Kansas City finances a mixed bag

The mayor and city manager this week listened while city finance experts spun numbers that were often grim.

But they also had bright spots, and Moody’s Investors Service reported Wednesday that it is keeping the city at a Aa2 rating for general obligation bonds.

Still,  Kansas City revenues are averaging 2.6 percent growth a year while expenditures are averaging 2.9 percent – not counting more spending needed for pension funds and deferred maintenance.

Mayor Sly James said at the Tuesday meeting, “We know our revenue is never going to keep up, at least we can’t count on it.”

City Manager Troy Schulte said, “We’ve got to figure out a way to provide these services at current or higher levels with fewer people.”

Employees are expensive. Health and life insurance goes up at an average of 5.25 percent a year, pension funding up 4.25 percent and pay up 3.12 percent.

Then there is the nationwide problem of public safety costs eating city general funds. In Kansas City, police, fire and ambulance goes up 4.55 percent a year.

Yikes.

But the city earnings tax is growing at 1.5 percent a year, sales and property tax revenues are back up and the city has a diverse and strong economy, finance experts said.

Schulte said, “We’ve got to manage it but any comparisons to Detroit are completely unfounded.”

City Treasurer Tammy Queen said the city so far has held its AA bond ratings in spite of somewhat high debt and leeriness because of Detroit’s bankruptcy action.

“We have that high debt burden but we have the other things to offset it,” she said.

Standard & Poor’s this month also stayed with its AA rating, citing a “strong and diverse economic base that continues to experience population growth” and strong financial management policies.

On the negative side, it said, are moderately high to high debt levels and the requirement that voters periodically must renew the earnings tax.

Randy Landes, city finance director, said recent pension reform will eventually turn the corner on that problem, and officials are preparing a plan for the city council on how to achieve what is a largely balanced budget.

The plan is expected to be done this fall, he said.