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The reallocation of funds from debt service to operations can provide these types of improvements:
City facilities are aging. In order to extend the life of these buildings and protect the investment made by our citizens, maintenance needs must be addressed.
Recently, the City expanded digital access to services and information. These digital touch points provide convenience and flexibility for our citizens. We must continue to enhance the citizen experience with additional digital capabilities.
Our employees are essential to the delivery of quality community services. Attracting and retaining well-qualified individuals committed to public service is vital.
The debt service fund is used to pay for the interest and principal payments on the City’s outstanding general obligation bonds. Debt financing is used for large capital projects, such as acquiring land and construction of a new fire station. It has also been used to acquire equipment for public safety purposes and installing new network infrastructure.
If approved by voters, the transfer of $2.3 million annually from the debt service to the general operating fund would place revenues in areas of greatest need and still leave sufficient funds in debt service to adequately address future debt service needs. Interest cost on current debt is locked in and will not change. Existing debt continues to get paid off and replaced with new debt based on the City’s needs and voter authorization. Future interest costs cannot be determined until bonds are issued. Our future interest costs are subject to many variables including fluctuations in interest rates, the City’s credit rating, and the length of the debt issued. The City’s current Aaa bond rating from Moody’s is the highest rating possible and reflects our strong fiscal position and manageable debt levels. The City intends to continue our pattern of issuing bonds with short maturities to keep interest costs as low as possible.
The state statute and constitution require voter approval when there is a tax change of this type.
No, the City will still have adequate tax revenues to pay for existing debt and future debt issues. Much of the previously issued debt has been, or will soon be paid off. Over half of our existing debt will be paid off by October 2023. New bonds will likely need to be issued in the future (subject to voter approval) for capital improvements, and those can be planned to fit within the lower debt service revenue and still be consistent with past practices of shorter maturities.
If approved by voters, the transfer of $2.3 million annually from the debt service to the general operating fund would place revenues in areas of greatest need and still leave sufficient funds in debt service to more than adequately address future debt service needs.
Terms, rates and payments of previously issued debt are fixed and will not change. The terms of any future debt are impacted by many variables at the time of issuance including fluctuations in interest rates, market conditions, the City’s credit rating, and the length of the debt issued. The City has historically issued debt with shorter maturities compared with patterns of other cities and plans to continue that approach.
The current property tax levy is $1.4563 per $100 in assessed valuation.
The City Council will need to take legislative action to reduce the general obligation debt service levy rate during the proper time for setting those rates. According to the City’s bond counsel, the City may not bind itself to a future action via a ballot as it relates to the debt service levy. To do so would potentially violate our bond covenants. While it is fully the desire and intention of the City Council to reduce the rate as described, there may be some unexpected remote circumstance where the City Council cannot take this action. For example, if there was a catastrophic natural disaster that requires the City Council to issue additional debt for clean-up purposes or for public infrastructure repair, that situation could inhibit the City Council’s ability to carry out this intention. Barring some unforeseen event such as this, expressing this action as the City Council’s intention accurately reflects the direction of the City Council as discussed in public meetings while preserving the option to deal with unexpected calamitous events.
Shall there be a ten-cent increase in tax levy on one hundred dollars of assessed valuation for general municipal purposes in the City of Lee's Summit?
So that there is no net increase in the overall City property tax levy rate to 2021 due to this change, if this question is approved, it is the intention of the City Council to reduce the general obligation debt service levy rate by an equivalent amount in 2021.