Budget proposal to charge entrance fees at recreation centers represents change in philosophy for city
photo by: Nick Krug
With its funding from the city holding flat and reserves dwindling, city officials say that the funding philosophy of the city’s recreation services — which have historically been free or substantially tax supported — needs to change.
Amid what he’s described as a difficult budget year, City Manager Tom Markus’ recommended budget proposes no increase in the amount of money the recreation fund receives from the city’s general fund.
Instead, the recommended budget proposes significant changes to make the recreation division’s budget balanced, including charging entrance fees at recreation centers citywide, increasing other recreation fees, and closing the Community Building for drop-in use, among other proposals. The proposal has been controversial, as some residents have said the changes would disproportionately affect low-income residents, whom local reports indicate already suffer from worse health than those with higher incomes, according to data compiled by the Lawrence-Douglas County Health Department.
Finance Director Jeremy Willmoth said one of the factors behind the proposal is that recreation revenues did not increase as much as once projected and expenses continue to go up. He said that this year the recreation fund is on track to spend $392,000 of its fund balance, or the money it holds in savings. He said that prompted a change.
“So unless revenues increase or expenses decrease, we’re going to cut the fund balance in half in one year,” Willmoth said. “And so from a staff perspective we looked at 2020 and said it’s not sustainable. We don’t have enough fund balance to manage status quo, and that’s why something had to change.”
The recommended budget states that revenue increases are needed to keep up with the increased costs for providing recreation services. Willmoth said the fee increases and cost reductions in the recommended budget address an approximately $500,000 budget gap.
The proposed changes
The city’s recreation centers have always been free to enter, and the impact charging an entrance fee could have on low-income residents has drawn concern from some community members and the Parks and Recreation Advisory Board. Under the proposal, key cards would be required to enter recreation centers and annual entrance fees would be charged based on age, ranging from $24 to $48 annually and more for nonresidents. Those under 18 would only be charged a one-time fee of $5 to purchase a key card, and the city has said it would work with Lawrence nonprofit service agencies to provide reduced rates for low-income individuals and others in need.
The city estimates the entry fees could generate about $175,000 in revenue. Parks and Recreation Director Derek Rogers has said that figure was a rough estimate because the department doesn’t have reliable data on how many people use the recreation centers or know how many would sign up for the fee entry program. The city estimates it will cost about $65,000 total to initiate the program. That includes $5,000 for card reader equipment for all centers and $60,000 to remodel the main entryway of Sports Pavilion Lawrence to accommodate card entry.
In addition to charging entrance fees, the recommended budget proposes renewed efforts to increase sponsorship revenue, initiating an entrance fee for the wading pool at South Park, and increasing fees for athletic field rentals, room reservations and recreation classes. It also proposes eliminating 1.5 vacant Parks and Recreation Department positions, which would be accommodated by eliminating drop-in public access to the Community Building, which includes basketball courts, cardio equipment and a weight room currently available for public use.
The Community Building was originally an armory, and City Manager Assistant Brandon McGuire pointed out that it was not designed to house a recreation center. McGuire said scheduled programs could still occur at the building, but the proposal also acknowledges that the city needs to think long-term about the future of the property. He added he thinks the city needs more space in all its recreation centers, and potential expansions at other centers will also be part of future discussions.
Budget and Strategic Initiatives Manager Danielle Buschkoetter said it became abundantly clear that the issues with the recreation budget needed to be addressed soon when the city started doing analysis for the five-year financial forecast for the 2020 budget. Buschkoetter said the recreation budget needs to be sustainable long-term, and she emphasized that the proposal would not reduce the general funding for next year.
“I think the big change is that we were deficit spending, and the proposal in 2020 tries to reduce that deficit spending pretty significantly,” Buschkoetter said. “And because we didn’t increase the transfer (from the general fund), that means that additional revenue had to be found within our fee structures.”
Due to the significance of the changes, the Parks and Recreation Department presented the proposed budget adjustments to the City Commission on May 21, after which the commission requested that the Parks and Recreation Advisory Board review the proposal. At that time, the city manager’s office was contemplating a transfer of only about $2.23 million from the general fund to the recreation fund, which would have represented a 7.4% reduction over 2019. Willmoth said it was later decided to hold the funding flat, and the city manager’s recommended budget that came out in June called for the recreation fund to receive about $2.4 million, with an additional one-time transfer of $150,000 to help offset the costs of the new internal service fund, which requires departments to allocate more toward overhead costs.
As with all budget proposals, the City Commission could elect to make reductions elsewhere in order to increase its general support for recreation services, instead of holding its transfer from the general fund flat. Property tax and sales tax collections are both projected to increase in 2020, though sales tax by a relatively sluggish 1%, adding pressure throughout the budget.
The city funds the Parks and Recreation department via fees, property taxes and sales taxes, including a portion of the additional 1% countywide sales tax that voters approved in 1994. However, there is not a set percentage of the general fund or the countywide sales tax revenue that the recreation fund must receive. The ballot language from 1994 states the city portion of the sales tax shall be used by the city for general governmental purposes, including but not limited to the development and operation of parks and recreation facilities and programs; funding for the Bert Nash Community Mental Health Center, Douglas County Visiting Nurses Association, and the Lawrence-Douglas Health Department; and the reduction of ad valorem property tax levies as established and determined by city.
Markus is proposing a recommended operating budget of about $236 million, and some residents have pointed out that the fee increases and position cuts to the recreation budget amount to less than 1% of the city’s overall budget.
When asked, for instance, why the city doesn’t just increase the recreation department’s share of the countywide sales tax, Willmoth said that all funding decisions for the general fund must take into account the competing needs in the budget.
“It’s the same question with any department,” Willmoth said. “The entire budget has to be balanced, and so if we were to allocate more money toward recreation from the general fund, other things in the general fund would have to be reduced.”
Due in part to the slower than projected sales tax growth and other increases in city expenses, increased fees for recreation services are not the only proposed increases that Lawrence taxpayers may have to contend with.
The recommended budget includes a 0.5-mill property tax hike and increases in water, solid waste and stormwater rates. The property tax rate increase would help fund, among other things, the first across-the-board wage increase that most city employees have seen in years. The increase would amount to about a $12 increase in annual property taxes on a $200,000 home. The utility rate increases would amount to a $78 increase for the average resident. Taken together, the owner of a $200,000 home would pay about $90 more in 2020, amounting to an overall increase of about 4.7%.
The budget also includes about $10 million in unfunded capital improvement projects, personnel requests and equipment purchases.
A change in philosophy
Still, city officials acknowledge that the proposed changes aren’t strictly tied to the upcoming year’s finances, but relate as well to a shift in philosophy regarding how the Parks and Recreation Department will be funded into the future.
Increasing Parks and Recreation user fees has been a discussion point at City Hall in recent years. One of the key finance issues in the department’s 10-year master plan, which was adopted in 2017, was the need to standardize the pricing process and increase user fees. As part of the master plan process, the city worked with a consultant to develop a methodology for setting fees based on how much the program or service benefits the community versus the individual.
McGuire said the proposed changes were intended to start a conversation in the community about such a shift. He said the proposal plays into a larger philosophical conversation about the level of cost recovery that’s expected or needed for the city’s recreation programs.
“We do need to have the philosophical conversation,” McGuire said. “I don’t feel like the fee proposals are radical and I don’t necessarily feel like the expenditure reductions proposals are radical, but they certainly get the conversation started, which is what needs to happen.”
The Lawrence City Commission will discuss the recreation budget proposal as part of its work session July 9. As part of the meeting, the Parks and Recreation Advisory Board will provide the commission its recommendations regarding the proposed changes.