Junction City officials will look to renew a special sales tax for debt relief purposes.
City Finance Director Lindsay Miller presented an option to place a special question on the Nov. 5 general election ballot during Tuesday night’s city commission meeting. The city’s 1 percent sales tax for debt services is set to expire on Dec. 31, 2020. If the sales tax is approved by voters, it would be renewed for 10 years. The sales tax brings in an estimated $3.5 million annually, Miller said.
“If it does not pass, the city will need to pursue other sources of revenue,” Miller said.
Debt payments are made to various agencies, including the Kansas Department of Transportation for street projects, City Manager Allen Dinkel said.
“We spend about $11 million a year in debt service,” Dinkel said. “So, the $3.5 million is just a part of the whole solution; an important part because if that wouldn’t happen, you would have to raise — at the current mill levy this year — it would be a minimum of 20 mills if it doesn’t pass.”
Dinkel said the main reason staff has requested to put the question on the ballot this year is because other items on it should attract voters.
“We have a general election in the fall for city and school elections,” Dinkel said. “It would be a good time to get people to the polls. Our next option of having a special election would be next August during the primary. And there may not be much happening in the primary; who knows? We cannot wait until the November election of 2020 because if you do, the state makes you wait three months. You’d actually have a gap of three months in your sales tax.”
Mayor Pat Landes said he approved of the request.
“It’s the most equitable way to distribute the burden for everyone, even those from out of town,” Landes said. “The last thing we want to see is people’s property taxes going up, so this is the best way to do it. So everybody can help with that.”
Dinkel said the city’s general obligation debt has gone down since he began working in Junction City four-and-a-half years ago.
“The general obligation debt was roughly $114 million when I started in January 2015,” Dinkel said. “Our general obligation debt after this year is going to be in the mid-70 millions. Still way too high, but a far cry from where it was. And you have to remember the $114 (million) is a lot less than it was before that. It’s been a good approach the city has used to address the situation to move forward.”
Each year the city makes payments on the debt, it chips away at the principal, Dinkel said.
“Like a house payment, the further you get into it, the more you pay in principal and the less you pay in interest,” Dinkel said.