In a sign of the city's fiscal woes, City Manager David Corliss turned down a raise in his salary as part of his annual evaluation in October 2006. Corliss is pictured in his office at that time. The current fiscal status isn't any better.

Batten down the hatches.

City Hall is ready to sail into choppy waters in 2009, as city leaders likely will be confronted with the first overall decline in Lawrence property values in memory.

“It looks like we’ll be headed into uncharted territory,” said City Commissioner Rob Chestnut — who as vice mayor is expected to be chosen by city commissioners in April to become the city’s next mayor.

The property values are expected to be a major story throughout 2009 both on the real estate front and with local government. Property values are a major component in how much money the city receives in property taxes.

If property values go down — which the Douglas County appraiser has said is likely — city government will receive less in property taxes, unless commissioners decide to increase the mill levy.

“I think that will be the crux of the issue,” Chestnut said. “Whether we increase the mill levy to maintain services or whether we cut services. I think we are going to have to have a discussion about what our core services are and what we believe they should be.”

Commissioners, in essence, had that type of discussion in 2008. Commissioners debated whether the public transit system was a core city service, and ultimately put the issue in the hands of the voters — who approved two sales taxes to keep the system on the road.

City Manager David Corliss said he doesn’t anticipate the debate taking that type of turn in 2009.

“I anticipate a serious discussion about prioritization,” Corliss said, “but it is difficult to see what other large services we have that we would give to the will of the voters.”

But city leaders may have the results of this year’s sales tax elections on their mind in 2009. Corliss said the fact that voters overwhelmingly approved all three sales taxes — two were for the bus system and one was for increased infrastructure funding — may give commissioners pause in making major reductions in city services.

“I think the community supports the current city services, but that makes reducing any of those services challenging,” Corliss said.

City Commission elections also will play a large role in 2009. Voters will elect three commissioners in April. Commissioners Mike Amyx, Boog Highberger and Sue Hack have terms that are expiring. None has yet announced plans on seeking re-election.

Highberger said whether he is there or not, he expects the city will have a hard time finding places to cut the city budget without cutting the level of service that residents also receive.

“We’re really at the point where we are getting as much as we can out of the current staff,” Highberger said “I don’t see any other place where we can cut positions and maintain existing service levels. Just maintaining what we have is going to be the real challenge for next year.”

The city has cut 15 positions — through attrition — from the 2009 budget. Corliss said the city will have to be open to other cost-cutting measures as well.

“We’re going to have to be nimble enough to deal with whatever the economy throws at us,” Corliss said.