Memorandum

City of Lawrence

City Manager’s Office

TO:	Thomas M. Markus
FROM:	Casey Toomay, Assistant City Manager
CC:	Diane Stoddard, Assistant City Manager Bryan Kidney, Finance Director
DATE:	July 14, 2016
RE:	2017 Budget – Establishing Maximum Expenditures and Setting the Public Hearing

Background

Under K.S.A. 79-2929, a public hearing on the proposed budget must be held and notice of the hearing must be given at least 10 days prior to the hearing. The required budget summary/notice of public hearing document sets the upper limits of the 2017 expenditure budget and the mill levy rate.

Once the summary/notice of public hearing is published, the budgeted expenditure amount and the mill levy rate can be reduced but cannot be increased.

2016 Notice of Budget Hearing

The attached notice sets the public hearing for August 2, 2016 and establishes a maximum expenditure level for 2017 of $240,299,667. No increase is recommended in the mill levy rate of 31.488 mills.

The budget reflects additional resources from utility rate increases (water and wastewater, solid waste and stormwater) and the increased parking meter fines previously adopted by the City Commission.

Changes from the City Manager’s Recommended Budget

The City Manager’s Recommended Budget released on July 7, 2016 as well as the presentation made at the July 12, 2016 work session showed the total expenditure budget of $189,247,606. Since then, some adjustments have been made. A table showing the changes and additional information is provided below.

Transmittal Memo Total	$189,247,606
Guest Tax Expenses	($100,000)
Economic Development Funds	$1,850,829
Library Fund	$12,000
Total 2017 Expenditures All Funds	$191,010,435

Guest Tax Expenses. At the work session on July 12, 2016, a summary of all funds was distributed showing the total expenditure budget of $189,147,606. This amount adjusted for $100,000 of expenditures for special event expenses budgeted in the Guest Tax Fund that was duplicated in two department budgets. The correct total for the Guest Tax Fund of $2,157,562 was shown on page 29 of the City Manager’s Recommended Budget.
Economic Development Funds. The funds used to budget the expected revenues and expenditures of the various economic development incentives (TIF, TDDs, etc.) were not included in the expenditure total referenced in the transmittal memo or the summary of all funds distributed at the study session. The individual fund summary pages for each fund were included in the budget document (see pgs 36-44.) The total of these funds is $1,850,829.
Library Fund. After reviewing the projection for delinquent property tax for 2017, an additional $12,000 of revenue and expenditures were budgeted in the Library Fund. This brings the total recommended expenditure budget for the Library to $3,778,542, which is an increase of $28,542 over their 2016 Budget.

Reconciling to the State Budget Forms

The City is required to use the State Budget Forms when submitting the budget to the County and State. These forms are used by all municipalities across the state and are used to prepare the notice of public hearing.

There are two major differences between the State Budget Forms and the City Manager’s Recommended Budget. First, is how fund balance is presented. Second, there are some funds that are not included on the state forms that were presented as part of the City Manager’s Recommended Budget.

The attached table shows a reconciliation between the City Manager’s Recommended Budget and the State Budget Forms. The $240,229,667 shown as the total expenditures on the State Budget Forms is derived by subtracting the non-budgeted funds totaling $19,689,440 from the City Manager’s Recommended Budget of $191,010,435 and adding the estimated ending fund balance of the state budgeted funds of $68,978,672.

Staff Recommendation

Staff recommends the City Commission authorize publication of the notice of budget hearing as attached. It reflects the City Manager’s Recommended Budget as discussed at the work session on July 12, 2016 and the adjustments outlined in this memo.

Action

Staff requests the City Commission authorize publication of the notice of budget hearing establishing the maximum expenditure level for the 2017 budget and setting the public hearing date for August 2, 2016. Once the summary/notice of public hearing is published, the budgeted expenditure amount and the mill levy rate can be reduced but cannot be increased.