Long-term city business plan emerges

By Joe Lambe

City debt is high, savings are low and the critical earnings tax now has to be renewed every five years – all not good, city finance officials said.

But they say it is manageable. On Thursday they presented the city council with a five-year business plan intended to help  steer through economic shoals.

City Manager Troy Schulte said, “What we’re trying to do from a staff perspective is telegraph where we’re going for the next five years.”

Councilman John Sharp said the council should adopt the objectives of the plan and strive for its balanced budget approach as opposed to going forward as is.

Staff showed how the plan could help with planning, using various scenarios to show short and long term implications of changes.

How, for instance, would a  3 percent reduction in the work force, a salary freeze or other measures play out over time?

Sharp said now was not the time for details but, “I think we need to bite the bullet and agree to adopt balanced but I don’t think we should say how to get there.”
After the council adopts the plan, it will be used to help put together next year’s budget. It then serves as a road map for departments and others on what it possible, officials said.

City debt is a major concern. Kansas City’s per capita debt is $3,352, higher than that in eight comparable cities and much higher than the national average of $1,948.

But Kansas City is better able to manage that than most cities because 55 percent of its revenue comes from dedicated sources like sales taxes and the earnings tax, said Finance Director Randy Landes.

In January, a Citizens Association study called for such a city plan in part because of the ballooning debt. In 2003, it found, total tax supported debt was $517 million, which more than tripled to $1.6 billion in 2012.

The association report also said: “While the city’s population has increased only 4.2 percent from 2003 to 2012 (18,662 people, with gains north of the river offsetting losses south of it), government expenditures to serve essentially the same sized population since then have increased by $334 million (42 percent), ten times the amount of the population increase.”

Multi-year planning is needed, the study said, because expenses work that way and the city’s biggest expense, its work force, is covered by collective bargaining agreements that span two to three years.

“Understanding the city’s finances is not easy or obvious,” the association reported.


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