Memorandum

City of Lawrence

City Manager’s Office

DATE:	09/09/09
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; Ed Mullins, Finance Director
RE:	2009 Budget Projections

Pursuant to your direction, year to date revenue and expenditure information has been reviewed and updated 2009 General Fund projections are attached.  A summary is provided below. 

Revenues.  Based on receipts through the end of August 2009, revenues in the general fund are projected to total $59,834,171, which is $952,704, or 1.6%, less than 2009 budget.  Almost every category of revenue is expected to be below budget.  Interest rates have continued to remain extremely low resulting in reduced earnings on city investments.  The result is projected interest revenues totaling $560,000 less than budget.  Property taxes are also projected to be just below budget.  Sales taxes will be up from 2008 actual receipts, however, most of this increase will be from the new transit and infrastructure sales taxes, which will be transferred to other funds.  As of the end of August, sales tax collections total $16,646,700.  Proceeds from the city-wide sales tax distributions to date are shown in the table below:

Sales/Use Tax	Budget	Month	Year to Date	% of Budget
City 1%	13,871,685	1,063,068	9,013,219	65.0%
Infrastructure .3%	2,255,925	315,021	1,015,949	45.0%
Transit .2%	1,503,950	210,015	677,300	45.0%
Transit Eq. .05%	375,988	52,504	169,325	45.0%

Total revenue from sales tax is projected to be approximately 1%, or $264,000, below budget.  Revenues from licenses and permits are projected to be below budget by approximately 32%.  The elimination of the “slider” payment to cities means revenue from state transfers will be below budget. 

Franchise fees are projected to exceed budget in 2009 by 9% due to higher electric rates while transfers from other funds are expected to meet budget. 

Expenditures.  In order to keep general fund expenditures below projected revenues, it will be necessary to limit expenditures in the General Fund to less than 97% of budget.  As of the end of August, only 56.4% of the general fund has been spent or encumbered.  Savings has already been achieved from the following:

• Fuel - In February, division budgets were reduced to reflect lower fuel prices. Estimated Savings - $130,000;
• Primary Election -  Because of the changes in State law, it was not necessary to hold a primary election in 2009.  Estimated Savings - $34,000;
• Vacant positions - A number of vacant positions have remained/will remain unfilled including positions in Planning, Administrative Services, and Legal. 

Departments have been directed to seek further limits on expenditures to achieve greater savings, however, this may not be possible in all divisions.  It is likely that overall spending in the general fund will be close to 97% of 2009 budget.  Two scenarios are provided in the attached projections – one showing 96% of budgeted expenditures and one showing 97% of budgeted expenditures. 

Fund Balance.  As shown on the projections, even at 97% of budgeted expenditures, general fund revenues are projected to exceed expenditures.  The projections show a 2009 projected ending fund balance in the General Fund ranging between 20.44% and 21.70% of projected expenditures.  This is in keeping with the City Commission’s policy of having a General Fund balance between 15% and 30% of actual expenditures.

Revenue and expenditures in all funds will continue to be monitored closely and the City Commission will be informed of year-end projections in other major funds.