Hillsboro council proposes electric surcharge to cover shortfall

by Don Ratzlaff

The Free Press

While many taxing units across Kansas are calling for mill-levy increases to make up shortfalls caused by state funding cuts, the Hillsboro City Council provisionally accepted a new budget Thursday that will generate funds through a surcharge assessed on all its electric customers.

If the proposed budget for 2004 is approved following a public hearing Aug. 12, local electric users will see a $5 surcharge added to their city bill each month beginning in January.

The surcharge should raise the estimated $84,000 needed to cover reductions in state funding-which, in turn, will enable the city to get by with a miniscule increase in the mill levy from 41.012 in 2003 to 41.015 in 2004.

Covering the shortfall through property taxes would have required an increase of about 6.5 mills.

City Administrator Steven Garrett said he proposed a surcharge instead of a mill-levy increase because the surcharge is a fairer way to generate funding for services that benefit all citizens.

“I feel the property tax is an unfair way to fund essential services,” he said.

“Property owners aren’t the only ones who derive benefits from those services, but under the current system, they are the only ones who pay for them.”

He said the surcharge will be assessed to every residential user, but further research will be done to determine how to charge large commercial and institutional users who have more than one electrical meter.

The surcharge would continue indefinitely, Garrett said.

The general fund budget proposed for 2004 totals $934,752-an increase of about $67,000 from the estimated expenses for 2003 and about $27,000 more than was actually spent in 2002.

The biggest single increase proposed in the 2004 general fund is for police protection-from $244,000 estimated for 2003 to $263,000 in 2004. The $19,000 increase will help cover the addition of an officer to the force.

A $9,000 increase is budgeted for fire protection, from $69,550 estimated for 2003 to $80,000 project for 2004.

Garrett said the proposed budget would also increase the city’s spending authority, which means it has permission to use previously untouchable unencumbered funds in case of an emergency.

He said the city’s blue-algae situation this summer could have created a financial crisis for the city, had it continued for several months.

The city had an unencumbered cash balance in 2003 of more than $1.05 million that it could not spend because it did not have the authority to do so.

With broader spending authority granted, the 2004 budget eliminates the “unencumbered cash balance” line item and replaces it with a “contingency” fund of $742,147 that would be accessible if needed.

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