DALLAS — With its overall debt load falling, Wichita, Kan., will bring $73 million of general obligation bonds to market this month for streets, bridges and highways.
With this issue, the state's largest city will have about $533 million of general obligation bond bonds outstanding, according to Moody's Investors Service.
For all forms of debt, including revenue bonds, the city dipped below $1 billion last year, city officials said.
Wichita surpassed $1 billion of debt in 2010, city budget officer Mark Manning reported in the certified annual financial report released last month. The outstanding debt dropped in 2011 and 2012 before sinking below $894 million last year.
During 2013, the city only issued $12.8 million in new bonded debt, while paying off $124.4 million, including $90.9 million in general obligation bonds and $33.5 million in revenue bonds.
The southern Kansas city of 382,368 people has taken advantage of 14 refunding opportunities to lower interest costs since 2009, officials said.
Two series of refundings in July saved the city about $4.8 million in debt service costs through 2030, officials said
Previous refundings saved more than $28 million, they added.
The city council is expected to approve a $577.9 million budget by the end of August, including $218.2 million in the general fund.
"The 2015 proposed budget is balanced, focuses on outcomes in priority areas, does not require service reductions and reflects a stable and sound foundation to support future growth," city manager Robert Layton wrote in a presentation of the fiscal year budget.
The city is considering a 1-cent sales tax referendum in November to fund water and road improvements, job development, and street repair and maintenance. The sales tax hike would be in place for five years and is expected to generate approximately $400 million.
Wichita currently receives about 58.43% of Sedgwick County's 1% sales tax. About half of the city's share of the county-wide local option sales tax is dedicated for capital projects and the other half for property tax relief.
Property taxes represent the city's largest general fund revenue source, at 40.5% of fiscal 2013 general fund revenues. Franchise fees make up 18.7%, and sales tax revenues provide 13%.
"Given the city's recent history of favorable budget-to-actual variances and stable reserves projected in the city's five-year financial forecast, we expect that the city will continue its demonstrated ability to maintain structural balance and satisfactory reserve levels consistent with its formal policy," Moody's analyst Tatiana Killen noted.
Wichita's $20.7 billion tax base has experienced modest growth in recent years, averaging 0.1% annual growth over the past five years, according to Killen. Most recently, the city experienced the first decline in valuation in 2012 in over a decade. The modest 1.3% decline can be attributed to declines in residential and commercial property values, Killen said.
The 2013 valuation reflected very modest growth of 0.03%, a trend which the city expects to continue, she noted. Preliminary 2014 valuation figures indicates continued growth with a 1.2% increase in valuation.
While Wichita gains most of its economic muscle from the aviation industry, the concentration in that sector also opens the city to risk, Killen warned.
The Wichita region lost 13,000 of its nearly 38,000 aircraft manufacturing jobs between 2008 and 2010. The numbers do not capture local jobs in the numerous related businesses that are dependent on aircraft manufacturing, Killen said. More recently, in 2013, Boeing closed its defense plant in Wichita due to cuts in federal defense spending.
"Given the declines in the aerospace industry, the city's unemployment levels may remain above the state's in the medium term and higher than the city's own pre-recession levels," Killen said.
