2025 UG Budget Adopted and Explained

2025 UG Budget Adopted and Explained

Published on August 29, 2024

Each year, the Unified Government (UG) must submit a balanced budget to the State of Kansas for the upcoming fiscal year. On August 25, 2024, the UG Commission voted six to four for the amended 2024 / 2025 budget: adopting $472M budget with $360M budget for the City of Kansas City, KS and $113M budget for Wyandotte County. In this article, we'll explain the budget and possible service impacts.

UG Budget, Simplified.

The UG budget is a massive document with 40 city and county departments providing a diverse range of infrastructure, services and programs. Some of our operations are required by law (e.g. hold local, state and national elections) and others are established by UG Commission priorities (e.g. parks, infrastructure, community services, etc.). The difference is the required functions mustbe funded while the UG Commission priorities have to be balanced with what funds are available.

Something that is commonly misunderstood is what we do at the UG - we provide only city and county services. While the UG is the tax bill collector for all jurisdictions within Wyandotte County, we receive less than half of property taxes and redistribute your tax dollars to the public schools and libraries, community college, water district (as applicable), and State of Kansas. Check out the dollar bill below that represents how your taxes are distributed:

It is also important to understand that we are still paying for the past with roughly 40% of our City General Fund mill levy going to debt service. And, just like when we have household debt, it can be hard to get ahead when you're still paying off the past. Plus, minimizing our debt is a good way to maintain our credit rating which provides additional savings for the taxpayer.

The 2025 budget includes no new general obligation debtwhich will impact our ability to deliver street preservation projects (see below for more).

Additionally, the organization had dipped into its reserves, our "rainy day fund," to cover any difference between our revenue and expenses in the past. So, technically, we had a balanced budget but eventually our reserves will drop below the required minimum. This is not sustainable. County Administrator David W. Johnston is leading the UG toward more fiscally responsible approaches to our budgeting to avoid these pitfalls in the future.

For the 2025 budget, the UG Commission prioritized property tax relief and BPU PILOT relief for residential customers. As a result, the city and county adopted budgets will bring some changes to the UG with cuts being made to spending while we continue the work of the administration's "deep dive." We are working toward improvements to our operations and budgeting approach, identifying more cost savings and efficiencies, while remaining committed to excellent customer service.

Understanding Revenue Neutral

A couple of years ago, the State of Kansas passed legislation requiring a public hearing within any jurisdiction contemplating exceeding revenue neutral. On June 27, 2024, the UG Commission opted for a revenue neutral budget for 2025. What is revenue neutral? Think of it this way:

The revenue collected from 2023 property taxes is used to predict revenue for the 2024 budget year. If a property is assessed at $10M and the mill levy rate is 25 mills, for instance, the jurisdiction will collect $250,000 dollars in taxes. The County Administrator then builds a budget estimating we'll have $250,000 to work with for the coming year.

However, if property valuations increase in 2024 (which they did), then the jurisdiction collects $262,500 without making any changes to the mill levy. Going revenue neutral means that the elected body determines the jurisdiction should only collect $250,000 for 2024 taxes - keeping the organization "revenue neutral." Instead of collecting the additional $12,500, the jurisdiction must lower the mill levy to ensure it collects the same amount as the previous year. Cost increases associated with materials and labor must then be addressed by making cuts to the budget.

So, we're revenue neutral. What does this mean?

The Unified Government oversees the budget for the City of Kansas City, KS and Wyandotte County. Budget reductions have been proposed across departments to identify savings needed for a revenue neutral budget. While the specifics of how these cuts will impact our departments will be worked out in the coming months, we have summarized the proposed cuts here. Because the city and county general funds are most flexible (other funds are restricted by state or local legislation), we have outlined the changes to these primary funds below:

City of Kansas City, Kansas General Fund Impacts

In 2025, we estimate new available revenue of just more than $200,000, once we factor in the BPU PILOT reduction and address some of the structural imbalances in our budget. At first glance, this is good news and a healthy fund balance. On the other side of the budget, however, we identified $8.69M in additional known expenses due to contractual obligations and other cost increases. To achieve a balanced budget, the County Administrator and budget team worked with departments to identify more than $6.4M in operational cuts in addition to closing a $2M gap for capital projects (e.g. street preservation).

As of today, here are some of the proposed changes to our operations that were identified in the 2025 budget:

• With COVID funding running out, there are anticipated changes to UG Transit operations. Adjustments to routes and schedules are being reviewed now to try and minimize impact on travelers.
• Capital spending was reduced 32%, or by $2,060,032. There were significant cuts to capital in the city general fund, but some projects and equipment remain.
• The Fire and Police Departments are looking to keep their budgets trim by reducing staff overtime. This will require a thorough plan which is being discussed this fall.
• Livable Neighborhoods will not be filling the open director position in 2025 but will maintain the current staffing of one (1) person. Additionally, funding to our Neighborhood Business Revitalization partners was reduced by half and the neighborhood grant/home repair program was cut entirely. (Please note: we have other home repair programs and are working to streamline and make these more accessible to the community.)
• Funding for abatement teams and mowing services has also been reduced.
• The street preservation program will be shifting from mill and overlay projects to filling potholes for short-term savings. This will impact our overall infrastructure quality so we will be monitoring this closely for impacts.

Over the coming months, the County Administrator and budget team will be working with departments to solidify the consequences of these city general fund budget impacts. We will be sure to report back on the details as finalized.

Wyandotte County General Fund Impacts

The county side of the UG Budget is a little harder as there are various state requirements and several constitutional officers. Since many of the county departments are so small, in lieu of making cuts that would decimate their ability to deliver services, the UG will close a portion of the $11M gap with one-time fund transfers. In addition to the County General Fund, there are several smaller funds that have their own balances and surpluses (i.e. haven't spent their money in the past). This will help us in 2025 but will not be available to us in the future. The remaining $7M gap in funds have led to some of the following reductions:

• We will not be working on any new capital projects in 2025 and funding for new equipment such as technology, fleet vehicles, etc. was cut.
• Positions that have remained unfilled for three (3) years have been eliminated.

The UG has little authority over the Sheriff or District Attorney's Office, constitutional officers, both of which operate as county departments. In 2025, the District Attorney's Office will fund a victim advocate position and the Sheriff's Office will maintain its cadet program. The UG is still working to identify other opportunities for savings on the county side which will be shared when available.

Residential BPU Customers to See a Decrease in PILOT

Following the direction of the UG Commission, the residential BPU customers will decrease by 1% and will be eliminated as a line item on your utility bill.

What's next?

Now that the 2025 budget has been adopted by the UG Commission, County Administration and the budget team will work closely with departments to hone their budgets for the coming year, identifying new opportunities to save while making sure our expenses do not exceed revenue. Please stay tuned for further updates as we continue to dive into the 2025 budget.

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