Proposed city budget $1.8 million out of balance

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Local News

August 9, 2019 - 4:42 PM

Iola City Council members will be asked to approve a budget Monday that spends roughly $1.8 million more than it will generate in revenues in 2020.

Rather than enduring spending cuts, “which would likely result in service impacts,” City Administrator Sid Fleming said in his budget message, that he recommends the Council use unencumbered reserves to cover the anticipated shortfall.

The proposed spending plan includes a 2.5 percent cost-of-living pay increase to each employee, other merit increases to those not already at the top of their respective pay scale, and a 12.5 percent increase in health insurance premiums.

The $29.9 million spending plan overshoots the $28.1 million the city expects to receive next year, through property and sales taxes, utility sales and other fees.

If the Council gives its approval, the city’s unencumbered funds for all accounts would drop from about $13.5 million to $11.7 million by the end of next year.

 

A FEW noteworthy elements:

The city’s water fund remains difficult to keep in balance. In order to cover costs in 2020, Fleming is encouraging the Council to eschew, for the second straight year, a $200,000 transfer from the water fund to the general fund; and to put no money into a fund for major capital projects down the road.

The fund also will be used to make a scheduled $600,000 water plant bond payment out of the water fund reserves. That payment was made with the city’s sales tax fund in 2019.

Fleming said the Council must once again look at raising water rates to further replenish the fund.

 

THE GENERAL fund, which is supplemented with utility revenues in order to keep property taxes lower than they otherwise would be, includes $7.6 million in expenditures in 2020, versus the $7.1 million in revenues. 

Part of the shortfall can be attributed to the lost $200,000 water fund transfer, Fleming said.

The city’s ad valorem tax levy will drop ever so slightly, from 48.5 mills to 48.2 mills.

That means the owner of a $75,000 home will spend about $415 in property taxes to support Iola’s general fund in 2020, down from $418 spent this year. (Note: The figure does not include taxes to support Allen County, USD 257 or Allen Community College.)

 

THE SPIKE in health insurance premiums will cost the city an additional $122,000 in 2020, Fleming predicted, to about $848,000.

The city pays $475 a month for each single employee plan, and $775 a month for family plans. Employees enrolled in family plans pay $250 a month.

 

ANOTHER  big ticket item still up in the air— and won’t be decided on Monday — is whether, for how long, the city will continue to use a portion of its sales tax proceeds to support Allen County Regional Hospital.

At issue is the annual $300,000 payment the city makes to the county, part of an agreement between the two entities to help facilitate the hospital’s construction in 2012 and 2013.

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