City finances in the first half of 2002 were mixed, reflecting a weak local economy.

On the one hand, the city government’s overall level of spending was “significantly below budgeted levels,” City Finance Director Ed Mullins said in a written report to the Lawrence City Commission.

On the other hand, Mullins said, the city’s income was lower than expected.

“The financial problems plaguing the state are starting to appear in Lawrence,” Mullins wrote.

Much of what he had to say, however, are problems city officials have known about for a while. Interest rates continue to be low, which means the city is seeing little gain on its reserve funds. And sales taxes, stagnant for much of the last year, have started to slide.

City officials reported earlier this month that combined revenues from the city sales tax and the city’s share of the countywide sales tax were $1.39 million in May, down 8 percent from $1.52 million in May 2001. Sales tax revenues were nearly $1.36 million in June, down 5.5 percent from $1.44 million a year earlier.

Those declines offset gains earlier in the year. The $8.71 million in total collections has fallen behind the $8.76 million collected through the first six months of 2001.

“Consumer confidence has been hit with layoffs, accounting scandals and a lack of faith in the stock market,” Mullins wrote. “As a result, a rebound in consumer spending is not anticipated.

“However, sales in the second half are typically larger than the first half,” he wrote. “As a result, the amounts budgeted for sales tax should be met or exceeded.”

Parks and Recreation also has financial problems. Enrollment in the department’s classes has been lower than expected, as has been income from renting the department’s buildings for events. Those two factors could lead to a $70,000 shortfall in the recreation fund, Mullins wrote, prompting the department to shift funds and reduce spending.

Revenues from Eagle Bend Golf Course also have been lower than expected, Mullins wrote, but that may be cured by the hot, dry weather of July.

Despite his gloomy assessment of the economy, Mullins said things could be worse.

“Lawrence appears to be impacted less than cities in other areas of the state,” he said, “including (those in) Johnson County.”