Colby Council Keeps Mill Levy Flat in Preliminary 2027 Budget Direction
June 30, 2026
The Colby City Council took its first detailed look at the proposed 2027 city budget during a special budget workshop June 30, ultimately directing staff to prepare a final budget that keeps the city's mill levy unchanged from 2026 while accepting additional revenue generated by increased property valuations.
After spending almost three hours in their workshop, council members took a closer look at each major fund before formal budget hearings later this summer. Finance Director Deb Zerr and City Manager Ron Alexander outlined tax-supported funds, utility operations, and long-term financial challenges facing the city. Council member Jared Johnson was the only member absent.
Zerr explained the preliminary budget was prepared below the Revenue Neutral Rate (RNR), but council members voted to instead maintain the current mill levy and capture approximately $46,000 in additional revenue generated by higher property valuations.
Alexander emphasized that property taxes account for only about 20 percent of the city's overall operating budget.
"The rest of the budget is paid for through sales tax revenue," he said, noting Colby's diverse revenue sources have helped keep the city's property tax rate relatively low.
Current property taxes in Colby total 169.452 mills, with the city receiving 34.93 mills, or roughly 21 percent of the total tax bill. Thomas County receives 47.443 mills, USD 315 collects 45.683 mills, Colby Community College receives 39.137 mills, while the remainder supports the cemetery district and State of Kansas. The preliminary budget keeps the city's mill levy essentially unchanged for 2027.
Although proposed expenditures increase by roughly $400,000 over 2026, Zerr explained most of that growth is tied directly to revenue-producing operations rather than expanded spending.
The largest increase, about $177,000, reflects additional aviation fuel purchases at the airport, where higher fuel sales generate corresponding revenue. Other increases include a lease payment for a new fire truck, additional maintenance at the Colby Aquatic Park and planned staffing growth within the police department as the community is expected to expand.
Alexander cautioned that while the city is looking stable, the General Fund has recently outspent collected revenue, requiring the use of unencumbered cash reserves. He said that trend will need to be addressed to remain sustainable over the long term.
Utility funds received significant attention during the workshop.
Officials highlighted recent investments in backup electric generators, with the arrival of six used units, and a new 3 mega-watt unit. Once operational, Colby expects to have the capacity to sell excess electricity back into the regional power grid, creating a potential new revenue stream that could approach $100,000 per month under favorable market conditions.
The Water Utility Fund remains a concern despite slightly lower projected expenditures. Officials said the city's ending cash balance could decline significantly in 2027 because current water rates remain below market levels. The city plans additional analysis before considering future adjustments to its recently implemented tiered rate structure, with Waterworth expected to present recommendations during a July council meeting.
The Sewer Utility Fund is expected to improve considerably after the city's wastewater treatment plant debt is paid off next year, reducing annual expenses by more than $250,000.
Solid waste(Sanitation) operations remain one of the city's biggest financial challenges.
Alexander said the city has already reduced labor costs, eliminated separate grass collection routes and improved operational efficiency, but rising landfill costs continue placing pressure on the fund. Colby currently pays approximately $275,000 annually to Thomas County for landfill services.
Council members also discussed recycling costs, noting cardboard is the only material that consistently generates revenue while most other recyclables cost more to process than they return. Officials indicated a preliminary $2 monthly increase in residential trash rates may be needed to improve the fund's long-term stability.
Recreation and employee benefits were identified as two additional areas needing attention. Recreation officials continue evaluating whether the current 3-mill levy is sufficient to maintain city facilities and support future events, while employee benefits remain one of the city's largest expenses at approximately $2.09 million annually. Blue Cross Blue Shield premiums alone exceed $1 million each year.
At the conclusion of the workshop, council members unanimously directed staff to prepare the final proposed budget using the current mill levy while incorporating increased property valuations.
City officials stressed that if property owners see higher tax bills in 2027, it will be due to increased assessed property values rather than an increase in the city's tax rate. The proposed budget will continue through the required public hearing process before formal adoption later this year.