The Girard City Council on Monday found a happy medium in its ongoing budget discussions.



By unanimous vote, with council member Sandra Hallacy absent, the council approved publication of the proposed 2009 budget with a 3.463 mill levy increase and scheduled a hearing for 5:30 p.m. Aug. 11 to receive comment from the public.

The Girard City Council on Monday found a happy medium in its ongoing budget discussions.

By unanimous vote, with council member Sandra Hallacy absent, the council approved publication of the proposed 2009 budget with a 3.463 mill levy increase and scheduled a hearing for 5:30 p.m. Aug. 11 to receive comment from the public.

This was the third time in as many weeks the council has struggled with its budget for the coming year. Accountant Terry Sercer presented a first draft of the budget at the council's July 14 meeting.

As initially presented, the '09 budget contained an almost 40 percent increase in the levy, from 43.994 mills this year to 60.385 mills. The proposed increase would be used to purchase needed equipment for the city's fire and street departments, the cemetery and the golf course.

If adopted as published, the final rate for 2009 would be 47.457 mills.

“Everything here is what we need to make it through 2009 and do our best for the community,” Gary Emry, city administrator, said at that meeting. “We may have some items in there that may not be where we end up, but we wanted to have a starting point.”

The council balked at such a significant increase at one time and asked Sercer to refigure the budget with 10-mill and 12-mill increases. Last week, Sercer was again instructed to decrease the levy proposal by using lease-purchase agreements instead of outright cash purchases to acquire the needed equipment.

“I took all the capital outlays and put them over three-year, four-year, five-year and six-year amortization,” Sercer said Monday.

Depending on the length of time of the lease-purchase, the levy would increase ranging from about 2 mills to almost 5 mills. A 5-mill increase would raise taxes on a $100,000 home by about $55 per year.

Sercer recommended the council accept and publish the greatest increase, with the idea that it can be decreased later, before the final budget is adopted. Once published, the levy can be decreased by any amount the council wanted. But it can't be increased if council members decided they hadn't allowed for enough taxes to meet all the city's needs.

“I think we can pass whatever we want to tonight,” council member Richard Cussimanio said. “This will get us on with our budget and going. There's a couple areas I think we can still work on from there.”

Emry advised the council not to stretch the lease-purchase agreements over too long a period of time. His concern was, in the near future, there could be additional city-owned equipment needing to be replaced. The city could find itself in an economic pinch, trying to replace buy additional equipment while still paying off items purchased through the 2009 budget.

“Obviously, I lean toward the higher mill levy,” Emry said. “I like the shorter amortization.

“The sooner we get out of debt from the capital outlay, the better. I just know there's going to be equipment purchases that are going to be needed in the next three to five years.”

The 3.463 mill increase would raise enough money to retire the lease-purchase debt in four years, Server said.

Additionally, retiring the debt would free up money to establish a capital reserve fund, Sercer said, something he recommends to all the cities he works with. Allowed by Kansas statute, the council could transfer additional money to the reserve fund at the end of each year, dependent on the final fiscal audit of the city. The money would accumulate and could be used to finance large equipment purchases, forestalling the need for additional tax increases in the future.

“I like the idea of the 3.4 (mills) myself,” council member Sharon Mattson said. “I think we could work within that rate.”

Council member Daniel Smith disagreed, preferring instead the higher rate.

“With all the projects we want to do,” Smith said. “I understand what we're doing, trying to please the taxpayers year after year after year.

“But the bill's going to have to be foot by somebody. I don't see where we can strap ourselves so much.”