Lawrence City Commission to discuss city manager’s recommended budget, which calls for utility rate increases

photo by: Journal-World photo illustration

A City of Lawrence utility bill is pictured in a photo illustration.

Lawrence city leaders will soon get their first look at the city manager’s recommended budget for 2022, which calls for a flat property tax rate and an increase in utility rates.

As part of a study session Tuesday, the Lawrence City Commission is scheduled to receive City Manager Craig Owens’ recommended budget. The commission does not take any action as part of its study sessions, but commissioners will have the chance to discuss the budget in detail and ask questions about the recommendations.

The recommended budget is $383.87 million across all funds, and though it does not propose an increase in the city’s property tax rate, it does call for increases in all three city utility rates. Those rates have been increasing steadily in recent years, with the average bill now more than $100 per month. City officials have said those increases were needed to keep up with utility infrastructure maintenance, and an executive summary of the 2022 recommended budget states that many of the rate increases are related to “increasing maintenance and capital needs.”

City utility bills are made up of charges for water and sewer, storm water and solid waste, and all three rates would increase as part of the recommended budget, though it is not yet known by how much. In a letter to the commission, Owens states that details of the recommended utility rate increases will be presented later in the budget process following an update of the city’s utility rate models, which rely on the annual financial audit that was recently completed.

Budget & Strategic Initiatives Administrator Danielle Buschkoetter said in an email to the Journal-World Monday that the city was just now starting the process of updating its utility rate models to incorporate the audited financial figures as well as some other recent changes. She said those included changes related to internal services and the increased costs the city has been experiencing for construction, equipment, labor and commodities.

As a result, Buschkoetter said the exact impact on each utility rate was not yet known and would vary based on the service. Similar to last year, she said the plan was to bring the specific rate increases to the City Commission in the fall for consideration. As the Journal-World reported last year, though the commission did not approve the specific utility rates as part of its budget last year, it still had to approve the spending authority to be able to potentially raise the rates as part of the budget process.

For lack of more precise figures at this time, there are some very rough indicators about the potential scope of the utility rate increases in the recommended budget. In looking at the city’s water and wastewater fund, the charges for services in that fund — which include more than just rate increases — show an 8.7% increase from the 2021 revised budget to the 2022 recommended budget. Charges for services for storm water show a 2.8% increase, and those for solid waste show an 11% increase.

Buschkoetter said while increases in utility rates were the “main driver” of those increases, they also included other revenues. More specifically, she said the city has also shifted how it shows trade-in values for vehicle replacements, and those changes are also driving up some of the revenues, particularly in the solid waste fund. She said all of these variables would be incorporated into the proposed rate increases that are brought back to the City Commission in the fall.

Utility rates have been rising steadily for the past several years under the city’s rate models, and along with rate increases this year the city also put in place a new block rate model that charges more per gallon for excess or irrigation usage. From 2015 to 2021, the typical utility bill, based on average use of 4,000 gallons of water per month, has increased from about $77 per month to about $112 per month, according to past city budget documents. That equates to a 45% increase in city utility rates since 2015, or an average of about 7.5% per year over that time period.

The proposed rate increase also comes as some residents have fallen significantly behind on their utility bills amid the coronavirus pandemic. About 3,500 households have a balance that is more than three weeks past due, amounting to about $1.6 million in back payments and an average past due balance of about $470 per delinquent account, according to the city’s May utility billing report. The city previously allocated federal coronavirus relief for a utility assistance program and is in the process of setting up a longer-term utility assistance program in conjunction with Catholic Charities to assist low-income residents. That program will begin Jan. 1 and will be funded by voluntary donations made by other city utility customers.

According to an expenditure summary, there are three key focus areas of the recommended budget: reallocating existing resources to establish a Housing Initiatives Division within the Planning & Development Services department; investing in the city’s infrastructure; and adding approximately $5 million in new compensation for employees as part of a two-year plan to bring compensation to market rate. There are also eight new positions proposed, including a sustainability analyst, an equity and inclusion coordinator, a budget analyst and an economic development analyst.

The Lawrence City Commission will meet at 5:45 p.m. on Tuesday at City Hall, 6 E. Sixth St. Residents who want to provide public comment can do so in person at City Hall, in writing, or virtually via Zoom, and more information about those options is available on the city’s website, Lawrenceks.org.

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