By City Commissioner

Mark Taussig

This budget proposal is offered to my fellow Commissioners, City staff, and the citizens of Manhattan to layout my position on the 2002 City Budget. The first 2002 budget proposal presented to the Commissioners included an unrealistic increase of 19 percent in the City's portion of our property taxes. The second proposal, the one we have now, offers a still too high 12 percent increase in our City property taxes.

I am proposing that we look at the budget from a little different perspective. I propose that we first determine what we can afford and then develop a budget that is within our means.

I believe that I am representing a vast majority of our tax payers in Manhattan when I propose that we must hold the line with tax or fee increases. That is why I propose that our 2002 City budget only allow for a 2 1/2 percent increase in what the tax payers pay for their City property taxes. This equates to a 2.25 mill reduction of our present 44.15 mill levy and an $869,000 bite out of the City staff proposed tax increase.

Our decisions as Commissioners should reflect the voice of the community and the status of our economy. I offer here some points we should keep in mind when considering the level of taxes that we approve to take from the citizens of Manhattan.

• The most recent City election nominated, by a wide margin, two candidates that clearly campaigned for slowing down City spending. I intend to work toward the promises I made during the campaign. I hope that there are two other Commissioners to join with me in proposing that we keep City spending at a level our citizens can afford.

• The City has been increasing our property taxes more than 10 percent a year for the past several years. In contrast, the cost of living has been increasing at around three to 4 percent. Our incomes are simply not keeping up with the tax increases. These tax increases have been particulary difficult for those on fixed incomes, our elderly, and our families.

• Tax increases are hard on businesses. It takes funds they intended for marketing, inventory, or capital improvements and gives them in our case to the City. It makes it more difficult to compete against businesses with lower tax rates. The taxes take money out of the local economy, money that could be spent in Manhattan stores. Could this be part of the reason our sales tax revenues are flat? In recent years millions of dollars have been paid to out-of-town consultants and businesses. And when we talk about attracting new business or industry, our high taxes are surely not considered to be an asset of the community.

• High taxes make area houses more expensive. Entry level employees have a difficult time finding affordable housing, in part because of high property taxes.

• Families and businesses are moving out of town to reduce their tax burden.

• Economic projections are for a slower economy, perhaps in the 2 percent range. The growth of City government should reflect the economy of the community. We must be mindful that there has never yet been a City known to mankind that has been able to tax itself into prosperity.

There are many areas that we must look at to reduce the budget. These reductions will impact salaries, staffing levels, debt, capital projects and elimination of nonessential programs.

2002 salary increases should more closely match the raises in the community and the economy. The average Kansas income in Kansas increased 1 percent from May 2000 to May 2001. Kansas State University employees received a 2 1/4 percent increase this year. I propose a 1 percent cost of living increase with a 1 ? percent merit increase for a total of 2 ? percent for City employees.

• Establish a hiring freeze for the first six months. For the following six months, the City Commission must approve the filling any full time (.6 or more) position.

• Reduce budgets for contractual services and commodities to reflect only the essentials.

• Hold off on the purchase of major vehicles or equipment in 2002 from any fund source unless it is considered essential to the operation of the City.

• Research the potential cost benefits to privatize certain areas within City government. It may be that when considering the employee costs, equipment costs and overhead costs we find that private industry can provide the same basic service for less.

• Consider dropping certain programs that are not vital to the operation of the City.

• Assume no new debt. Right now a significant part of our budget is directed at paying off debt. Debt is a mechanism that allows us to buy something now that we cannot afford so that we can pay it off later when we still cannot afford it. There are two main problems with debt. First, it takes an already expensive project and makes it up too twice as expensive because of financing and interest payments. Then it assures that we must raise taxes in the future to be able to pay off the principle and interest. The City debt payments increased 31 percent from the 2001 projected budget to the 2002 budget for a total of $7,644,050. Just think about what we could have purchased with the $2,245,600 interest payment or the taxes that could have been saved. There is additional debt recorded in some of the Special Revenue Funds.

• There are several Special Revenue Funds that receive transfers of City tax revenues that must be considered for reductions. They include the Employee Benefit Fund, Fire Equipment Reserve Fund, Library Funds, Park Development Fund, Riley County Health Department, and the Riley County Police Department.

• There are several projects in the General Operating Fund for Outside Services that must be considered for reductions. They include the Manhattan Center for the Arts, Social Service Contracts, Municipal Band, Wolf House, Taxi Program, and Neighborhood Grant Program.

• There are several of the Capital Improvements Program items that could be tabled for future years. Here I will offer a proposal to save at least $600,000 by modifying the Kimball Avenue street improvement project. The current proposal has a total budget of $2.6 million dollars which includes approximately $1 million from KDOT, $250,000 from the Special Street and Highway Fund, and $1,350,000 on the City credit card (debt). Just not getting into debt for this project could save up to $1 million dollars in interest payments down the road. The project as currently proposed includes new pavement, intersection improvements, significant grading, extra turn lanes, retaining walls and a traffic signal.

By taking a less severe approach we can still get the new street surface, new curbs, traffic signal and intersection improvements. Our cost savings is in leaving out the earthwork and the extra turn lanes. I received a budget estimate from a contractor that believes we can construct the entire project for around $1 million. If we can get KDOT to assist with the new traffic signal and intersection improvements, it is possible we could get our costs down as low as $500,000 to $600,000. This translates into an approximately $2 million savings plus around $1 million in interest savings if we pay cash. While this proposal does not offer an immediate reduction of our CIP, it does offer the opportunity to save several million in tax payer dollars.

This 2002 City budget proposal may be a little radical but I believe that we are in very difficult economic times and difficult times call for radical measures to protect the economic health and vitality of our community. There may be other options or parts of this proposal that just will not work but hopefully it is a starting point. I hope that my fellow Commissioners, the City staff and our citizens seriously consider this proposal. I also hope that the USD 383 School Board and the Riley County Commission take the same close look at what we as a community can afford before they finalize their budgets. I welcome your comments, criticisms and solutions to keeping City spending at a level we can afford.

Respectfully submitted,

Mark Taussig

Manhattan City Commissioner