Two years ago, Chanute commissioners likely were the toast of the town when they decided to eliminate the vast majority of the city’s property taxes.
“It’s a big night” in the city’s history, City Manager Todd Newman said after commissioners voted to do away with an ad valorem tax levy of 36 mills. All that remains is an 8-mill levy to fund the city’s library.
The property tax raised about $2.2 million a year for the city’s general fund.
To offset that loss, Newman suggested city commissioners raise electric rates by 1 cent per kilowatt hour, or about $10 a month for most households.
That hike would bring utility revenues to about $1.6 million.
“That doesn’t fund the entire difference,” Newman admitted at their Aug. 15, 2023 meeting. Newman recommended commissioners fill that gap by tapping into the city’s utility reserves to supplement the general fund.
Because the city generates its own electric, water, gas and fiber-optic cable, the city has an untold advantage, Newman said.
Newman proposed his plan be implemented over the next three to five years.
Instead, Chanute commissioners approved the plan to begin in 2024.
Last month, Chanute commissioners voted to enact a similar increase as to last year’s, this time by 95 cents a kilowatt hour.
Commissioners said the second increase, which will go into effect Oct. 1, was needed to offset inflation, a decrease in demand for utilities, and the need for more revenue in the city’s general fund, noting a need to purchase radios for the city’s police and fire departments.
They should have seen this coming.
How you fund a city matters.
Because wealthy residents typically own homes, RVs, and land, they benefit the most when property taxes are cut.
As such, it’s no surprise to anyone that property taxes are a constant thorn in their side.
On the flip side of the coin, those with lesser means don’t have those concerns. They also can’t share in the joy of such tax breaks.
But when utility rates are increased, they certainly feel the pain.
