photo by: Screenshot/City of Lawrence

The Lawrence City Commission, city staff and public commenters meet virtually Tuesday, Aug. 11, 2020.

City leaders have approved Lawrence’s 2021 budget, which keeps the city’s property tax rate flat and gives the city room to increase all three of its utility rates.

However, discussions about those utility rate increases will not occur until next month.

As part of its meeting Tuesday, the Lawrence City Commission voted unanimously to adopt the 2021 budget, which does not include an increase to the city’s mill levy but includes the spending authority for the city to increase water, solid waste and stormwater rates. If the new rate plans are ultimately approved — a process that takes place separately from the budget approval — the revenue generated from the rate increases would go to support infrastructure improvements planned in the budget, which calls for $90 million in capital and maintenance projects. The budget also includes funding for a new field operations headquarters and raises for all city employees.

Typically, when the city’s budget calls for spending money that will be generated by utility rate increases, the expectation is that the commission will move forward with the associated utility rate plans once they are brought to the commission. However, commissioners indicated that outcome was not a given and they expected more debate once specifics of the rate plans are proposed. Vice Mayor Brad Finkeldei confirmed with city staff that approving the 2021 budget, and the spending authority and capital projects it encompasses, does not obligate the commission to move forward with the recommended utility rate increases.

The commission will not vote on the utility rate plan changes until September, and Finance Director Jeremy Willmoth told the commission that if it decides not to raise the utility rates — or to raise them by a smaller amount than staff recommends — the budget could be amended to reflect that. But Willmoth noted that would also mean that some projects currently included in the budget would have to be removed for lack of funding.

“Given the fact that there needs to be more revenue generated by the utilities to fund their deferred capital and maintenance needs, there will need to be utility rate increases,” Willmoth said. “The question of to what extent and whom it impacts — whether it’s residential, business (or) both, etc. — will all be determined as the utility staff continues to work on the rate model that will be presented to you at a later date.”

photo by: Screenshot/City of Lawrence

City of Lawrence Finance Director Jeremy Willmoth speaks during a virtual Lawrence City Commission meeting, Tuesday, Aug. 11, 2020.

Taken together, the recommended utility rate increases would amount to an approximately $110 annual increase over this year for the typical residential customer using 4,000 gallons of water per month. Specifically, the budget calls for an 8% increase for water, a 3% increase for solid waste and a 50% increase for stormwater. The stormwater increase — which because the current fee is relatively low amounts to only $27 more annually — would go toward major stormwater infrastructure projects. The city has different customer types, and how the rate increase would be distributed among them is one of the undetermined aspects of the rate plan.

The utility rate increases would go to support utility operations and maintenance. The budget approved by the commission Tuesday includes a $51.6 million capital improvement plan, a $24.4 million maintenance plan and a $14 million vehicle and equipment replacement plan, or about $90 million total among the three plans.

Though Finkeldei said he supported the capital improvement plan, he said possibilities were still open, and he emphasized the possibility of a budget amendment.

“I’m very excited about some of these projects we are doing, and so I’m certainly going to be supporting this budget and I think these projects are worthy of being funded,” Finkeldei said. “That being said, until we have the details, it’s hard to say for sure what the final outcome will be.”

Commissioner Lisa Larsen asked about her previous request that city staff create a list of the maintenance projects that would go unfunded should the commission not increase the rates as much as requested, with different options for different levels of rate increases. City Manager Craig Owens said that report is in the works and will be brought to the commission at an upcoming meeting.

Another topic of Tuesday’s discussion was funding for raises for nonunion city employees. The budget includes a general wage adjustment of 0.5% and about $828,000 in market adjustments for city employees in the primary pay plan, amounting to a total of about $1.04 million in pay increases for those employees. The funding provided for nonunion employees does not fully fund the pay plan previously recommended by a city-commissioned market consultant, which also calls for funding merit-based raises.

In response to questions from the commission, Willmoth said that funding the general adjustment and addressing wage compression in the plan, which made some salaries below market, were the first two priorities in the recommended pay plan, with the merit pool being the third priority. He said that given the commission’s previously stated desire not to raise the property tax rate amid the pandemic, the wage increases included in the budget are what staff believed were prudent and equitable for all employees. Another $227,000 is included in the budget to fund annual wage increases in the Lawrence Police Officers Association pay plan, and $179,000 is included to fund annual wage increases in the International Association of Fire Fighters Local 1596 pay plan.

Other significant conversations about the 2021 budget will actually occur next year, as the commission expects to make significant amendments to the budget or the CIP. Owens has described the budget as a placeholder because the commission will likely make amendments once it updates its strategic plan in the coming months, a process that was delayed because of the pandemic and a desire to account for calls for police and racial justice reforms.

City Commission Work Session 08/11/20