CHANUTE — Chanute City Commissioners have taken a previously unheard of approach to funding the city’s 2024 budget, by eliminating property taxes as a revenue source for the general fund.
In what City Manager Todd Newman described as a “big night” in the city’s history, commissioners approved the new spending plan by doing away with an ad valorem tax levy of 36 mills.
The maneuver will save the owner of a $100,000 house roughly $400 annually, Newman estimated.
To make up for the $2.2 million in lost revenue, commissioners subsequently approved a 1-cent-per-kilowatt-hour increase in electric rates.
Newman estimated the higher electric rates — expected to cost the average customer about $10 more a month — will bring in about $1.6 million annually.
“That doesn’t fund the entire difference,” Newman noted, but brings it close enough that commissioners can tap further into utility reserves to supplement the general fund.
“$2.2 million sounds like a lot,” Newman added, “but in reality, it’s only about 2% to 3% of our total budget.”
The maneuver is possible, Newman explained, because Chanute owns its major utilities — electric, water, gas and now fiber-optic cable.
“All of them contribute to the general fund,” he said. “That’s a huge advantage for cities like us.”
Commissioners at first were wary of Newman’s proposal, which took shape following a budget workshop earlier this year.
The initial idea was to phase out the property taxes over a three- to five-year period.
“But as we worked along, the commissioners favored a plan to give immediate savings instead of saving a little from year to year,” he said.
Newman also noted property taxes aren’t eliminated entirely from the city’s spending plan.
Commissioners retained an 8-mill levy to fund the Chanute Public Library.
That means the owner of a $100,000 home will spend about $92 annually to support the library.
