Memorandum

City of Lawrence

City Manager’s Office

DATE:	7/27/2009
TO:	David L. Corliss, City Manager
FROM:	Casey Toomay, Budget Manager
CC:	Cynthia Boecker, Assistant City Manager Diane Stoddard, Assistant City Manager Jonathan Douglass, Assistant to the City Manager
RE:	Countywide sales tax in 2010 budget

The 2010 budget assumed the City of Lawrence would receive $9,288,264 from the 1.0% countywide sales tax.  Under state law, all sales tax proceeds must be deposited into the City’s General Operating Fund.  The table below shows how that sales tax will be distributed in the 2010 budget. 

5 mills property tax relief	$4,269,000
estimated revenue loss (Motor Vehicles tax)	126,131
recreation operation costs	1,646,420
50% city share health bldg maint. costs	177,321
transfer to sales tax reserve fund	3,069,392
Total Countywide Sales Tax	$9,288,264

As envisioned in the ballot language for the countywide sales tax, the revenue equivalent to five mills of property tax remains in the City’s general fund to reduce the general fund mill levy.  In the 2010 Budget, five mills of property tax equals $4,269,000. 

Property tax supported funds also receive revenue from motor vehicle taxes in an amount proportionate to the mill levy of each fund to the total mill levy.  Because the countywide sales tax provides five mills of property tax relief, the general fund receives less motor vehicle tax revenue.  To offset this loss of revenue, an equivalent amount of the countywide sales tax proceeds remain in the general fund.  In 2010, this is projected to be $126,131. 

A portion of the countywide sales tax is transferred into the Recreation Fund to support the cost of operating the City’s parks and recreation facilities.  The 2010 budget includes a transfer of $1,646,420. 

The countywide sales tax is also used to fund the City’s share (50%) of the maintenance costs for the Community Health Building.  The 2010 Budget includes $354,642 for the maintenance of the building.  Fifty percent (50%) equates to $177,321.  The other 50% will be paid by Douglas County.

The remaining proceeds from the countywide sales tax are transferred into the City’s Sales Tax Reserve Fund.  The 2010 budget includes a transfer to the sales tax reserve fund of $3,069,392. 

The table below shows expenditures from the sales tax reserve fund planned for 2010.

Parks and Rec facility maintenance projects	$400,000
West Lawrence Recreation Center design	300,000
Street maintenance	550,000
Parks and Rec bond payment	1,617,635
expenditures from sales tax reserve in 2010	$2,867,635