By Jon A. Brake

Tuesday night the Manhattan City Commission passed a 2002 Budget of $55.2 million. In 2001 the Budget was $59.3 million. What appears to be a $4.1 million reduction could be all smoke and mirrors.

The staff changed many areas of the Budget to the point were a third party cannot look at the two budgets and get an answer.

City debt was commented on several times at Tuesday nights meeting.

City Finance Director Bernie Hayen said the debt was $67 million and then made an off-handed remark about last weeks Manhattan Free Press: "I don’t know where the $71 million figure came from." The Free Press gave a year-by-year accounting of the debt.

Manhattan citizen Don Rose told the Commission that the quality of his financial life had been going down. Rose had a copy of the Manhattan Free Press with the story about the City debt going up to $71 million over the past four years. Rose said that the only thing wrong with the Free Press was that their whistle was too small."

But, look how the Manhattan Mercury reported on Rose’s remarks and the Free Press story:

"Rose’s comments were aimed mostly at the level of debt the city has incurred in the past. He quoted the last edition of the Manhattan Free Press, in which it was stated that city debt has increased by $28 million in the last four years. City staffers contested the $71 million in estimated debt for 2002 in that article, and said it was closer to $67 million, bring the increase down to $24 million."

At the first break taken by the Commission Free Press Publisher Jon Brake confronted Hayen as he talked to Commissioners Ed Klimek, Mark Taussig and Brad Everett.

Hayen was asked: "Where in your presentation did you put the $6.4 million loan that the City make with the Kansas Department of Health and Environment? Hayen told Brake and the Commissioners that he did not know where to put it and he had called the State and they did not know either."

Last week, the July 17th meeting the City approved a $6.4 million loan from KDHE. It is printed on page 4 of this weeks Free Press.

The Loan is a debt and must be paid back to KDHE. The Total City Debt is $71.1 million.

Here is a memo given to the Commission about the 2002 Proposed City Budget and Proposed 2002-2007 CIP:‘

BACKGROUND

The budget is the single most important document the City will prepare in a given year. The annual budget serves as a policy document, financial plan, operations guide, and communications tool for the City. The six-year Capital Improvements Program (CIP) is also an important planning document that contains projects and equipment valued at more than $5,000 and having a life of over two years. The City Manager’s Budget Message provides a more thorough overview of the proposed 2002 Budget and is attached to the budget booklet to provide further important background information.

Since January, City Administration has been working to obtain input from citizens, advisory boards, departments, and other agencies regarding the 2002-2007 Capital Improvements Program and 2002 City Budget.

* Tonight, July 24, 2001, the City Commission will hold a public hearing on the proposed 2002 City Budget and the proposed 2002-2007 Capital Improvements Program and should approve first reading of a budget ordinance to adopt the 2002 City Budget and approve the Capital Improvements Program Resolution.

* On August 14, 2001, it is anticipated that the City Commission will consider second reading of the 2002 budget ordinance.

* By August 25, 2001, City Administration will certify the adopted 2002 City Budget to the Riley County Clerk, as required by law.

DISCUSSION

Since the budget work session held on July 10, 2001, City Administration has been working to establish a 2002 Budget which would at least hold the mill levy at its 2001 level or reduce it.

Proposed 2002 City Budget

On Friday, July 13, 2001, the proposed 2002 City Budget was published in the Manhattan Mercury. At this point, the City may not increase the budget or property tax levy of any fund. The published property taxes to be levied was $10,296,270 and the total published 2002 Budget was $55,996,145. The estimated mill rate for the published budget was 46.801 mills, an increase of 2.654 mills from the current rate.

At the July 10 Work Session, the City Commission provided input to City Administration to at least keep the mill levy at its current rate or possibly lower it. Attached is a delineation of additional cuts to meet that objective.

As a result of these recommended adjustments, the property taxes to be levied can be reduced from $10,296,270 to $9,708,319, a decrease of $587,951 (includes 1% delinquency factor) from what was published. The estimated mill rate has gone from 46.801 mills to 44.128 mills, a decrease of 2.673 mills. However, after the final valuation is determined this November, the final mill rate is likely to fluctuate somewhat. A proposed City Budget Mill Levy Summary is attached.

Including the adjustments mentioned above, the proposed 2002 City Budget is now a decrease of $3,834,955, or 7% over 2001. The proposed Budget of $55,276,539 is $719,606 lower than what was published.

The Utility Funds total $12,706,964, which are $1,895,054 less than 2001 or a reduction of 14.9%. There are no utility rate increases planned for 2002.

Proposed 2002-2007 Capital Improvements Program

The proposed 2002-2007 Capital Improvements Program is also included and serves as a planning document for future projects and equipment expenditures.

The total proposed 2002-2007 Capital Improvements Program is $87,609,353 for all funding sources with $67,817,231 of this amount coming from the tax supported funds. The proposed 2002 Capital Improvements Program has been included in the proposed 2002 City Budget. The total cost of the 2002 Capital Improvements Program is $7,993,600. The 2002 budget impact of the 2001 Capital Improvements Program is $3,924,200. About 21% of that impact is in the Utilities Funds to finance the short-term capital improvements recommended by the Facilities Plan and Cost of Services Study.

ALTERNATIVES

It appears the Commission has the following alternatives concerning the issue at hand. The Commission may:

1. Approve first reading of an ordinance adopting the 2002 City Budget, and approve Resolution No. 072401-A adopting the 2002-2007 Capital Improvements Program as proposed.

2. Modify the proposed budget ordinance and/or proposed CIP and/or Resolution to meet the needs of the City Commission.

3. Table the item.

RECOMMENDATION

City Administration recommends approval of the first reading of the proposed ordinance adopting the 2002 City Budget that has been modified from the July 13 publication and approval of the 2002-2007 Capital Improvements Program Resolution. City Administration believes the modified 2002 City Budget achieves the goals and expectations of the City Commission as a whole.

City departments have made considerable sacrifices in order to achieve these objectives.