Lawrence city commissioners on Tuesday took their first steps in budget planning for 2024, which early numbers indicate could require bridging a $4.6 million deficit.
However, some commissioners said they wanted to look at a potential property tax cut.
Mayor Lisa Larsen said she recalled that last year, the city was looking at about a $5 million gap in the budget.
Jeremy Willmoth, finance director, said she was correct — the city was able to use one-time American Rescue Plan Act (ARPA, federal COVID-19 relief) funds to fill in that hole. The remaining ARPA dollars are already allocated for homelessness and housing projects, such as the Pallet Shelter Village, so that money will not be available again.
City finance staff members were hoping to get the commission’s feedback on the current employee pay plan.
Lawrence City Manager Craig Owens said the city has brought employee wages up to competitive market pay rates and is now in “maintenance mode” to keep up with similar positions in nearby communities.
“That means both making step adjustments and then keeping up with inflation, or cost of living, or market conditions,” Owens said. “We want to make those adjustments to the structure.”
Willmoth said the annual pay increase for the average employee is about 7.5%. City unions have different negotiated pay structures, however. The projected budget deficit includes continuing the employee pay plan at those rates.
“In the projection that you see before you, had we left it at baseline and not included supporting the pay plan that you all had approved in previous fiscal years, we actually would have revenues in excess of expenditures,” Willmoth told the commission. “But for that to occur, we would essentially have to see no increase in expenditure whatsoever — so no inflationary spending adjustments, no increase for utilities, no increase for staff costs, etc. As we mentioned before, there probably will be other revenue enhancements, but there will also be other expenditure requests.”
Commissioner Brad Finkeldei said he tends to be optimistic, but he is interested in looking at lowering the mill levy.
“I think we won’t know until we get to July, and we look more at the sales tax numbers and get the final report on property taxes,” Finkeldei said.
Vice Mayor Bart Littlejohn asked staff members to bring back numbers the city could see depending on whether the commission decides to keep the mill levy flat, increase it or decrease it.
“Obviously, keeping it flat or lowering it would be optimal, but again, that’s why they put us up here to make the hard decisions,” Commissioner Courtney Shipley said.
Commissioner Amber Sellers said she thought it was too early to decide to lower the mill levy, particularly after conversations with the county on Monday about Lawrence-Douglas County Fire Medical’s hopes of building two new stations and relocating a third to improve emergency response times to the city’s outskirts.
If elected officials move forward with that plan, the construction alone would require a city property tax increase of more than 8 mills to fund, Willmoth told the commissions on Monday.
Commissioners discussed the structure of the city’s priority based budgeting system. They agreed they want to put more emphasis on how community factors are weighed in budget planning. (See more about that system in the presentation in this article.)
Community members can play with budget numbers and share their feedback and priorities with city staff members through a new online program called A Balancing Act, available at lawrenceks.abalancingact.com.
“I do think it can give us a better jumpstart on getting a budget that’s much closer to what this community is hoping we do,” Owens said.
The commission did not need to take binding action on Tuesday. City staff were asking for guidance as they begin the process. Owens will present a draft budget to the commission in July.