Memorandum

City of Lawrence

City Manager’s Office

DATE:	October 6, 2011
TO:	David L. Corliss, City Manager
FROM:	Cynthia Wagner, Assistant City Manager
CC:	Ernie Shaw, Interim Parks and Recreation Director Casey Toomay, Budget Manager Diane Stoddard, Assistant City Manager
RE:	1994 Countywide Sales Tax

In November 1994, voters approved a 1.0% countywide sales tax.  Per state statute, proceeds are apportioned among the county and each city located in the county based on the ratio of property tax revenues and the population of the City of Lawrence to the total property tax revenues and population of the County.  In 2012, City revenues from this source are estimated to total $9,041,150.

Under state law, all sales tax proceeds must be deposited into the City’s General Operating Fund.  The table below summarizes how the sales tax proceeds are budgeted to be distributed in 2012.  The difference between this distribution and the revenue estimate above is $200,691.  This amount in 2012 will remain in the General Fund to support operational costs, including parks and recreation operations.

                   5 mills property tax relief                                  $4,287,099

                   Estimated revenue loss (Motor Vehicle tax)                       119,986

                   Recreation Operations                                                 1,879,348

                   Health Building Maintenance Costs                          184,715

                   Transfer to Sales Tax Reserve Fund                      2,369,311

Total Countywide Sales Tax                                $8,840,459

As envisioned in the ballot language, the revenue equivalent to five mills of property tax remains in the City’s general fund to reduce the general fund mill levy.  The 2012 budget includes $4,287,099 for this allocation.

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 relieve, 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 2012, this is projected to be $119,986.

A portion of the countywide sales tax is transferred into the Recreation Fund to support Parks and Recreation operations, including support of the Indoor Aquatic Center and Prairie Park Nature Center.  The 2012 budget includes a transfer of $1,879,348 for operations.

The countywide sales tax is also used to fund the City’s share (50%) of the maintenance costs for the Community Health Building.  In 2012 this totals $184,715.

Finally, some proceeds of the countywide sales tax are transferred into the City’s Sales Tax Reserve Fund.  The amount included for transfer in 2012 is $2,369,311.  The table below shows 2012 anticipated expenditures from this fund.  The expenditures outlined reflect a reduction in the total amount originally budgeted in 2012 for parks and recreation projects in order to reduce the total mill levy increase to support the 2012 budget.  The remaining estimated proceeds will remain in the reserve fund balance.

                   Parks and Recreation Infrastructure Maintenance   $  500,000

                   Street Maintenance                                              350,000

                   Parks and Recreation Bond Payment                             1,359,330

2012 Expenditures from Sales Tax Reserve  $2,209,330

An allocation of approximately $500,000 is annually designated for improvements to parks and recreation infrastructure to address priority maintenance needs.  The attached list outlines the current priority projects.  It should be noted that as circumstances change, projects are re-prioritized.