The City of Wichita is fond of saying that it hasn’t raised its mill levy in 19 years. But the mill levy has increased in recent years, and what that tax revenue is used for has shifted.
In 2002 the Wichita mill levy rate was 31.845, and in 2011 it was 32.359. That’s an increase of 0.514 mills, or 1.6 percent. The Wichita City Council did not take explicit action to raise this rate. Instead, the rate is set by the county based on the city’s budgeted spending and the assessed value of taxable property subject to Wichita taxation. While the city doesn’t have control over the assessed value of property, it does have control over the amount it decides to spend.
(In a certain sense the city and its policies influence the assessed value of property in the city. If Wichita’s economic development policies were effective in attracting business and people to Wichita, values would rise, or not fall as much as they have.)
In addition, other taxes the city collects have risen. From 2002 to 2011 property tax revenue increased from $82.948 to $117.986 million, or 42 percent. We didn’t experience anything near that rate of growth in population or inflation. For the same period sales tax collections rose from $40.982 million to $54.919 million, or 34 percent. It’s true that these values have slowed in growth or even declined in recent years. But that’s a symptom of the problem: When tax revenue increases, so to does spending, and we become accustomed to a certain level. When revenue increases don’t keep pace with history, we find it difficult to make the necessary cuts.
The allocation of city property tax revenue has shifted in a troubling way. According to the 2010 City Manager’s Policy Message, page CM-2, “One mill of property tax revenue will be shifted from the Debt Service Fund to the General Fund. In 2011 and 2012, one mill of property tax will be shifted to the General Fund to provide supplemental financing. The shift will last two years, and in 2013, one mill will be shifted back to the Debt Service Fund. The additional millage will provide a combined $5 million for economic development opportunities.”
This shift has not caused the city to delay paying off debt in the sense that we are making our scheduled payments. But we need to recognize that approximately 2.5 mills that could have been used to retire debt has instead been shifted to support current spending.
Instead of spending this money on current consumption — including economic development spending that has produced little result — we could have, for example, used that money to purchase some of our outstanding bonds.
Or, we could have used that money to pay for some of the things for which we’ve issued bonds lately. An example is when we recently spent $400,000 on a project to analyze aging fire stations with the aim of planning future projects. Spending on fire stations — a capital asset — is the type of spending that is commonly financed with long-term debt. But an analysis to see if the spending is necessary– and what type of spending is needed — this is current consumption and should not be paid for by long-term debt.
The video below is of interest as it provides insight into the level of knowledge of some elected officials and city staff.