As storm clouds darken on the national economy, a new survey reveals the city’s rainy-day fund is not as large as most.

A recently released survey by the National League of Cities found that Lawrence’s primary safety-net fund is below the national average, and has been declining while other communities have been rapidly building their funds.

“I still think we’re positioned well to deal with a downturn,” said City Commissioner Rob Chestnut, who said Lawrence’s economy may not be as volatile as those in other parts of the country where housing values have dropped by 20 percent or more.

The survey – which used results from 319 cities of 10,000 population or more – clearly showed that Lawrence was heading in an opposite direction from most of those surveyed.

The survey examined the amount of “general fund balances” cities are carrying. The fund balances generally can be thought of as a savings account that the city can dip into during emergencies or for special initiatives.

At the end of 2008, cities are expected to have general fund balances totaling 24.4 percent of their general expenditures. In Lawrence, that number is projected to be 16.9 percent.

The survey also found that beginning in 2006, governments began seeing warning signs of weakness in tax collections and started ramping up the amount held in their rainy-day funds.

But in Lawrence, the total amount in the general fund balance has declined significantly from $14.5 million at the end of 2005 to a projected $9.5 million at the end of 2008.

The biggest drop came from 2005 to 2006, when the previous City Commission reduced the property tax mill levy more than recommended by staff, and increased expenditures. The result was that in one year the city’s rainy-day fund went from $14.4 million to $11 million.

City Commissioner Sue Hack – who was on that commission – said commissioners at the time studied the issue hard and determined the fund balance could be safely reduced because it was near an all-time high.

“We worked hard to not raise property taxes,” Hack said. “That has been the plea from the public: Please do not increase our property taxes.”

The previous commission – which included all the current members except for Mayor Mike Dever and Chestnut – is not the only group to significantly dip into the fund balances. The current commission has authorized the city to reduce the fund from $11.4 million to $9.5 million this year.

Chestnut said dipping into the fund this year was necessary to avoid major reductions in services, especially to street maintenance.

Thus far, city leaders are not expressing concern about the fund balance levels. The drop in fund balance totals comes at the same time some economists are predicting the beginning of a prolonged recession.

But City Manager David Corliss said he believes the city has been aggressive in controlling its expenses. The city made significant midyear budget reductions, and it ended up spending less in 2007 than it did in 2006.

“We’ve already started the hard work of saying no to a number of projects and initiatives,” Corliss said.

Corliss also thinks the city is turning the corner on balancing expenses with revenues. He said the 2009 budget, which was approved this summer, does not anticipate dipping into the city’s fund balance.

But he also said he could not reasonably project that the fund balance would grow in 2009.

“I don’t think anyone would say that we’re well-poised to deal with a significant economic downturn, but we think we have the right mindset to closely monitor and, if necessary, reduce expenditures.”