Memorandum

City of Lawrence

Finance Department

TO:	Diane Stoddard, Interim City Manager Casey Toomay, Assistant City Manager
CC:	Ashley Lonnberg, Senior Accountant
FROM:	Bryan Kidney, Finance Director
DATE:	June 19, 2015 – Updated 06/23/15
RE:	Property tax lid impact of tax levy for prior six budget years

House Substitute for Senate Bill 270, which was adopted as the “trailer” bill accompanying Senate Substitute for House Bill 2109, included “tax lid” provisions regarding municipal governments. These measures will prevent local units of government from increasing their tax levies beyond consumer price index increases (with some noted exceptions), without an election of voters to approve such increase. 

We reviewed the tax levies in each budget adopted by the governing body from 2010 through 2015 and 2016 current budget estimate. We compared the City’s yearly tax levy increase with the corresponding consumer price index increase. The first chart represents all budgeted property taxes. Because debt service is exempted from the tax lid legislation, the second chart shows budgeted property taxes increases without debt service (see attached). There are various additional exemptions, such as state mandates, that would also be exempt but not included within this analysis.

Please note that there is an inherent timing issue with these calculations. We are being asked to limit growth in a future tax year based on CPI growth from a previous tax year. As an example, the 2016 levy increase would be over the 2015 levy. However, the CPI increase (decrease) for the 2016 budget year would be the CPI of 2014 over the 2013 CPI.

Both charts show the actual tax levy budgeted property taxes (blue bar) and the calculated CPI tax levy limit (red bar). We included tables that show the actual dollar impact difference between the two on the tax levy.

Based on the “excluding debt service” chart, the years in which the budget increase is significantly higher than the CPI increase is 2015.  The 2015 reflects increase in mill levy increase due to general fund mill levy.