Budget

Budget 2022 Primer

Posted by Bonnie Limbird

The information below is meant to provide you with some factual information regarding Prairie Village’s proposed 2022 Budget. If you have additional questions, please reach out. 🙂

Revenue Neutral Rate

The Revenue Neutral Rate (RNR) is the tax rate in mills that would generate the same property tax revenue in dollars as levied the previous tax year using the current tax year’s total assessed valuation. To exceed the RNR means to request a tax rate in mills which is higher than the RNR rate, but not necessarily an increase from the current rate. For Prairie Village, the City is not asking to increase the 2021 mill levy rate of 19.321, but to keep the rate flat.

As an example: if the price of a piece of paper increases, you pay more in sales tax. It’s not because the sales tax rate changed but because the price of the paper itself increased.

Balancing the budget and also budgeting to return to the 25% minimum fund balance

A balanced budget is defined in the City’s financial policies as operating costs not exceeding revenues. In 2022, the City’s General Fund revenues are budgeted at $23m and operating expenditures (which includes departmental expenses and debt payments) are just under $20m. If there exists a surplus of revenue and fund balance above the Council’s 25% minimum fund balance target, the City has traditionally budgeted to spend that overage typically on long-term capital projects such as streets and parks. (See page 4 in the budget document for these figures.)

Typically, the City will not spend 100% of the budget and does not anticipate spending the entire $1.7m shown. However, due to State budget law the City cannot spend without requesting authority to do so, so historically (and this year) the City has requested this full budget authority when passing the budget.

Contingency

It is standard practice in municipal budgets to include contingency line items. This gives flexibility to the City in case of emergency to access funds. It is not anticipated to be spent, but is there if needed in case of emergency. Cities are not legally allowed to raise revenues or taxes mid-year if an event should occur, so budgeting access to spend from the “savings account” is necessary.

The City is AAA rated from rating agencies which ensures we get the lowest rates possible when borrowing funds. Eliminating or significantly reducing a contingency, as some are advocating, could be a very risky move to not only rating agencies but potential investors in the City.

Comparisons to 2020 actuals

Overall 2020 citywide expenditures were lower than normal due to extraordinary and successful expense reduction measures implemented related to the COVID-19 pandemic. The City guided departments to cut expenses in anticipation of potential economic impacts from the pandemic. Many programs were either reduced or eliminated in 2020 and added back in 2022, so comparing 2020 to 2022 may not be relevant in some cases.

Police funding

City Staff, the Mayor, and City Council have consistently expressed public safety as a priority in the budget. The Police Department is well funded.  They were budgeted 100% of what they requested.  They have the largest share of departmental budgets at 38% of general fund expenditures

Additionally, for a larger dollar amount budget, the percent increase is smaller but the dollar amount is larger. For example, a 7% increase to the $7m police department budget has a larger dollar increase than a 7% increase to a $1m departmental budget.  The increase in the 2022 Police budget is mostly due to personnel. While the total number of staff members is the same as 2021, the cost of wages and benefits shows up the most prevalently in the Police Department due to it having the largest number of employees.

Antecedently, the City Administrator is the former Police Chief and the last thing he would do is recommend jeopardizing anything public safety related; he is recommending this budget.

The 2022 Police budget includes the addition of a canine unit.

Administrative funding

The Administrative Department includes the Governing Body, Management and Planning, Legal Services, Human Resources, Finance, and City Clerk. There is a misleading “31% increase” circulating that is a calculation between 2020 actuals and 2022 budget. A better apples-to-apples comparison would be to look at the 2021 budget compared to 2022 budget. The 2022 budget is larger because of course salaries, health insurance and other costs go up every year.  Our population is increasing as well.  It also includes the addition of an Assistant City Administrator to oversee Emergency Management and Information Technology, and starting with the 2022 budget the full Deputy City Administrator’s expense is showing in this department vs being split between this department and Community Development.

Additionally, several new City-wide budget items are included in Administration’s 2022 budget including an updated salary survey, a property tax relief program (which will have the effect of actually lowering property tax for some), and diversity training.

Community Development budget

The Community Development department budget includes solid waste expenditures and codes administration. Some 2020 expenditures were impacted by COVID-19. The 2022 budget includes the addition of a codes software to provide better customer service.

The solid waste fund budget is always higher than actual expenditures due to a reserve being budgeted per fund balance policy requirements.

Community Programs budget

Community Programs includes a variety of areas such as special events, committee funding, pool operations, and various recreational programming. Many of these events and programs were cancelled in 2020 which explains the large increase between 2020 and 2022.

The 2022 budget does include relatively minor new expenses for a diversity committee budget and additional software maintenance.

Public Works budget

The 2022 Public Works budget includes an addition of one maintenance worker to provide maintenance tasks through the city, and the addition of vehicle lease payments previously budgeted in other line items. The City anticipates overall long-term savings by utilizing leased public works vehicles vs purchasing and maintaining. 

Closing

I hope this answers any questions that have been raised in the last week or so as some misleading information has been circulating.

The budget process begins each year around March for the following year and to date, the City Council has already had seven public meetings with budget topics and specific line items reviewed, discussed, and voted on in a very transparent forum.

Prairie Village has demonstrated fiscal leadership for as long as I’ve lived here, and I hope you know that your vote for me (or even if you didn’t vote for me) means a continuation of that fiscal leadership. While we can’t control county-calculated property values directly, we do all we can to control our costs at the city level, and we are continuously looking at local policies and ordinances to rein in extreme property fluctuations where we are able. If you have ideas for city programs or services that are under-utilized or unwanted, please let me know. We want to know, because just like you, we are residents too, and we’d rather spend that money on services that are valued by our residents.

Thank you to City Finance Director, Nicole Lee, for collating all the bulletpoints above to share with our residents.

Please be well and have a great weekend.

🙂

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