Memorandum

City of Lawrence

TO:	Mayor Dever
FROM:	City Manager David L. Corliss
CC:	City Commission
Date:	August 11, 2008
RE:	Additional Sales Tax  of 0.05% for Transit

Mayor, you requested staff analysis of placing on the November ballot an additional sales tax of 0.05% for transit.  Attached to this memorandum is a draft sales tax resolution for your consideration. The following items are relevant for consideration:

°  The wording of the 0.05% sales tax provides that it would only be effective if the 0.20% sales tax for transit becomes effective.  In other words, the 0.05% sales tax would not be effective on its own, it would only be effective if the 0.20% sales tax for transit is also enacted.  Possible election results would be:

1) a 0.20% sales tax for transit; (if only the 0.20% sales tax passes) or

2) a 0.25% sales tax for transit (if both the 0.20% and the 0.05% sales tax referenda pass); or

3) no sales tax for transit.

This is written this way to make it clear that voters can not approve only a 0.05% sales tax for transit purposes.

° A 0.05% sales tax would provide approximately $375,000 in revenue in the shortened 2009 budget year.  In a full budget year, the 0.05% sales would generate approximately $650,000.  As noted in earlier memorandum a 0.25% sales tax would provide $1,879,938 in 2009 and $3,287,205 in 2010.  Staff believes these are appropriate conservative estimates on sales tax based on 2% annual growth.

° We believe that we have federal earmarks and reserve fund match in the amount necessary to acquire 7 new fixed-route heavy duty buses.  We are not proceeding with this acquisition until the results of 2009 funding is known.  (We have a total of 12 buses, and we run 10 buses on routes today).  The acquisition of replacement buses for the five other buses should come from a mix of federal, state, and local funding.  The local funding can either be debt issuances (backed by property tax), sales tax funding, or property tax mill increases. 

°Additional resources for the transit system can provide for bus replacement, route enhancement, facility improvements or contingencies not anticipated in the current financial projections.  The items listed in the draft resolution appropriately convey that authority.  

Please advise of additional staff review on this issue as appropriate.