City’s budget outlook worsens

Property tax increase may be necessary to maintain current service levels

The prospect of a 2008 tax rate increase for Lawrence residents became a bit more likely after city commissioners Tuesday learned additional details about the city’s budget woes.

Commissioners were told that a preliminary analysis found it would take about a 1 mill increase in the city’s property tax rate to maintain existing city services. Without it, they were told major cuts to the Lawrence Transit System would be needed, and that city employees would have to go without a raise for the second time in the last three years.

“None of us go into this process with a desire to raise taxes,” Mayor Sue Hack said. “But I think some sort of reasonable mill increase would be a conservative approach to our budget problems.”

Hack and Commissioner Boog Highberger said they were leaning toward a property tax increase if it could help prevent some of the painful budget cuts, such as eliminating Saturday service and cutting weekday hours for the T.

“If we want to make our transit system work like we want it to, we can’t shoot it in the foot like that,” Hack said. “It really could be more of a dagger in the heart.”

But a tax increase is far from a done deal. Hack and Highberger’s support would be two of the three votes needed to approve a tax increase. But a third vote didn’t immediately emerge at Tuesday’s budget study session.

Commissioner Mike Amyx said he did think it was important to maintain city services, but said he wanted to further explore a new sales tax rather than an increase in property taxes. New Commissioners Mike Dever and Rob Chestnut also stopped short of saying they supported a mill levy increase.

Dever said he still wanted to look for more efficiencies in the city budget. He also said he wanted to review T routes to see if there is a way to improve the system’s efficiency without cutting its operating hours.

“I’m trying to challenge the city to look within for a solution,” he said.

Highberger and Hack both said they were open to a mill levy increase, in part, because the city had reduced the mill levy over the last two years. Highberger, though, said he thought the need for future mill levy increases could be alleviated by implementing impact fees, a type of fee that would charge developers for new parks, roads and other infrastructure items.

“We can attribute some of our increases to being a growing city,” Highberger said. “I think impact fees could help cover some of those growth costs. It is a discussion we really need to have.”

Hack said that discussion would take place during the budget-making process, but she questioned whether impact fees were an equitable way to fund new infrastructure.

A new piece of information that commissioners heard Tuesday is that without a mill levy increase, the city likely would not be able to offer any raise for city employees.

Assistant City Manager Debbie Van Saun said with an approximately 1 mill increase the city likely would be able to offer a 2 percent to 3 percent increase in salaries for city employees. She also said the increase would alleviate the need for many of the proposed cuts to the T.

A mill is $1 in tax for every $1,000 in assessed valuation. For a $150,000 home, a 1 mill increase would amount to an increase of $17.25 for a year.

Van Saun stressed that the 1 mill increase is only an estimate. She said a specific recommended budget is expected to be presented to commissioners in early July.