Property owners in Manhattan are looking at a tax increase after the city commission approved the proposed 2020 budget by 3 to 2 vote Tuesday. Dodson, Reddi and Morse supported, Butler and McKee opposed.

In total, the budget amounts about $163 million. Property taxes are projected to increase by $238,448 for Manhattan, which equates to a 0.406 mill increase. The city will also see $267,124 more in revenue due to new buildings and improvements and $252,244 from an average 1.8 percent property valuation increase. Calculating in the valuation increase, the owner of a $200,000 home will pay $22 more per year for city taxes and a $1,000,000 business property will pay $325 more per year. Calculating in USD 383 and Riley County, those same homeowners and business owners are projected to see yearly increases of $197 and $2,139 respectively.

A mill is a unit of measuring property taxes, one mill equates to $1 for every $1,000 of assessed property value. The value of a mill in Manhattan for 2020 is $585,000.

The budget will permit the hiring of seven new city employees — almost all expected to be cost neutral — a 1.6 percent cost of living adjustment (COLA) and 2 percent step increase for employees. Manhattan also reduced its capital outlay fund by around $130,000 as a cost saving measure, with improvements being funded by a lease program to be paid by a new equipment reserve fund drawn from water and wastewater dollars.

Mayor Mike Dodson says it’s a difficult equation to work out how to afford rising costs — especially in personnel, which make up the bulk of general fund expenses. He says he appreciates the work that city administration put in to bring the proposed budget down, which came in at a 4.3 mill increase at the first work session.

“That doesn’t mean we ought to not try our best to  get it down even further,” says Dodson.

Following a public hearing in which there were no speakers, commissioners explained their reasoning for supporting or opposing the budget. Mayor Pro Tempore Usha Reddi noted that only a small portion of the property tax increase in the area is their responsibility, with higher increases from Riley County and USD 383. Reddi says she doesn’t want to add to property tax bills, but voted in favor with city employees in mind.

“I think we are right now [increasing]as little as we can raise it — mostly for personnel and we want to keep our personnel here,” Reddi says. “We have a very young staff and very mobile people and we want to keep them here.”

Commissioner Wynn Butler says he’s unable to vote in favor of the budget as the city needs to make it a point to hold any budget increases strictly to the increase in property valuation.

“Just like somebody who gets a paycheck — you get so much money, that’s all you can spend,” says Butler. “We could knock the rest of that out of there if we had to and there just isn’t the willpower to do it.”

Commissioner Linda Morse says the increase is reasonable, especially considering the flattening revenue the city has seen over the past few years and the state of the housing market.

“It’s important that we moderate and be as flat as we can and we just still have to have some growth in this community,” says Morse. “We don’t have to have multiple mills, we don’t have to have millions of dollars, but this is an ever-so-slight increase that we should be able to tolerate it and make it work for us.”

Commissioner Jerred McKee commented on a memo from City Manager Ron Fehr that detailed scenarios that could keep the mill levy flat. McKee says that it would hurt — resulting in decreasing city services and events — but it’s entirely possible. He also says that the state has failed to alleviate the situation for cities and could help in two ways.

“The first is taking up internet sales tax, which they were one of the few states in the country who failed to do that the last legislative session,” says McKee. “The second big thing that they could do is take on some gall and add a couple more income tax brackets and do revenue sharing like they used to with cities and counties.”

The budget will return for approval one more time in a second reading — typically on the consent agenda — but leaves the door open for potential last minute reductions.

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