City balances budget despite rough economy

The Lawrence City Hall, 6 E. Sixth St.

A combination of spending cuts and revenue from a trio of new sales taxes helped the city end 2009 with a balanced general fund budget despite a down economy.

“I’m very pleased,” Mayor Rob Chestnut said. “I want to get in that position where in good times and bad we can count on having a balanced budget.”

The 2009 budget marked the third year in a row that the city spent less than it received in revenue in its general operating fund. The general fund is the city’s largest and funds most of the city’s basic services.

For the year — according to preliminary numbers that could change once the city goes through its formal audit — the city’s general fund received $59.7 million in revenues and spent $59.4 million. That allowed the city’s operating fund balance — kind of like a savings account — to grow to $12.5 million, which is its highest level since it reached $14.4 million in 2005.

Overall, revenues — including the new sales taxes — grew by 6.7 percent. Expenses — also including projects funded by the new sales taxes — grew by 7.8 percent.

Revenues were helped by a trio of new sales taxes that voters approved in late 2008. The taxes, which began being collected in April, helped overall sales tax revenues grow from $23.1 million in 2008 to $27.0 million in 2009. The sales taxes went to streets, infrastructure, public safety and public transit.

Expenditure growth was curtailed as City Manager David Corliss ordered several mid-year spending cuts. The city started 2009 with 15 fewer positions. During the course of the year, the city left 11 other vacant positions unfilled.

Cuts were spread out among a variety of departments. Of the 26 line-items in the general fund, 14 of them spent less than in 2008.

In addition to the general fund, the city budget includes 13 other smaller funds. Results in those funds were mixed. Seven of the funds ended the year with revenues exceeding expenses. The remaining six — library, public transit, solid waste, parking, stormwater, and bond and interest — had to dip into their fund balances to make up for shortfalls.

Other items of note from the year-end report:

• The city’s second largest fund — the water and wastewater fund — finished with revenues $383,000 above expenses. Its fund balance is $13.6 million, at its highest level since 2006.

• The solid waste fund, which funds trash service, continued to lose money. Its shortfall is estimated at $69,000. But Corliss said he was pleased the deficit had shrunk from the $500,000 mark posted in 2008. The department cut its losses by deferring some equipment purchases and leaving several positions unfilled during parts of the year. The fund, however, still has a $2.3 million fund balance.

• The public transit fund finished the year with a $116,000 shortfall. But Corliss said that was largely because the department did not receive a full-year’s worth of sales tax collections. This year, with a full year of the new sales taxes in place, the fund is expected to have a funding surplus of $774,000. The fund is in need of money. Its fund balance finished 2009 at $240,000, its lowest level on record.

• The bond and interest fund — the account the city uses to pays its debts — had expenses that were $840,000 over revenue. Corliss said the city had planned to operate that fund at a deficit in 2009, in part because the account had about a $9 million fund balance. Even with the shortfall, the city still has the capacity to issue about $5 million worth of new debt per year from the fund without increasing the city’s property tax rate, Corliss said.