To comply with new state law, city leaders set hearing to consider exceeding ‘revenue-neutral’ tax rate

photo by: City of Lawrence

Members of the Lawrence City Commission and city staff are pictured during the commission's meeting on July 20, 2021.

Lawrence city leaders have taken the first step toward a 2022 budget that, though it would not increase the city property tax rate, would result in residents paying more in taxes than they did last year.

To meet requirements of a new state law, the Lawrence City Commission voted unanimously as part of its meeting Tuesday to set Aug. 31 as the date for a newly required public hearing for exceeding the “revenue-neutral” rate. Commissioners agreed to consider the property tax rate proposed by City Manager Craig Owens’ recommended budget. Though the budget calls for the rate to remain flat, the city’s property tax collections would still increase by about $940,000 under the proposal because the county’s property tax valuations have increased.

Mayor Brad Finkeldei said he hoped to continue hearing from residents as the city moves closer to the public budget hearing.

“This is the first step in the process that’s going to culminate on August 31, so hopefully we do continue to get some feedback from folks on the budget,” he said.

The Kansas Legislature passed the new law, Senate Bill 13, in March. It requires governing bodies to notify their taxpayers and have a public hearing if they are going to consider a budget with a property tax rate increase or a flat property tax rate that results in property owners paying more in taxes because of an increase in assessed property value. Supporters said it would force local officials to be more open in making tax and budget decisions, The Associated Press reported.

The city’s current property tax rate is 33.318 mills, and because of the increased property tax valuation, the rate would have to be reduced to 32.515 mills to be budget neutral, according to a city staff memo. The approximately .8 mill difference in the rate would adjust for the approximately $937,000 in additional tax payments the city would receive under a flat rate due to increased property assessments.

Now that commissioners have set a hearing for the proposed property tax rate, they can decrease the rate later in the budget process but cannot increase it.

The recommended budget is $383.87 million and calls for an increase in all three city utility rates. It includes a new division to address homelessness; $117 million for infrastructure and maintenance; $5 million total in pay raises for both union on non-union employees; and eight new staff positions, four of which are at least initially grant funded. The budget also begins to allocate about $19 million in federal coronavirus relief the city will receive from the American Rescue Plan Act.

Correction: A previous version of this article misstated the total amount allocated toward employee raises.


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