Kansas City’s $70M shortfall amid COVID: Mayor wants to sell property, freeze hiring
Kansas City could sell off property, eliminate vacant positions — including police — and cut funding to major community institutions to offset a $70 million shortfall in revenues, the mayor and city manager announced Thursday.
Mayor Quinton Lucas and City Manager Brian Platt presented their budget proposal to the City Council that afternoon. It includes more than $42 million across most city departments to address the decline in revenues brought on by the COVID-19 pandemic and ensuing economic fallout.
The Kansas City Police Department’s budget would be cut by nearly $12 million under the proposal, but Lucas and Platt stressed that would not mean fewer officers on the street. The budget proposes leaving all vacant positions unfilled.
KCPD declined to comment until the City Council votes on the budget in March.
Cuts are also anticipated to some major institutions the city supports, including the Kansas City Zoo, Starlight Theatre, ArtsKC, the Black Archives of Mid-America, Visit KC, Legal Aid of Western Missouri and the Kansas City Film Office.
Lucas said Wednesday those cuts were not made lightly.
Randy Wisthoff, executive director and CEO of the Kansas City Zoo, said in a statement to The Star that the zoo was concerned about the proposed $1 million cut to its budget.
“We will be analyzing what the substantial loss in funding would mean to the Zoo in this already challenging environment,” he said. “Our leadership will be meeting soon with city officials to further discuss the impact of this proposed budget cut.”
At the same time, the city plans to boost spending on road resurfacing. The proposal suggests hiring additional human resources officials to ensure staff are being treated fairly in the wake of a year-long investigation into racism in the Kansas City Fire Department published by The Star in December.
Even so, the city will likely have to dip into rainy day funds to make ends meet.
“Our goal here was to close this … budget shortfall caused by the COVID-19 pandemic while creating no reductions in essential city services with no layoffs or furloughs and also adding some additional investments and resources into some of our priority areas,” Platt said.
Cuts and changes
Lucas previewed the proposal in his State of the City address Wednesday evening, acknowledging that the city is in a difficult season.
“Even in our darkest days, know that our work and our sacrifice today develops that bright, impressive, smiling, energetic daughter, son and leader of tomorrow,” Lucas said at Winnetonka High School in the Northland.
Though Lucas and Platt don’t see a need to lay off city staff, the budget does include a hiring freeze expected to save $7 million. And employees will be offered an early retirement incentive. The city will also convert the rest of its approximately 100,000 street lights to LED bulbs, bring recycling services and brush removal in house, refinance debt and sell off property.
The budget also proposes folding a separate police force that patrols Kansas City International Airport into KCPD, which Platt said could save “several million dollars” while aviation officials previously contended it would be a cost increase.
While the KCPD budget is cut, the Kansas City Fire Department will see more spending because of overtime and pension costs and the fire sales tax increase that took effect in January. At a time when the department, which also runs the city’s ambulance service, is grappling with a pandemic, KCFD has a shortage of emergency medical technicians and paramedics, Platt said.
Kansas City will also look to save money by selling off underutilized property and refinancing debt.
The budget proposes closing Hale Arena in the West Bottoms, saving $1.7 million in maintenance each year. In his Wednesday speech, Lucas raised the possibility of selling it. But work toward that goal is preliminary. Platt said the city was preparing to meet with the American Royal, which plans to leave its longtime West Bottoms home for a new campus near Village West in Kansas City, Kansas.
Originally started under a tent at the Kansas City Stockyards in 1899, the organization in 2016 announced plans to leave. It plans to take its marquee rodeo and livestock events to 115 acres it owns and leases in Wyandotte County. American Royal leaders plan to build an agricultural campus that could cost upward of $250 million.
In 2017, the Council agreed to sell the nearby Kemper Arena for $1. Development firm Foutch Brothers spent millions revamping it into a multi-use facility with multiple courts, a fitness center and food and retail space. It’s now known as Hy-Vee Arena.
It will also refinance KC Live! and surrounding parts of the Power & Light District to save $8.8 million. The bar district does not make enough in revenue to pay off the debt the city issued to help develop it.
Council members adopted the current fiscal year budget, which ends April 30, almost a year ago at the onset of the COVID-19 pandemic. Despite the economic uncertainty caused by the pandemic, which had only begun to spread in Kansas City, the city boosted spending across several departments.
The council worked to cut the budget as the year went on, but staff said Thursday that the city is expected to end the fiscal year having used $50 million — or about half — of its reserve funds. This year, staff estimate they will have to use another nearly $13 million in rainy day funds to offset revenue losses.
The council’s finance committee chair, Katheryn Shields, was worried as the council prepared to pass the budget a year ago. She urged the council not to increase spending at that time, and she told colleagues Thursday to proceed with caution.
“I think we ought to be very skeptical about those numbers, and we really need to work hard … to figure out how we make some substantial changes to this budget so that we actually don’t end up next year with no reserves on hand.”
By city law, the council needs to pass a budget in March. The new fiscal year begins May 1.
Public comment sought
Before the council votes, it will hold public comment sessions at the following times and locations:
▪ 9 a.m. to noon Saturday, Feb. 20. To be held virtually.
▪ 9 a.m. to noon Saturday, Feb. 27. In person at Municipal Arena, 301 W. 13th St.. Doors open at 8:30 a.m.
▪ 10 a.m. to 1 p.m. Tuesday March 2. To be held virtually.
Details are expected to be posted at kcmo.gov/budget.
Incentive reform
Also in his State of the City address Wednesday, Lucas said Kansas City should consolidate the disparate boards and commissions that recommend and grant tax subsidies for developers in an attempt to add more transparency and accountability.
Lucas has long said the city needs to rein in its generous tax subsidies.
“Today, each of those entities is interpreting economic development policies independently, often with different rules of engagement,” Lucas said. “As a result, many members of our community perceive disparities in priorities, don’t know which meeting to go to, may not know what’s going on.”
He said that would create more transparency for residents who might struggle to understand how the city gives away their tax dollars. He hoped it would also decrease developers’ ability to “shop” for incentives.
“No longer in Kansas City should we develop out of fear of falling behind. We should invest in development because we think it’s right for all Kansas Citians,” Lucas said. “We want growth; we want new jobs, but good jobs. … Simply put, we want to know that if the public is paying for development, that development is benefiting the public.”
The consolidation includes Port KC, which has previously argued it can’t be subjected to the same rules as other incentive-granting agencies because it is created under state statute.
In a statement to The Star Wednesday evening, Port KC President and CEO Jon Stephens did not directly address the mayor’s consolidation plan.
“I wholeheartedly agree with the Mayor that our goal should always be equitable growth for all of Kansas City. We have made progress, but must continue the work,” Stephens said. “How we structure policy and process is a complex endeavor, one that is already underway in many respects. It must be well thought through, and implemented in a way that accommodates the diversity of needs and opportunities.”
This story was originally published February 11, 2021 at 1:47 PM.
