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Wichita’s finances affected by state actions, ‘fiscal cliff’

  • The Wichita Eagle
  • Published Saturday, Dec. 15, 2012, at 5 p.m.
  • Updated Friday, August 23, 2013, at 4:55 p.m.

January could be a tipping point, city officials say, for the kind of services they provide and what city government will look like in the future.

Uncertainty hovers over council members and city staff as they try to sort out the potential impact of the federal “fiscal cliff” and Gov. Sam Brownback’s state tax cuts on the city’s fragile recovering economy and thus an already tight city budget.

If federal budget cuts plunge the local economy into a recession, and if the state tax cuts don’t deliver promised economic prosperity, then the face of city government and the services it provides — particularly to low- and moderate-income Wichitans — will have to shrink, city officials say.

“I think everybody’s cautiously optimistic about the city economy right now,” council member Pete Meitzner said.

“But no one knows what’s coming on the growth front. No one knows the final impact of the fiscal cliff, the health care law, the impact of the state tax cuts. You could say it’s paralyzed growth, and I don’t think anyone knows how this all will work out at this point.”

Any economic downturn, driven by federal spending cuts or a transfer of state services to cities driven by the state tax cuts, would pose immediate challenges for a city budget stretched tight by four years of cost-cutting and trimming as revenues shrunk, council members said.

For example, City Manager Robert Layton said, the city could take an immediate $250,000 federal funding hit if President Obama and Congress cannot reach a deal to avoid the fiscal cliff.

“That’s a direct impact we’re talking about on the homeless, on housing rehabilitation programs in certain parts of the city,” Layton said. “That’s hitting hardest the people who can least afford it, and we cannot backfill those lost funds.”

And then there are what council members call “unfunded mandates,” or the state handing off functions formerly financed out of Topeka to the cities.

One potential mandate drawing particular concern at City Hall is alcohol tax revenues, or the city’s slice of millions raised statewide by a special tax on mixed drinks. There’s no proposal on the table, Mayor Carl Brewer said, for the state to capture those revenues, but city officials are worried about the possibility.

“It’s $6 million to us every year; $2 million we use for parks and recreation, $2 million for drug and alcohol treatment programs and $2 million for housing and homeless programs,” Brewer said. “Certainly, if the state moves on that money, it would have a huge impact on us.”

And then there are the big ticket funding items the city is seeking from Topeka: Affordable Airfares, the Equus Beds water recharge project, aviation training and education. The city, supported by the Kansas Water Authority, is seeking $2 million for groundwater recharge. The city also is seeking at least $5 million for Affordable Airfares, a program Brownback has publicly committed to support, $5 million for the National Institute for Aviation Research and $5 million for the National Center for Aviation Training.

All of those programs could be threatened if state revenues lag, council members said. Brownback spokeswoman Sherriene Jones-Sontag did not respond to requests for comment from the governor’s office.

The city isn’t broke, council members said. But beset with declining tax revenues after the fall 2008 economic collapse, the city budget has been streamlined and extra money isn’t lying around to plug sudden budget holes.

Layton isn’t ready to say that more belt-tightening isn’t possible. But he believes the city organization has been streamlined.

“I’m not naive,” he said. “There’s always room for improvement. But there have been places where we have cut too thin and we’ve had to make adjustments to fill some staff vacancies.

“As long as we can shore those up, I won’t say we’re a bare-bones operation, but we’re significantly leaner than we have been and we’re looking for other ways to improve process and costs.”

Meitzner said there are countless consolidation opportunities with Sedgwick County, such as the newly formed joint office of central inspection that begins operating next year, and privatization opportunities.

“And what we can also do is really determine what debt we can delay and what debt we can eliminate in the capital improvements plan,” Meitzner said. “We would have to look at eliminating wants, and focus on the things we need, like water and sewer.”

The task of protecting Wichita’s interests during the 2013 Kansas Legislature, which begins in January, falls to governmental relations manager Dale Goter.

“His job is going to be tougher than usual this year,” Brewer said.

“A lot of these things, we’re going to have to wait until the issues surface,” the mayor said. “A lot of strange things happen in Topeka when the session starts wrapping up in April.

“In the past, we’ve weathered the storms up there and come out pretty well. But we certainly expect some storms this year.”

Reach Bill Wilson at 316-268-6290 or bwilson@wichitaeagle.com.

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