City budget to call for ‘tough decisions’
De Soto City Administrator Greg Johnson got a surprise Friday when he received assessed valuation numbers from the Johnson County Appraiser's office.
The July 1 assessed valuation was the last available to Johnson for preparation of the city's 2004 budget. Amazingly, in a city that added a neighborhood of homes last year, De Soto assessed valuation actually decreased more than $600,000, making valuation $44.6 million.
"That's just one of the things that makes this budget a nightmare," Johnson said. "It's not the biggest by any stretch of the imagination."
The decline in the city's total assessed valuation resulted from the timing of abatements for Mr. Goodcents, Rehrig Pacific and Intervet, said Jeremy Smoot, public information officer for the Johnson County Appraiser's Office. The companies had applied for abastements, but they hadn't yet completed the approval process when last year's city budget was approved, he said.
Other items Johnson said the Council would need to consider in budget hearings that started Wednesday were:
¢ The Kansas Legislature's decision to cut the amount of sales taxes it shares with cities as it dealt with the state's budget crisis.
¢ Errors in the city's 2003 budget forms sent to the state that shortchanged the city's law enforcement and fire department funds by $155,000.
¢ Few past efforts to build contingency fund reserves.
¢ City accounting changes that removed significant revenue sources from its general fund.
The accounting changes were made for sound, fiscal reasons, but they would make balancing the city's 2004 general operating budget difficult, Johnson said.
The new accounting procedures were a result of the City Council's decision of last year to adopt a capital improvement plan, which both identified projects and the revenue streams that would pay for them. Therefore, the city administrator said, excise tax that pumped up the general fund in previous years ($204,000 this year), was now dedicated to project funds for identified street improvements.
Similarly, Johnson said the $100,000 to $140,000 in Community Development Block Grant the city received annually was counted as general fund revenue in the past, although the city's required 10-percent match was ignored.
Johnson declined to say what the many challenges would mean to the 2004 mill levy, which was 23.861 mills in 2003 for that part of the city served by the fire department.
"It will be extremely difficult to provide our current level of services and keep the mill levy the same," he said. "The Council will have tough decisions."
Past errors, such as the mistake in reporting the true 2003 law enforcement and fire department budgets to the state compounded difficulties for 2004, Johnson said. Although last year's budget spreadsheets suggested the law enforcement budget received $162,000 in property tax support, the official forms filed with the state listed $62,000. A similar mistake in the fire department fund shortchanged that department $55,000, Johnson said.
To make matters worse, the Council contracted an added level of service with the Johnson County Sheriff's Office that increased that budget by $84,000 annually.
The net effect would be to further erode already inadequate contingency funds for those departments, Johnson said.
Johnson's early efforts to rationalize city financing by making revenue sources match up with intended uses seemed to suggest the city had a large amount of unencumbered funds on hand. Mayor Dave Anderson told De Soto Chamber of Commerce members in January the amount could be as much as $1 million.
Unfortunately, that wasn't true, the city administrator said. There was that amount of money in funds used for purposes other than its proper designation, but ultimately all was spoken for, he said.
"The only large pool of money the city has is the $5.2 million in the utility fund from the sale of the electrical system," he said.
There was good news amid all the depressing numbers, Johnson said. The 3/4-cent sales tax voters approved in October 2001 was performing as expected. The Council issued $2.5 million in bonds for street improvements based on revenue expected from the sales tax.
"We have the revenue to meet bond obligations," he said. "Capital improvement projects will continue."