Nov. 5, Junction City voters will find an item asking for the renewal of a one cent sales tax.
City officials are asking the population to vote “yes” on the renewal.
According to City Manager Allen Dinkel, the tax is helping Junction City pay off its debt.
According to Dinkel, this debt springs from decisions made by the city in 2003, to have general obligation bonds totaling about $12. The city had been advised to build, Dinkel said, in anticipation of the return of the Big Red 1 to Fort Riley.
“Then of course, economy (crashed) and everything just changed,” he said.
This shift hit Junction City in the worst possible way.
“By 2010 2011, the city had about 130 million dollars of general obligation debt — nearly you know, 11, 12 times more than they had just a few years previous,” Dinkel said.
The city found itself in violation of debt limits set by the state. While Dinkel said not all debt counts toward a debt lid, but the city had gone over the 30 percent level.
The city prepared a financial plan to restructure its debt, which the one cent sales tax is a part of. The tax accounts for about $3.5 million of the $11 million the city puts toward its debts each year.
“They increase property taxes a little bit that one year, but then they brought back the property tax down to the same level in 2013,” he said. “And they stayed that same mill me this than what they put the sales tax and place which voters voted on in 2010, to begin on Jan. 1 of 2011.”
The sales tax can only be in place 10 years unless a community votes in favor of allowing it to remain, which is why the item is on the ballot this November. Otherwise, the sales tax will expire Dec. 31, 2020.
“We chose to go to vote this fall, because one we didn’t want to have a cost of a special election,” Dinkel said. “And if we didn’t do it now, we’d have to do it next summer in August. Next August there’s primary, but it will not be for city issues. It will be for you know your county or sustained issues.”
The city thought it better to have people vote on the matter while also voting for city commissioners.
According to Dinkel, without the sales tax the city will be forced to look for money elsewhere. This could mean raising property tax further or cutting services such as police, fire, or parks, he said.
The good news, according to Dinkel, is that the city is now below the 22 percent level.
“I know when I started here five years ago, your obligation debt was $114 million,” he said. “ And again, I’m rounding off a little bit. And right now it’s about $76 million. So we’ve retired off, you know, nearly $40 million with a death in five years.”
However, he said, the one cent sales tax needs to stay in place until 2030.
“A community this size should never have general obligation that more than $30 million — $30-$35 million. That’s, that’s the high end and you prefer it lower than that,” Dinkel said.
According to Dinkel, refinancing the debt has helped the city keep its mill levy in place and allowed it to conduct street repairs using savings — repairs it might not have been able to do otherwise.
Mayor Pat Landes talked about these street repairs as well.
“With the sales tax revenue or applying that directly to debt,” he said.
This means, Landes said, that the city has money it can spend on street repairs that would otherwise be applied to its debt.
“So if we don’t have the revenue to put towards the debt payment, then we’re not going to be able to we’re not going to be able to fix as many streets as we are,” he said.
At one point, the city was only spending about $200,000 per year keeping the streets in order, which he said is a comically small amount to spend on such an endeavour. The city, he said, has taken advantage of matching funds provided by the Kansas Department of Transportation.
“The Eighth Street trail from Spring Valley Road to Rucker Road — that was a 90-10 (percent) match (with KDOT) to get that done so you know we try to stretch our doors as far as we can,” Landes said.
He, too, asked people to vote in favor of keeping the current sales tax in place.
“But you know, if we have to take every nickle that we have and put it toward debt only, there’s not going to be a whole lot we can do it around this town in the streets and building maintenance while all that stuff continues to deteriorate if you don’t take care of it,” Landes said. “So either you pay some now you’re going to pay a lot more later on.”
Vice Mayor Jeff Underhill spoke about the matter at the State of the Chamber address held Thursday evening, asking people to vote in favor of keeping things as-is.
“That is a critical component to Junction City’s financial recovery,” he said. “And we wanted to make it clear that it is not a new tax — it is simply extending taxes that we currently have that equates to about $3.5 million a year in revenue to help us pay off our debt and keep Junction City moving forward.”
Underhill asked attendees to spread the word and “debunk any myths that might be out there” concerning the sales tax item scheduled to be on the ballot Nov. 5.
“It will really help if we can extend that so we can keep moving forward,” he said.