CORRECTION: A previous version of this story inaccurately stated the vote count on the resolution. This version has been updated to reflect the correct vote count.
The city of Mission is discussing raising its local property tax rate for the first time in nearly a decade to help meet a projected $900,000 budget shortfall next year.
Rising costs for city services, a decrease in tax revenues in recent years — driven in part by the COVID-19 pandemic — as well as reimbursements the city has had to pay recently to big box retailers in “dark store” settlements are all contributing to the budget hole, staff told the city council last week.
The city council ended up approving a resolution on at its regular meeting on Wednesday, July 19, laying out the city’s intention to exceed the state-mandated revenue neutral rate.
That resolution also includes a proposed mill levy rate ceiling next year of 18.500, which, if ultimately approved, would be a more than 2-mill increase over the current mill levy rate of 16.374.
Spending favored by residents eats up revenue
City Administrator Laura Smith told the Post via email that the budget shortfall is the result of “too many things vying for the same pot of money.”
Street maintenance eats up 40% or more of total property tax revenues each year, she said, and those costs have been climbing. But the city has avoided cutting those services because residents consistently say they support expenditures on maintaining roads.
The city has also steadily seen revenue from local property taxes decline since the last mill levy rate hike in 2015, Smith said.
Mission does not have revenues to sustain spending on streets while also maintaining a 25% general fund balance, keeping up with staffing challenges and purchasing new equipment for basic services, Smith told the Post.
Tax revenues have declined
The city’s mill levy rate has steadily declined since 2016, leading to an estimated total loss of $1.3 million worth of property tax revenue in that time.
That decrease of 1.645 mills from 2016 to 2023 is due to “fluctuating values within (tax increment financing) districts, changes in reporting in the state budget forms and changes in final assessed valuations,” according to city documents.
Smith told the Post that minor fluctuation happens annually because assessed values aren’t finalized until after the deadline to submit the budget to the county. Still, these fluctuations are typically insignificant, she said.
The 1.645 mills loss is compounded by revenue losses from the pandemic, unanticipated sales tax refunds and “dark store” settlements totaling about $150,000 that the city has paid out to Hy-Vee and Target, Smith told the Post.
“We’re at that point where we have to have a serious conversation about what do we, either, remove from our budget or slow down or progress on if we’re not willing to look at how do we fund that,” Smith told the city council.
The 18.500 mill levy rate is not set in stone
Smith told the city council that the city is able to set a lower mill levy rate when the city council adopts the budget during a special meeting on Sept. 6.
In the interim, the city council can discuss mill levy rates of up to 18.500 because that was the figure included in last week’s resolution to exceed the state-mandated revenue neutral rate.
As for how this would impact residents, the city outlined scenarios based on the average Mission home’s assessed value in 2023 of $310,935.
A 2.126 mill increase to 18.500 mills would cost the average homeowner an additional $9 per month.
Overall, such a rate increase would mean the average Mission homeowner would pay $662 a year in city property taxes, according to city documents.
In addition, residents also pay taxes to other local taxing jurisdictions, including the county and the Shawnee Mission School District, which set their own property tax rates.
A mill levy rate increase does not solve the problem
City staff developed three different budget scenarios, presented to the council Wednesday.
In all three scenarios, the city is left with a budget deficit next year.
The first scenario would hold the mill levy rate steady at 16.374 mills, resulting in a budget deficit next year of $895,527.
A second scenario envisions a mill rate increase of slightly more than one mill to 17.500 mills, resulting in a slightly smaller budget deficit of $787,793.
The final budget scenario uses the 18.500 mill levy rate, still resulting in a budget deficit of $661,750.
“A mill levy rate does not alleviate those pressures (of too many priorities), but it helps us to make up ground instead of continuing to lose ground,” Smith told the Post.
Three councilmembers vote against the resolution
Councilmember Debbie Kring pressed city staff about what the city is doing collectively “to not put every burden on the taxpayer.”
“The only people that are impacted by this are the citizens,” Kring said.
She, fellow Ward 3 Councilmember Kristin Inman and Ward 2 Councilmember Lea Loudonwere the three dissenting votes on the resolution.
Smith said, in response to Kring, that the city takes an annual look at ways to cut costs, including delaying the purchase of capital equipment and intentionally holding staff positions vacant.
Mayor Sollie Flora said she believes the city can still look at funding resident priorities like street maintenance through a mill levy increase and at ways to expand on property tax relief.
What’s next:
- A final review of the budget by the finance and administration committee is scheduled for Aug. 2.
- The city will hold a work session and community input session on the proposed 2024 budget — which include the proposed property tax increase — on Aug. 16.
- There will be a special city council meeting on Sept. 6 for a public hearing and consideration of adopting the final 2024 budget, which is about a month ahead of the Oct. 1 deadline to submit a budget to the county.
