No change proposed for Holton's mill levy

If Mike Peroo could give the City of Holton a grade based on its finances, that grade would be an “A.”

The Overland Park-based financial auditor, in presenting the Holton City Commission with its annual audit report during the commission’s Monday meeting, said he based that grade on the city’s ability to control its expenditures, pay down its debts and keep its property tax levy virtually unchanged for the past few years.

“Our tax base is strong, and if we combined our utilities, we’d be looking good,” Peroo told commissioners. “Financially, this has got to be an A-rated city, just on your cash position.”

Peroo also presented commissioners with a proposed budget for 2016 that no change in mill levy from the 2015 budget — 54.363 mills. The 2016 budget as proposed and presented has the city generating $12,293,518 in overall budget authority, after a projected transfer of $525,000 in funds from this year’s budget. 

Commissioners voiced their approval of Peroo’s presentation and scheduled a public hearing on the proposed 2016 budget for 7 p.m. Monday, Aug. 3 at the next commission meeting. A copy of the proposed budget is included in a notice of the hearing as printed on Page 15 of today’s Holton Recorder.

The amount of budget authority proposed for 2016 represents a 6-percent increase over 2015’s budget authority estimate of $11,007,380, mainly due to increasing personnel costs. Peroo attributed the rise in personnel costs to employee health insurance “getting a little bit crazy on the premium side… I have seen premiums go up 25 percent.”

But with a growth rate of less than 3 percent in its spending in recent years, Peroo told commissioners that the city is doing “a really good job” of controlling the tax rate — a fact that Commissioner Erich Campbell said the city could claim with pride, specifically after asking city residents to increase the city’s sales tax rate by half a percentage point in late 2013.

Peroo also noted that the city is in good financial shape in terms of “days in cash” — the number of days that the city would be able to maintain its financial solvency if revenues stopped coming in altogether. As a benchmark, Peroo said anything more than 110 days is excellent, and the City of Holton has 126.

In terms of utility funds, the number of available “days in cash” varies from utility to utility. Peroo said utility funds should try to maintain 180 days of operating cash, noting that Holton’s water fund has 56 days in cash, the electric fund has 99 days in cash and the sewer fund has 393 days in cash.

The relatively low number of water fund days in cash is likely to “suffer a little” with all the rain the city has received this spring, Peroo noted. However, the city’s efforts to shift some of the water utility’s operating costs — mainly in personnel — to the sewer fund will go far to give the city a “better balance” between the two funds.

“It’s better than hitting the water customers by increasing the rates,” he said.

Concerning the city’s assessed valuation, the city’s most recent valuation of $19,601,196 marked a decrease of little more than $54,000 from last year’s valuation, and Peroo attributed that decrease to the 86 property owners who protested their property valuations and were able to get their numbers decreased. However, commissioners noted that with recent commercial growth, the city’s valuation will be increasing in the near future.

That the city has been able to reduce its indebtedness in recent years with reduced spending was also a high point of the auditor’s report. At present, Peroo noted, the city is sitting on $6,436,023 in debt, while in 2013, that number was $8,354,745 — and indebtedness was even higher in previous years — prompting him to note that since 2008, when he started working with the city on its annual audit, the difference has been “night and day.”

Reducing that indebtedness, Campbell noted, effectively puts that much more money into the city’s coffers. Holton City Manager Bret Bauer added that extra money not going into debt service can be put away for future capital improvement projects or used to retire other debts more quickly.