Lawrence City Commission sets stage for potential property tax increase, plans to cut some projects

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

Lawrence city commissioners on Tuesday gave preliminary approval for a property tax rate increase that would help fund a new police headquarters.

Commissioners at their meeting voted unanimously to set the maximum 2018 budget at $255 million, which would increase the property tax rate by 1.25 mills. Taxes are levied on 11.5 percent of a home’s assessed property value, and a mill is $1 in taxes for every $1,000 of that value.

Vice Mayor Stuart Boley said the budget is in line with the strategic plan the commission adopted earlier this year.

“This is the plan that we have come up with to deal with the infrastructure needs in our community, significantly the police facility,” Boley said.

Commissioners can reduce the mill levy before passing a budget in August, but they can’t propose an increase in the maximum budget established Tuesday. The 1.25-mill increase amounts to about $25 per year in new property taxes on a $175,000 home.

Mayor Leslie Soden emphasized that she wanted to keep the property tax rate flat. When asked by Soden, commissioners indicated that their goal was to find ways to reduce the 1.25-mill increase.

Commissioners came to a general consensus that as part of their upcoming budget deliberations, they would like to defer or reduce some projects in the $60 million capital improvement plan for 2018 so that the tax rate increase could be lower than 1.25 mills.

“CIP is going to be something that I’m sure this entire commission is going to look at, as to the various projects that we have and where we want to spend the money,” Commissioner Mike Amyx said.

The mill levy increase would help fund the first phase of a new police headquarters, which is estimated to cost $17 million. The plan is to create a campus that would allow the city police to co-locate with the Douglas County Sheriff’s Office to save costs. City Manager Tom Markus said the phased approach gives the commission flexibility with future costs.

“You then can adjust what that subsequent phase cost would be at the time you’re ready to go ahead and do that,” Markus said. “We tried to get this into an area where we could do about 50 percent of a reasonable project.”

Lawrence voters narrowly rejected a citywide sales tax to fund a $28 million police headquarters in 2014. Unlike the current proposal, that project was to involve a significant land purchase and did not seek to consolidate facilities with the county.

Commissioners voted to allow for a potential increase in the tax rate even though property values are on the rise. The increase in values is projected to add another $1.8 million to the city’s coffers that was not originally factored into the proposed budget, according to a memo to the commission. City staffers stated the mill levy increase is to provide additional resources in the city’s debt service fund, and that the revenue generated by the growth in property values is not sufficient to fund the increased bond and interest payments for the police facility.

The commission did discuss the possibility of using some of the city’s reserve funds to lower the proposed mill levy increase. City staff said they did not recommend that approach because it could lower the city’s bond rating, which could cause its interest rates to increase.

The public hearing for the budget will be Aug. 1.

In other business, the commission:

• Voted unanimously to ask Lawrence voters whether to renew a citywide sales tax that is set to expire next year. If renewed, the 0.55 percent citywide sales tax would be in place from 2019 to 2029 and is projected to generate more than $116 million for city infrastructure improvements, transit operations and affordable housing projects. The renewal would be part of the Nov. 7 election, and the ballot question would allow voters to consider each of the three components of the tax individually.

• Voted to defer a decision on a proposed water and utility rate increase until Aug. 1, in order to consider it at the same time as the 2018 budget. The rate increases would add about $65 annually to residents’ bills.

• Voted to defer the public hearing regarding VanTrust Real Estate’s application to the city’s Catalyst incentive program. The hearing will be held July 18 once all documents are ready.