Memorandum

City of Lawrence

City Manager’s Office

 

TO:

Mayor and City Commissioners

 

FROM:

David L. Corliss, City Manager

 

CC:

Cynthia Boecker, Assistant City Manager

Diane Stoddard, Assistant City Manager

Casey Toomay, Budget Manager

DATE:

January 30, 2009

 

RE:

Response to Governor’s Proposed Budget

 

 

In January, Governor Kathleen Sebelius presented the Fiscal Year 2010 Budget Report, which included significant reductions to local government budgets.  Staff has reviewed current programs, services and functions in an effort to identify potential cuts to the 2009 budget.  In review of potential reductions, staff placed priority on ensuring that reductions were not recommended to those programs and services identified as core City services:  public safety and infrastructure.  The information provided in this memo outlines budgetary reductions recommended at this time and the implications to the City of Lawrence. 

 

Unfortunately, given the current economic uncertainties at the national and state level, cuts for the 2010 budget may be required whether or not the Governor’s recommendations are ultimately adopted.  Staff strongly recommends that any review of cuts take into consideration the nature of the reduced revenue stream.  Any permanent revenue loss should be matched with permanent reductions in expenditure levels, or an equal revenue or tax increase. 

 

Governor’s Recommended Budget and Implications for Lawrence

In order to generate additional revenue for the State General Fund, the Governor’s recommended budget eliminates the distribution of liquor taxes to local governments.  In 2009, that revenue is anticipated to total $1,782,684 in Lawrence.  The City’s General Operating, Special Alcohol and Special Recreation funds each receive a third of total collections.  The full year impact to each fund is estimated at $594,228.  Because the state fiscal year begins in July, the City would receive only half of the funds budgeted for 2009, thus a 2009 impact to each fund is estimated to be $297,114.

 

Additionally, the Governor’s recommended budget suspends the machinery and business equipment transfer (commonly referred to as the slider payment) for state fiscal year 2010.  The City’s 2009 budget includes $252,925 for this payment.  The General Fund receives $146,805 of this payment.   It is likely this will impact the 2009 budget if enacted as proposed. 

 

The table below summarizes the potential impact to the City of Lawrence 2009 budget by fund.

 

 

Budgetary Reductions for Consideration   

In response to the announcement of the Governor’s recommended budget, staff has worked to identify areas for reduction to the 2009 budget.  As noted earlier, the attached is a listing of areas reviewed for potential reduction.  Please note that the list is not in priority order and not all items are recommended.  Staff recommendations to meet the projected shortfall generated by the Governor’s recommended budget are outlined below.

 

General Fund

In analysis of potential cuts to General Fund programs and services, every effort has been made to protect full staffing in the Police and Fire Departments and to refrain from reductions to the street maintenance budget as public safety and infrastructure maintenance have repeatedly been identified as community priorities.   Staff continues to aggressively manage the budget, working to identify areas of operational efficiency.  Executive staff including myself, the Assistant City Managers and Department Directors have agreed to forego salary increases prior to July 1.  Additionally, we anticipate one-time savings in fuel costs totaling an estimated $130,000 in the general fund in 2009.  However, as noted earlier, any permanent revenue loss should be matched with permanent reductions in expenditure levels or an equal revenue or tax increase.  For discussion purposes, one mill of property taxes will generate approximately $860,000 in revenues in 2009.

 

As outlined above, the anticipated impact to the General Fund is approximately $445,000.  As discussed later in this memo, the School Resource Officer (SRO) salaries funded through the Special Alcohol fund are recommended to be paid from the General Fund.  This would require an additional $125,000 of cuts, increasing the total impact to the General Fund to $570,000.  The following have been identified as options for service reductions or program elimination. 

 

School Crossing Guards:  It is recommended that the School Crossing Guard program be eliminated effective at the beginning of the 2009-2010 school year.  Staff recommends the school district assume this responsibility as is done in other communities.  Estimated 2009 impact: $50,000. 

 

Fire Department Services:  It is recommended that the following educational programs be eliminated or that a fee for provision of the service be implemented:

 

The anticipated savings also includes elimination of an employee educational degree program whereby fire department command staff may be reimbursed for educational tuition and fees for advanced degree programs.  Estimated 2009 impact:  $98,000.

 

Human Relations:  It is recommended that duties relating to enforcement of the Civil Rights Ordinance be re-assigned within the Legal Services Department, resulting in a reduction in force of 2.5 full-time employees.   The City would retain its Human Relations Commission and Ordinance.  Estimated 2009 impact: $92,500. 

 

Outside Agencies:  It is recommended that funding to outside agencies in the General Fund be reduced by 32% to reflect loss of the alcohol tax transfers the second half of the year.  Funding to agencies which provide services the City would otherwise have to provide (i.e. Douglas County Legal Aid and the Lawrence Humane Society) and the $75,000 for a biosciences incubator are not included in these reductions.  The $4,000 for Martin Luther King Day activities already paid to Ecumenical Ministers Fellowship is also not included.  A breakdown of agency funding and recommended reductions is attached.  Estimated 2009 impact:  $342,292.

 

Special Alcohol Fund

The 2009 budget for this fund includes revenues of $594,228 – all coming from the state alcohol transfer.  The expenditure budget totals $577,150, with the remaining funds anticipated to go to fund balance. 

 

In order to offset the reduction in funding from the state, it is recommended that all expenditures in this fund be eliminated effective July 1, 2009.  This would include:

 

Special Recreation Fund

This fund provides monies for the Cultural Arts Commission and Lawrence Arts Center scholarships as well as the maintenance and expansion of parks and recreation services, programs and facilities.   The expenditure budget totals $580,105, with the remaining funds anticipated to go to fund balance.

 

The anticipated impact to the Special Recreation Fund for 2009 is $290,052.  The following have been identified as options for service reductions or program elimination.

 

Outside Agency Funding:  It is recommended that funding to outside agencies in the Special Recreation Fund (Cultural Arts Commission and Lawrence Arts Center) be reduced by 50%.  Estimated 2009 impact:  $25,250.

 

Prairie Park Nature Center:  While not an expense in the Special Recreation Fund (Fund 216), it is recommended that operations of the Prairie Park Nature Center be eliminated in July, resulting in savings to the Recreation Fund (Fund 211).  The transfer from the General Fund to the Recreation Fund for operational and maintenance costs could then be reduced and used to cover maintenance and other costs usually funded through the Special Recreation Fund.  Estimated 2009 impact: $96,500.

 

Downtown Beautification:  Currently four full-time employees are responsible for Downtown beautification.  It is recommended that the staff in this division be reduced by one.  This can be accomplished by not filling a currently vacant position in the Parks Department.  The estimated cost for this position is $60,000.  Additionally, it is recommended that supplies for this program be reduced by $10,000. Estimated 2009 impact: $70,000. 

 

City Band Concerts:  It is recommended that funding for Summer Concerts by the City band in South Park be eliminated.  Estimated 2009 Impact:  $12,000.

 

Reductions in Facility Hours and Staffing:  Reducing hours of operations for the indoor and outdoor aquatics centers as well as recreation centers as follow results in savings in staffing (part-time and/or full-time).  Hours are estimated to be affected as outlined below: 

 

 

Estimated 2009 impact: $90,000.

 

 

Requested/Recommended Action

 

This information is provided for review and discussion purposes.