City manager’s recommended budget calls for the creation of new Homeless Programs Department, additional $7.5 million in employee compensation and benefits
photo by: Rochelle Valverde/Journal-World
Story updated at 4:53 p.m. Friday, July 7:
Lawrence city commissioners next week will begin considering a $471 million budget for 2024 that would add a Homeless Programs Department and provide about $7.5 million in additional wages and benefits to city employees.
It also would keep the city’s property tax rate steady from a year ago, but many residents should expect their property tax bills to increase due to rising home values.
City Manager Craig Owens’ recommended budget is on the agenda for the commission’s meeting on Tuesday. The budget is being presented with a flat property tax rate of 33.207 mills, but due to a growing tax base the city is expected to collect about $3.58 million more in property taxes in 2024.
The budget also assumes an increase in sales tax revenue of about 8% over expected 2023 totals, good for about $4.3 million in new city revenue. The sales tax rate will remain the same from a year ago, but city leaders are projecting more purchases to occur in the city.
City commissioners will be presented with information on a potential property tax rate cut that would keep property tax revenues stable from a year ago. The “revenue neutral rate,” which state lawmakers require local governments to calculate and consider, would reduce the property tax rate by 2.5 mills. That would equate to about a $71 reduction in city property taxes on a $250,000 home.
But Owens is not recommending commissioners take that path. Instead, he said the city will need the additional revenue to fund existing services and undertake a handful of new initiatives.
The proposed 2024 budget adds about $10 million to the city’s general fund, which is the primary operating fund for city services like public safety, parks and recreation and parts of municipal services and operations. The proposed 2024 budget’s general fund total would be about $115.5 million, a 10% increase compared to the 2023 budget.
In part, that’s because of one initiative reflected in the 2024 budget — tackling homelessness and affordable housing. A memo from Owens notes that these were the top two issues facing the community that were identified during the city’s strategic planning process. With that in mind, the budget sets aside $2 million in the general fund to support the operations of the Homeless Programs Department.
“To build our capacity in a space that, quite frankly, cities don’t often get involved in, we will be creating a Homeless Programs Department and hiring a dedicated director,” Owens said in the memo.
An additional $1.1 million from the general fund is intended to bolster the city’s affordable housing stock in a partnership with Tenants to Homeowners. As part of its Capital Improvement Plan, the city intends to partner with Tenants to Homeowners to purchase property near Holcom Park to develop about 40 new units of permanent affordable housing for residents from very low- to moderate-income households.
Combined with the $2 million proposed for the creation of the Homeless Programs Department, the city plans to spend $3.1 million in new money on housing and homelessness issues. But Owens’ memo noted the investment meant postponing other capital projects and approving only a handful of departmental and community partner organizations’ operational enhancement requests.
City spokesperson Laura McCabe told the Journal-World Friday afternoon that the new department is intended to provide better structure for the city’s homelessness response efforts. Right now, McCabe said the city’s goals and operations related to reaching “functional zero” — in other words, making sure the number of people experiencing homelessness never exceeds the community’s capacity to move them into permanent housing — fall under the purview of the Planning and Development Services Department.
But that department also leads the city’s affordable housing initiatives. Creating a separate department means Planning and Development Services will be able to narrow its focus more in that direction, McCabe said.
“It has become clear during the last year that the homeless crisis affecting our city, and the nation, requires a dedicated operations department,” McCabe said. “The move will allow us to support and focus on affordable housing within Planning and Development Services, while an additional department leads our commitments related to homelessness.”
Other details from Owens’ recommended budget include:
A “structurally balanced” budget: According to Owens, the city’s budgets for several years have had a “structurally imbalanced” general fund, which more simply means expenditures were outpacing revenues. That was, in part, due to the effects of the pandemic. Over the last three budgets, the city used more than $11 million in federal American Rescue Plan Act relief funds to cover the deficits.
This year’s budget meets the goal of eliminating that structural deficit in the city’s general fund, Owens’ memo says, due to revenue growth and targeted departmental reductions. The memo touts that the deficit was eliminated with minimal service impacts. The city otherwise would have had to consider a tax increase or substantial service-level reductions, Owens said via the memo.
In turn, the memo also notes that this will allow for future federal grant resources to be dedicated to top priorities like housing, emergency shelter and infrastructure.
A boost to employee compensation: Owens’ memo notes that the city has “caught up” to the market for public sector compensation, and now needs to maintain that market to be a competitive employer. That’s leading to multi-year agreements with the city’s labor organizations, and an additional $7.5 million in net employee compensation and benefits recommended in the 2024 budget.
Public voices impact spending priorities: According to Owens’ memo, city staff sought more public engagement in this year’s budgeting process through the use of a tool called “Balancing Act,” which allows participants to simulate the budgeting process by changing service levels in numerous programs across the city’s strategic plan outcome areas. The feedback from that exercise showed that, on average, participants desired to increase service levels in areas like street maintenance and housing initiatives at the expense of various Parks and Recreation programs — especially Eagle Bend Golf Course — and the Office of the Police Chief.
Along with the golf course, city staff is proposing “minimal reductions” to Parks and Recreation programs like cemetery and levee management, parks, trails and open space management, and urban forestry and right-of-way.
Prairie Park Nature Center is also on that list for minimal reductions, a year after the proposed 2023 budget called for closing it entirely. That’s a move that received significant public backlash last year and would have saved the city $337,000. The budget document itself notes that the nature center’s requested budget for next year is actually increasing from $424,000 to $458,000.
Capital Improvement Plan: The recommended five-year CIP calls for $480.73 million in spending from 2024 to 2028. That’s a significant increase over the initial recommendation in last year’s budget, which was about $408 million in spending from 2023 to 2027. Of that amount, the CIP calls for about $125 million in project spending in 2024.
The plan includes a number of projects with hefty price tags for next year, such as more than $31 million in improvements at the Kansas River Wastewater Treatment Plant and a nearly $6 million City Hall reconfiguration project.
During last year’s budget process, the Journal-World reported that the city’s level of spending on capital projects was among the highest in years, and that trend has only continued. The city spent $62.65 million on its CIP in 2020; under the recommended five-year CIP in this year’s budget, four out of the next five years of planned spending will eclipse that amount by at least $20 million.
Utility rate increases to be explored later: The agenda for Tuesday’s meeting notes that revenue increases have been identified to fund the city’s utilities department. But those details won’t be explored until later in the year as part of the process of updating the rate model, city officials said via the budget memo.
Crafting the budget without setting utility rates first was possible because water and wastewater rates were actually adopted in a multi-year approach last year. McCabe told the Journal-World Friday afternoon that a city ordinance last year established water service charges for three years, from 2023 to 2025.
“This is a benefit to the 2024 and 2025 budget processes that we have not had in recent years,” McCabe said.
The budget document does imply that an increase is in the cards for those rates, though. At the moment, the 2024 budget calls for about a 5% increase in the amount of rate money collected.
Trash and stormwater rates are still adopted on an annual cycle that takes place after the budget is adopted, McCabe added. Should the commission decide to change the rates for any utility, it’d have to happen in a budget revision before the start of 2024. For now, the charges for services in the solid waste fund remain relatively flat, actually decreasing by around $200,000 compared to 2023.
Loose ends: The presentation for Tuesday’s meeting breaks down some of the smaller-scale increases relative to the budget as a whole. Some highlights on that front include increased Lawrence Police Department foot patrols in the downtown area, a 20% increase in city funding to the Lawrence Humane Society, increased street maintenance and traffic signal improvements and further expansion of the Lawrence Loop.
The Lawrence City Commission will receive the recommended budget as part of a work session at 5:45 p.m. Tuesday at City Hall, 6 E. Sixth St.