There was little happy news to be found in the Johnson County Commission hearing room last week, as commissioners took their first comprehensive look at next year’s budget proposal from the county manager’s office.
After years of cutbacks in personnel and a relatively flat tax rate, County Manager Hannes Zacharias told the commission there was no more fat left to trim. It is time, he said, for the first property tax rate increase in eight years.
The increase of 0.814 mills would bring the county’s levy to 24.061 mills, which translates into about $23.28 per year on an average $249,000 residential property. The additional revenue was requested to compensate the loss of income from the mortgage registration fee, which the Kansas Legislature decided to phase out, and to provide more staffing for the county sheriff’s office.
But that wasn’t all. Also on deck is a proposed $5 fee for people who come to the Department of Motor Vehicles offices to renew their registration and a 6.25 percent rate increase for wastewater.
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Asking for a mill levy increase is, “not something I relish,” Zacharias said. But he said it is necessary to address the “impending structural imbalance” that will be brought about by the loss of about $49 million over the next five years from the mortgage registration fee.
The levy increase may not be a one-time thing, he said.
“This governing body has to consider increasing the property tax each and every year for the next four years to accommodate that loss in revenue, unless property values accelerate beyond our projections,” Zacharias said.
The $874 million budget proposal includes spending of about $695.3 million and $178.7 million in reserves. Those numbers include spending from such things as the wastewater department, which is run on user fees, and other departments with their own levies and grants.
The amount the county spends that is supported by property tax only is about $310.5 million. Likewise, the reserves amount includes funds from departments that have their own dedicated reserve and special use funds. When those are subtracted, the general fund reserve amount is about $64.7 million.
The budget plan also reflects about a $10.3 million increase in revenue from rising property values.
At this point, the budget is only a proposal drawn up by county staff based on comments and questions from commissioners over the course of the year. The commission must arrive at final spending figures before the July 15 publication date. After publication, spending cannot be increased. The public hearing will be July 28 and a final vote is scheduled for Aug. 14.
Zacharias and some commissioners have not been shy about placing the blame for much of the situation on state legislators. The Statehouse has dealt several blows to county governments in the past year. Besides the mortgage registration fee, the state also cut funding for the Johnson County Enterprise Center, loosened rules for when property values can be appealed and cut money for mental health staff.
“When I look at the horizon, the biggest threat we have is the state of Kansas. That is disappointing news,” Zacharias said.
But Ray Merrick, speaker of the Kansas House of Representatives, said a tax increase shouldn’t be necessary, because of increased property values. In an email last week, Merrick said the net loss in tax revenue from the fee would be $1.7 million, according to Legislative Research, a nonpartisan agency that does fiscal analysis for the state legislature. Meanwhile, he said, total appraised property values have increased 6.68 percent, adding millions in revenue to county coffers.
While the registration fee is ending, legislators allowed counties to increase filing costs for individual documents. The registration fee was paid at closing and was based on the amount borrowed. But legislators agreed to allow increases in certain filing fees to make up some of the lost revenue. For instance, a document certifying instruments on record will go from $1 a page now to $12 a page by 2018. The first page of deeds and other instruments will go from $6 now to $17 and each additional page of such documents will go from $2 to $13 in the same time period. The most expensive plats pages, which are $20 now, will increase to $31.
Commissioners and county officials, however, question whether the new higher filing fees will really bring in as much revenue as state lawmakers say. Home buyers typically have recorded 20 pages of documents on average, but only two are required by law. The county’s estimates are based on the assumption that higher filing fees will cause people to file fewer documents. If that happens, the county will have less revenue from the fee increases than projected.
The increase in property values, which was projected by the county to be $10.3 million, has to be shared with the parks and library. The $8 million that would go to the county taxing district would be used to cover a 3 percent merit increase for employees and to fill some positions cut by reduced state and federal funding.
Commissioners differed in their reactions to the manager’s proposed budget. Commissioners Jim Allen and Steve Klika said that despite state cuts, the county should take the reins of its own destiny. Allen said the county must take into consideration that if services and amenities start to slip, other parts of the metro area like Lee’s Summit and northern Kansas City may become more attractive as places to live.
Commissioner Ed Peterson questioned whether the county’s most vulnerable people are being taken care of.
And Commissioner Michael Ashcraft said he would be looking for proof that the county is getting the best value for its dollar as the budget discussions progress.
Said Commission Chairman Ed Eilert: “This will be a different exercise than what we’ve experienced the last three or four years. I don’t think any of us take lightly the recommendation of increasing the mill levy.”
Here are some details on a few budget highlights:
Capital improvements: There is no provision in the five-year plan for building a new courthouse, any major park development or transit spending beyond regular bus replacement. However, the budget provides for renovation of the first floor of the courthouse, continuation of a library master plan and a new park police building and visitor center at Shawnee Mission Park.
Sheriff’s office: Zacharias proposed a “hybrid approach” to ongoing concerns about overtime costs. The sheriff could hire 20 new civilian employees and the county would pay about $1.4 million for additional overtime, but there is no funding for the additional 22 deputies Sheriff Frank Denning wants to hire. About 0.378 mills of the property tax increase would go for the sheriff’s items. Denning said he isn’t happy with that solution because of the fatigue overtime hours cause the officers. He said he will present an alternative budget for his department later this month.
Motor vehicle registration: Anyone who comes in person to the DMV to renew license tags would pay a $5 fee. This is to encourage more people to renew by mail or online, saving the county money.
Sewer rate increase: A 6.25 percent increase for Johnson County Wastewater would be needed so the county can rebuild its Tomahawk treatment plant to treat water that now goes to Kansas City. Kansas City’s rates have gone up so it can meet federal requirements on clean water.