photo by: Chad Lawhorn/Journal-World

Lawrence City Hall is pictured on Oct. 11, 2024.

Early numbers show Lawrence will face a $6.5 million budget shortfall in 2026, and City Hall budget-makers say it is not too early to ask city commissioners a couple of questions.

What would you cut, and would you consider raising property taxes?

Commissioners at their Tuesday evening meeting will discuss multiple options for bringing down the budget gap, including whether to commit to keeping market rate pay for all city employees, possibly adding user fees for some services like Parks, Recreation and Culture, deciding what areas of the budget would be untouchable for cuts and whether they would consider raising property taxes.

City Manager Craig Owens and his staff said in a memo to commissioners that the deficit is “primarily driven by payroll increases and rebuilding fund balance.” Fund balance is the city’s name for a type of reserve account that is similar to a savings account that can be used to cover shortfalls. The city has dipped into that account as the city’s sales tax revenues have come in lower than expected. At their meeting Tuesday, commissioners will be asked to figure out what aspects of the budget will take priority moving forward.

The city budget memo also provides a warning to commissioners that any sustainable cuts to the budget “will likely result” in a reduction of city employees.

This early discussion of the 2026 budget, which will eventually be adopted in September, comes after last year’s budget talks led to both commissioners and city staff agreeing that earlier action was necessary because the 2025 budget was unsustainable.

The $518.7 million budget, which was approved Sept. 3, kept the city’s mill rate about the same despite an initial proposal that would have raised the levy by 3.6 mills. The commissioners instead voted to dip into the city’s reserve fund, using $1.6 million in place of tax revenue that would have been generated by a mill levy hike.

One question the commissioners will discuss is about the future of the reserve fund. Currently, the city has budgeted $2 million to add back in its reserves, and commissioners will provide guidance on if they feel that is the correct number. According to the presentation, if the city opts not to restore its fund balance, that fund would end up in a deficit in 2029. Currently, the fund is below the policy minimum, and the presentation said the city would have to develop a restoration plan to ensure its fund is at least “equal to 90 days of operating expenditures.”

Since that budget vote, the city created two special committees last year — a Community Budget Committee and Employee Budget Committee — to help provide more feedback in the budgeting process. The Community Budget Committee had its first meeting in December, as the Journal-World reported, and though its meetings are confidential, the city said the group’s findings will be presented to the public in some form during future City Commission meetings.

Some of the initial feedback from the committees comes from their work using the city’s interactive budgeting tool called Balancing Act. According to the presentation, two-thirds of the committee members would support increased property taxes and suggested new fees, such as for parks and recreation services. Although there were some services or programs all members maintained at the same level, no program was increased or decreased by all groups.

City Commissioners also used the Balancing Act program. According to the city memo, all five commissioners agreed on two areas to cut city funding: Information services expenses for the Lawrence Police Department, and expenses for the city-owned Eagle Bend Golf Course. On the issue of increasing property taxes, there was less agreement: Two of the five commissioners indicated they would be open to increasing property taxes, although the presentation does not say which commissioners provided those responses. Details about how large a property tax increase would need to be also weren’t provided.

The City Commission will convene at 5:45 p.m. Tuesday at City Hall, 6 E. Sixth St. A live stream of the meeting can be viewed via Zoom or the city’s YouTube channel.