Hutchinson City Manager proposes 2-mill levy increase and city sales tax to close budget gap

City Manager Enrico Viegas urged the Hutchinson City Council Thursday to consider a combined approach — a 2-mill increase to the city’s property tax and a city-specific sales tax — to close a projected $873,000 shortfall in the 2026 operating budget and protect the city’s bond rating.

“This is truly one of the most important policy documents that the city puts together,” Viegas told the council, summarizing staff’s budget outlook and the trade-offs behind several scenarios being considered.

Viegas and Finance staff presented three core scenarios: (1) a revenue-neutral path that keeps taxes aligned to prior-year revenue, (2) keeping the mill levy flat, and (3) the proposed 2-mill increase paired with a dedicated sales tax for streets, parks and stormwater. Viegas said the combined 2-mill and sales-tax scenario is the only one in staff modeling that turns the forecast positive in the out years — producing an estimated $3 million improvement in later years — while the revenue-neutral and flat-mill paths leave the city tens of millions short by 2029 under current assumptions.

The presentation explained the difference between “revenue neutral” and a “flat mill levy” and why flat levies can still increase a homeowner’s tax bill when assessed valuations rise. Viegas gave an example using simplified numbers: if assessed value rises while the mill levy is unchanged, total property-tax collections grow even though the city did not…