It is like finding a dollar on the sidewalk — except instead of one dollar there are 1.4 million of them. That is kind of the situation the city of Lawrence has found itself in.

When you find a dollar on the sidewalk, you have a decision to make. Do you spend it? Do you save it? Do you give it to charity? Do you try to find its original owner? City Hall budget-makers have found themselves in a similar situation. They essentially have found $1.4 million in unexpected money.

Spoiler alert: City Hall plans to spend it.

What’s the story behind $1.4 million of found money at City Hall? The short answer is a hot real estate market has caused the value of most homes in Lawrence to rise quite a bit in 2017. The city charges you a property tax based off the value of your home. When your home value goes up, so does the amount you pay in property taxes — unless the city reduces its tax rate. The city is not proposing to reduce its tax rate. It is planning to raise it by 1.25 mills, or about $25 per year in new property taxes for a $175,000 home.

That doesn’t really sound like that much, but do remember that the school district is raising its property tax rate to fund improvements to school facilities, the county is now proposing a 1.9 mill increase as it starts spending on mental health care, and some folks are facing an income tax increase from the state. It adds up, and we’ve already written an article about how Lawrence residents are in line for their largest property tax increase in years.

None of this is all that unusual. This will not be the first time that property values go up and government believes it still needs to raise tax rates to fund itself. But here’s the interesting twist: For some reason, City Hall officials were surprised home values went up so much. City Hall budget-makers had put together a recommended budget in May that was based on the property tax base — i.e., the value of real estate in the community — increasing by 2 percent.

After that budget was publicly released, the county appraiser notified the city that the tax base actually had grown by a little more than 6 percent. That one change generated $1,408,000 in additional property tax funds for the 2018 budget, according to figures provided by the city.

But here’s the thing: In May, city officials weren’t planning on spending that $1.4 million because it didn’t know it existed. City officials recommended a budget that didn’t include that money. The amount of money in the May recommended budget was enough to adequately operate the city in 2018, we were told.

But now that the city knows this $1.4 million exists, it plans to spend it. The alternative would be to make a corresponding reduction in the city’s property tax rate. Because of the higher property values, the city can generate all of the money it planned to spend as detailed in the recommended budget released in May, and it won’t need as large of a property tax rate to do it. Could the city eliminate the need for any property tax increase? I’m not sure of that, but it certainly could reduce the 1.25 mill levy increase by a significant degree.

So, why isn’t the city doing so? The city hasn’t been real clear in its thinking on this, but here is what I’ve gathered in talking with Finance Director Bryan Kidney and others. It involves the phrase the NFL referee uses after looking at the replay: upon further review. After the recommended budget was released in May, city staffers took a closer look at some of its spending assumptions. It now believes some things are going to cost more than they expected. A big one is future borrowing. They think they undershot what interest rates are going to be in the future. Some construction costs also may not have been fully accounted for either. Adjust those upward, and suddenly you need some of that $1.4 million in found money. Plus, Kidney wants to give future commissions as much flexibility as possible. Keeping the extra money in the budget does that.

City Manager Tom Markus also told me that it just puts the city in a better position in the long term. All the proposed tax increase is slated to benefit the city’s bond and interest fund, which pays for big infrastructure projects. Markus is concerned that fund won’t be healthy enough long-term, if the city doesn’t start devoting more resources to it.

“It is easy to say ‘we can cut that and we can cut that,’ when really all that does is push it to the next year,” Markus said. “We have done too much of that.”

The city also believes some of its other revenue sources aren’t going to be as robust as once thought. A big one is franchise fees, which is a special tax you pay on utility bills for landline phones, cable television, electric and other such services. People don’t buy phone and cable services like they used to, and as a result the city is expecting franchise fees to come in about $240,000 less than expected.

The city also is expressing some concern that sales tax collections aren’t growing as fast as they have in previous years. That is true, but it is debatable what level of immediate concern this should cause the city. The reason I say that is because even though sales taxes aren’t growing as fast as they did in the past two years, they are still growing at about a 3 percent rate. In addition, the city in 2017 is still on track to collect significantly more in sales taxes than what it budgeted to collect. Right now, the city estimates in the general fund it will collect about $700,000 more in sales taxes than what it budgeted to collect. That $700,000 windfall more than covers the decline in franchise fees, and leaves money left over that could be moved to the 2018 budget to help cushion against a slowing of sales tax collections in that year. In addition, the city in 2016 and 2015 also collected more in sales tax revenues than it budgeted to collect.

Markus, though, notes that the city still isn’t funding everything it ought to, even with the healthy sales tax collections.

“I don’t think we as a city have done a very good job of budgeting expenses for infrastructure,” Markus said. “We are good at spending money to build projects, but we haven’t set aside money to maintain them.”

There are other people, though, who will argue that at some point, those excess collections in sales taxes should lead to a property tax reduction.

I’m not here to argue anything, however. Honestly, I’m not passing judgment on the city’s decisions on how to deal with the $1.4 million in unexpected money. I just want you to know about it. The decisions aren’t a done deal. The city doesn’t finalize its budget until August.

I also think it is important to keep the matter in perspective. The city’s proposed 1.25 mill increase is the lowest of the three major governing bodies. The school district’s will be more than 2 mills. When voters approved the bond issue in May, it was estimated to be a 2.4 mill increase, but perhaps it will come in less than that. The property tax base in the school district presumably has risen, as well. Theoretically, that could help the district have a lower than expected mill levy, too. We’ll see. The county is proposing a 1.9 mill levy increase and is spending in ways it hasn’t done in the past, primarily on mental health services.

But the city’s situation is odd because of the timing. The city threw a spending number out early in the process. Then the growth in the tax base was discovered, and it found itself with the question of whether to increase its spending plans or reduce its tax rate. All this is done as the city prepares to ask voters in November to renew a set of sales taxes totaling 0.55 percent for another 10 years. That plan already is drawing opposition. As it stands now, voters will get their largest property tax increase in years when bills come out in late November. We’ll see whether that is on their minds when they go to the polls in early November to vote on the sales tax question.

The stakes with that issue make the $1.4 million look small. If voters reject the sales taxes, that puts about a $120 million hole in the next 10 years worth of city budgets.