For the first time in recent years, the financial news at City Hall won’t be all doom and gloom next week when Lawrence City commissioners begin budget talks.

Property valuations are expected to rise 6 percent, putting extra money in city coffers, and sales tax receipts have started turning upward in recent months after two years of stagnation.

“At least the numbers are improving,” Commissioner Sue Hack said. “That’s a good thing.”

But if commissioners have a little more money to work with in the next budget, they might have even more new expenses.

Fuel prices are rising, and so are health care costs for the city’s more than 700 employees. New firefighters will be hired to staff a new station, and the city must find a way to pay the salaries of 11 traffic unit police officers whose grant funding ends next year.

That’s just the beginning. And it leaves officials wondering if 2005 will be another year of choosing between belt-tightening or tax increases.

“I don’t know that yet,” said Assistant City Manager Debbie Van Saun, who oversees the budget process for the city. “I really don’t.”

This round of budget talks comes a year after commissioners approved the second biggest property tax rate increase of the past decade — 2.49 mills, to 28.065 mills. Those taxes helped support an overall budget of $110 million for 2004.

A mill is $1 of tax for every $1,000 of a property’s assessed valuation.

Commissioners tried to hold down the jump by refusing a cost-of-living pay increase for employees, reducing the street maintenance budget and spending down rainy-day funds for equipment.

City tax collections continue climb in ’04 (4-27-04) Text of Dunfield’s State of the City address (3-30-04) 6News video: Lawrence’s 2004 budget approved (8-29-03)

Commissioner David Schauner said he wanted to hold the line on taxes this year.

“I think we need to put on a cap of what we’ll spend,” he said. “Then we can talk about prioritizing the money within those limits.”

There’s little support for such an approach among Schauner’s colleagues, who say city needs should drive the bottom line instead of vice versa.

“My desire would be, certainly, as low an increase — if any — as possible,” Hack said of a possible tax increase. “But we don’t know the numbers yet.”

Schauner said, though, that allowing taxes to rise too high would make Lawrence less livable.

“We’re already getting substantial increase in revenue from property taxes based on increasing property values,” Schauner said. “For us to add a mill levy increase on top of that just makes it tougher for people on fixed incomes.”

Commissioners will begin their 2005 budget talks in sessions Monday, Tuesday and Wednesday. Commissioners’ work on the budget won’t be completed until they adopt it in August.