Memorandum

City of Lawrence

City Manager’s Office

Date:	4/28/2008
To:	David Corliss, City Manager
From:	Casey Liebst, Budget Manager Michael Tubbs, Management Analyst
CC:	Cynthia Boecker, Assistant City Manager Diane Stoddard, Assistant City Manager
RE:	Assessed Valuation, Mill Levy, and Local Sales Tax Comparison Information for the 2008 Budget Year

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.  It is important to remember that the municipal services provided by each municipality vary.  For example, libraries and transit in Johnson County are funded by the County, not the city.  Therefore, cities do not levy property tax to support these functions. 

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 for the 2007 and 2008 budget years.

City	Population (2005 est.)	2006 total estimated assessed value	2006 assessed valuation per capita	2007 total estimated assessed value	2007 assessed valuation per capita
Wichita	347,996	$2,838,612,382	$    8,157	$3,211,938,914	$    9,230
Overland Park	168,000	$2,708,926,593	$   16,125	$2,858,903,882	$   17,017
Olathe	116,910	$1,233,812,291	$   10,554	$1,350,381,302	$   11,551
Unified Government	144,210	$1,048,420,602	$    7,270	$1,254,330,729	$    8,698
Topeka	122,008	$1,025,163,449	$    8,402	$1,040,553,093	$    8,529
Lenexa	43,765	$   982,460,511	$   22,449	$1,005,163,545	$   22,967
Lawrence	88,664	$   824,213,461	$    9,296	$   853,590,988	$    9,627
Shawnee	56,915	$   709,272,936	$   12,462	$   740,069,197	$   13,003
Manhattan	49,462	$   367,438,289	$    7,429	$   417,648,011	$    8,444
Salina	45,956	$   374,610,096	$    8,151	$   392,728,487	$    8,546
average	118,389	$1,211,293,061	$   11,029	$1,312,530,815	$   11,761
median	102,787	$1,003,811,980	$    8,849	$1,022,858,319	$    9,429

Source:  County Clerk’s offices

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 the 2008 budget year just as it did for the 2007 budget year.  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 two percent (2%) above the median but still more than eighteen percent (18%) below the average assessed valuation per capita.  The four cities with higher assessed valuations per capita are all in Johnson County. 

The table below compares Lawrence with the nine other largest cities in the state in terms of percentage of tax base made up residential versus non-residential real property for 2007 and 2008.  Non-residential real property includes property classified as agricultural, not for profit, commercial, and other.  This breakdown does not include the assessed valuation of state assessed utilities or personal property in these communities.  Lawrence falls below the median in terms of non-residential property as a percentage of our tax base. 

Municipality	2007 Residential/ Non Residential		2008 Residential/ Non-Residential
Shawnee	73.37%	/26.63%	74.16%	/25.84%
Manhattan	73.11%	/26.89%	69.13%	/30.87%
Olathe	71.03%	/28.97%	69.65%	/30.35%
Lawrence	68.59%	/31.41%	68.99%	/31.01%
Salina	63.67%	/36.33%	63.20%	/36.8%
Wichita	60.79%	/39.21%	58.74%	/41.26%
Overland Park	59.29%	/40.71%	58.69%	/41.31%
Topeka	58.49%	/41.52%	67.60%	/32.4%
Lenexa	47.58%	/52.42%	48.01%	/51.99%
Unified Government	45.81%	/54.19%	45.73%	/54.27%
average	62.17%	/37.82%	62.17%	/37.83%
median	62.23%	/37.77%	62.23%	/37.77%

The table below shows the City mill levies for the ten largest cities for the 2007 and 2008 budget years.  While the city mill levy in the 2007 budget for the City of Lawrence ranked sixth among the top ten largest cities, the city mill levy in the 2008 budget for Lawrence ranks fifth.  At 26.787 mills, it is 0.155 mills above the median but 0.45 mills below the average.

City	2007 Total City mill levy	2008 Total City Mill Levy
Unified Government	41.742	40.685
Topeka	30.747	32.457
Wichita	31.898	31.979
Manhattan	33.088	31.683
Lawrence	26.363	26.787
Lenexa	26.468	26.477
Olathe	24.843	25.03
Shawnee	24.621	24.652
Salina	23.999	23.789
Overland Park	8.889	8.832
average	27.266	27.237
median	26.416	26.632

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.  A number of cities have also established special taxing districts.    

The chart below shows a breakdown of the city and county sale tax rates by purpose 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.

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 cities of Salina and Wichita have a lower sales tax rate.  Much of Manhattan has the same sales tax rate as Lawrence. 

City	City Sales Taxes	County Sales Taxes	Combined Sales Tax Rate
Wichita	none	0.50% property tax relief	6.300%
		0.50% road and bridge projects
Wichita River Walk Redevo.  Dist.	1.00% for River Walk improvements	none	6.300%
Overland Park	1.00% general purpose	0.50% general purpose	7.525%
	0.125% streets	0.25% public safety
		0.25% school sales tax
		0.10% storm water
Overland Park Transport.  Dist	1.00% improvements at location	same as above	8.525%
Overland Park Transport.  Dist	.5% improvements at location	same as above	8.025%
Unified Government	1.25% speedway debt	1.00% speedway debt	7.550%
Kansas City Rack Track	1.25% speedway debt	same as above	7.550%
Kansas City Transportation District	0.6% improvements at location	same as above	8.150%
Kansas City Transportation District	0.6% improvements at location	same as above	8.150%
Kansas City Transportation District	0.10% improvements at location	same as above	7.650%
Olathe	1.00% general purpose	0.50% general purpose	7.525%
	0.125% streets	0.25% public safety
		0.25%economic development
		0.10% storm water
Olathe Gateway TDD No. 1a	1.00 improvements at location	same as above	8.525%
Olathe Gateway TDD No. 1b	1.00 improvements at location	same as above	8.525%
Olathe Transportation District	1.00% improvements at location	same as above	8.525%
Olathe Transportation District	1.00% improvements at location	same as above	8.525%
Topeka	1.00% general purpose	0.65% Washburn	7.450%
		0.25% economic development
		0.25% streets and bridges
Lawrence	0.50% public safety	0.50% property tax relief	7.300%
	0.50% general purpose	0.50% parks and rec, health, jail
Shawnee	1.00% general purposes	0.50% general purpose	7.650%
	0.125% public safety	0.25% public safety
	0.125% parks and pipes	0.25%economic development
		0.10% storm water
Manhattan (Pottawatomie Co.)	1.00% general purpose	0.50% general purpose	7.300%
		0.50% road and bridge projects
Manhattan (Riley Co.)	same as above	same as above	7.300%
Manhattan Transportation District	0.50% improvements at location	same as above	7.800%
Manhattan Transportation District	0.50% improvements at location	same as above	7.800%
Manhattan Transportation District	0.50% improvements at location	same as above	7.800%
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	7.050%
	0.03125% economic development
	0.21875% capital improvement 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 2007, as well as the total city and county sales and use tax budgeted for 2008.  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	2006 TOTAL Sales Tax Revenue*	06 Sales Tax Revenues Per Capita	2007 TOTAL Sales Tax Revenue*	07 Sales Tax Revenues Per Capita	2008 Budgeted Sales Tax Revenues**	08 Sales Tax Budgeted Per Capita
Unified Government	$43,323,001	$ 300	$44,925,213	$ 312	$38,479,500	$  267
Olathe	$39,084,109	$ 334	$39,785,841	$ 340	$38,801,521	$  332
Manhattan	$15,882,815	$ 321	$15,164,199	$ 307	$17,330,717	$  350
Shawnee	$19,906,731	$ 350	$19,637,522	$ 345	$20,936,000	$  368
Overland Park	$70,745,637	$ 421	$69,959,536	$ 416	$78,700,000	$  468
Lenexa	$22,681,510	$ 518	$23,333,752	$ 533	$22,096,736	$  505
Topeka	$33,804,251	$ 277	$34,803,745	$ 285	$36,540,000	$  299
Wichita	$47,704,545	$ 137	$49,255,687	$ 142	$50,495,720	$  145
Lawrence	$21,805,097	$ 246	$21,989,782	$ 248	$22,675,298	$  256
Salina	$13,554,130	$ 295	$13,955,363	$ 304	$14,707,044	$  320
average	$32,849,183	$ 320	$32,849,183	$ 323	$34,076,254	$ 331
median	$28,242,880	$ 311	$28,242,880	$ 309	$29,607,649	$ 326
*source: KS Dpt. of Revenue Office of Policy and Research
** includes city sales and use taxes and the city's share of county sales and use taxes

This table highlights the following:

• The City of Lawrence ranked seventh in total sales tax revenues received in 2006 and 2007.  Sales tax revenues budgeted in Lawrence for 2008 ranks sixth among the ten largest cities.  We budgeted $6.9 million dollars less than the median, or more than twenty-three percent (23 %.)

• When comparing sales tax revenues received per capita, the City ranked next to last in 2006 and 2007.  This was more than 24% below the median in 2006 and almost twenty percent (20%) below the median in 2007.  Only the City of Wichita received less sales tax revenue per capita in both 2006 and 2007.  The City of Lenexa received the most per capita sales tax in both 2006 and 2007.

• Budgeted sales tax per capita in Lawrence is ninth among the top ten largest cities for 2007.  Only Wichita budgeted less sales tax per capita.  At $256 per capita, budgeted sales tax per capita in Lawrence is more than twenty-one percent (21%) below the median and more than twenty-two percent (22%) below the average.  The City of Lenexa budgeted $505 per capita for 2008, the most of any city in this comparison. 

Sales Tax Elections

A number of communities in this comparison have held or will be holding sales tax elections. 

• Overland Park conducted a mail-in election through which voters approved continuation of a 1/8 cent sales tax for neighborhood residential streets and thoroughfares.  The total sales tax rate will continue to be 7.525%.
• Voters in Lenexa will be asked to approve a 3/8 cent sales tax, 40% of which would be used for pavement management projects with the remainder going to recreation, civic, and cultural amenities.  If approved, this would bring the total tax rate in Lenexa to 7.9%. 
• Manhattan voters did not approve a ¼ cent sales tax to fund a number of “quality of life projects” including an indoor recreation and aquatic center, soccer complex, replacement of a neighborhood swimming pool, and a new Zoo education and visitor’s center.  Had the sales tax been approved, the total tax rate in Manhattan would have been 7.55% (8.05% in the transportation districts.)

Conclusion

While the services provided by municipalities vary, it is possible to compare the City of Lawrence to the nine other largest cities in the state in a number of areas.  Our assessed valuation per capita is two percent higher than the median.  Our property tax base is made up of a larger percentage of residential property than all but three of the largest cities.  The city mill levy for 2008 is just below the median and our sales tax rate is among the lowest in the top ten largest cities in the state.