Memorandum

City of Lawrence

City Manager’s Office

Date:	8/2/2006
To:	David Corliss, Interim City Manager
From:	Casey Liebst, Budget Manager
CC:	Debbie Van Saun, Assistant City Manager
RE:	Response to questions about 2006 Projections

Below are responses to questions from Commissioner Rundle.

Question: Could you let me know for the dollar amount we are ahead of projections for those revenues listed below that were reported to be coming in ahead?

General Fund

Property taxes revenue

Sales tax revenues

Interest revenue

Enterprise Funds

Water and Sewer Fund revenue

Sanitation and Stormwater Fund revenues

Answer: A table is provided below that shows the amount budgeted in 2006 for the funds mentioned above, as well as the amount of revenue received as of June 30, 2006. All of these funds are above 50% of budget at the end of the first half of the year.

	2006	YTD	% of
General Fund	Budget	as of 6/30	budget
Property Taxes	$ 12,697,857	$ 10,514,353	83%
Franchise Fees	3,847,000	1,990,392	52%
Sales Taxes	20,880,000	10,831,450	52%
State Transfers	667,000	341,283	51%
Licenses & Permits	928,000	647,233	70%
Fines	2,175,000	1,283,607	59%
User Fees	639,500	614,505	96%
Interest	400,000	722,626	181%
Other	3,535,394	2,149,744	61%
Transfers	1,628,662	859,331	53%
TOTAL REVENUES	$ 47,398,413	$ 29,954,524	63%

	2006	YTD	% of
Enterprise Fund	Budget	as of 6/30	budget
Water and Sewer	21,570,000	13,127,804	61%
Sanitation	8,524,500	4,409,851	52%
Stormwater	2,673,500	1,439,963	54%

Question: What is the dollar amount and percentage we would be ahead for the fiscal year if we generated the amount of revenue projected (and no more) for the third and fourth quarters of this year?

Answer: The table below shows the amount of revenues in the 2006 Budget, as well as a revised projection of the total revenues for the year. The table shows the dollar amount and percentage difference between budgeted and projected revenues.

It is important to remember that the 2006 budget numbers were underestimated in all of these funds order to meet the state statutory requirement of a 5% budgeted fund balance. This is especially true for the Water and Sewer Fund where we are building up our cash balance to fund future capital projects.

This confusion should be alleviated in the 2007 Budget because revenues were not adjusted to meet the 5% budgeted fund balance requirement. Instead, revenues were budgeted according to projections and transfers were budgeted that will only occur if revenues meet or exceed the levels budgeted.

	2006	revised	$	%
General Fund	Budget	Projection	difference	difference
Property Taxes	$ 12,697,857	12,850,000	152,143	1.20%
Franchise Fees	3,847,000	3,900,000	53,000	1.38%
Sales Taxes	20,880,000	22,200,000	1,320,000	6.32%
State Transfers	667,000	680,000	13,000	1.95%
Licenses & Permits	928,000	1,100,000	172,000	18.53%
Fines	2,175,000	2,600,000	425,000	19.54%
User Fees	639,500	650,000	10,500	1.64%
Interest	400,000	1,400,000	1,000,000	250.00%
Other	3,535,394	3,470,619	(64,775)	-1.83%
Transfers	1,628,662	1,628,662	-	0.00%
TOTAL REVENUES	$ 47,398,413	50,479,281	3,080,868	6.50%

	2006	2006	$	%
Enterprise Fund	Budget	Projection	difference	difference
Water and Sewer Funds	21,570,000	28,688,801	7,118,801	33.00%
Sanitation	8,524,500	8,896,370	371,870	4.36%
Stormwater	2,673,500	3,023,151	349,651	13.08%

Some explanation of the difference for each of the general fund revenue sources is provided below.

Property Tax – The majority of property tax distributions have been received for 2006; only one additional distribution will be received in September and is typically smaller. While the distributions in the first seven months have been up, revenues from delinquent property taxes appear to be down and are likely to be less than budgeted. Therefore, the overall difference of $152,143 is projected at the end of 2006.

Franchise Fees –Based on the first seven months of revenues and historical trends for the second half of the year, it is anticipated that revenues will be $53,000 above budget.

Sales Tax – Using revenues received in the first seven months of 2006 and trend data from the monthly sales tax distributions in prior years, sales tax revenues (including city and county sales and use taxes) are now projected to exceed budget by $1,320,000.

State Transfers – Most of the funds from the state that were anticipated for 2006 have already been received, therefore, an increase over budget of $13,000 is projected.

Licenses & Permits – Building permits have been high in the first half of 2006. The revised projection takes that into account but assumes a second half similar to 2005, allowing the projection to be $172,000 greater than what was budgeted.

Fines – The Municipal Court fines revenues are greater than 2005, however, the amount of increase has leveled off in 2006. Revenues are now projected to exceed budget by $425,000.

User Fees – Revenues received to date indicate that user fees received in 2006 may exceed budget by $10,500.

Interest – Interest rates have remained at higher levels than 2005. We have already exceeded the revenues budgeted for 2006 and it is now projected that by the end of 2006, we will exceed budget by $1,000,000.

Other – While revenues exceeded 50% of budget at the end of the first half of 2006, the most of the large payments (i.e. the County’s payment for their share of the Fire Medical operations) have already been received. Revenues received in the first half of 2006 and historical data indicate that revenues in this category may fall short of budget by $64,775.

Transfers – Historically, the amount of transfers do not exceed the amount budgeted.

Again, it is important to remember that the revenues budgeted for 2006 were underestimated by almost 3 million dollars in order to meet the state statutory requirement of a 5% fund balance.

This confusion should be alleviated in the 2007 Budget because budgeted revenues equal projections and transfers are budgeted that will only be made if revenues meet or exceed those projections.

The table below shows the revenues budgeted for the general fund in 2006. It also shows the revenue projection for 2006 used to prepare the 2007 Recommended Budget and the revised projection explained above.

The projection used in the 2007 Recommended Budget was prepared in May, when only five months of 2006 receipts were available. The revised projection was prepared using seven months of 2006 receipts. It is now projected that general fund revenues will exceed the levels used to prepare the 2007 Recommended Budget by $109,000, or just less than one quarter of one percent of the total revenues.

	2006	2006 projection	Revised 2006	difference in
General Fund	Budget	in 2007 budget	Projection	projections
Property Taxes	$ 12,697,857	$12,893,058	12,850,000	(43,058)
Franchise Fees	3,847,000	3,941,893	3,900,000	(41,893)
Sales Taxes	20,880,000	22,170,832	22,200,000	29,168
State Transfers	667,000	715,000	680,000	(35,000)
Licenses & Permits	928,000	1,000,000	1,100,000	100,000
Fines	2,175,000	2,700,000	2,600,000	(100,000)
User Fees	639,500	650,000	650,000	-
Interest	400,000	1,200,000	1,400,000	200,000
Other	3,535,394	3,470,619	3,470,619	-
Transfers	1,628,662	1,628,662	1,628,662	-
TOTAL REVENUES	$ 47,398,413	$50,370,065	$50,479,281	$109,216

The additional $109,000 of revenues in 2006 will increase the ending fund balance and therefore reduce the revenue requirements for property taxes in 2007 by .13 mills. Other options would be to amend the 2006 budget to allow for additional expenditures in 2006, or to allow the additional revenues to increase the 2007 ending fund balance by 0.185%.

Question: For the projects listed in the capital budget section could you provide a list of the primary contractors on each project?

Answer: The attached table shows the projects from the capital section of the 2^nd quarterly report. A column has been added showing the primary contractor.