Toward the end of the City Commissioner’s Feb. 7 study session, Marcus Rothchild, the city’s chief financial officer, presented the status of the city’s 2021 financial report on where Abilene is today and compared some of the statistics from previous years. The report covers taxes, revenue, cash balances and reserves.
For Total Property Assessment, definition, the Total Base has increased since 2014 with the exception of a decrease between 2018 and 2019. Property Assessment has increased from $57,989,051 to $58,933,906.
“This steady growth is really positive for Abilene, and we really hope it continues in the years to come,” Rothchild said.
The tax rate has decreased over the past two years, which has reduced the mill fee. Last year’s decline, Rothschild said, was due to revenue neutrality. The same dollar amount of taxes was levied, but decreased the total number of mills. He said the property assessment increase allowed the city to reduce the mill rate from 51,003 to 50,187 for the 2021 budget.
Rothchild then presented an infographic that breaks down the single dollar property tax breakdown. Of one dollar, 34 cents goes to Dickinson County, 30 cents to the City of Abilene, 29 cents to the Abilene School District, three cents to the Abilene Recreation Commission, one cent to the Memorial Health System, one cent to the State of Kansas, Extension District, and the Cemetery District.
The next presentation slide showed another infographic breaking down a dollar the city earned from property taxes. Of one dollar, 58 cents goes to the general fund, 16 cents to the Abilene Public Library, 12 cents to the debt service fund, eight cents to the capital improvement fund, four cents to fire apparatus and two hundred at Abilene Municipal Airport.
In terms of the city’s total revenue, property tax, sales tax, and utilities provide three-quarters of the city’s total revenue. Transient guest tax, state distributions, and special assessments each provided one percent. The franchise fee provided seven percent. Miscellaneous provided four percent.
For sales tax collections, 2020 saw a 9% increase in general sales tax that year. 2021 increased even more, increasing another 12% from the nine of 2020. In the 12%, the sales tax on city purchases increased the percentage of the general sales tax by 11%, and the tax of sale on Internet purchases contributed 1%. Internet sales increased by 14% compared to 2020.
“When people shop online, the city at least gets that sales tax here, and that’s still really helpful given the current situation (COVID-19) where people aren’t traveling as much,” Rothchild said. “It’s actually helped us take out a few extra sales tax dollars over the last two years.”
For franchise fees, 2021 saw an increase in these fees of $55,000, driven by gas and electric utilities. Cable and telephone continue to decline, Rothschild said. Phone revenues were $1,740 lower from 2020 to 2021. Cable revenues were $687 lower from 2020 to 2021.
The transient guest tax has increased from a low level in 2020 to 2021 with an increase of 8%.
“Julie (Roller-Weeks, Director of the Abilene Convention and Visitors Bureau) always does a great job of cutting expenses,” Rothchild said. “She’s working less and finding new ways to continue putting Abilene on the map, and she’s done a great job over the past two years.”
For utility charges, water and sewer revenues have increased to almost 14% in 2021. In the chart provided by Rothchild, with the start year of the chart being 2014, revenues have fallen to ‘ in 2018 and then reached the highest point of the chart in 2021.
The transition from revenues to expenses, staff and operations represents 68% of the city’s total expenses. Down payment, contractual for legal and engineering, debt service and the 2019 bond project. Rothschild said expenses for the 2019 bond project are decreasing since the city has completed the majority of the project.
Looking more closely at debt service, the city paid $925,000 in principal and $371,000 in interest paid. Rothschild said part of the costs were paid by the sewage fund and the water fund for their related bond issues.
Earning $407,000 at the end of 2021, $304,000 was taken from the equipment reserve, leaving the reserve with $103,000 through 2022. The street department had approximately $85,000 in expenses, consisting mainly into lease payments on equipment. Rothschild said with the equipment reserve setup, once it is healthy enough, the city will be able to pay for leases and equipment in one payment and not earn interest. The police department had $128,000 in expenses last year. The fire department had $79,000 in expenses, which includes equipment such as hoses, a skid unit, and damaged vehicle expenses. The Parks Department spent $10,000 on a zero-turn mower.
In total, the total cash balance, consisting of 25 funds, was $9.2 million. The general fund makes up the largest portion of the total cash balance at 26%. Rothschild pointed out in the balance chart that the Department of Water and Sewerage fund grew in 2019 and 2020 from “frightening levels” in 2018.
As 2022 approaches, the general fund starts at $561,482, “significantly higher” than Rothchild predicted.
Rothschild then discussed the city’s long-term financial plans. The water gear stash, especially in 2018, nearly disappeared, dropping as low as $3,000. Rothchild said the city has not used that fund since then. Now the fund is “sound enough,” Rothchild said, to transfer money into the general equipment reserve for purchases the city has made for water utilities.
The capital improvement fund decreased in 2021, so the 2022 budget was adjusted to increase the fund, Rothschild said. The fund is lower than expected due to renovations from City Hall to the Police Department.
For utility cash balances, Rothschild said the city spent $715,000 of the $910,000 water portion of the 219 bond issue for the water treatment plant upgrade. water. The city saved $195,000 on many project estimates, with the upgrade costing less than expected. The $195,000 will be placed in the water fund for future use.
Reviewing the sewer cash balance, Rothschild said the city did not use much of the 2019 bond earmarked for sewer upgrades on the 8th Street project. The rest of the bond money will be used this year for other sewer improvements, suggests Lon Schrader, director of the public works department.
As Rothchild then presented the balance and reserve policies, he said the bond and interest fund had fallen “slightly” lower than the policies allowed in 2021. The fund must remain above 10% of the debt obligation and interest payment expected for the coming year, and the fund is down a little below 10%, or $50,000 for 2021.
“I think I probably budgeted a bit too high the projected revenue for our special assessments and didn’t leave enough room for potential late payments or those not being paid during this year,” did he declare.
Rothschild said he expects the fund to top 10% by the end of 2022 and will make adjustments for the 2023 budget.
The target general fund balance, on the other hand, is above the amount needed at $2.382 million. The policies read, Rothchild said, the general fund’s target balance should not be less than 15% or more than 25% of projected current-year revenue for the fund. For 2021, the amount of the fund should have been between $769,000 and $1,281,901.
“I think it’s something where we look at the upcoming budget. When we budget them at the beginning, we budget our staff based on the presence of each member of our team throughout the year. Unfortunately, this has not always been the case. If that day comes, then our budgets are going to tighten very quickly, and I’m going to be very nervous in December. On a positive note, this gives us a bit of a head start for the year ahead, but I think we could actually be a bit more aggressive and tighten up how we look at this budget this year.