By JONATHAN ZWEYGARDT
Hays Post
The Ellis County Commission got an early look and the county’s financial situation this week as they prepare to begin working on the 2024 budget.
County Administrator Darin Myers told the commission Tuesday that, for 2022, the county saw an increase of more than 4.5 percent in revenues, totaling a little more than $1 million.
"There are several reasons,” Myers said. “You have revenues from EMS, health (and) grants throughout all the departments (and) that collectively is where that $1 million comes from.”
Myers said a big reason for the increase is a reduction in spending. The county’s expenditures for the end of 2022 came in $1.3 million under budget.
“So, kudos to the staff, the department heads (and) elected officials to make sure we maintain collectively, the general fund under budget,” Myers said.
Of that $1.3 million, approximately $377,000 was transferred to capital reserve accounts.
“So essentially, we were still about $950,000 under budget last year,” Myers said.
If departments come in under budget for the prior year, they are allowed to transfer up to 50 percent of the amount they are under budget to the capital outlay fund. The fund is used to purchase equipment for departments.
The county will also continue increasing the amount of money set aside for the special highway road and bridge fund.
Myers said three years ago the county set aside just less than $400,000 per year and that has increased each year surpassing $4 million in 2022. The county transferred $1.6 million to the fund and also received approximately $2.8 million in additional federal funds from a build grant for the Northwest Business Corridor project reimbursement.
“That's significant for that fund, to be able to maintain increased minimum balance, but also just start doing more projects into the future,” Myers said.
Myers said the county is benefitting from an increase in the interest rate.
Through the county treasurer’s office investments, the county saw an increase of $210,000 from 2021 to 2022.
“That's because of the changes though, where the funds are invested, but also the interest rates that have gotten better,” Myers said.
Myers added that through the first three months of 2023 the county has already collected $355,000, a 50 percent increase from last year’s total. They estimate the county could see $1.3 million in revenue from those investments this year.
“If those rates and investments stay the same. It would be about three mills that would offset property taxes,” Myers said.
Myers also updated the commission on the revenue generated from the two quarter-cent sales taxes. According to Myers both funds increased by more than 4 percent.
“One is up year over year by 4.6 percent. And the other one is up by about 4.9 percent,” Myers said.
He said he does not believe that will continue at the rate in the future.
“I don't think we can plan on 4.5 to 5 percent annual growth and sales tax. These last couple years have been good, partially probably because of inflation, the stimulus money that's been out there, the ARPA funds, people are spending more,” Myers said.
2021 was the first full year the county collected a full year of sales tax under both taxes. The current sales tax is scheduled to sunset in 2030.
The county collects the entire quarter-cent for health services and the general sales tax is divided between Ellis County and the cities of Hays, Victoria, Ellis and Schoechen.
Commissioner Michael Berges asked Myers how the county plans to counter the possibility of losing the sales tax on food.
Kansas lawmakers are working on legislation that would not only eliminate the sales tax collected at the state level on food, but also block local entities from collecting those taxes.
“To me, it's counterproductive for our state legislature,” Myers said. “when they when they say one thing, about we want to do whatever we can to help lower property taxes, but then when a county passes a sales tax to help offset those property taxes, they then take away our sales tax as well.”
Myers touted the county’s pull factor that helps to offset property taxes.
“We do have that pull factor, which means a lot of people come in as a regional hub to Ellis County, spend money stay play, eat (and) shop, and more of the sales tax that we collect comes from those who visit Ellis County,” Myers said.
Myers said as the commission works through the 2024, they will have to take into account several factors.
If it aims to keep the ad valorem tax collections the same as 2023, approximately $17 million, the county would likely reduce the mill levy rate.
But, Myers cautioned, that could have a negative impact.
“If we keep the revenues same, but all of our expenses for contractual services, for commodities (and) for capital, all those go up, you start to get where eventually you're going to lose your ground, and you're going to start going negative,” he said.
Last year, valuations saw an increase of 13 percent, Myers said. Appraiser Lise Ree said next year’s valuation is approximately 10 percent. But Myers said the five-year historical trend is approximately 3.7 percent.
Myers said if the sales tax is allowed to sunset in 2030 it will start cutting into the county’s unencumbered rollover cash. The county’s budget policy states that the county should attempt to roll over 25 percent of that budget to the next year.
For the $29 million budget this year Myers said they are million away from reaching that budget margin.
He said that each year they are getting closer to that goal and it could be reached by the year 2029. The year before the sales tax is allowed to sunset.
“Once 2031 comes around and the sales tax doesn't get re-voted on again and reallocated right away within that next year,” Myers said, “we're already starting dipping into how much unencumbered cash we have at the beginning of the year.”
He said that without the sales tax, the rollover unencumbered case will be cut dramatically.
“As it progressively gets worse, the county would not be funding for operations without making significant cuts again,” Myers said.
Myers said as they begin preparing for this year’s budgeting process he urged the commission to look at how the decisions they make this year will affect the county for the next several years.
The commission weigh options with employee salaries and benefits, departmental spending and the amount of funding the county provides to each outside agency.
Next week, the commission is set to provide a budget direction for each department and for those outside agencies.
Myers said an initial draft budget will be provided to the county commission.