Memorandum

City of Lawrence

Finance Department

TO:	Dave Corliss, City Manager
FROM:	Ed Mullins, Finance Director
Date:	May 10, 2012
RE:	Gasoline Tax

Background

The City of Lawrence receives gasoline taxes from both the State and the County.  The distribution from the State is based upon the city’s population.  The distribution from the County is also based upon population and is equal to 90% of the amount received by the County from the State. The revenue must be deposited in a fund dedicated to the construction and maintenance of roads. 

Revenues

Revenue from the State tax on gasoline has varied between $2.5 million and $2.6 million over the last several years.  The revenue in 2009 includes a catch up payment of $102,000 due to an error by the State in calculating earlier distributions.  The table below shows the distributions received from the State and County over six years.

Year	2006	2007	2008	2009	2010	2011
Revenue	2,532,556	2,667,979	2,760,749	2,561,174	2,662,488	2,549,192

The revenue for 2012 is projected to be between $2,500,000 and $2,540,000.  The League of Kansas Municipalities is projecting $2,502,000.  Due to continued high gasoline prices and the purchase of more fuel efficient vehicles, distributions from the State gasoline tax are projected to decline in future years.   While the League is projecting $2,520,000 for Lawrence in 2013, a more conservative estimate of $2,450,000 is recommended.

Future Years

It is anticipated that the impact on the gasoline tax on more fuel efficient cars has just begun.  In addition, there is a possibility that alternate fuels, such as natural gas, will be used to power vehicles.  The City’s Gas Tax Fund supports 25 positions and the purchase of materials such as concrete and asphalt.   Expenditures from the fund were approximately $2,650,000 in 2011.  Expenditures at this level appear to not be sustainable.   In addition, if revenues decline as anticipated, it will be necessary to reduce expenditures in the fund to below $2,400,000 in 2014 and beyond.