The Manhattan City commission is considering raising the sales tax because of a decreased amount of money in the General Fund for 2024. 

According to the City of Manhattan website, “The general fund is the principal fund of the city which accounts for all financial transactions not accounted for in other funds.” At the beginning of 2023, the general fund had a cash balance around $16 million, and the preliminary estimate today stands around $10 million. 

At the City Commission Work Session on Tuesday, Deputy City Manager Jason Hilgers said there was a drop in the fund’s cash balance and inflationary costs for city equipment are staggering. 

“Each year the cost of goods, services, contracts, gas, electricity and vehicles are increasing,” Hilgers said. 

Hilgers said in the meeting agenda summary the money in the general fund cannot keep up with community needs.

“In order to provide consistent services to the community from the general fund, either a consistent revenue stream has to be utilized, or revenue streams that fluctuate or remain volatile must be supported by healthy cash balances,” Hilgers said. 

At the meeting, Hilgers said the City Commission should consider raising the permanent sales tax from 1% to 1.5% or 2%.

 “A half percent sales tax increase will generate around $7.5 to $8 million, while a full percent sales tax increase could generate up to $16 million,” Hilgers said. 

To pass a permanent sales tax increase, it would require over 50% resident approval. 

If the commission wants to put a permanent sales tax increase on the August ballot, a resolution is owed to the county by June 3. 

“I am in favor of at least a .5 increase on sales tax, maybe .75, but I am not sure we can get to one,” committee member Wynn Butler said. “I am hesitant to increase the sales tax to over 10%.” 

As of the meeting, four of the five committee members would move to put the proposed sales tax on the August ballot up to a .5% increase.