It’s nice to hear Lawrence city commissioners discuss using $700,000 in unbudgeted funds to reduce taxes. After all, it’s not an approach the city has historically applied.
At a meeting last week, the City Commission received a final report from the auditing firm RSM related to the missing payments, which essentially were lease payments for city-owned property that the city had neither billed nor collected in years. The leases were handled manually and were not incorporated into the city’s financial audit, allowing them to be easily overlooked as staff turnover occurred.
The $700,000 was recouped during the course of 2017 and was not a part of the 2018 budget.
Earlier this year, before the funds had been recouped, commissioners approved a city property tax increase of 1.25 mills for 2018, mostly to pay for a new police station. The tax increase will cost the owner of a $175,000 home an additional $25 annually in city property taxes. Commissioners also approved an increase in utility rates that will cost the average resident another $65 annually.
City Manager Tom Markus said that had the money been collected when it should have been, the tax increases might not have been as much. Markus said that during the next budget process he thinks the commission should seriously consider not increasing the property tax rate by that same extent.
“I think you ought to give it some thought,” Markus said. “These were funds that, if they had been collected, I don’t think our rate would have been the same, I don’t think maybe some fees would have been the same.”
Added Commissioner Mike Amyx, “I concur with the city manager that we return it back to the people who actually pay. With the increase we had to do, I think that’s important.”
Of course, commissioners should return the funds to taxpayers — such an approach should be taken with any “excess funds” that become available.
But giving funds back in the form of tax relief hasn’t always been the city’s instinct. For instance, city sales tax receipts increased by more than $1.12 million in the 2017 fiscal year as compared with the year before and are up another $200,000 through the first five months of the 2018 fiscal year. Despite the excess revenues, the city moved forward with its highest tax hikes in recent memory this year.
Perhaps the discussion of using the $700,000 for tax breaks could also be the city’s attempt to spin a rather embarrassing financial miscue into a taxpayer benefit. In essence, $700,000 in city funds went missing for years and no one noticed. In its final audit report, RSM recommended that the city automate its billing process and billing audits.
Let’s hope that the city does find a way to lessen the burden on taxpayers with the newly found $700,000. Moreover, let’s hope that the city makes a habit of prioritizing tax breaks any time the city finds itself with excess funds.