Mayor's Community Update

Mayor’s Community Update:

Every year around this time the City publishes the proposed budget for the upcoming calendar year and the City Council holds a public hearing and passes the proposed budget. With that in mind, I want to focus on (and hopefully provide some enlightening information) the 2024 budget for the City of Colby. 

There are several sources of revenue that are used to operate the City throughout the year. Some of the major sources include property tax, sales tax, utilities, transient guest taxes and grants. Out of these revenue sources, property taxes usually draw the most attention. 

As I mentioned, there is a public hearing held to hear comments from the public regarding the proposed budget before the City Council adopts the budget. However, there is likely a second public hearing that also would need to be held prior to the budget adoption and that is a hearing regarding the "Revenue Neutral Rate". What is Revenue Neutral Rate? Revenue neutral is when a taxing jurisdiction budgets the exact same amount of property tax revenue, in dollars, for the upcoming budget year as they did for the current year. For example, if the City uses $1 million of property tax revenue in 2024, being revenue neutral means the City plans to only use $1 million in 2025, as well. If the City plans to use more property tax revenue in the next budget year compared to the current year, even $1 more, they will exceed revenue neutral and need to hold a public hearing. 

As we all know from our personal budgets, it costs more every year to meet our basic wants and needs of food, clothing, transportation, and entertainment. That is due to annual rate of inflation on goods and services. It is the same for businesses and public entities, such as the City. It costs more every year for the City to provide the services necessary to keep Colby thriving and prosperous. Therefore, the City cannot sustain services to the community with the same amount of money every year. In order to maintain services, there hast o be an increase of revenue from one year to the next. 

There are two ways in which the City receives more money from property taxes. The assessed value of property within the city limits of Colby increases or the city has to increase the mill levy for property taxes within the city limit. If the assessed value of property increases, then each mill generates a greater amount of revenue for the City, which results in the City exceeding the Revenue Neutral Rate with the mill levy remaining unchanged. Also, if the assessed value of property increases, that indicates that Colby is prospering and growing, which is good. In the last 10 years, the assessed value of property in Colby has gone from $44,674.557 to $63,771.759. That is an average increase of 1.9 million dollars per year, which is outstanding growth and that is why the City has been able to maintain a relatively flat mill rate. The mill rate for the City of Colby in the last 10 years has gone from 33.254 mills to 33.866 mills. That is only a .612 mill increase over a 10-year period. 

As a property owner, you may be wondering why the amount you are paying in property taxes continues to increase if the mill rate isn't increasing much. The reason is the assessed value of your property is increasing. In other words, your property is worth more now that it was in prior years. Unemployment is low in Colby and the demand for housing is high in Colby. That indicates that Colby is thriving and there is a strong desire for people to move to Colby. These are strong indicators of a vibrant community and as a result, property continues to appreciate in value. 

The City Administrator, the Finance Director, the City Council and I as Mayor have all been committed to keeping the mill rate as low as possible and we will continue to strive to find ways to fund the City while keeping the burden as low as possible on the property owners of Colby. It is just another way we are "working together to build a more prosperous community".  

Mayor - Lee Leiker