Memorandum
City of Lawrence
City Manager’s Office
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DATE: |
01/07/13 |
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TO: |
David L. Corliss, City Manager |
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FROM: |
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CC: |
Cynthia Wagner, Assistant City Manager Diane Stoddard, Assistant City Manager Jonathan Douglass, Assistant to the City Manager / City Clerk |
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RE: |
Countywide Sales Tax Projection for Recreation Center |
Per your request projections of the city’s share of the countywide sales tax are attached. There are two projections presented – the first assumes an annual rate of sales tax growth of two percent while the second assume a three percent annual growth rate. The remaining assumptions, which are summarized below, are constant in the two projections. Under both scenarios there would be sufficient resources from the City’s share of the countywide sales tax to fund the annual debt payment for the Recreation Center and retain a positive ending fund balance at the end of the twenty years. In addition to the entire twenty year projection, a five year snapshot is also attached.
Assumptions
Assessed Valuation and Property Taxes. In keeping with the ballot language voters approved when the countywide sales tax was adopted, the equivalent of 5 mills of property tax remains in the City’s General Operating Fund. In order to calculate the dollar amount for the projection, both scenarios assume assessed valuation will decline 3% for 2013 and then grow 1% annually for the remaining years. An amount equivalent to the loss of motor vehicle tax revenue remains in the general fund as well since motor vehicle tax distributions are calculated based on the property tax mill levy.
Transfer to Recreation Fund. Some of the proceeds of the countywide sales tax are transferred to the recreation fund for operations of the City’s parks and recreation facilities. The scenarios assume the transfer to the recreation fund will remain flat in 2013, increase by $350,000 in 2014, and then grow 2% each of the remaining years.
Community Health Building Maintenance. Proceeds from the countywide sales tax were used to construct the Community Health Building. Proceeds of the sales tax are used each year to fund the City’s share of the maintenance costs which are split with Douglas County. The projections assume this amount will increase 2% each year.
Transfer to Sales Tax Reserve. The City transfers an amount of the countywide sales tax to a reserve fund as well. The projections assumes a set amount in 2013 but in the remaining years, the transfer is equal to the remaining proceeds from the countywide sales tax.
Existing Parks and Rec Facility Maintenance. Each year funds from the sales tax reserve fund are used for parks and recreation facility maintenance. Both scenarios assume $500,000 each year until 2015, then the amount is increased 5% each year.
New Rec Center Maintenance. Both scenarios assume funds will be set aside for building maintenance for the new rec center. The amount is $100,000 beginning in 2017 and the amount increases to $150,000 beginning in 2027.
Existing Debt payments. The scenarios assume the remaining debt payments for the community health building, eagle bend golf course, and various improvements to Clinton Park, DeVictor Park, Burroughs Creek, and the Skate Park that were debt financed.
New Debt Payment. Both scenarios assume annual debt payments of $1.35 million for twenty years for the new recreation center.
Conclusion
Under both scenarios, there would be sufficient resources from the City’s share of the countywide sales tax to fund the annual debt payment for the Recreation Center and retain a positive ending fund balance at the end of the twenty years.