photo by: Nick Krug

Lawrence City Hall, 6 E. Sixth St., is pictured on May 3, 2016.

Reading a government’s financial audit can be a bit like reading Tolstoy: It is thick, dense and sometimes leaves you wanting vodka. But, it also can provide a good look at the big picture.

The City of Lawrence’s financial audit for 2023 is complete, and city commissioners will get a briefing of the document — which is the city’s official scorecard for its finances — at their Tuesday meeting.

I went through all 166 pages of it this morning, with the goal of trying to find a few nuggets that could provide a big-picture look during this time when the city is contemplating a 3.5 mill property tax rate increase, which would be its largest in 50 years, plus an increase to its sales tax rate.

Specifically, I looked at 2023 finances versus 2019 finances, which was the last year before the pandemic, to see how much has changed since then. Here are a few things I’ve found:

• City spending for health and social services has skyrocketed. The city spent $14.56 million on health and social services. You may think, “We did have a pandemic, after all.” That is true, but the spike in spending didn’t happen during the height of the pandemic. In 2022, health and social services spending was about $5.9 million. It was in 2023 that it soared.

Here’s the eye-popping number: Since 2019, the city’s health and social services spending has increased by nearly $12 million, or 443%.

The increase, indeed, is related to the pandemic. It just wasn’t necessarily to pay for masks, vaccines or that sort of expense. Rather, a large amount of this money — more than $8 million — is federal funding that came in the wake of the pandemic. The city devoted that money to programs such as homeless outreach, affordable housing projects, emergency shelter for the homeless and other such programs. Those decisions were made in late 2022, and the spending showed up in 2023.

Figuring out how to keep some of that money in the 2025 budget — now that federal funds are no longer available — is a key issue for the City Commission, and is part of the reason the city is calling for tax increases.

• Spending on culture and recreation — this includes parks and recreation, arts programs and other similar services — also is way up. The city spent $27.02 million in 2023. That’s up 95% from the approximately $14 million it spent in 2019.

• The amount the city spent on interest related to its debt is up 82% since 2019, and totaled $6.27 million for general government operations. In other words, this doesn’t include the debt the city has for its water, sewer and other utilities operations. These higher interest costs are somewhat related to higher rates, but it also is a sign that the city is building a lot more infrastructure than it once did.

The city’s net position in all its capital assets — streets, buildings, water lines and sewer mains, equipment and other such pieces of capital — was $335 million in 2023. Think of that like equity in your home. It is how much it is worth, over and above what you still owe the bank. That $335 million is up from $324 million in 2022. That’s important because it shows the city is building and repairing infrastructure at a rate faster than what it is degrading. Most infrastructure loses value. A street is worth less the older it gets, for example. It is not unusual for cities to see the value of infrastructure decline because they are not investing enough money to renew it. This is a key number to City Manager Craig Owens, who began his tenure in 2019 saying the city had fallen behind on infrastructure upkeep. Getting that number to where it is has been a big part of the city’s strategy over the last several years.

• Public safety spending, which includes the police and fire and medical departments, continues to be the single biggest category of spending in the city’s budget. It was $69.62 million in 2023, up 34% since 2019.

• When it comes to revenues, property taxes have been growing more than sales taxes since 2019. The city collected $48.9 million in property taxes in 2023. That’s up 28% from 2019. Sales taxes are still a larger part of the city’s budget at $59.7 million, but their growth has been slower. Sales tax collections are up 22% since 2019.

• While property taxes have created grumbling, so too has rising water and sewer rates. The audit shows those rates have gone up faster than any set of taxes. In 2023, the city collected $62.3 million in water and sewer rates. Back in 2019, the amount was $45.6 million. That’s an increase of 36%. Yes, some of that comes from new growth as the city adds homes and businesses to the system. But a lot of it is coming from higher rates. The city manager’s office hasn’t yet proposed rates for 2025, but it has forecasted that another rate increase is planned.

Here’s another important fact about the city’s water and sewer department: Its rates have been going up a lot faster than expenses. While rates have increased by 36% since 2019, expenses have increased by 19%.

In 2023, the water and sewer department collected about $62 million in rates but spent about $54 million in expenses. The department is a nonprofit entity, so what is up with the approximately $8 million of excess revenue? The city is building up cash to pay for a multitude of utility infrastructure projects.

That’s part of the answer, anyway. Another element is that the city really is vigilant in making sure it has plenty of reserves to operate the utility department during a downturn. The city aims to keep 250 days worth of operating expenses in a cash account to help it get through a downturn.

The city indeed is accumulating cash in that fund. The water and sewer fund ended 2023 with a fund balance — kind of the equivalent of a savings account — with about $144 million. To meet its requirement of having at least 250 days of expenses on hand, the city would need about $37 million in a rainy day account. The excess of more than $100 million is to help the city pay for future infrastructure projects.

• It probably is fitting to end this with a summary of grant money the city has received. When we look back at this period, it may be tempting to call it the era of free federal money. In 2023, the city received $22.6 million in operating and capital grants. In 2019, it received $7.7 million.

That’s a nearly $15 million difference. It also could be quite a budgeting challenge, as you have to figure the days of such large grants are done, but the desire to spend such sums is not.