An editorial published in the Lawrence Journal-World on July 13 raised concerns about the proposed property tax mill increase given the growth in assessed valuation. Those concerns need to be addressed for all city taxpayers to understand the 2018 recommended budget.
The statement that “the city is scheduled to receive $1.8 million in property tax revenues in 2018 that the city leaders weren’t expecting when they put this budget together” is incorrect. The budget as presented in May assumed a conservative 2 percent in property tax growth. A portion of the $1.8 million cited in the editorial was expected and was being used to balance the budget.
The editorial implies the city has an increase in the 2018 budget of $1.7 million in revenues in the general fund from the May projection to the June projection. This is incorrect. The general fund revenue from the May to June estimates was a net increase of $485,000.
The editorial states “… sales tax revenues are growing faster than budgeted, which means the general fund is projected to receive about $600,000 in additional sales tax proceeds.” This is misleading. The editors are confusing two fiscal years. The increase in sales taxes noted are projected to occur in 2017, and as staff explained to the Journal-World, the 2018 sales tax estimates are already based on those increases.
The 2018 sales tax projection does not continue the same large rate of increases into the future. Staff has explained to the Journal-World several times that the majority of the increases in 2017 were due to specific industries. When projecting sales taxes, it would be unreasonable to assume the same rate in growth as in the current year when there has been no indication that there is a similar increase in the retail footprint within the city. The net decrease in estimated 2018 sales taxes was $590,000.
The editorial also states that “despite that unexpected amount of tax revenues, the city has taken no steps to reduce its mill levy.” The city has previously detailed the steps taken to avoid increasing the mill levy. We have also met in person and over the phone with staff from the Journal-World multiple times to discuss the steps. The steps include eliminating 11 positions, reducing the amount of merit pool for some city employees from last year and making changes to our employee health care plan in order to significantly reduce the increases in health care costs.
The editorial states, “The City, though, could consider using some of those new funds to provide a reduction in the general fund mill levy. City officials would not have to touch the bond and interest fund.”
But the net increase in revenue to the general fund for 2018 is $485,000, not the $1.1 million or $1.7 million in the editorial. Also, as previously explained to representatives of the Journal-World, estimated expenditures were adjusted by $485,000 from May to June.
City property taxes make up less than one-quarter of the total property taxes paid by Lawrence residents. Based on the total property tax mill levy last year, the city received 24 percent of property taxes paid by Lawrence taxpayers. About 41 percent went to USD 497, 34 percent to Douglas County and approximately 1 percent to the state. This breakdown is expected to be the same in 2017, which means that of the $125 increase in property taxes for the owner of a $200,000 home referenced in the editorial, only $29, or $2.41 per month, will be used for city services.
For the increased cost in property taxes, taxpayers will benefit from additional capital improvements including two fire apparatus, police body cameras, repairs to the Lawrence Arts Center, phased construction of a new police facility, improvements to the fire med training tower, personal protective equipment for public safety employees, intersection improvements, traffic-calming improvements, ADA ramp improvements, riverbank stabilization, etc.
As residents of Lawrence, and taxpayers ourselves, we do not take property tax increases lightly. We have tried to minimize the impact of the increased cost of providing City services. We have also tried to increase the transparency of the budget process. We have revised our budget document to focus on the impact to taxpayers and highlight the alignment of resources with the city’s strategic plan.
An unedited copy of this letter and more information about the city’s budget, including an interactive 2018 Budget Report, can be found at www.lawrenceks.org/budget/current. Citizens can call Bryan Kidney at 832-3214 with questions.
Editor's note: The Journal-World previously issued a correction related to the amount of new property tax revenues the city is scheduled to receive as part of the 2018 budget. The correct amount is $1.4 million, not $1.8 million. The amount of property tax revenue the general fund is scheduled to receive is about $948,000, not $1.1 million.