November’s sales tax initiative.

Commissioner Mark Hatesohl, though, says he’d prefer leaving it out to maintain the commission’s flexibility.

“The 70/20/10 and the explanation you have there, that will still provide the commission with some flexibility, but also keep some guardrails so we don’t wander off into the weeds and try to spend it on something nobody envisioned back in 2020.”

In the past on different sales tax initiatives, the city has left off an additional explanatory resolution — including it in 2012 due to the necessity to express their intent for their portion of the funding split with Riley County.

Pottawatomie County Commissioner Dee McKee also spoke during public comment. At first, her commission had an interest in receiving a portion of the funding in a split with the city — not unlike their agreement with Riley County in 2002 and 2012. But as Manhattan and Riley County differed in their opinion regarding a county or city-wide tax, the city moved toward a city-specific tax instead.

In part due to the tax impacting Pottawatomie County businesses, McKee asked the city to consider utilizing the funds to pitch in on prep work for a Marlatt-Junietta bridge connection. She noted a need for another route across the Big Blue River into Pottawatomie County as USD 383 constructs its new elementary school, Oliver Brown Elementary, in the Blue Township area. McKee raised concerns about how to ensure the new student traffic — in addition to those commuting for work and possibly to Fort Riley — would get to their destinations amid rising water that has impacted HWY 24 in the past.

She urged commissioners in the spirit of collaboration to consider working with them on the project, noting they often feel governmental organizations based more in Riley County but that have edged into Pottawatomie County often do not have good lines of communication with their governmental body.

City officials expressed interest in discussing the topic further at a joint governmental meeting. Commissioners will vote on a resolution to place the question on this year’s ballot on August 18.

In other business, city commissioners unanimously approved a transportation development district in the Blueville Addition, Unit 2.

Blueville Nursery petitioned to bring lots 2 and 3 of the subdivision into the TDD and self-impose a half cent sales tax on the property to fund improvements on West Anderson Avenue. Lot 1 was already included in the TDD formed in 2016.

Such districts can only be created through petition by property owners. The self-imposed tax will pay for improvements such as work at the intersection of Scenic Drive, Anderson and Kimball Avenue, eligible projects from which have been bonded out for $4.5 million. Historically, the TDD has collected between $15,000 and $20,000 per year.

Now approved, the tax will run 20 years and goes into effect upon publication in the Manhattan Mercury.


About Author

Nick McNamara

Local government reporter, sometimes host/producer of the KMAN Morning Show. 2017 Long Beach State graduate in Journalism/Native American cultures. Los Angeles County born and raised. Nick can be reached at

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