City of Lawrence, Kansas
Third Quarter Report – 2004
Purpose of Report
The following information summarizes the financial activities of the City of Lawrence for the first nine months of 2004 and advises the City Commission as to current budgetary issues that may become a concern. In the first section, the budgetary highlights from the major funds of the City are itemized, including the General, Recreation, and Transportation Funds, which are partially funded by property taxes, and the Water & Sewer, Sanitation, Storm Water and Public Golf Course Funds, which are enterprise funds supported by user fees. The second section provides tables that compare year to date financial activities to the budget and prior year results for the same period. Included in the third section is a summary of the investment activities for the period. The final section summarizes the amount of outstanding debt.
I. BUDGETARY HIGHLIGHTS
● General Fund revenues are over 87% of budget and increased by $4.25 million or 13.6% compared to the same period last year.
● The $4.25 million increase in revenue was partially the result of a $2.40 million rise in property taxes. The property tax increase consisted of a 7.0% growth in assessed valuation and a 20.2% increase in the levy.
● The second largest component of the increase in General Fund revenue was a $1.58 million rise in sales tax distributions. Slightly over half of the change was the result of growth in the City and City share of the County sales tax distributions of 6.0%. The remaining increase was the result in changes in State statutes allowing collection of a local use tax and changing the sales tax on automobile sales. As a result, about half the growth in sales tax revenue will not be sustainable.
● The remaining significant increase in General Fund revenue was a $227,000 or 15% increase in court fines. The increase in court fines is explained to some degree by the addition of a traffic unit in the police department.
● General Fund expenditures were less than 70% of budget and increased by only 1.5% over the same period last year. However, over $600,000 of budgeted capital outlay expenditures were moved from the General Fund to the Equipment Reserve Fund in 2004.
● Recreation Fund service charges were $32,000 less than the previous year. The decrease is primarily the result of a $48,000 reduction in outdoor pool revenue compared to the previous year partially offset by an increase in adult sports revenue.
● Recreation Fund expenditures will be below budget and will approximate revenue.
● Public Transportation Fund expenditures were only 57% of budget. It is anticipated that fund’s expenditures will finish the year $800,000 below budget because the MV Transportation contract will be less than budgeted.
● Water and Sewer Fund revenue was $570,000 less than the same period last year. This was the result of the wetter than normal summer reducing water revenue by over $1.0 million.
● Water and Sewer Fund expenses were up significantly from the prior year due to an increase in cash financing of capital projects. Operating expenses remain significantly below budget, however.
● Golf Course Fund revenue was only 68% of budget, but increased by $29,000 or 3.7% compared to the same period of last year.
● Golf Course Fund expenses were 77% of budget and $105,000 more than revenue for the first nine months of 2004. The expenses were high because of the payment of principal and interest outlays on September 1 and the heavy use of temporary staffing during the summer months. A more detailed projection of the Golf Course Fund’s revenues and expenses is currently being performed.
II. REVENUE – EXPENDITURE TABLES
Third Quarter Fund Analysis
|
|
|
20033rrd Qtr. |
20043rrd Qtr. |
% of budget |
|
General Fund |
|
|
|
|
|
|
Revenue Source |
|
|
|
|
|
Taxes |
$10,785,114 |
$13,222,863 |
89.8 |
|
|
Sales Tax |
13,580,464 |
15,159,608 |
84.7 |
|
|
Licenses & Permits |
689,740 |
753,085 |
117.7 |
|
|
Intergovernmental |
514,770 |
552,029 |
86.0 |
|
|
Service Charges |
315,498 |
317,896 |
86.6 |
|
|
Fines |
1,453,755 |
1,680,052 |
112.0 |
|
|
Interest |
312,387 |
250,677 |
50.1 |
|
|
Miscellaneous |
2,669,255 |
2,638,908 |
79.5 |
|
|
Transfers |
909,875 |
909,875 |
72.2 |
|
|
Total Revenue |
31,230,858 |
35,484,993 |
87.6 |
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|
|
|
|
|
|
|
Expenditures |
|
|
|
|
|
General Government |
9,702,772 |
9,952,191 |
69.4 |
|
|
Public Safety |
14,240,580 |
14,423,054 |
68.3 |
|
|
Public Works |
3,595,880 |
3,736,983 |
72.9 |
|
|
Parks & Recreation |
1,987,470 |
1,871,167 |
70.5 |
|
|
Total Expenditures |
29,526,702 |
29,983,396 |
69.3 |
|
|
|
|
|
|
|
|
Revenues over Expenditures |
1,704,156 |
5,501,597 |
|
|
|
|
20033rd Qtr |
20043rd Qtr |
% of budget |
Recreation Fund |
|
|
|
|
|
|
Revenue Source |
|
|
|
|
|
Taxes |
$571,339 |
$329,795 |
89.0 |
|
|
Service Charges |
1,158,325 |
1,126,126 |
83.4 |
|
|
Miscellaneous |
6,168 |
6,028 |
|
|
|
Transfers |
750,000 |
900,000 |
75.0 |
|
|
Total Revenue |
2,485,832 |
2,361,949 |
80.9 |
|
|
|
|
|
|
|
|
Expenditures |
|
|
|
|
|
Parks & Recreation |
2,039,258 |
1,998,560 |
64.5 |
|
|
|
|
|
|
|
|
Total Expenditures |
2,039,258 |
1,998,560 |
64.5 |
|
|
|
|
|
|
|
|
Revenues over Expenditures |
446,574 |
363,389 |
|
|
|
|
20033rd Qtr. |
20043rd Qtr. |
% of budget |
|
Transportation Fund |
|
|
|
|
|
|
Revenue Source |
|
|
|
|
|
Taxes |
$806,340 |
$1,132,791 |
90.7 |
|
|
Service Charges |
97,091 |
116,423 |
122.6 |
|
|
Miscellaneous |
0 |
19,089 |
0.0 |
|
|
Total Revenue |
903,431 |
1,268,303 |
94.4 |
|
|
|
|
|
|
|
|
Expenditures |
|
|
|
|
|
Public Transportation |
1,302,672 |
1,149,600 |
57.0 |
|
|
Total Expenditures |
1,302,672 |
1,149,600 |
57.0 |
|
|
|
|
|
|
|
|
Revenues over (under) Expenditures |
(399,241) |
118,703 |
|
|
2004 Enterprise Funds |
Water & Sewer |
|
Sanitation |
|
Storm |
|
Golf |
|
|
|
|
% |
|
% |
|
% |
|
% |
Revenue Sources |
|
|
|
|
|
|
|
|
|
Service Charges |
$16,762,075 |
83.7 |
$6,151,883 |
81.8 |
$2,117,516 |
88.2 |
808,636 |
68.1 |
|
Interest |
367,297 |
90.8 |
51,083 |
85.1 |
24,114 |
241.1 |
53 |
1.8 |
|
Intergovernmental |
0 |
|
33,825 |
|
0 |
|
0 |
|
|
Miscellaneous |
191,571 |
|
111,214 |
260.1 |
50 |
|
837 |
|
|
Total Revenues |
17,320,943 |
85.7 |
6,348,005 |
83.3 |
2,141,680 |
88.9 |
809,526 |
68.0 |
|
|
|
|
|
|
|
|
|
|
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Expenses |
|
|
|
|
|
|
|
|
|
Operations |
18,820,918 |
59.0 |
6,085,680 |
67.3 |
1,524,645 |
60.2 |
915,011 |
76.9 |
|
|
|
|
|
|
|
|
|
|
|
Net Income |
(1,149,975) |
|
262,325 |
|
617,035 |
|
(105,485)) |
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2003 Enterprise Funds |
|
|
|
|
|
|
|
|
Revenue Sources |
|
|
|
|
|
|
|
|
|
Service Charges |
$17,323,259 |
84.5 |
$5,782,634 |
79.7 |
$1,990,846 |
86.6 |
$777,220 |
66.0 |
|
Interest |
203,173 |
58.0 |
57,521 |
88.5 |
19,954 |
199.5 |
1,466 |
|
|
Intergovernmental |
0 |
|
0 |
|
0 |
|
0 |
|
|
Miscellaneous |
372,542 |
|
75,635 |
252.1 |
25,050 |
|
2,095 |
|
|
Total Revenues |
17,898,974 |
80.1 |
5,915,790 |
80.5 |
2,035,850 |
88.1 |
780,781 |
66.3 |
|
|
|
|
|
|
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Expenses |
|
|
|
|
|
|
|
|
|
Operations |
13,927,840 |
43.0 |
6,020,897 |
67.4 |
1,634,689 |
51.7 |
891,611 |
75.7 |
|
|
|
|
|
|
|
|
|
|
|
Net Income |
3,971,134 |
|
(105,107) |
|
401,161 |
|
(110,830) |
|
III. INVESTMENTS
While the Federal Reserve continues to raise its discount rate and short term rates are increasing, short term investment rates remain near historic lows. Since the City invests primarily in investments with less than a one year maturity, our interest earnings continue to be below expectations. This will result in General Fund interest revenue being approximately $125,000 less than budgeted. Interest revenue in the other funds was budgeted more conservatively and will meet or exceed the budget.
As of September 30, 2004, the City of Lawrence had over $127 million in cash and investments. Over $96 million was invested in securities. Approximately 17% of our investments were in certificates of deposits, 50% in government agencies and 251% was in cash. The City’s investment policy limits the portfolio to a maximum of 30% in any one financial institution’s certificates of deposit. The City’s certificates of deposit are with Commerce Bank and Corner Bank. The average rate of return on our investments during the third quarter was 1.92%.
Over 80% of the City’s portfolio has an original maturity of less than twelve months. Only 3% of our securities had a maturity longer than twenty four months. The City plans on holding its investments to maturity and has sufficient cash and short-term investments to avoid a liquidity crisis that would force the sale of the longer-term investments.
IV. DEBT ISSUANCE
The City closed on its most recent general obligation debt issuance on September 27, 2004. The issues included a $15,745,000 temporary note that matures on October 1, 2005. In addition, two general obligations bonds were sold, one totaling $10,600,000 for storm and street improvements (including W. 6th), and another for $1,600,000 for airport improvements.
The following table shows the anticipated total outstanding debt for the City at the end of 2004 and the different funding sources. The table also includes some anticipated capital projects that will likely be funded with general obligation bonds. A preliminary analysis has shown that the City can issue approximately $4.0 million in at-large general obligation annually without having an adverse impact on the debt levy.
|
City of Lawrence Estimated Debt 12/31/04 |
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|
|
GO Debt |
Enterprise |
Less Enterprise Portion of GO Debt |
Total |
|
Long term debt, 1/1/04 |
$ 66,295,000 |
$ 64,431,956 |
$(5,486,064) |
$ 125,240,892 |
|
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|
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|
|
|
Debt, added Spring 2004 |
3,520,000 |
- |
- |
3,520,000 |
|
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|
|
Debt, added Fall 2004 |
12,200,000 |
1,885,778 |
(1,885,778) |
12,200,000 |
|
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|
|
|
|
|
Debt, added, Kansas Water Supply Loan |
- |
1,816,200 |
- |
1,816,200 |
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|
Less: Principal paid in 2004 |
(7,130,000) |
(3,535,717) |
627,759 |
(10,037,958) |
|
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|
|
|
|
|
Total long term debt, 12/31/04 |
$ 74,885,000 |
$ 64,598,217 |
$ (6,744,083) |
$ 132,739,134 |
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Total long term debt is composed of: |
|
|
|
|
|
Enterprise fund portion |
$ 6,744,083 |
$ 57,854,134 |
$ - |
$ 64,598,217 |
|
Sales tax portion |
11,391,210 |
- |
- |
11,391,210 |
|
Benefit District Debt (estimated) |
11,431,519 |
- |
- |
11,431,519 |
|
Net long term debt, city at large, 12/31/04 |
45,318,188 |
6,744,083 |
(6,744,083) |
45,318,188 |
|
Total long term debt, 12/31/04 |
74,885,000 |
64,598,217 |
(6,744,083) |
132,739,134 |
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Future long term debt will result from: |
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Notes currently outstanding which will be bonded (includes fall note issue) |
$15,745,000 |
$ - |
$ - |
$ 15,745,000 |
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Proposed/pending property tax supported projects include: Fire Station #5 (City share of $5M), Fire Station #4 relocation ($2.3M), Library expansion (?), Kasold improvement, 15-23rd renovation ($3-5M?), Carnegie Library renovation ($750,000),Farmer's Market (?), City share of future developments (?), and City participation in Farmland purchase (?).
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Property tax supported projects underway & not included in the estimates above: 7th/Kentucky ($100K), Harvard Rd. traffic calming ($400K), Harvard, GWW west ($200K), Folks Rd South ($613K), O'Connell Rd, 23rd to 31st ($372K), Peterson Rd, Kasold to Monterey Way ($112K)Monterey Way, south ($231K), Kasold, Peterson to KTA ($750K), Airport runway improvements ($58K) |
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Note- all costs are estimates of City's share |
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