Clay City council approves 5‑mill ad valorem levy after weeks of debate over tracking and bonds

The Clay City Council on May 12 approved Ordinance 26‑02, a new 5‑mill ad valorem levy described by the mayor as intended for education‑related public purposes. Councilors amended the ordinance during its second reading to change several provisions — including replacing the previously used word "designated/exclusive" with the word "intent" — before voting to pass the measure.

Mayor (speaker 1) opened the public hearing on the measure and explained council staff believed adopting the levy now would avoid a costly referendum mandated under recent state changes if the council delayed. The mayor said failing to act would create an estimated budget shortfall of about $600,000 for the city next fiscal year.

The hearing drew a string of public comments both for and against the levy. "I'm a staunch no new taxes," said Bill McAllister (speaker 12), who asked the council to explain whether the measure was a reinstatement of a past levy. Polly McClure (speaker 3) and Matt Clay (speaker 12) likewise asked whether the funds would be additional to existing school allocations. Supporters including Mark Howell (speaker 15) and Eddie Dawson (speaker 13) urged the council to restore the levy to bolster school funding and accountability.

Council debate focused on two issues: whether the levy would be a permanent, legally separate fund the bondholders could access, and whether the council should earmark proceeds or retain flexibility. Councilor Thompson (speaker 6) argued the city already has high reserves and questioned whether the tax was necessary, citing historical totals and recent expenditures. "We removed this tax. It's costing each household roughly $300 a year," he said, and noted recent city spending on capital projects and schools. Councilor Youngblood (speaker 7), chairing the finance committee, countered that the levy produced revenue the city has relied on for improvements and that without it the municipality could not pursue planned projects such as acquiring the DSY property.

City legal counsel (speaker 17) advised that, under the council's rules, the changes described in the meeting — removing exclusive designations and changing language to an intent — could be treated as amendments and voted on without another public hearing. Counsel also said he would review bond covenants and applicable case law to determine whether earmarking funds could conflict with bond agreements.

After a motion to amend the ordinance to strike section 3, remove the word "exclusively" from the funding language and replace references to "designated" with "intent," the council voted on the amendment by roll call and then voted to approve Ordinance 26‑02 as amended. The roll‑call recorded one no vote from Councilor Thompson and affirmative votes from the mayor and the other present councilors; the mayor declared the ordinance passed.

The council directed that the finance committee meet with school principals and outside agencies to lay out line‑item needs and implement budget tracking for any funds ultimately allocated to education. The mayor and finance chair said the city would continue to present school allocations as a line item in the general fund budget rather than moving proceeds into a separately restricted fund to avoid potential conflicts with bond covenants.

What happens next: Ordinance 26‑02 passed on second reading as amended. Council members said finance staff and external auditors will be asked to provide tracking and reporting on education expenditures, and principals are expected to present needs to the finance committee before allocations are finalized.