Lane Eisenbart, of Lawrence, looks over some of the entries of the Lawrence Art Auction. City leaders are hoping to have a new arts district operating by August.

It is City Hall’s version of baptism by fire.

A new crop of city commissioners will take office on April 14. Just a few weeks later, they will be bombarded by documents and data and will be asked to make up or down decisions about the 2010 budget.

And this year, the fire may be a little hotter than usual.

City Hall leaders are bracing themselves for perhaps the largest decline in property values in recent memory. Very preliminary data from the Douglas County Appraiser’s office shows the average selling price of homes in Douglas County so far in 2009 is down by about 8 percent.

If that indeed becomes the trend, such a decline in property values would reduce city revenues by nearly $2 million — unless city commissioners raise the property tax rate.

In addition, Gov. Kathleen Sebelius has proposed a reduction of about $1 million in state funding to the city.

These possibilities have social service agencies, city employees and other groups that rely on city funding on edge.

Here’s a look at how the eight candidates running for three seats on the Lawrence City Commission view several issues surrounding the 2010 budget.

Issue: Raising revenue

In 2004 — when the city’s economy was humming at a faster pace — the city’s property tax rate stood at 28.065 mills. Today, it has dropped to 26.688 mills. In the meantime, property values were going up, which means many people’s property tax bills went up, too.

But as commissioners prepare to craft the 2010 budget, that likely won’t be the case. Property values, on average, declined slightly last year, and are expected to move downward again this year.

None of the city commission candidates, however, say that increasing property taxes is their first option for dealing with the budget.

Candidates for the April 7 election were split on other ways to raise city revenues. In particular, two camps emerged on whether the city should begin charging more impact fees — fees charged to developments to cover costs related to increased infrastructure and services.

Candidates Gwen Klingenberg, Aron Cromwell, Dennis Constance and Tom Johnson all expressed varying levels of support for impact fees, as long as they are properly administered.

“I think they are important because they could help keep people from paying someone else’s share of a tax,” Klingenberg said.

But opponents have argued that new development already pays for much of the new infrastructure that it requires, and that impact fees end up charging particular developments for services that the entire community benefits from.

Candidates Lance Johnson, Mike Amyx, Price Banks and James Bush all expressed varying levels of opposition to the fees.

“I think it is an unfair taxation tool,” Lance Johnson said.

Issue: Balanced budget

The year 2006 is notable when it comes to city budgets. In 2006, the City Commission decided to dip into its fund balance — the equivalent of a savings account — to the tune of $3.3 million to avoid cutting some services or raising taxes. The current City Commission has not continued that trend. General fund spending in 2007 and 2008 ran slightly below the amount of revenues the city collected.

As a result, the City Commission has about $12 million in fund balances to work with as part of the 2010 budget. With the 2010 budget expected to be tight, commission candidates had differing views on whether to dip into the city’s saving account to ward off service cuts or tax increases.

Banks, Bush, Constance and Klingenberg all expressed some openness to using the fund balances. Bush said he likely would prefer using a portion of the fund balance to keep services running than increasing taxes. Klingenberg said she would be open to using the money to fund “basic needs,” but would not use it to support new infrastructure growth. Banks, who used to work at City Hall as the director of planning, said he would question whether the fund balances needed to be so large. Constance said he thought using a portion of the fund could be appropriate.

“It is sort of like a savings account, and what is the use of having it if you don’t use it when you really need it?” Constance said.

Cromwell and Tom Johnson both said they would only use the fund for unforeseen emergencies, and would not use it as a way to cushion the city from tough budget decisions.

Lance Johnson and Amyx both said they were leaning against using such money. Lance Johnson said he would only use the fund for “short-term cash flow situations.” Amyx was on the 2006 commission that approved the use of the funds. But he said he has made it a priority to rebuild the fund during the last two years.

Issue: Government growth

Here are a couple of statistics that candidates were presented with when asked about the size of Lawrence government: From 2004 to 2009, the number of city employees has grown by 8.3 percent. But since 2007, employee numbers are down 2.5 percent.

Total city spending has grown by 32 percent, or about 6.4 percent per year, from 2004 to what is budgeted for 2009.

Most candidates said they did not think city government had gotten too large. Banks was an exception. He said there’s “tremendous waste and inefficiency” in City Hall, and said much of it was from an overly complicated development process that creates “make-work” for the staff.

Lance Johnson said he thought it was prudent that the city had started to adjust employee levels downward, but said he thought the overall rate of city spending still seemed high.

Klingenberg said she thought some city departments likely were understaffed, and said she thought the bulk of any overspending by the city had been for infrastructure to support new development

Tom Johnson said he thought the number of city employees probably was fine given the amount of services the city provides. But he said the city had not done a good enough job matching spending growth with growth in property valuations.

Amyx, Cromwell and Constance all said the size and spending levels of government were generally acceptable given the services the city provides, inflation rates, and the fact that the city had been asked to take on several responsibilities previously funded by state or federal government.

Issue: Outside agency funding

Providing funding for social service agencies during these tight economic times has been an issue in the race since the early days of the campaign.

No City Commission candidate has been campaigning on the idea of cutting funding to social service agencies, but some have said that city data shows that maintaining the pace of city funding growth for outside agencies may be difficult.

From 2004 to 2009, the amount of city property tax funding for outside agencies increased by 51.6 percent, or about 10 percent per year. Those numbers don’t include funding for economic development agencies — such as the Chamber of Commerce, Downtown Lawrence Inc. and the Lawrence Douglas County Bioscience Authority. With those economic development groups included in the mix, outside agency funding has grown by 86.6 percent from 2004 to 2009.

But four candidates — Cromwell, Constance, Tom Johnson and Klingenberg — have made preserving social service funding at current levels a prime point of their campaigns.

“I think those agencies are going to be more and more hard-pressed,” Cromwell said. “I think we’ve been a little behind in spending on some of these social service issues. Some of that growth is catching up with where we should have been before.”

The other four candidates have said they would try to avoid cuts, but said some cuts — at least on a temporary basis — may be unavoidable given the current economic situation.

“That type of growth is probably not sustainable without some other changes taking place,” said Bush. “We’re hearing from some candidates who are very pro-social services but they’re not willing to do some of the difficult, tough things that need to be done to grow the tax base. To me, there is a disconnect there.”