photo by: Chris Conde/Journal-World File Photo

The Douglas County Courthouse at 1100 Massachusetts St., which houses the county government, is shown on Sept. 15, 2018.

There won’t be an ambulance filled with $2.6 million traveling from the Douglas County Courthouse on the south end of Massachusetts Street to City Hall on the north end.

But it is a fitting picture nonetheless for a proposed property tax rate increase that Douglas County commissioners are being asked to approve as part of the 2022 budget.

County Administrator Sarah Plinsky on Thursday unveiled a recommended budget that is seeking a property tax rate increase of 1.768 mills. Plinsky said the recommended tax increase is being fueled by a new funding deal between Douglas County and the City of Lawrence that spells out how the two governments will operate and fund Lawrence-Douglas County Fire Medical.

That new funding deal will require the county to send an extra $2.64 million to the City of Lawrence for its share of operating expenses of the joint department, which provides fire protection services to all of Lawrence and ambulance service throughout the county. The proposed property tax rate increase would generate about $2.76 million in new property tax revenue for the county, with almost all of it being shipped down the street to Lawrence City Hall.

Plinsky on Thursday said recommending a tax increase is always difficult, but she’s confident this one would be for the right reasons. She said the new funding deal with the city is still cheaper than if the county were to run its own, standalone ambulance service.

“I know that a consolidated fire and EMS service ultimately saves our citizens substantial resources by not having duplicative services,” Plinsky said.

Some communities have services where there may be a city fire station on one block and a county ambulance station in the next block. Lawrence and Douglas County avoid those inefficiencies, but the new funding deal — which is an update from the original 1996 agreement — will result in a higher county tax bill for residents if county commissioners ultimately approve Plinsky’s recommendation.

The proposed property tax rate increase would amount to just more than $40 in new taxes for the owner of a $200,000 home. The increase would amount to just more than $440 in new taxes for the owner of a $1 million commercial building.

What’s not yet clear is whether city of Lawrence residents will see a property tax decrease as a result of the funding shift. While Douglas County’s cost to run the combined fire and medical department is expected to increase by about $2.6 million, the city of Lawrence’s cost to run the department is expected to decline by a similar amount.

“This really is a cost transfer,” Plinsky said. “No additional funds are going to fire and medical as a result of this.”

Lawrence City Manager Craig Owens has not yet released his recommended budget for 2022, so it is not yet known whether he will propose a property tax reduction to account for the new money the city is getting from the county. However, there have been indications his budget won’t propose a property tax rate decrease. Lawrence Mayor Brad Finkeldei indicated earlier this week that he expects the city to hold its property tax rate steady for the next budget year, although he said that is subject to change.

It also is not yet certain that Douglas County commissioners will approve the property tax rate increase. Commissioners will begin budget deliberations next week. State law requires them to have a budget for 2022 approved by mid-August. Any property tax increase would show up on the tax bills that property owners are scheduled to receive in November.

Home vs. business

The tax year is shaping up to be a different one for homeowners versus business owners. It is likely that homeowners are going to see their property tax bills increase in two ways, while it is more likely that owners of commercial property will see theirs increase in only one way.

Property tax bills are calculated both by the tax rate and by the value of the property owned by the taxpayers. The total taxable value of property owned in the county increased by 2.75%. But, in general, the value of homes in the county went up by far more than that, while the value of business property in the county actually declined in total, in part caused by business downturns related to the pandemic.

“The commercial sector has had some real winners and losers this year,” Plinsky said.

The end result is likely that many homeowners will see both their tax rate and the taxable value of their home increase, which will result in a larger tax increase than if only one of the two increases had occurred. In contrast, some business owners may not see a property tax increase at all if the taxable value of their business property has declined by a large enough amount.

How that works out for each taxpayer will vary case-by-case, depending on what value the county appraiser assigned for each property. But for Plinsky and her staff tasked with creating a county budget, the end result was easier to understand. It ensured that finances were going to be very tight if the county did not pursue a property tax increase.

“It is the lowest assessed valuation increase I have seen,” Plinsky said of her more than 10 years of putting together budgets in the county.

She said the numbers are a reminder of why it is important for the community to grow its tax base, not only with homes but also new businesses.

“This is why a strong tax base is really important,” she said.

Tap reserves?

The county does have sizable amounts of funds in reserve that could be used to offset the tax increases — at least for one year. The county is expected to start 2022 with about $12.5 million in its general fund reserve account, which functions somewhat like a savings account. That’s up from about $6.6 million in that fund in 2020.

Despite the larger-than-normal amount in the fund, Plinsky said she is not recommending that the county spend down those reserve funds to eliminate the need for tax increases. She said she is uncomfortable with that approach because the issues driving the need for a tax increase are ongoing expenses, while spending the reserve money can only happen once.

“I’m really cautious about spending one-time resources on ongoing expenses,” Plinsky said.

An even larger source of one-time money also is coming the county’s way via the federal government. Plinsky said the county is expected to receive about $23 million in federal money related to pandemic relief efforts. She said the county will have three years to spend those funds.

She said the funds do have restrictions on how they can be spent, which would make them difficult to use to pay for the county’s increased cost for the ambulance service, for example. She said her recommended budget doesn’t the federal funds but said county commissioners will hold public discussions in the coming weeks and months about how those funds should be spent.

New services, raises

The recommended budget includes about $1.2 million for pay increases for the county’s approximately 500 employees. The proposal would provide pay increases of 3% to 4% in many instances.

Plinsky said the recommended budget does not propose cuts to any existing services. It does propose some new services and also recommends about 10 new employee positions related to those services.

Among the new services recommended by Plinsky are:

• About $250,000 in additional funding to expand the county’s drug court program, which aims to help reduce incarceration levels for drug offenders in the county. Plinsky said the new dollars are expected to help the court serve an additional 10 offenders per year, in addition to helping fund other enhanced diversion services in the community.

• About $580,000 for Bert Nash Community Mental Health Center for a “mobile access team” that will help the agency provide more services outside its offices, and for a new homeless services position that will maintain a more complete database on the homeless population.

• $2.8 million in county funds for operation of the new behavioral health crisis center that is expected to begin operations on a new campus near the LMH Health hospital in February.

• About $12,000 for the county’s share of five new employees at the emergency communications center, which handles 911 calls. The city of Lawrence would be required to pick up the bulk of those employee costs as part of a funding agreement for that shared department. The county has made similar requests in the past — and set aside funding for the positions — but the new positions have not been added due to a lack of funding from the city.

• About $109,000 for two new employees in the sheriff’s department — a cook for the county jail, and a new correctional officer who will oversee issues related to the growing practice of using video technology to host first appearances for inmates at the jail.

Correction: This article has been corrected to reflect that the federal funds the county will receive in pandemic relief have not yet been added to the recommended budget.