Zacharias’ Johnson County budget plan has hike in mill levy

Six years since the Great Recession was declared officially over, pent-up demand is catching up to Johnson County government: The entities that govern parks, the library system and mass transit are all asking for funding for major improvements.

After nine years of holding the line on property taxes, county leaders will find themselves considering increases from just about all sides.

The latest was the county manager’s office, which oversees most county departments that don’t have their own governing bodies and separate sources of revenue. Last week County Manager Hannes Zacharias presented a budget plan with a mill levy increase of 1.622 mills that he said would be necessary to avert a $13.7 million shortfall. The other choice, he said, would be to shrink the services the county offers its residents.

The proposed $913.5 million budget includes expenditures of $728.3 million and reserves of $185 million. That’s including wastewater, the parks and library, which have their own levies or fees. The part of the budget supported only by property taxes comes to about $326.8 million.

The property tax increase proposed would bring the county’s mill rate from 17.764 to 19.386 mills, which amounts to about a $4.05 per month increase on the average $260,000 house, Zacharias said. A mill equals $1 of tax per each $1,000 of taxable value.

“This is a maintenance budget,” Zacharias told county commissioners. If commissioners approve it, another increase shouldn’t be needed for county departments for the next five years, he said.

“We do not go into this area of talking about a mill levy increase with reckless abandon,” he said. “It was very thoughtful. We are stewards of the taxpayers’ money and every penny is precious to our residents. We recognize that.”

Zacharias offered three possibilities to commissioners as they begin summer deliberations on the county’s budget. They could reduce services and keep a constant mill rate; adopt his proposal, what he called a “modest increase” to maintain services; or add the increases requested by parks, library and transit to expand those areas.

Finding $13.7 million in cuts would be “a heavy hill to climb” he said. “If you are reducing services you need to have a frank conversation with the public,” he said.

A combination of things has brought the county to this point. Home values are tied to property tax revenue. But as home values fell in the recession starting in 2007, the commission did not even things out by raising the rate of tax. Instead, officials made $46 million of ongoing budget cuts, reduced its workforce by 428, or about 12 percent, and reduced or eliminated merit raises for three years.

This year, is a breaking point, Zacharias said. In the past the county has reached into reserves to pay for some expenses. That caused the reserve pot to shrink to the point that any further loss could hurt the county’s bond rating. The county is already at the maximum it can charge in sales tax, he said.

Continued low interest rates on the county’s investments; a $3.3 million loss of income from the mortgage registration fee, and compensation for new employees in the sheriff’s department also put pressure on the budget, he said. Increases in home values will not provide enough new revenue to counterbalance.

The county has continued to grow during the recession, adding about 90,000 new residents. Now the pressure is on to meet the needs of an increasingly older and less affluent population while keeping the county attractive to younger families. Parks, library and transit officials say the services they offer are a key part of that.

Now that the economy is improving, the commission is being asked to take action on a number of big items that have been left undone. The park and recreation district has recommended an increase from 0.75 to 1.34 mills to develop 4,400 acres of land the county acquired in some cases years ago for new parks. Library officials have asked for improvements that would call for an increase of 0.5 to 1.15 mills. And the JO would like support to lengthen some routes and offer more frequent stops and evening hours. (See story, Page 4.) That would likely call for increased tax support of about 0.25 mills. Zacharias did not take a position on those requests and did not include them in his budget.

In addition, the commission has adopted long-range priorities that include a decision soon on what should be done about structural and safety deficiencies in the courthouse. No proposals are on the table about that yet.

Also ahead is a planned expansion of the Tomahawk Creek Wastewater Treatment Plant, a project made necessary by federal regulations and increased fees on the Missouri side. Wastewater charges to Johnson Countians will be up an average of 5.5 percent over last year because of that project and other expenses in the department.

All of the commission’s deliberations will take place with a nervous eye on the Kansas Legislature. During the presentation last week, some commissioners expressed frustration with some of the decisions — or lack of them — that have lately come from Topeka. Commission Chairman Ed Eilert and Commissioner Steve Klika expressed frustration with unfunded state mandates for such things as the Department of Motor Vehicles taking precedence over county programs.

Commissioner Jim Allen also wondered aloud what would happen if state lawmakers still haven’t finished their budget before the county deadline.

“We’re going to have to be flexible in this and roll with the punches going forward,” answered Zacharias.

The commission will continue more detailed work sessions on the budget for the next couple of weeks before coming out with its maximum spending plan June 25. A public hearing is planned for July 27 and the budget should be adopted by Aug. 13.

This story was originally published June 9, 2015 at 3:56 PM with the headline "Zacharias’ Johnson County budget plan has hike in mill levy."