photo by: Nick Krug

Lawrence City Hall, 6 E. Sixth St., is pictured on May 3, 2016.

Disagreements about funding allocations to nonprofits and other local agencies were “minor” compared with the decisions the Lawrence City Commission will soon be facing, City Manager Tom Markus warned Tuesday.

A budget work session at City Hall on Tuesday afternoon focused on requests from social service agencies, economic development groups and other outside entities, such as the Lawrence Public Library and Lawrence Humane Society. All together, the groups requested approximately $9.5 million, and the city is recommending they get a total $8.4 million.

When Commissioner Matthew Herbert pushed for more funding for the Lawrence Arts Center, and Vice Mayor Leslie Soden said it should get less, Markus asked them to keep the amounts in perspective.

The city has been struggling to put together a balanced budget for 2017 without raising property taxes, and ways to reduce spending from the general fund — the main fund for city services — still need to be found.

“I know that this is the place these discussions take place, but at the end of the day if you’re really serious about holding your property tax rate, I wouldn’t get too hard and fast about what your actual funding for some of these items are at this point,” Markus said. “Because when we come back, there may be some way tougher decisions to be made about this entire operation that would make some of these adjustments seem minor.”

City Finance Director Bryan Kidney is estimating the city’s assessed valuations — the value of property to be taxed — will increase by 4 percent in 2017. With that estimate last week, he projected a $1.3 million deficit for the general fund. The estimate is now $1.1 million because revenue from sales tax, some of which also goes into the general fund, is “trending higher than anticipated,” he said Tuesday.

On July 1, Douglas County will release information on assessed valuations. If the valuations are less than the 4 percent increase Lawrence leaders are estimating, “we’re going to be really busy coming up with how to make up the difference,” Kidney said.

Last year, the valuations rose by 2 percent.

At last week’s budget work session, Markus told commissioners they’d have to decide between raising property taxes or cutting city staff to fill the deficit in the general fund. Mayor Mike Amyx asked Markus to come back with recommendations that combined a slight increase to property taxes with cuts. Soden asked that property taxes not be raised.

The city currently levies 31.488 mills. A mill is $1 of tax for every $1,000 of a property’s assessed valuation.

Markus has asked heads of city departments to make suggestions on trimming their budgets, he said. Last week, departments presented funding requests totaling more than $198 million.

“Our efforts at this point are to try to come back with no increase in the mill levy,” Markus told commissioners. “So anything you do that adds more burden to that general fund causes us to extract more from other departments. And I assure you that there’s going to be a real possibility of people being laid off.”

The general fund could be stressed further by a request from Douglas County to add four emergency dispatch positions. Through an agreement, the city pays for a portion of the countywide dispatch system. The four additional employees would create an expense of $150,000 from the city’s general fund in 2017.

The amount would put the projected deficit back at $1.25 million, Markus said. A formal proposal from the county about the staff additions has not yet been received.

Markus’ recommended budget will be released Thursday, July 7, and the City Commission will review it at a work session on Tuesday, July 12. Commissioners will have time to make adjustments before passing a budget in August.

Some of the requests from outside agencies were highlighted during the work session.

The city’s Social Service Funding Advisory Board recommended Bert Nash Community Mental Health Center receive $465,785 total for 2017, about $62,000 less than it requested and $37,000 less than it was allocated this year. Bert Nash CEO Dave Johnson said the cut would likely affect the organization’s homeless outreach program.

Soden said she wanted the Lawrence Community Shelter to receive its full request of $319,500. It was allocated $184,000 in the 2016 budget but was given $50,000 more in “emergency” funding last summer to keep the facility afloat.

Assistant City Manager Diane Stoddard noted Johnson County was requesting a “significantly larger” amount for the K-10 Connector service in 2017 than what the city is recommending be paid.

“A letter from Johnson County indicated they may likely be cutting that route or somehow altering it if it didn’t receive the requested funding level from the city,” Stoddard said.

Explore Lawrence is set to receive $110,000 more than was allocated in 2016. Historically, the city has provided its tourism arm with 55 percent of revenue from transient guest tax. The $990,000 Explore Lawrence is set to receive in 2017 is 55 percent of what the tax is estimated to generate.

Commissioners also heard about rate increases for water, solid waste and stormwater. Water and sewer rates are set to increase by 3 percent in 2017, and commissioners will decide on 3 percent increases for solid waste and stormwater. Kidney said he would later present commissioners with an example of how the average resident’s utility bill will change with the increases.