During a recent government meeting, officials discussed the potential financial implications of maintaining property taxes at the 2024 revenue neutral rate, which could lead to a budget revenue reduction of approximately $1.8 million. This reduction would bring the total mill levy down to 1.6 mills, equating to a revenue decrease of around $2.82 million. The ongoing nature of this reduction raises concerns about the risk of a credit rating downgrade, which could subsequently increase the cost of issuing debt.

The discussion highlighted the importance of credit ratings, with a AAA rating potentially saving the city between 20 to 50 basis points on bond issuances. For instance, if the city were to issue $50 million in bonds for a project like the Justice Center, a 20 basis point savings could result in $1.4 million in savings, while a 50 basis point spread could save $3.3 million. When considering the city’s total outstanding debt of $150 million, these savings could range from $3.8 million to $9.5 million, depending on the credit rating.

Additionally, the meeting touched on the impact of residential versus commercial growth on property tax revenue. It was noted that cities like Shawnee, Overland Park, and Olathe have a higher proportion of residential properties compared to Lenexa, which has a commercial base comprising about 44% of its tax revenue. This disparity in tax base composition could influence future revenue generation and budget planning for the respective cities.