Will state's lower bond rating hurt Salina?

By Tim Horan

The Salina Journal

Will the state of Kansas' bond rating drop have an effect on Salina's bond rating?

"They say not directly," Rod Franz, Salina's director of finance and administration, told city commissioners during a study session Monday.

Moody's Investors Service last month dropped the state's bond rating from AA1 to AA2, its third-highest rating. The change came after state budget officials said tax revenues had dropped 45 percent from a year ago; so far this year, Kansas has taken in nearly half a billion dollars less than it did in the last fiscal year, according to published reports.

During its last bond review last year, Salina's bond rating dropped from AA2 to AA3.

City Manager Jason Gage said he thought the city's bond rating could drop again.

"The state of Kansas has been downgraded because of their budget circumstances," Franz said. "That can't be good for us."

"They look at other things other than the criteria that they publish," Franz said of rating agencies. "Those are a lot more subjective."

Franz said that many measures used to determine the bond rating can't be controlled by the city government.

"They look at things like average personal income. That is nothing we can affect in an immediate sense; in Salina that is relatively low," Franz said.

Bond ratings are an estimate of a government's ability to repay its debt, and a lower rating means higher interest rates.

General fund a problem

Franz told commissioners that looking at the next budget year, Salina's general fund budget carryover for 2015 is expected to be about half what had been budgeted -- about $2.5 million instead of $5 million.

"It is not enough in our minds to show any impact to the interest rate, which is good," Gage said. "But we don't want a series of declines. We have to plan for that (general) fund level to go up. It does create a lot of policy questions because we have been holding back on operations significantly."

Gage said that while sales tax collections are up 2.6 percent, property tax collections are not growing.

"The general fund is the problem," he said. "It is going to continue to be a problem. We have seen very little growth in revenue sources."

In a response to Commissioner Kaye Crawford's question about how the city budget is faring overall, Gage said that some individual areas of the budget look good.

"Sanitation is doing well. Solid waste is a challenge," he said. "We'll deal with that."

He said the solid waste budget currently is in good shape. However, McPherson County, which currently uses the city landfill, is building a facility which eventually will take revenue away from Salina.

BiCenter project on track

Also Monday, commissioners heard that final plans and costs for renovation of the Salina Bicentennial Center will be complete by July 1. Construction could start before the end of July.

However, the final phase of the estimated $10.5 million project won't be finished until the summer of 2015, according to Todd Knight, of McCown Gordon Construction of Manhattan.

Knight said a key issue will be working around the Bicentennial Center's schedule. The facility will not be able to host events while some of the renovations are being completed.

David Greusel of Convergence Design of Kansas City showed artist images of many of the pro-jects. He said there will be an art element but "that art project is still being developed."

Some of the major noticeable changes will include outside work, ticket booths, lobby, concessions and restrooms.

"It will be light years ahead of what you have," Greusel said of the concessions. "More than hot dogs on rollers."

One concourse will have the "Smoky Hill Grill" and the other the "Midway Cafe."

Designers weren't able to incorporate executive suites because of the Bicentennial Center structure but are designing several suite areas similar to those in Bramlage Coliseum at Kansas State University.

"We are thinking 30 years ahead," Commissioner Jon Blanchard said.

Greusel said the primary sub-projects include: new roof; new heating/cooling system for the arena; complete renovation of production kitchen and arena concession stands; renovated public restrooms; new disabled seating platforms and premium seats; renovated lobby; new north outdoor plaza; new arena entries at north and south sides; renovated arena concourses; renovated dressing and locker rooms backstage; new interior wayfinding signage; repainted metal panels at exterior; renovated VIP lounge; renovated administration space with new box offices north and south; new lighted entrance canopies at lobby; new arena entrances; upgraded arena roof structure for show rigging loads; and life safety enhancements.

(c)2014 The Salina Journal