It’s not a sure thing, but the county property tax rate might be coming down next year. The Johnson County Commission began looking at a 2018 budget that maintains a portal, of sorts, to reduce the tax rate under the right circumstances.
The budget proposed by County Manager Hannes Zacharias April 27 holds out $2.4 million in undesignated spending that could be used to reduce the mill levy rate by a quarter mill for the county taxing district. A mill equals $1 of tax per each $1,000 of taxable value.
That doesn’t necessarily mean everyone would pay less in taxes. Property taxes are tied to a home’s value. But it does acknowledge stronger revenues, relatively stable state funding and a lack of any major funding issues so far, he said.
“A big part of (this budget) is trying to provide a path to a rollback. I say a path because it is not a certainty,” Zacharias said.
Zacharias proposed a budget that keeps the mill levy at 26.6 mills, which is the same as last year. That includes 19.59 mills for the county, 3.9 mills for the library system and 3.1 mills for the park and recreation district. The county will be able to maintain its level of service to taxpayers as the population grows, he said.
The proposed budget is also unlikely to trigger a referendum vote required by the new state property tax lid, because of law enforcement spending that is exempted from the lid and because revenue growth does not exceed the consumer price index.
Zacharias kicked off the budget-writing season about a month early because of time constraints of the new law. If an election is necessary, it would have to happen this fall.
The county manager’s budget is the commission’s starting point in a process that will end with the budget’s adoption Aug. 10. The commission must approve a maximum spending budget by June 15.
The total budget proposal for next year is $1.06 billion, with reserves at $243 million and total expenditures at $820 million. However those figures include all sources of revenue, including user fees and grants. When those monies are subtracted from the $820 million in expenditures, the county’s tax-supported spending comes to $381.6 million.
Reserves can be broken down in a similar way. Wastewater, parks and libraries have their own reserves. Some reserves, like the 911 fund, are especially dedicated and can’t be used for anything else. When those are subtracted from total reserves, the general fund reserve is at $81.9 million.
Several things have combined to make it possible to consider a tax rate rollback, Zacharias said. Property values have been climbing, and that has resulted in higher assessed valuations for tax purposes. About three months ago, County Appraiser Paul Welcome said about 96 percent of homeowners would see an increase in value, with an average increase of 7 percent.
Also, interest income has gone up as a result of higher interest rates, and the approval of a special sales tax to build a new courthouse and coroner’s lab means the county won’t have to budget as much in long-term fixes to the existing courthouse.
But any hopes for a rollback could still be squashed by future events in the Kansas Legislature and by appeals of those property valuations. The budget-writing schedule has been moved up by about a month, and some things that could have an impact are still in flux.
If enough property value appeals ago against the county, for instance, that could mean less money coming in than expected.
The state budget also has a big potential impact,as well, and state lawmakers are still dealing with budget shortfall problems. For instance, if the state cuts money it sends the county for roads, mental health services or developmental supports, or if it demanded increased county contributions for the retirement fund, the county would have to take another look at the rollback, he said.
But Zacharias said he’s fairly optimistic that the rollback will take place.
“That’s my hope, but in the heat of the budget, that’s what can happen,” he said.
He also warned that after a prolonged growth period, the country is closer to another recession than to continued expansion.
“I think we’re well-positioned with the reserves we have to withstand that storm,” he said. “If you look at the last downturn, it hit us in the gut because it dealt with property values,” he said, adding that he does not see that problem on the horizon in the immediate future.
Other highlights from the budget:
▪ A proposed 7 percent increase in wastewater rates. This is slightly lower than the 7.5 percent increase predicted last year for 2018. The wastewater department has predicted successive rate increases of about 5 to 7 percent each year as it rebuilds the Tomahawk Creek plant and makes other changes to meet growth and clean water standards.
▪ A workforce of 3,950 full-time equivalent employees. That’s a 38 more than last year but most of those will be paid from fees. About eight would be paid from property tax money.