Real Estate Information Archive

November 23, 2008 10:00 AM

Outlook for the city is upbeat

Economic trends 'holding strong'

Kathryn Waller
kwaller@themercury.com

Citing a steady increase in sales tax revenue and property tax valuations over the past few years, city finance director Bernie Hayen said that he is "optimistic" about Manhattan's economic future.

Despite an announcement that the city may have to temporarily withhold $120,000 from the Riley County Police Department's allocation due to a rise in delinquent property taxes in 2008, Hayen said the small increase of delinquencies is not indicative of a poor local economy.  "I have no reason to believe that this portends serious trouble," Hayen said, adding that the main problem with the RCPD fund stemmed simply from the fact that no delinquency rate was factored into the 2008 budget.

"Clearly, if both of our main revenue sources (sales taxes and property taxes) showed a consistent decline for three or four months in a row, that would be worrisome," he said. But he added that the city "constantly monitors the economic trends" and the numbers seem to be holding strong. "I think we try to be real good stewards of where we let our finances go," he said.

Although Hayen admitted that there has been a steep rise in special assessment delinquencies in Manhattan during recently (up to nearly 5 percent in fiscal year 2008), the finance director said the issue lies in the personal financial problems of a few individuals only and is not reflective of the city's economic stability.  "We understand that the problem is with one or two developers, not with everyone," he said.

On a larger scale, Hayen said Manhattan's relationship to K-State and Fort Riley may help shield the city against the struggles of a failing global economy.  "Economists always say that communities who have a diverse economy — especially those near large universities and military bases — tend to be better insulated from times of economic severity. And we are fortunate to have both," Hayen explained. "It could very well be that we weather the storm better than most places."

However, even though Manhattan may be naturally positioned to withstand a slowing market, Hayen said that the prospect of a  financial shortfall is "always a concern." He said the city has a three-tiered plan to ensure financial stability during a recession or shortfall period.

The plan, which was devised a few years ago after the city was shorted nearly $1 million in state sales tax revenue, focuses on cutting travel expenses, lowering capital improvement spending and (if necessary) establishing a hiring freeze.  "During a time like that, you have to keep the tax burdens low," Hayen said. "You cut out all the frills and the fluff. If there are things that we can go without, then we will."

While global headlines portray a rather dismal picture of the long-term financial future, for now at least, Hayen said he has not seen an impact in Manhattan's numbers — something he believes is a good sign.  "I will really be interested to see if the sales figures from September and October mirror the national trends and go down," said Hayen of the sales reports that should be released shortly after Thanksgiving and Christmas respectively. "But so far, we've seen nothing that indicates a decline."