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September 27th, 2021

ROBERT PIERCE • Leader & Times

 

Friday, Seward County commissioners passed a budget for fiscal year 2022, but that approval came after the approval of two ordinances concerning a new law introduced this year by the Kansas Legislature and some discussion about the budget itself.

The law concerns the Revenue Neutral Rate, which came about during the 2021 legislative session, in which the tax lid was removed via the enacting of Senate Bill 13 and House Bill 2104.

This legislation establishes new notice and public hearing requirements if the proposed budget will exceed the property tax levy’s revenue neutral rate.

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These requirements take effect in 2021 for the county’s 2022 budget. Information in the agenda packet added the tax lid was about actual dollars, while the Revenue Neutral Rate is about the mill levy itself.

What is the Revenue Neutral Rate? The agenda information said it is defined as the tax rate in mills that would generate the same property tax revenue in dollars as levied the previous tax year using the current tax year’s total assessed valuation.

The mill levy for fiscal year 2021 was 48.044. The final assessed valuation from the November 2020 abstract was $246,812,055. Therefore, at that time, 1 mill was equal to $246,812 in total dollars.

The mill levy needed to fund the budget as proposed for FY 2022 is 48.002. The total estimated valuation is $247,031,701. That is estimated as of June 8, and final certification will not be made until the November abstract.

There are also outstanding appeals before the Board of Tax Appeals that can change valuation, but as of the June 8 estimated valuation, for the upcoming fiscal year, 1 mill will equal $247,031.

Due to the valuation not being certified until November and outstanding appeals before the Board of Tax Appeals that could cause a change in valuation, county leaders proposed exceeding the Revenue Neutral Rate.

If the county did not have a hearing to exceed the RNR, and once the county clerk calculates the final assessed values and it exceeds the rate, the county would have to amend the budget or refund any property taxes levied in excess of the rate.

Seward County Clerk Stacia Long was notified by July 20 of the intent to exceed the RNR.

“We did place a notice on the county Web site and newspaper more than 10 days prior to the hearing to exceed the Revenue Neutral Rate and the hearing for the budget,” the agenda information said. “The hearings have to take place no earlier than Aug. 20 and no later than Sept. 20.”

Resolutions were prepared for and approved by commissioners for the county and the Rural Fire District to exceed the RNR. Commissioners voted unanimously to approve both resolutions.

Later in the meeting, the commission hosted a budget hearing and approved the budget, but that approval came after some discussion, including that from local businessman Kelly Hill.

Hill started by talking about what he believed community investment in Liberal meant.

“It means more bills,” he said. “It means more taxes. In late ’14, early ’15, my family bought the Billy’s Ayr Lanes facility. I know it’s not just your taxes you’re levying. It’s also all the taxing authorities. My taxes were roughly $14,000 at that point in time. In the year 2016, my taxes were $35,000. That’s when I built my restaurant, and I invested in our community.”

Hill continued by talking about the further increases to his taxes.

“In 2017, my tax bill went to $41,000,” he said. “In 2018, it was $46,000. In 2019, it was $50,000. In 2020, my taxes were $50,676. What does that mean to people? As a business owner, I look at my expenses on a daily basis of what it costs me to do business so I know what to charge my customers, and it costs me $138 a day to pay the taxing authority in Liberal, Kansas. I don’t know what the margin is the county thinks it needs to operate on, but in my world, I’ve got to have a big margin just to cover the tax bill on a daily basis before I even get to electricity, the gas and other expenses – insurance that I’m required to have.”

Hill said he sees county officials spending more and more taxpayer money.

“You’ve got to go back to the well to get more water from your constituents so you can pay your bills,” he said. “At some point in time, the well runs dry, and we’re getting to that point now. I understand there’s other taxing authorities that need a cut too, but when I look at this budget bill you’re going to put in front of everyone and approve today, you’re not going to change anything in this budget today. You’re going to pass this, but there’s $6 million more in expenditures in this budget than the previous year. You’re going to have to get that money from somewhere, and that somewhere is the taxpayer.”

Hill said after examining the FY 2022 budget, he began to ask questions.

“Where do we get some revenue to lay off the bill from the taxpayers of this community?” he said. “It’s pretty simple if you look at it for more than 10 minutes. Our solid waste and the landfill out here returned in 2019 $165,000 to the county budget. In 2020, they returned $154,429 to the county budget. I ask you today if the county is going to be in the business of hauling and removing solid waste from other communities far and wide, when’s that asset going to start making money for this county to take the burden off the taxes?”

Hill said the landfill is returning less than 2 percent to taxpayers, and he asked what would happen if he ran his business the same way.

“I couldn’t pay your tax bill just to the county,” he said. “Do you think there are ways we can look inside this budget and figure out ways to generate revenue to bring something back to this community besides other people’s trash? Right now, all we’re doing is bringing back their problems at our expense.”

Hill advised county leaders to look at other ways to get money other than from taxpayers.

Administrator April Warden then took the mic and explained some of why the county’s numbers look the way they do.

“When we propose budget expenditures, those are proposed by different figures of historical numbers, actual numbers for our health insurance and different things,” she said. 

Warden said while the county’s projected expenditures are in the $35-$36 million range for the last few years, actual expenditures are lower.

“In 2020, the budgeted expenditures were $35,123,313, but at the end of the year, we only spent $30,841,549. In 2021, we budgeted expenditures of $36,110,780. As of budget time, budget planning for 2022, we estimate we’ll actually spend $30,782,253. Your proposed budgeted expenditures with the intention of raising the Revenue Neutral Rate, your proposed budgeted expenditures would be $36,321,071. With your proposed budget, you’re actually looking at $35,728,936.”

Warden said like Hill, the county is running a business.

“We are running the county,” she said. “You don’t balance your budget to zero. You have to plan for things that are going to happen. You have to plan to have money in reserves. You can’t balance a budget to zero and expect nothing to happen. We do have appeals out there. We have to plan for our community’s future because we don’t know what’s going to happen to the tax roll.”

Warden explained the mill levy is different because mills are generated by valuation.

“Obviously, if your valuation lowers, it takes more mills to fund the same dollar amount,” she said.

Warden added the county’s landfill is self-sufficient.

“It is a county-owned landfill,” she said. “Even if we weren’t taking trash from surrounding areas, we have to have a landfill for our county, or they’re going to be paying for the services to take it somewhere else. All of the equipment that is used at the landfill, all the employees who are paid, all of their benefits, everything is reimbursed to the county by the landfill. Nothing is paid from the county general fund to operate the landfill from equipment or anything else. They also give you $1.50 for the annual tonnage.”

Warden said it is up to commissioners to decide how the landfill is run.

“It is a needed service, and they have figured out how to make it work to not cause our county any additional money to go to the taxpayers to fund,” she said.

As for the county’s health insurance plan, Warden said that is budgeted according to what claims could be.

“Otherwise, it would be a burden if we tried to figure out where else to come up with that money,” she said. “We have come in under budget each year on the county health insurance. Doing more with less, that’s what we’ve been doing on an employee basis.” 

Warden said cutting the budget is a consideration, but ultimately, that decision goes back to the community.

“They’re going to have to decide what services do you want cut,” she said. “You have to have employees to provide those services, and we are taxpayers. We all have the same burden everybody else has.”

Warden then addressed some of the criticism the county has received for the purchase of the new health department building on West 15th Street.

“The total cost of the health department for purchase and remodel was $807,566.83,” she said. “$183,387 of that was reimbursed by CRF funding, and the State of Kansas WIC Department also paid a percentage of that remodel in the amount of $39,528. The total cost of that building after reimbursements to the county was $584,651.83.”

Warden said the extra money the county makes from the difference between its projected and actual expenditures is a necessity.

“Yes, I believe we should be able to break even on what we have, but if you start pricing yourself to make a profit as a county, you do have people who frown upon that,” she said. “For a community to grow and to thrive, you’ve got to have quality of life, and some of those things are quality of life.”

County commissioners and department heads worked through a budget work session in July, and Warden said the results of those two days are worth the work.

“I believe we put in a lot of time and effort,” she said. “We do go through the budget work session process with each department and with each entity out there that ask you guys for funds. We made budget cuts when you put the proposed budget before you today.”

Warden said changes could have been made to the budget on Friday if commissioners chose to do so.

“You’re allowed to decrease budget,” she said. “To make any increases in the budget, you would have to propose another budget hearing. You would have to put the advertisement out there for another 10 days, but to make any decreases or cuts to the budget, that’s well within your authority to do that.”

Warden said all of the information regarding the budget was available during the budget work session, and comments could have been made there as well.

“It’s on the Web site,” she said. “It’s on Facebook. It’s in the newspaper, all of those place so people can come in and make comments there. That’s the time in July when the commissioners are planning to put a budget together and have these discussions. It is very difficult once you get to this point to make big changes in the budgets. That’s why the work sessions are open to everyone, and that’s the time to really review the documents from each department, from each entity, to ask questions.”

For those who want to make cuts to the budget each year, Warden asked what suggestions people had for those changes.

“What services do you feel we could do without?” she said. “Just like businesses have extra costs that come to them, there’s a cost of running the county as well.”

Commissioner Steve Helm later said fees charged for services such as EMS, the sheriff’s office and the Activity Center could be examined as well.

“All the fees the county charges haven’t been increased for at least five years, yet expenditures keep growing,” he said. “We seem to keep passing that burden to the property taxes and potentially commercial property taxes. If we raises our expenses and expenditures yearly, we have to look at what we charge for our services.”

The budget approved by the commission includes the following:

• Proposed budgeted expenditures of $35,728,936 without the RNR;

• Actual spent will be determined after the 13th month closing of books;

• Ad valorem needed to fund the budget of $11,759,562;

• Estimated valuation in June of $247,031,701;

• Final certified valuation will be provided by the county clerk in November;

• Mill levy based on estimates of 47.603; and

• 1 mill based on estimates generates $247,031.

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