photo by: Nick Krug

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

As part of his recommended budget for next year, City Manager Tom Markus is proposing the city’s mill levy rate remain flat.

The recommended operating budget totals about $206 million and will be presented to the City Commission for initial input at its work session Tuesday. As proposed, next year’s budget would see $14.6 million of unfunded capital improvement projects, personnel requests and equipment purchases.

A memo to the commission notes that many tough decisions had to be made about priorities, and Markus said that for him, the capital improvement projects are the most difficult.

“There’s just a lot of things that get deferred, and with CIP, you pay for it sooner or later,” Markus said. “The problem with not doing it now is it bumps up our actual operating costs because you have to spend more on maintenance.”

Though the mill levy is proposed to remain the same, that doesn’t mean residents won’t see some increase in their city bills. The budget estimates that residents will see about a 4 percent increase in the cost of all city services next year, due in large part to increased utility rates. Rising home values will also likely increase tax bills for many residents.

Mill levy rate

Of the $14.6 million in unfunded requests, unfunded capital improvement projects make up about $12 million.

Those include $3.7 million for the second phase of the city’s solid waste facility; $800,000 for security and Americans with Disabilities Act improvements at the Community Building; $550,000 (another $550,000 the following year) for a public safety mobile command vehicle; and $115,000 for the sports courts at Veterans Park. The public works department also received $668,000 less than it requested for sidewalk and street maintenance.

Mayor Stuart Boley said that although he’ll be looking to hear more information Tuesday from Markus and department heads about the particulars of the budget, he thinks the city needs to be responsible with taxation.

“I believe the city staff has understood that the commission is leery of raising the mill levy, and I appreciate that they’ve worked that into the city manager’s recommended budget,” Boley said.

Commissioner Matthew Herbert said there have been a lot of local tax increases recently between the city, county and school district. He also mentioned the county’s proposal to increase taxes to expand the jail and improve mental health services, which voters recently rejected. Herbert said that although he thinks that vote was about more than just taxes, now might be a good time for the city to show a little restraint.

“I’m going to push for the city to show some restraint and be the one entity this year, perhaps, that says, you know what, we’re going to try to hold firm and try to make do with what we have,” Herbert said. “And there are going to be some hard decisions we have to make as a direct result of that.”

Utility rate increases

The budget calls for an increase in the rates for water, sewer and storm water. If adopted, city utility bills for the typical household would go up about $58 per year.

Finance Director Bryan Kidney said the water rate increases are based on a rate model that is tied very closely with the utility department’s capital improvement plan. He said in communities that don’t have an annual assessment of rate needs, what you’ll find is unmet needs — such as water and sewer line replacements — that will end up costing more.

“If you hold your rates down artificially, then the community will see a rate spike in the future,” Kidney said. “That’s the one constant we know, is that the cost of producing quality water and taking care of wastewater is always going up.”

Herbert said he agreed with Kidney’s statement, but that the commission also needs to be aware, as the city works to address the rising cost of housing in Lawrence, that both property taxes and utility rates contribute to making housing unaffordable. He said utility rate increases can especially affect those with fixed incomes, such as the elderly.

“It is something we have to be concerned about, but at the same time, we also have to, from a budget standpoint, operate a sustainable city,” Herbert said.

Regarding the rate increase, Boley said it’s important that the city provide residents good service, and he is confident the utility department does so. Boley noted the recently completed $74 million Wakarusa Wastewater Treatment Plant, which city officials have said will improve the city’s ability to manage heavy rainfall and nutrient pollution as well as enable additional development.

“The plant is a great example of how the utility department is on top of environmental concerns,” Boley said. “I think the background of that rate increase is people are getting value for their money.”

Personnel changes

The city has about 850 employees, and one of the city’s biggest costs is personnel. In addition to the $12 million in unfunded capital improvement projects, the unfunded list contains about $1.6 million in personnel requests, including three police positions and 11 fire and medical positions.

Overall, the budget calls for a net increase of 3.5 positions. The recommended budget eliminates 2.5 positions, all of which are already vacant. Two vacant solid waste loader positions would be eliminated as well as a part-time administrative support position in the planning and development department.

The budget recommends that six positions be added: a payroll coordinator, a housing specialist, an IT business systems analyst, a utilities business systems analyst, a police marketing specialist and a police crime scene technician.

Markus noted that the police marketing specialist and crime scene positions are currently filled by sworn police officers. He is recommending the city fill the two positions with civilian personnel, allowing the city to shift those officers to patrol positions. He said that gets two more officers on patrol at a lower net cost.

“That’s the objective,” Markus said. “We’re not adding to the number of people there; what we’re doing is adding two more people to patrol.”

The unknowns

The budget holds the mill levy rate flat at 33.279 mills, but that doesn’t mean the tax bills of Lawrence property owners will remain the same.

Rising home values will likely mean many residents will pay more than last year once property tax bills are calculated. The budget assumes a 6 percent growth in assessed valuation, but a memo to the commission notes that rate may need to be adjusted when the county estimate is received in early July. Based on that estimate and the median Lawrence home value of $175,500, the current city mill levy rate would result in $10 more per year, according to budget estimates.

The recommended budget also makes revenue assumptions related to sales tax collections. It assumes that city sales tax collections will grow by 2 percent next year and that the county’s sales tax collections will increase enough that the city’s share will be 1.8 percent larger.

There are some additional unknowns when it comes to next year’s expenditures.

Contract negotiations between the city and the local police officers union are ongoing. The Lawrence Police Officers Association is proposing that the pay grade for police officers and detectives increase by 5.5 percent next year. The city plans to make its proposal once a market comparison study is complete later this month. The 2019 budget includes funding for a merit pool equivalent to 2 percent of base salary for all other city employees.

The memo states that based on updated figures and input from the commission, city staff will bring back updated revenue and expenditure figures at the commission’s July 10 work session. The commission will consider publication of the budget July 17, and a public hearing will be held on Aug. 7.

The City Commission will convene at 5:45 p.m. Tuesday at City Hall, 6 E. Sixth St.