Commission wrestles with revenue-neutral budget cap
Updated: Jul 22
MOUND CITY – During talks about how to lower the county budget on Monday, July 11, County Clerk David Lamb told the Linn County Commissioners that aiming for revenue neutral every year is not sustainable, especially with prices continuing to rise.
Lamb presented a budget to the commissioners that required a 43.449 mill levy, which was actually a decrease from last year’s 47.848 mill levy.
Lamb said that the revenue mill levy that the state figured the county needed to reach was 42.581. This levy was adjusted already considering what it would take for the county to make the same amount of money as 2022 with the new increased valuations.
A mill is $1 of tax for every $1,000 of assessed property valuation. For residential property, Kansas has a statewide assessment percentage of 11.5 percent. So a house with an appraised market value of $100,000 would have a tax assessment value of $11,500. If the tax rate on that residence is one mill, the tax levied would be $11.50.
Lamb told the commissioners that the increase in the budget would be $615,000 including the 5 percent cost-of-living increases. The $300,000 American Rescue Plan Act (ARPA) funds have already been put in to cover the increased insurance costs.
Commission Chair Jim Johnson asked if the $72,000 revenue from the school districts covering school resource officers had been added as revenue. Lamb said that it had not and added that to the budget, leaving $543,000 that the county would have to cut to meet revenue neutral.
Commissioner Rick James asked why it was not as much of a struggle to reach revenue neutral last year.
Lamb pointed out that the revenue neutral mill levy had been lowered and prices and number of employees had gone up. The employee benefits went up $618,000 because the health insurance rates had increased, and also because more employees were hired which added to the employee benefits cost.
“Truthfully to me, this would be a year to go over if you are going to,” said Lamb. “The costs have risen on everything we are doing, fuel goes up, it drives every other cost up.
“And you know truthfully if it wasn’t for this revenue neutral law, we wouldn’t be even having this discussion right now, because I would come in and tell you we could lower the mill levy over 3 mills and everybody would be happy. So that brings up a discussion that there is nothing that says we can’t go over if you are willing to do that.”
The general fund levy is decreased by 3 mills, the road and bridge is decreased by 2 mills, but the employee benefits are up by 1.5 mills, said Lamb. And while the health department budget seems like the number has gone up, it is really lowered from about 0.5 to a little above .25 mills.
James said that the higher the levy, the more it cost taxpayers.
There is a time limit to make this decision, said Lamb. He said he would need to know by next Monday if the county was going above the revenue-neutral rate so he could publish the notice by July 20.
Lamb said if the notice was published that they were going over revenue neutral, it did not require the county to do that. However, publishing it gave them a month to work over the budgets to find any other ways to save. If the county was not going over revenue neutral, the budget notice needed to be in the paper by August 3.
Lamb told the commissioners that if the county goes over revenue neutral and passes a resolution, it may be good for the county in the long run. It would keep the county’s budget where it needed to be.
He reminded the commissioners that they went under revenue neutral last year, so that reduced what revenue neutral was for the county this year. It is a fallacy that the county can be revenue neutral forever. If prices continue to rise, income has to go up or the county has to cut services and employees.
Lamb said it was going to be hard to cut the remaining $543,000 from the budget without cutting into the contingency or windfall reserves. He pointed out that he had already lowered the windfall budget in the proposed plan. He said it was good to have some reserves in case of an emergency.
McCullough asked if they could use more of the ARPA funds to help with the increase, especially the cost of living. He also threw out the idea of paying the increase to employees in a lump sum instead of giving them a cost-of-living increase.
Lamb said the employees would probably pay higher taxes on the lump sum. The ARPA funds are just a bandaid, he added.
County Counselor Gary Thompson went over the amount of money already paid out or obligated out of the ARPA funds. KwiKom has been paid $500,000 and another $58,000 will be paid to them, and the commissioners told Peoples Telecommunications that they would receive $50,000. Southeast Kansas Regional Planning Commission (SEKRPC) will also be paid 5 percent, or $95,000, of the $1.9 million grant for administering the grant. That would leave a total of less than $1.2 million in the grant fund.
Economic Development Director Jessica Hightower told the commissioners that Southeast Kansas Mental Health had turned in an application and one of the water districts was getting ready to turn one in to apply for funding.
Commission Chair Jim Johnson asked how much the county could save if they cut the cost-of-living raise.
Lamb said that would save the county about $100,000.
McCullough asked about using more ARPA money to pay for the cost-of-living raises.
Lamb said that in the future when it runs out, the county would be looking at jumping the levy 10 mills to cover costs.
Thompson said that if the commission was interested in glossing over this year, it could pull from the ARPA funds. Or if commissioners are interested in looking ahead and asking how can we prevent having a big jump later, a little increase now as compared to a big jump later might be advantageous.
Johnson asked about the income from the jail after it opened.
Lamb said that he had talked with sheriff and he had given him what he considered low estimates to be for the remainder of this year and the whole year next year. For this year, the sheriff estimated that revenue from having prisoners would be about $150,000, and for 2023 it will be about $500,000.
James asked that Lamb schedule a special meeting with department heads and other organizations so that everyone could work together on lowering the budget. The commissioners decided to set the meeting for 8 a.m. Friday morning, July 15.