From 1999 to 2001 the City of Manhattan's Budget went from $52.1 million to $59.3 million.
During that same time the City Debt went from $55.3 million to $64.7 million.
With the election of two new City Commissioners last year the Budget dropped for the first time in more than ten-years. Last years Budget was $55.2 million.
New Commissioners Brad Everett and Mark Taussig with Mayor Ed Klimek have stopped the Budget increases.
The Debt continued to go up becaues of the items already contracted for by the old Commission. It now stands at $66.6 million.
Tuesday's City Commission Meeting on the 2003 Budget was different than meetings over the last ten-years. Words were used that never make it to the City Commission. Words like "No"; "Stop"; and Decrease.
A look at the latest Moody's Investors Service report will show why the City Staff and Commissioners Bruce Sneed and Roger Reitz have started take notice of what others have been saying for a long time. The City Debt is to high and the Budget is out of line.
Some items in the Moody Report are wrong. They think the City had "just under $2 million" in the General Fund as "operating surplus" at the end of 2001. The City had $1.3 million.
The report should be a wake-up call for the City of Manhattan. Citizens need to continue voting to bring in more Commissioners like Everett and Taussig.
Here is page 2 of the Moody Report:
SATISFACTORY FINANCIAL POSITION; NEAR-TERM PRESSURE EXPECTED
Moody’s believes that the City of Manhattan’s financial operations are satisfactory, yet vulnerable due to reliance on sales taxes and the Possible creation of a structural imbalance, caused by a reduction in the tax rate. Over the past three years, the city’s General Fund balances have averaged 16% of General Fund revenues. As of fiscal 2000, the undesignated General Fund balance totaled $1.7 million, or 13.1% of General Fund revenues. However, an operating deficit of $664,578 was incurred during the year due to a General Fund subsidy provided to the Riley County Police department (RCPD). Beginning in fiscal 2002, the RCPD will be financed from a property tax levy rather than General Fund subsidy, thus relieving this burden from the General Fund. Upon receipt of audited 2001 financial statements, officials expect an overall operating surplus and that the undesignated General Fund balance will increase to just under $2 million. Moody’s believes that fiscal 2002 operations may be somewhat strained due largely to a reduction in property taxes caused by a decrease in the tax rate. The majority of the city’s revenues are derived from property taxes (23.6%) and sales taxes (20%). Officials indicate that budgeting for sales taxes is now more Conservative, and that thus far in 2002, sales tax receipts are approximately $250,000 ahead of budget. Debt service comprised a significant 14.4% of expenditures in fiscal 2000, reflecting the above average debt burden as well as the faster than average rate of principal retirement. Moody’s believes that Manhattan’s ability to augment reserves is essential to future credit quality due to concerns of sales tax revenue variation and potentially reduced state shared revenue.
ABOVE-AVERAGE, YET MANAGEABLE DEBT LEVELS WITH SIGNIFICANT SPECIAL ASSESSMENT SUPPORT
Both overall debt burden, above-average at 6 .5% and direct debt burden, relatively high at 4.5%, have risen since the previous year. However, approximately 60% of all city direct debt is paid from special assessments, thereby mitigating the impact on the general levy. Also, the rate of principal amortization is above average with 65% of outstanding obligations repaid in 10 years. Over the next three years, the city intends to maintain its quarterly issuance pattern and issue no more debt than it retires each year, as dictated by a formal debt management policy adopted earlier in 2002. Consequently, Moody’s anticipates that the city’s debt burden will moderate due to continued tax base growth coupled with a level amount of debt outstanding.
Moody’s stable outlook is based on the expectation that the city will
increase reserves in the medium term in order to provide for short-term
Contingencies that may arise due to vulnerabilities in sales tax revenue
as well as state shared revenue. In addition, Moody’s anticipates that
the city’s debt burden will moderate over time due to the city’s resolve
to maintain a level amount of debt outstanding, while the tax base continues
to experience moderate growth.