Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
FROM:	Cynthia Wagner, Assistant City Manager
CC:	Casey Toomay, Budget Manager Diane Stoddard, Assistant City Manager
DATE:	May 12, 2011
RE:	Cost Drivers Affecting 2012 Budget Development

Development of the 2012 budget includes funding for a number of items that have been initiated in past years and have new or on-going expenditures. These expenditures are discussed below.

Increases in Unit Costs for Utilities and Fuel

In development of the budget, departments were directed to anticipate an increase of five percent in electricity costs and an increase of three percent in natural gas costs over 2010 actual. Fuel cost budgets assume an average price per gallon of $4.30 for diesel fuel and $4.10 for unleaded fuel in 2012. Any reductions in utility or fuel cost are related to projected energy savings of improvement projects or reductions in mileage driven.

Later this year, the energy management team lead by Sustainability Coordinator Eileen Horn, will present an overview of the EnergyCap software program purchased by the City earlier this year to assist in monitoring and management of energy consumption, including gas and electric energy costs and fuel consumption by facility.

Health Care Costs

As discussed in a separate memo, the Healthcare Committee has been directed to develop recommendations for review which reflect no increase in costs to the City for the healthcare program in 2012.

Staffing

Police Department Detective

In January, the City Commission approved receipt of a S.T.O.P. Violence Against Women Act (VAWA) grant funding a detective in the police department to focus on violent crimes against women. As outlined at the time of approval, the City match can be accomplished within planned 2011 City resources. However, at the time of approval it was not envisioned that this would fund the addition of a police officer permanently. Whether the City can fund an additional police officer position (beyond the currently budgeted number of sworn police officers) will need to be determined during the City’s 2012 budget process. If additional revenues or different spending priorities are not established during the budget process providing for permanent support for an additional sworn officer position, the additional position will be lost to future attrition in the police department beginning in 2012.

The portion funded by the VAWA grant is $53,613 (75%) with the department’s matching responsibility expected to be $17,871 (25%). The grant award period is from January 1, 2011 to December, 31, 2011. This is a one-year grant without a specified renewal provision. There are no requirements to continue to fund the project/positions once the grant award period is expended. According to police department estimates, total 2012 costs would be approximately $100,000.

Sustainability Coordinator

Included in the American Recovery and Reinvestment Act (ARRA) is an appropriation of funding to the Department of Energy (DOE) for formula-based grants under the Energy Efficiency and Conservation Block Grant (EECBG) Program. On September 29, 2009 staff was notified that the City was awarded $858,600 in grant funds, including up to $100,000 for a Sustainability Coordinator to be jointly funded with Douglas County. Per the terms of the agreement approved by both the City and County Commissions in 2009, this position is a County employee supervised by the County Manager with direction from the City Manager, or designee, for approximately 40% of the employee’s work time on projects and tasks related to sustainability and energy conservation on behalf of the City. Using EECBG funds, the City is providing 100% of the costs of the Sustainability Coordinator, including County benefit expenses related to the employment, up to $100,000. These funds will be exhausted later this summer. The County will then provide a matching $100,000 for the position. Based on this agreement, allocated funds for this position will be depleted in October, 2012. This leaves two months of funding unaccounted for in 2012. Per the agreement, if the City and the County agree to fund the position, the City shall pay 40% of the position and the County shall fund 60% of the position.

Economic Development

Based on City Commission authorization last fall, staff is currently in discussions with Plastikon, a new business slated for East Hills Business Park, whereby the City will pay $6,300 in 2012 if the company meets job training incentive requirements.

Radio Replacement

Identified as an unfunded need for the past several years, replacement all radios in public safety departments throughout the organization has become a funding priority. Replacement is necessary to comply with FCC regulations that require replacement of any equipment that is not capable of operating on channels of 12.5 kHz or less by January 1, 2013.

The City has been able to replace some radios with narrowband and digital compatible units.

In 2009, the Police Department replaced 44 handheld and 33 mobile digital radios with almost $280,000 in Edward Byrne Memorial Justice Assistance Grant funds;
In 2010, due to an unforeseen issue with the trunking system license, the Solid Waste Division replaced all of their radios.

Funding for complete replacement has continuously been included in budget requests by our public safety departments; however, limited resources have prevented the City from being able to adequately fund these requests to date. The total cost of replacement of the remaining equipment is estimated to be $1,983,908. A breakdown of the costs by department is provided below.

Police has 106 hand held and 49 vehicle radios remaining to be replaced. The estimated cost for replacement of these units is $655,900.
Fire Medical currently has 100 portable emergency operations radios and 86 mobile vehicle radios, all needing to be replaced. The estimated cost to replace these units is $1,160,342.
Public Works has 10 hand held and 64 mobile radios that need to be replaced. The estimated cost for these units, used in the streets, levee, airport, traffic, and storm water divisions, is $167,666.