OPENPUBLICA · PUBLIC MEETING RECORD
Record of Proceedings

City Council Workshop on Budget and CIP Process Update – April 22, 2025

City Council — Tuesday, April 22, 2025
BodyWichita, Kansas
SessionCity Council
DateTuesday, April 22, 2025
StatusFILED
Video Record
0:00 / 1:09:19

Transcript — Verbatim
0:08

Aye.

0:08

Aye.

0:09

All those opposed, same sign.

0:11

Motion passes 6 0.

0:13

We are now adjourned, and we will now begin workshop.

0:19

I know it's really cold.

0:20

City manager late.

0:22

Thank you, Mayor.

0:24

So we have just one workshop item today, and that's discussion of the budget, our current status.

0:30

What we're learning as we go through expenditures and revenues for 25, how we're now rethinking a little bit on 26 and 27, bring you up to date with all of that.

0:45

We have new estimates on expenditures that reflect the projects that we shared with you in workshop before that were our off-season projects, so that has helped the budget a little bit.

0:55

And then also we're gonna present uh some initial thoughts on the CIP.

1:00

Um we the staff has put together uh an initial draft, however, we're out of balance with the CIP, and so we're gonna be asking for some general direction as we bring that uh document into balance.

1:12

Um, and I uh we're gonna bring some policy considerations forward on the CIB.

1:20

So, with that, I'm gonna turn it over to Elizabeth Goldry.

1:31

Good morning.

1:32

Umtree, I'm from the finance department, and I'm here to give you an update on the operating budget.

1:39

Um, if you're just joining us online for the first time today, just as a reminder, we also had budget workshops on January 28th and February 25th.

1:48

You can find that information on YouTube.

1:50

And if you're interested in the budget documents, for example, you can find them at Wichita.gov by searching for budget.

1:59

The outline for today's presentation is that I will provide an update on the operating budget.

2:04

Then Mark Manning, the finance director, will provide an update on the app on the capital improvement program or CIP, and then I'll finish us up with some next steps as we move forward.

2:15

Um, as far as the budget operating budget goes, right now we're we're in the middle of the story, so to speak.

2:21

Um, we kicked off the process in January, and the budget will be presented in July.

2:26

At this point, we are continuing to update and update our models, um, review data to um, we're constantly reviewing and updating the models.

2:38

Um, I will go into a little more detail on forecasting risks.

2:41

Generally, those remain the same as the last time we provided a budget update.

2:46

Um, and then just generally the trends overall are consistent with expectations.

2:52

Um, the biggest change in the model compared to last time is an adjustment to pension rates.

2:59

As far as our forecasting risk goes, just to be um transparent with all of you, position vacancy rates are um a forecast risk both when it comes to overspending or underspending.

3:12

Um, we've been monitoring the level position vacancies.

3:16

Right now, there are slightly fewer position vacancies than there were at this point last year, which is really good news.

3:23

Um, but that was a factor when it came to our ending position in 2024, so we continue to monitor monitor that so that we have the right amount of position vacancies modeled in the budget that don't prevent departments from filling positions but reflect the reality of our position, our staffing as it is right now.

3:45

Um there's a lot of uncertainty related to economic conditions and monetary proper monetary policy, excuse me.

3:54

Um, and then property tax growth rates is another forecasting risk that I'll go into more detail on.

4:01

Um, and then the final forecasting risk is labor rates for 2026 and 2027.

4:08

Um, at this point, there are three labor contracts that expire at the end of 2025.

4:15

So that's a risk for 2026, a risk in the sense of forecasting risk in the sense that we don't know exactly what those labor rates will be.

4:23

And then for 2027, we don't have any contracts in place for that year.

4:28

So that is a forecasting risk when it comes to estimating labor costs.

4:35

These are some items that we've um provided an update on last time.

4:39

So just going to give you another update this time.

4:42

Court revenues.

4:43

Last time we told you that they were performing underperforming compared to the 2025 adopted budget.

4:49

That trend is continuing.

4:51

Um I looked at the first quarter of this year and compared it to the first quarter, is generally a good quarter, um the quarter when municipal court receives the most revenue in a given year.

5:00

The quarter when municipal court receives the most revenue in a given year.

5:05

Based on the first quarter of this year, I expect that court revenues will be a million dollars less than what I predict projected at the last workshop.

5:14

Franchise fees on the other hand, the first quarter was very strong, particularly in the area of natural gas, as a result of the very cold weather that we experienced during that period.

5:26

Interest earnings are something that we're constantly watching.

5:40

And there's some uncertainty in that area at this point.

5:47

So next I'll move into property tax growth components.

5:51

Property tax is a reminder is the largest element, the largest component of revenue for the general fund and also for the debt service fund.

6:00

The column on if for 2025, the first thing that's the best to the first, I guess the starting point to look at that is the 7.9%.

6:10

That's the growth in 2025.

6:13

That's based on the notice that we received from the county last June.

6:17

And that was used to finalize the 2025 budget.

6:27

One of them is new construction, which has been, it seems that it's been strong in the community based on information that we received from places like MABCD.

6:38

However, that was 1.3% of assessed valuation growth for this current year.

6:44

Expiring exemptions, that's for things like IRBs, EDX's, and also TIFFs that finish.

Discussion Breakdown — Share of Meeting
Budget Equity Analysis███████████████████████████████████████████43%
Engineering And Infrastructure██████████████████18%
Public Safety████████████12%
Public Engagement██████████10%
Financial Management████████8%
Sales Tax Referendums█████5%
Affordable Housing██2%
Public Works██2%
Summary of Proceedings

City Council Workshop on Budget and CIP Process Update – April 22, 2025

The Wichita City Council held a workshop on April 22, 2025, from 9:00 AM to discuss the current status of the operating budget and the Capital Improvement Program (CIP). Finance staff presented updated revenue and expenditure forecasts, forecasting risks, and initial CIP draft considerations. Council members debated policy options for property tax mill levies, potential sales tax measures, and the balance between maintenance and enhancement/expansion projects. No formal votes were taken; staff received general direction to prioritize maintenance in the CIP and to prepare two budget scenarios for further discussion.

Discussion Items

Operating Budget Update (Elizabeth Goldry, Finance Department)

  • The 2025 budget process began in January; the final budget will be presented in July. Forecast risks include position vacancy rates (currently slightly fewer than last year), economic uncertainty, property tax growth rates, and labor rates for 2026-2027 (three contracts expire end of 2025).
  • Court revenues are underperforming: first quarter data suggests a $1 million shortfall from earlier projections. Franchise fees (especially natural gas) were strong due to cold weather. Interest earnings are uncertain due to potential slower Fed rate declines.
  • Property tax growth: the 2025 adopted budget used 7.9% growth. For 2026, staff estimates 5.9% growth, but it could be as high as 7%. The county will provide the official assessed valuation notice by June 15.
  • Pension costs are expected to be $0.6 million higher in 2026 due to updated mortality tables. The pension fund remains near 90% funded (may drop slightly below).
  • Three baseline forecasts were presented:
    • 5.9% AV growth: deficits of $6.8 million (structural) in 2026, growing to $13.8 million in 2027.
    • 7% AV growth: even with stabilization reserve transfer, a structural deficit of $2.1 million in 2026.
    • Modified growth (revenue-neutral with only new construction and inflation): results in a $3.8 million deficit in 2026 (structural $6.8 million).

Policy Discussion on Revenue Options

  • Councilmember Johnson expressed support for raising the mill levy, noting that a 1-mill increase would generate approximately $5 million, and 2 mills $10 million. He argued this is more affordable than alternatives (e.g., $11 per year per $100,000 valuation) and would prevent larger future cuts.
  • Councilmember Hoheisel reported that most constituents at his breakfast opposed property tax increases. He suggested exploring a sales tax as a more equitable revenue source, as it would capture revenue from bedroom communities.
  • Councilmember Glasscock asked about a 1% city sales tax; staff estimated it could generate roughly $108 million. Councilmember Glasscock supported using sales tax for capital investments only, citing volatility.
  • Councilmember Hoheisel noted the regressive nature of sales tax and urged exemptions for necessities. Councilmember Lovett shared that some elderly constituents favored a mill levy increase to invest in the community for future generations.
  • Councilmember Johnson requested data on property taxes levied per district for 2024: total $164 million; highest in District 2 ($45.2M, 28%), followed by District 5 ($30.8M, 19%), District 4 ($26.9M, 16%), District 6 ($24.4M, 15%), District 1 ($23.2M, 14%), and District 3 ($13.3M, 8%).

Capital Improvement Program Update (Mark Manning, Finance Director)

  • The 10-year CIP totals approximately $3 billion, with the General Obligation (GO) at-large portion funded by property taxes. The largest GO categories are public safety, building maintenance, heavy equipment, and parks.
  • The CIP is guided by the Community Investment Plan priorities: (1) maintain assets, (2) enhance, (3) expand. Staff uses a data-driven process with a CIP committee of department directors.
  • The current draft is over-allocated by about $25 million in GO projects, primarily in early years. Solutions include reducing debt (target 50% pay-as-you-go, 50% debt), delaying projects, and re-scrutinizing enhancement/expansion projects.
  • The debt service fund is projected to be imbalanced for most years (red bars above revenue line), and ending balances could drop from ~$20M to under $10M.
  • Current GO allocation: 60% for maintenance (vs. typical mid-50s), 11% for expansion. Enhancement projects are mainly in public safety (fire and police station plans).
  • Staff will focus on pushing enhancement/expansion projects out to protect maintenance, assuming council agrees. Council members concurred with that approach but emphasized transparency about delayed projects.

Alignment with Council Goals

  • Elizabeth Goldry highlighted that 46 strategies have been aligned to 23 goals under five pillars. Examples: behavioral health (opioid settlement funds), affordable housing (survey shows high priority but low quality), and homelessness services.
  • The budget is being used as a strategic planning document, with ongoing cost recovery reviews (e.g., dog licensing changes approved).

Key Outcomes

  • General Direction for CIP: Council expressed support for prioritizing maintenance over enhancement/expansion. Staff will bring back a revised, financially viable CIP draft with a list of projects pushed out.
  • Budget Scenarios: Staff will prepare two scenarios – a base budget reflecting current projections, and a modified budget with potential service changes to meet deficit targets. Council will decide on mill levy direction by July 15.
  • Next Steps:
    • May: Staff will attend all District Advisory Board meetings to gather resident input.
    • May 27: Next budget workshop.
    • Mid-June: Receive assessed valuation notice from the county.
    • Late June: Workshop to incorporate AV notice.
    • July 15: Budget presentation and consideration of revenue-neutral rate and maximum tax levy.
    • August 19: Third public hearing.
    • August 26: Budget adoption.
  • Public Engagement: A budget simulator will launch in May. Council requested that DAB presentations include a breakdown of 16 city department budgets (with staffing and property tax funding) and that the simulator note the mill levy increase options as an asterisk.
  • No Formal Votes: The workshop concluded with no motions, but council members acknowledged that the mill levy decision will be voted on in July.

Meeting Transcript

Aye. Aye. All those opposed, same sign. Motion passes 6 0. We are now adjourned, and we will now begin workshop. I know it's really cold. City manager late. Thank you, Mayor. So we have just one workshop item today, and that's discussion of the budget, our current status. What we're learning as we go through expenditures and revenues for 25, how we're now rethinking a little bit on 26 and 27, bring you up to date with all of that. We have new estimates on expenditures that reflect the projects that we shared with you in workshop before that were our off-season projects, so that has helped the budget a little bit. And then also we're gonna present uh some initial thoughts on the CIP. Um we the staff has put together uh an initial draft, however, we're out of balance with the CIP, and so we're gonna be asking for some general direction as we bring that uh document into balance. Um, and I uh we're gonna bring some policy considerations forward on the CIB. So, with that, I'm gonna turn it over to Elizabeth Goldry. Good morning. Umtree, I'm from the finance department, and I'm here to give you an update on the operating budget. Um, if you're just joining us online for the first time today, just as a reminder, we also had budget workshops on January 28th and February 25th. You can find that information on YouTube. And if you're interested in the budget documents, for example, you can find them at Wichita.gov by searching for budget. The outline for today's presentation is that I will provide an update on the operating budget. Then Mark Manning, the finance director, will provide an update on the app on the capital improvement program or CIP, and then I'll finish us up with some next steps as we move forward. Um, as far as the budget operating budget goes, right now we're we're in the middle of the story, so to speak. Um, we kicked off the process in January, and the budget will be presented in July. At this point, we are continuing to update and update our models, um, review data to um, we're constantly reviewing and updating the models. Um, I will go into a little more detail on forecasting risks. Generally, those remain the same as the last time we provided a budget update. Um, and then just generally the trends overall are consistent with expectations. Um, the biggest change in the model compared to last time is an adjustment to pension rates. As far as our forecasting risk goes, just to be um transparent with all of you, position vacancy rates are um a forecast risk both when it comes to overspending or underspending. Um, we've been monitoring the level position vacancies. Right now, there are slightly fewer position vacancies than there were at this point last year, which is really good news. Um, but that was a factor when it came to our ending position in 2024, so we continue to monitor monitor that so that we have the right amount of position vacancies modeled in the budget that don't prevent departments from filling positions but reflect the reality of our position, our staffing as it is right now. Um there's a lot of uncertainty related to economic conditions and monetary proper monetary policy, excuse me. Um, and then property tax growth rates is another forecasting risk that I'll go into more detail on. Um, and then the final forecasting risk is labor rates for 2026 and 2027. Um, at this point, there are three labor contracts that expire at the end of 2025. So that's a risk for 2026, a risk in the sense of forecasting risk in the sense that we don't know exactly what those labor rates will be. And then for 2027, we don't have any contracts in place for that year. So that is a forecasting risk when it comes to estimating labor costs. These are some items that we've um provided an update on last time. So just going to give you another update this time. Court revenues. Last time we told you that they were performing underperforming compared to the 2025 adopted budget. That trend is continuing. Um I looked at the first quarter of this year and compared it to the first quarter, is generally a good quarter, um the quarter when municipal court receives the most revenue in a given year. The quarter when municipal court receives the most revenue in a given year. Based on the first quarter of this year, I expect that court revenues will be a million dollars less than what I predict projected at the last workshop. Franchise fees on the other hand, the first quarter was very strong, particularly in the area of natural gas, as a result of the very cold weather that we experienced during that period. Interest earnings are something that we're constantly watching.

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