In an effort to head off a county budget that will become unsustainable within the next five years, commissioners have begun to discuss where expenses or even programs could be cut back.
County commissioners left an afternoon-long budget retreat in late March with a consensus to look hard at where cutbacks or “efficiencies” could be made to stave off a future in which the county lacks enough money to meet the emergency requests that arise for unexpected expenses.
Less clear was what the direction commissioners might go on the taxing rate. Some suggested the starting point be a mill levy that is unchanged, while others preferred a quarter-mill rollback.
The meeting last month was the annual opening of the county budget-writing season. Commissioners listened to a staff analysis of revenue and expense trends and projections for 2025 through 2029.
What is putting pressure on the county’s finances?
County Manager Penny Postoak Ferguson and Budget and Financial Planning Director Robin Symes opened that March meeting with grim news.
A combination of inflationary pressures, an aging demographic and a projected leveling of property values and sales tax revenue are combining to put the squeeze on county resources.
For the next budget, “it’s tight, but I do feel it’s doable,” Postoak Ferguson said.
Although the county might get through the next budget year, she said it is important to focus on what may happen further out.
“You can’t solve ongoing issues with one-time things and have it be sustainable,” she said.
Analysis of a flat mill levy and a quarter-mill rollback showed revenues decreasing in 2026, 2027 and 2028 to the point that little or none would be left for unplanned expenses after the reserves restricted for such things as public safety are subtracted.
A flat mill levy, for instance, would leave only $300,000 in 2026 for requests for additional resources. With a mill levy rollback, zero dollars are forecast for both 2025 and 2026.
The calculation for the revenue neutral rate was also dire.
The revenue neutral rate is the tax rate that figures in changes in property values and proposes a mill levy that generates the same dollar amount of revenue as the year before. County officials in Kansas are required by state law to announce each year if they will exceed the revenue neutral rate, and it is a figure often mentioned by conservatives and proponents of limited government.
If Johnson County set next year’s levy using the revenue neutral rate, then it would collect $23 million less than this year in property taxes. Even adjusting for new growth, the county would still be short $20 million in property tax revenue.
Property values normalizing
Local governments have been whip-sawed by inflation and the COVID-19 pandemic in recent years, but the spike in assessed valuations seems to be leveling off, with some pockets of exceptions, according to the county’s analysis.
Values the past few years have shot up 10-12%, but now seem to be headed back to a more normal 6%, Symes said.
That accounts for property taxes, but meanwhile, other types of revenues like motor vehicle taxes, investment interest and recording fees have remained flat or shown little growth.
Sales tax revenue is also expected to decrease as more areas become annexed and there is less unincorporated area to tax from, Symes said.
How about spending?
On the expense side, county officials took steps a year ago to fill vacancies in its staff and law enforcement operations by adjusting pay scales.
The commission also committed to building a new $113.5 million Health Services building.
There is also a proposal under consideration to buy a Lenexa hotel and convert it to a homeless shelter.
Commissioners have also recently begun to explore other ideas, with pilot projects for landlord incentives, eviction mediation and low-income tax rebates. However, those play no factor in long-term budget projections.
Postoak Ferguson also noted that a new file management system for the district court that is being required by the state judicial branch will cost more than $3 million each year. That new system is being phased in in all Kansas counties and would replace Johnson County’s judicial file management system.
Hard choices
Although the school districts, cities and community college taxing districts make up a larger part of a resident’s property tax bill than the county, library and parks, county services are more likely to touch everyone.
That will make commissioners’ decisions about where to save money difficult, they said.
“I would say every one of the services we provide is wanted and needed,” said Commissioner Jeff Meyers. “I keep waiting to hear, where is the service somebody thinks we should not be providing?”
Commissioner Janeé Hanzlick expressed concern that the commission not make cuts to life-saving emergency services.
“If there are efficiencies, let’s find them but not by putting people’s lives in danger,” she said.
Commissioner Becky Fast pointed out the ever-growing size of the county budget from $1.2 billion her first term to $1.71 billion now. Given the size of the county budget, she suggested an efficiency audit be done by an outside service.
Commissioner Charlotte O’Hara said she is concerned about the cost of the new Health Services Building and the homeless shelter idea.
“I’m just very concerned that we’re really not being realistic as to what this is going to cost,” she said of the shelter.
Commission Chairman Mike Kelly said money-saving measures will have to take place, even if the commission decides to keep the same levy and not roll it back.
“We have our work cut out for us,” he said, “but I’m sure we’re going to do it.”
