Written by Don Ratzlaff Monday, 24 December 2012 14:45
The Hillsboro City Council passed a resolution at its Dec. 18 meeting urging the state’s congressional delegation to resist efforts in Washington to eliminate tax-exempt bond financing for cities.
City Administrator Larry Paine said the proposal to eliminate the bonds is part of the “fiscal cliff” negotiations under way in the nation’s capital.
If the measure passes, cities would lose a fundamental tool for financing infrastructure improvements. Paine said small cities will be hit the hardest because large cities have more people to carry the additional local burden that would be required to pay off the bonds.
To illustrate, Paine said a bond purchaser in a 35 percent tax bracket would be happy to get a 4 percent tax-free return on an investment. With the change, a taxable bond would have to earn 6.15 percent for the investor to get the same return.
For a 20-year, $1 million bond at 4 percent interest, the city of Hillsboro would be making an annual payment of $73,112, and the total interest paid over the life of the bond would be $462,230.
With a 6.15 percent bond, the city would make annual payments of $87,576 and the total interest would be $751,538—a difference of $14,464 for each payment and nearly $290,000 in interest.
If the project was used to finance a utility, Paine said each customer would have to pay $1.09 more per month to cover the additional expense.
In other business, the council:
• awarded Randy Jantz a certificate from the League of Kansas Municipalities and a gift in recognition of 10 years of service with the city.
• approved a final payment of $7,926 to Vogts-Parga Construction for work completed on the Adams Street project. The sum included a late change order that added $3,990 to the project.
• approved Resolution 1226, which will increase the city’s monthly household fee for recycling to $2.12. The current fee is $1.98. The city had received notice that McPherson Solid Waste was increasing its standard fee by seven cents. The remaining seven cents of the increase will go toward the fuel cost of MSW picking up recycling bins.
• adopted Ordinance 1225, which establishes a new schedule for building-permit fees. The fees cover new construction as well as remodeling or moving a structure. The current fee schedule was passed in 1976.
• approved one-year cereal malt beverage licenses for the Hillsboro Golf Association, Casey’s General Store, Ampride, Vogts HomeTown Market doing business as JTJ Inc. and Alco.
• listened to an explanation of the amendments proposed for the 2012 budget; 13 funds would be affected. The changes reflect changes in revenue and expense that were not anticipated when the 2012 budget was approved in mid-2011.
Paine said budget amendments are a routine process done to avoid budget citations at the time of the annual audit. By law, the amendments cannot increase the city’s mill levy.
A public hearing is planned for 4 p.m. Dec. 26 at city hall. Details are available through the city office.
• met for a work session following the meeting to discuss staff salary adjustments for 2013.