Lawrence city commissioners inched closer Tuesday to a budget agreement that would avoid a property tax hike next year, but would spend down nearly $894,000 of the city’s cash reserves.

The $87.1 million spending plan for 2016 includes funding for modest pay raises for Lawrence Police Department and Lawrence-Douglas County Fire Medical employees who are part of those departments’ collective bargaining units.

It also includes $350,000 to restore money for a program the city stopped funding in 2008 that pays for mental health and social workers in the Lawrence school district.

But to accomplish all that without the property tax increase that interim city manager Diane Stoddard originally recommended, commissioners will have to use some creative measures, such as transferring some general fund expenses onto special revenue funds, and spending down some of the city’s cash reserves.

City staff had originally proposed a budget that called for about $920,600 in new property taxes. That would have raised the city’s tax rate by 1.057 mills, or $19.45 in tax on a home valued at $160,000.

During a study session last week, however, all five commissioners indicated they were not interested in any property tax hike, and they directed staff to revise the budget plan. That revised plan was presented at another study session Tuesday.

It called for trimming about $543,000 in general fund expenses, while raising the estimated revenue the city will receive from licenses and permits by $250,000.

Some of the proposed cuts actually involve shifting the source of funding for certain expenses onto other special revenue funds. Among those was the $350,000 for the school district mental health and social worker program, which is now proposed to come from the special alcohol fund, money the city receives from state liquor taxes.

But Stoddard cautioned that the special alcohol fund may be vulnerable in the future if the Kansas Legislature decides to stop transferring that money to local governments to shore up the state’s own budget.

The revised plan also reduced funding for overtime in the police department by nearly $189,000, and it shifted funding for two new positions — a Geographic Information System analyst and a municipal court support staff position — to other special revenue funds instead of the general fund.

During a study session last week, Commissioner Matthew Herbert questioned the need for the city to keep as much money as it does in cash reserves. He noted that the city’s policy has been to maintain balances in each of its funds of 15 to 30 percent of annual expenditures.

Commissioners are expected to take their first formal vote on the budget on Aug. 4, when they will hold a public hearing and vote to publish a proposed budget. That action will set the upper limit on how much money the city can raise through property taxes next year.

After that, commissioners can act to reduce the proposed budget, but cannot add to it. A final vote to adopt the budget is expected on Aug. 11.