Memorandum

City of Lawrence

City Manager’s Office

Date:	2/12/2007
To:	David Corliss, City Manager
From:	Casey Liebst, Budget Manager
CC:	Debbie Van Saun, Assistant City Manager
RE:	Assessed Valuation, Mill Levy, and Local Sales Tax Comparison Information

Per your request, information related to the assessed valuation, mill levy, and local sales tax for the ten largest cities in Kansas is provided below. 

Assessed Valuation and Mill Levy

The table below shows how the City of Lawrence compares to the nine other largest cities in the state in terms of assessed valuation and mill levy rates for the 2007 budget year.

City	Population (2005 est.)	Total Assessed Value	Assessed Valuation Per Capita	City Mill Levy	Total Levy in Taxing District
Wichita	347,996	$2,838,612,382	$   8,157	31.898	116.003
Overland Park	168,000	$2,708,926,593	$ 16,125	8.889	103.313
Unified Government	144,210	$1,048,420,602	$   7,270	41.742	157.4
Olathe	116,910	$1,233,812,291	$ 10,554	24.843	123.595
Topeka	122,008	$1,025,163,449	$   8,402	30.747	142.84
Lawrence	88,664	$   824,213,461	$   9,296	26.363	115.675
Shawnee	56,915	$   709,272,936	$ 12,462	24.621	110.172
Manhattan	49,462	$   367,438,289	$   7,429	33.088	110.571
Salina	45,956	$   374,610,096	$   8,151	23.999	117.722
Lenexa	43,765	$   982,460,511	$ 22,449	26.468	112.019
average	118,389	$1,211,293,061	$ 11,029	27.266	120.931
median	102,787	$1,003,811,980	$   8,849	26.416	115.839

The table highlights the following:

• Based on 2005 population estimates, Lawrence is the sixth largest city in the state

• Lawrence ranks seventh in terms of total assessed valuation for 2007.  Lenexa, while the smallest in terms of population, has an assessed valuation that ranks fifth among the top ten largest cities in the state.  The city with the greatest total assessed value is Wichita, the city with the largest population. 

• When comparing assessed valuation per capita, Lawrence ranks fifth.  We are five percent (5%) above the median but still more than fifteen percent (15%) below the average assessed valuation per capita.  The four cities with higher assessed valuations per capita are all in Johnson County. 

• The city mill levy in the 2007 budget for the City of Lawrence ranks sixth among the top ten largest cities.  At 26.363 mills, it is 0.05 mills below the median and almost 1 mill below the average.

• In terms of the total mill levy in the taxing district, Lawrence also ranks sixth for 2007.  The total levy is 5.256 mills below the average mill levy in the ten largest cities.  It is below the median by .164 mills.

Local Sales and Use Tax

Municipalities across the state levy sales tax for a number of purposes.  For most communities, sales tax is levied for general purposes.  Some municipalities also levy sale taxes for special purposes.  For instance, the City of Lawrence passed a general purpose .50% sales tax in 1971 and a .50% sales tax intended for public safety in 1990. 

The chart below shows a breakdown of the city and county sale tax rates as well as the total combined sales tax rates in the ten largest cities in the state.  Included in the combined sales tax rate is the 5.3% sales tax levied by the State.  Cities do not receive any of this revenue.  Cities do receive a portion of the sales taxes levied by the County in which they are located based on a population ratio.

Municipality	City Sales Taxes	County Sales Taxes	Combined Sale Tax Rate
Wichita	None	0.50% property tax relief
		0.50% road and bridge projects	7.300%
		1.00% for downtown Wichita arena
Overland Park	1.00% general purpose	0.50% general purpose
	0.125% streets	0.25% public safety	7.525%
		0.25% economic development
		0.10% storm water
Unified Government	1.25% speedway debt	1.00% speedway debt	7.550%-
Unified Government speedway area	0.11%-0.6% improvements at locations		8.150%
Olathe	1.00% general purpose	0.50% general purpose
	0.125% streets	0.25% public safety	7.525%-
		0.25%economic development	8.525%
		0.10% storm water
Olathe Pointe District	1.00% improvements at location
Topeka	1.00% general purpose	0.65% Washburn
		0.25% economic development	7.450%
		0.25% streets and bridges
Lawrence	0.50% public safety	1% property tax relief	7.300%
	0.50% general purpose	and public facilities
Shawnee	1.00% general purposes	0.50% general purpose
	0.125% public safety	0.25% public safety	7.650%
	0.125% parks and pipes	0.25%economic development
		0.10% storm water
Manhattan	1.00% general purpose	0.50% general purpose	7.300%-
		0.50% road and bridge projects	7.800%
Manhattan Transportation District	0.50% transportation district
Lenexa	1.00% general purpose	0.50% general purpose	7.525%
	0.125% storm water	0.25% public safety
		0.25%economic development
		0.10% storm water
Salina	0.5% general purpose	1.00% general purpose
	0.0625% economic development		7.050%
	0.4375% capital projects and human services

The table below compares the ten largest cities in Kansas in terms of their total city and county sales and use tax distributions for 2006, and the total city and county sales and use tax budgeted for 2007.  The table shows how some communities, like Lawrence, budget increases in sales tax while other cities budgeted below actual receipts.  Staff will continue to research the rationale cities use to budget their sales tax revenues but it is likely some communities underestimate sales tax in order to satisfy the 5% fund balance limit.     

City	Combined State, City, County Sales Tax Rate	2006 Total Sales Tax Revenue^a,b	06 Sales Tax Revenues Per Capita	2007 Budgeted Sales Tax Revenue^b	07 Sales Tax Budgeted Per Capita
Unified Government	8.150% 7.650% 7.550%	$43,323,001	$300	$33,556,600	$233
Olathe	8.525% 7.525%	$39,084,109	$334	$36,512,274	$312
Manhattan	7.800% 7.300%	$15,882,815	$321	$  9,962,500	$201
Shawnee	7.650%	$19,906,731	$350	$19,021,215	$334
Overland Park	7.525%	$70,745,637	$421	$77,230,000	$460
Lenexa	7.525%	$22,681,510	$518	$21,866,736	$500
Topeka	7.450%	$33,804,251	$277	$35,840,000	$294
Wichita	7.300%	$47,704,545	$137	$48,405,920	$139
Lawrence	7.300%	$21,805,097	$246	$23,050,000	$260
Salina	7.050%	$13,554,130	$295	$13,915,000	$303
Average	7.600%	$32,849,183	$320	$31,936,025	$304
Median	7.525%	$28,242,880	$311	$28,303,300	$298
^a source: Kansas Dept. of Revenue Office of Policy and Research – Distributions for CY 2006
^b includes city sales and use taxes and the city's share of county sales and use taxes.

This table highlights the following:

• The combined sales tax rate in the City of Lawrence is among the lowest of the largest cities in the state.  Of the cities in this comparison, only the City of Salina has a lower sales tax rate.   Wichita and most of Manhattan have the same sales tax rate as Lawrence.  However, the 1% sales tax in Wichita for the construction of a downtown arena is scheduled to sunset no later than the end of 2007, bringing their sales tax rate to 6.3%. 

• The City of Lawrence ranks seventh in total sales tax revenues received in 2006.  Our sales tax rate is almost one-third of a percent (0.300%) below the average sales tax rate of the cities in this comparison.  Even if you remove the special taxing districts from the comparison, the sales tax rate in Lawrence is more than one-eighth of a percent (.13%) below the average. 

• When comparing sales tax revenues received in calendar year 2006 per capita, the City ranks next to last; receiving only $246 per capita.  This is more than 24% below the median.  The City of Lenexa received the most per capita sales tax - $518, almost 67% above the median.

• Sales tax revenues budgeted in Lawrence for 2007 ranks sixth among the ten largest cities.  We budgeted $3.25 million dollars less than the median, or eleven and one-half percent (11.5 %.)

• Budgeted sales tax per capita in Lawrence is seventh among the top ten largest cities for 2007.  Only the Unified Government, Manhattan, and Wichita budgeted less sales tax per capita.  At $260 per capita, sales tax per capita in Lawrence is almost thirteen percent (13%) below the median and more than fourteen percent (14%) below the average.  The City of Lenexa budgeted $500 per capita for 2007, the most of any city in this comparison. 

Conclusion

The City of Lawrence is the sixth largest city in the state.  When compared to the nine other largest cities in the state, our assessed valuation per capita is slightly higher than the median.  However, the total mill levy rate for our taxpayers is well below the average and our sales tax rate is among the lowest in the top ten largest cities.