City manager releases ‘placeholder’ budget; spending could change based on public input on pandemic and police reform

Recommended budget calls for flat property tax rate, increase in utility rates

photo by: Mike Yoder

Lawrence City Hall, 6 E. Sixth St., is pictured Thursday, July 7, 2016

Lawrence City Manager Craig Owens is proposing a recommended budget that he says will function as a placeholder while the city gathers additional input from the community about spending priorities amid the coronavirus pandemic and calls for police reform.

The recommended budget totals about $291 million and will be presented to the City Commission for initial input at its work session Tuesday. The commission has expressed interest in reevaluating some of the duties assigned to police, specifically those related to social issues. The city also announced last month it would reopen community feedback on the commission’s strategic plan to see how the pandemic and racial justice movements have affected the community’s spending priorities.

The role of police

Following Tuesday’s work session, the commission is scheduled to set the maximum spending limits for the 2021 budget at its meeting July 28, and the public hearing for the budget will take place Aug. 11. Though the budget process needs to begin to stay on track to meet certain filing deadlines under state law, Owens said that shifts of funding within the framework proposed could still occur later in the budget process or as budget amendments early next year.

“Even though I wish that we could have had those conversations and then we could have aligned this budget plan with that, it’s still great that we are in a position right now to have a priorities conversation that can reflect these pretty significant changes around the pandemic as well as social justice issues and policing,” Owens said. “So our community and our budget will be reflecting these top priorities.”

The recommended budget currently maintains the police department’s approximately $29 million annual budget and does not call for significant changes to operations, but Owens said potential changes would be discussed as the budget process continues. In a letter to the commission attached to his recommended budget, Owens spoke to how the death of George Floyd in May has triggered a “long overdue reconsideration” of the systems of criminal justice in this country.

“For decades we have asked law enforcement professionals to take on an ever increasing list of obligations either directly or by default when the social, economic and medical supports are lacking and nobody knows who else to call,” Owens wrote. “Appropriately, we have also continued to add accountability which further creates levels of complexity to the work these people are asked to undertake.”

Flat tax rates, increased utilities

The recommended budget calls for keeping property taxes flat for next year, but proposes increases to city utility rates. It’s recommended that all three city utility rates increase, amounting to an approximately $110 annual increase over this year for the typical residential customer.

Specifically, the budget calls for an 8% increase for water, a 3% increase for solid waste and a 50% increase for stormwater. Owens said the stormwater increase — which because the current fee is relatively low amounts to only $27 more annually — would go toward major stormwater infrastructure projects. Taken together, the recommendations would increase the monthly utility bill of the average Lawrence customer using 4,000 gallons of water per month from about $103 to about $112.

City utility rates have gone up significantly in recent years, with rates having already increased approximately 33% between 2015 and 2020, according to past city budget documents. If the recommended increases were adopted, rates would be set to increase by about 45% since 2015, when the average customer paid about $77 per month.

Owens said he does not take such increases lightly, but he said the broader story is that the city has to address its neglected infrastructure, which was one of the main observations he made when joining the city last year. He said that investment would ultimately result in a more efficient and cost-effective system for the city and its rate payers.

“These (increases) are not taken lightly, but these assets are ours as a community, and if we don’t make these investments, the cost to everybody is going to be much greater for less service,” Owens said.

Revenue projections

Though the budget does not recommend a property tax increase, the budget does assume an increase in assessed valuation of 4.3%, which will have the effect of increasing the city’s property tax revenue. The flat property tax rate also aligns with direction the commission previously provided to city staff. When anticipating revenue decreases due the pandemic earlier this year, commissioners said they favored budget cuts over tax increases.

The city’s other main revenue source, sales tax collections, is anticipated to decrease amid the economic slowdown related to the pandemic. The city usually projects growth in sales tax collections year over year.

Specifically, the city projects that 2020 sales and use tax collections will be 15% less than last year, or about $6 million less. Collections for 2021 are projected to come in 5% less than 2020, or another $2 million less. Finance Director Jeremy Willmoth said those numbers are improvements over previous projections.

“It’s really good news in the fact that we really thought we were going to be closer to 25% two months ago,” Willmoth said, in reference to the decrease from 2019 to this year. He said if revenues ultimately end up coming in lower or higher than the current projections, budget adjustments would have to be made.

The better than anticipated revenue projections also mean that the budget does not recommend spending as much of the city’s reserve funds as city commissioners previously thought could be needed. Commissioners said they were willing to spend general fund reserves down to as low as 15% of expenditures, but the recommended budget calls for that level to be approximately 21%. Owens said he is glad the city is in a better position than it was thinking it would be a few months ago.

“We didn’t use the full latitude the City Commission gave us to dip into reserves, which we think is really important,” Owens said.

The City Commission will convene virtually at 5:45 p.m. Tuesday, with limited staff members in place at City Hall, 6 E. Sixth St. The city has asked that residents participate in the meeting virtually, if they are able to do so, using temporary meeting procedures put in place to help stop the spread of the coronavirus. Directions for submitting public comment and correspondence are included in the meeting agenda that is available on the city’s website.

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