Memorandum
City of Lawrence
City Manager’s Office
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To: |
Mayor City Commissioners |
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From: |
Dave Corliss City Manager |
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cc: |
Management Team |
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Date: |
May 17, 2007 |
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Re: |
2007/2008 budget issues |
As noted in materials provided for the City Commission’s April 24th study session for the 2008 budget, the following are staff’s recommended goals:
· Make strong progress in ensuring that revenues and expenditures are balanced;
· Make significant progress in responding to infrastructure, facility and equipment needs;
· Understand that progress on economic development is necessary; and
· Communicate to the community that as the City’s financial condition improves – based on progress on these earlier items – additional program improvements and enhancements can be undertaken.
Emphasis was placed in the agenda for that April 24th study session on an overview and audit of the City’s infrastructure and major equipment. The focus of this memo is on the first goal listed: balancing revenue and expenditures.
Revenues, specifically sales tax revenues as relates to the General Fund, were projected at a level for the 2007 budget that now appears not to be realistic given the current economic environment. As noted in the attached memo from Ed Mullins, Finance Director, lower sales tax revenue will affect the unencumbered year end fund balance for 2007 if expenditures are at 95% of budget.
Initial discussions with the City Commission regarding the plan for the 2008 budget included no increase in the mill levy. To accomplish that plan, I believe it is important to “set the stage” for 2008 by reducing expenditures in 2007. In short, whatever we don’t expend in 2007 will enhance the fund balance for 2008 and get us closer to that goal of balancing revenue and expenditures. City staff has been challenged to identify a plan for limiting expenditures this year to no more than 94% of what has been budgeted in the General Fund. To that end, we provide the following information as the means for following that plan while maintaining basic City services to the community.
· Salary savings throughout the General Fund can be realized by not filling some currently vacant positions. Affected departments are prepared to shift workloads and responsibilities to address as many service gaps as possible. The plan is to keep the following General Fund positions vacant this year:
o Management Assistant – City Manager’s Office
o Personnel Specialist – Administrative Services Department
o Human Relations Director – Human Relations Department
o Court Clerk II – Legal Services Department
o Parks & Recreation Director – Parks & Recreation Department
o Zoning Enforcement Officer – Planning & Development Services Dept.
o Plans Examiner – Planning & Development Services Dept.
Note: The vacant Economic Programs Coordinator position will be a topic of discussion at our May 22nd meeting.
· Additional savings can be achieved by reducing the 2007 allocations to agencies funded from property tax supported funds, as shown in the attached table. Letters have been mailed to these agencies informing them of the decision to reduce expenditures by 6% in 2007. Additionally, staff met with Bruce Flanders, Library Director, to discuss the proposed reduction and the Lawrence/Douglas County Health Department has been notified that their future payment for the City’s share of their operational budget will be adjusted to reflect the 6% reduction.
· Identifying a 6% reduction in the 2007 General Fund budget means finding $3.3M in expenditures that will not be made that were budgeted for this year. Unfortunately, there may be some service reductions associated with this level of budgetary leanness, but City staff stands ready to minimize those impacts on basic City services to the extent possible. Examples of proposed expenditure reductions and associated service impacts are provided:
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Possible Expenditure Reduction |
Potential Service Impact |
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Reassign Prevention/Inspection Personnel in the Fire/Medical Dept. to operations to meet minimum staffing requirements. |
Reduction in prevention and inspection operations; fewer inspections for safety issues in commercial establishments. |
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Reduce remaining capital outlay purchases |
Delay in replacing vehicles and equipment can impact maintenance costs; eventual replacement will be necessary. |
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Delay police recruit academy |
Inability to fill current (6) and future vacancies in Police Department |
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Eliminate school crossing guards-fall 2007 |
Budget impacts to USD 497 to fund positions |
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Eliminate contingency funds |
Reliance on reserve funds in the event of unforeseen emergencies |
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Reduce or eliminate training opportunities |
Minimal impact if short-term |
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Eliminate transfers to Workers Comp and Liability reserve funds |
Minimal impact if only this year |
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Reduce part-time employee hiring |
Reduce mowing frequency and landscaping activities in parks; reduced field maintenance |
Although the General Fund is the focus of this memo, we are working with the Transit Administrator and the Interim Parks & Rec Director to identify reductions in 2007 expenditures and enhancements of revenues for the Transit and Recreation funds, both recipients of property tax revenue.
City staff continues to explore ways to make efficient use of taxpayer resources. For example:
o Rather than buying new computers for the Fire and Medical Department this year (necessary due to changes in hardware and software technology), the Information Systems Department is rebuilding computer equipment that has been replaced in the Utilities and Solid Waste departments at a much lower cost.
o Neighborhood Resources was budgeted for a new staff vehicle in 2007. Working with staff from the Central Maintenance Garage, we were able to refurbish a unit that was available due to the retirement of a staff member from another department and this vehicle is currently serving the needs of Neighborhood Resources at a considerable cost savings.
o Cooperative bidding is another area where City staff is seeking for efficiencies without affecting service levels. See attached information from the Finance Department regarding cooperative bidding and contract arrangements currently in use.
o In house inspection/design activities continue in many departments, saving the costs for consulting fees.
o Cooperative effort with Douglas County to use materials lab for testing rather than contracted vendors, resulting in increased quality control.
The attached documents provide additional information for the City Commission to review and use for upcoming budget discussions.
History of General Fund expenditures as a percent of budget
Ten year history of the City County, School District, and State mill levies
Ten year history of General Fund Budgeted Expenditures by Category