City of Lawrence, Kansas

Second Quarter Report – 2007

 

Purpose of Report

 

The following information summarizes the financial activities of the City of Lawrence for the first six months of 2007 and advises the City Commission as to current budgetary issues that may become a concern.  Budget projections for the remainder of 2007 are attached. 

 

The first section provides an update on implementation of our new management system, including our work on collecting and reporting performance measures.  In the second section, the attached revenue and expenditure tables are highlighted and explained.  Highlights include  the major funds of the City 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.  Section three provides tables comparing year to date financial activities to the budget and prior year results for the same period.  Included in the fourth section is a summary of the investment activities for the year.  The final section summarizes the amount of outstanding debt. 

 

I.       MANGEMENT SYSTEM IMPLEMENTATION

As part of the implementation of our performance management system, a Citizen Satisfaction Survey was conducted by ETC Institute in March.  The results were presented to the City Commission at their goal session in early June and the data collected will be incorporated in the Balanced Scorecard that will be presented to the City Commission after the first of 2008.

 

In the meantime, the goals of the City Commission and related data are provided below. 

 

Economic Development

 

Planned Growth

 

Transportation

 

Downtown Development

 

Service Delivery

 

Neighborhood Quality

 

Environmental Issues

 

Community Building

 

 

II. BUDGETARY HIGHLIGHTS

 

General Fund

 

●   General Fund revenues are over 54% of budget, however, they are less than the total of General Fund revenues collected through the end of the first half of 2006 by $270,622.

 

●   Property tax is up 7.5% over the same period last year, primarily due to a 6% increase in assessed valuation.

 

●   Sales tax receipts are practically flat compared to the first six months of 2006.  $10,837,906 has been collected in 2007, compared to $10,831,450 in the first half of 2006.  2007 sales tax are 47% of budget at this point in the year, compared to 51.9% in 2006, and 51.4% of budget at the end of the first half of 2005.

 

●   Licenses and permit fees also decreased 31.7% from the same period last year.  Much of this decrease was contractor licenses, which have only brought in 5.9% of the budgeted revenue for the year.  Building permits and inspection fees have only brought in 38.8% of budgeted year with 50% of the year over. 

 

●   Another decrease in General Fund revenue is in service charges.  Overall, service charges were down 62.2% from the same period in 2006.  Some of that decrease can be attributed to timing of the payment from Douglas County for planning services.  This payment was received at the end of June in 2006, but the 2007 payment has not yet been received.  Other planning related fees (charges for maps, plans, ordinances, etc.) are also below 50% of budget.  Engineering fees are only 30% of budget for 2007.  During the same period last year, more than three and one-half times the budgeted revenues were collected. 

 

●   Fines in the General Fund decreased by 9.1% from the first half of last year.  Staff continues to monitor the activity associated with this revenue source.    

 

●   Interest revenue in the General Fund was down $93,474, or 12.9%, compared to the same period in 2006.  This is in part due to a decrease in the fund balance in 2006. 

 

●   Miscellaneous income decreased by 52.5% over the first half of last year.  This is largely due to the timing of ambulance reimbursements. 

 

●   Intergovernmental revenues increased by 4.5% or $15,515 compared to the same period last year.  Most of this difference can be attributed to an increase in the state highway connecting link funds the City received in the first half of 2007.  Liquor tax collected in the first half of 2007 also increased slightly, by 2.1%.

 

●   Overall, General Fund expenditures were only 48.5% of budget and decreased by $832,058, which represents a decrease of 3.1% compared to the first six months of 2006.  This percentage reflects the 6% reduction made to the General Fund budget in June.

 

●   Much of this decrease is due to a reduction in general government expenditures, which were $1,451,144, or $15.6%, less than the fist half of last year. This is primarily a result of eliminating the transfer to reserve funds.  Public Works expenditures in the General Fund increased 59.5% compared to this period in 2006. 

 

●   Public safety expenditure increased 9.5% overall.  Police expenditures in the General Fund increased by $371,509, or 6%, and Fire Medical expenditures increased $379,198 or 6.5% over the first half of last year.  The majority of the increase in Fire Medical was related to personnel costs including salaries and benefits, communications, and capital outlay for vehicle replacement.  Expenditures related to the Health Department and maintenance and the public health facility decreased by $73,839, or 14.8% compared to the same period last year. 

 

●   Parks and Recreation expenditures from the General Fund increased $77,432, or 5.3%, over the same period last year.  While expenditures in the forestry an YSI operations decreased from the first half of 2006, and expenditures in District 1 stayed flat, expenditures in other areas due to increased cost of salaries and benefits, utilities, and material and supply costs. 

●   Seven divisions in the General Fund have expended more than 50% of budget at the end of the second quarter.

§         City Manager’s Office has expended 53.3% of budget, compare to 55% of budget during the same period in 2006.

§         Public Information (59.3%) due to salaries and a large encumbrance for printing.

§         Legal (51%) due to expenses related to outside legal fees.

§         Municipal Court (59.7%) due to a large encumbrance for the lease of office space.   

§         Street Maintenance (68.9%) due to very large encumbrances for crack sealing, curb repair, and mill and overlay work for the remainder of the year. 

§         Levee Maintenance (54.3%) due to motor vehicles repair and chemicals.

§         Neighborhood Resources (51.2%) due to an encumbrance to Johnson County Contractor Licensing.   

 

 

Special Revenue Funds

 

●   Recreation Fund revenues increased $92,669.51, or 25.8%, over the same period last year.  The majority of the increase was due to an increase in the property tax levy of 19%.  Revenue from service charges also increased.

 

●   Recreation Fund expenditures are less than 50% of budget but have increased $84,798 over the first six months of 2006. 

 

●   Public Transportation Fund revenues are up almost 16% compared to the first half of last year.  The property tax levy increased and fare box revenues increased over this half of last year by $3,584, which represents an increase of 3.79%.

 

●   Expenditures for public transit are only 35.3% of budget and represent an increase of almost 12% over the same period last year.

 

 

Enterprise Funds

 

●   Water and Sewer Fund revenue was significantly higher due to $19.8 million in bond proceeds.  However, water and sewer charges were lower than this period last year due to less demand.  Water and Sewer Fund expenses increased significantly, 24% over the first half of 2006, due to increased transfers to the General Fund and non-bonded construction.     

 

●   Revenue in the Sanitation Fund was up $199,799, or 4.5%, from the first six months of 2006.  Expenses increased almost $598,000, or 13.48%, from the second quarter of last year.   

 

●   Golf Course Fund revenue was 44.2% of budget due to the seasonality of rounds played.  Revenue was down from the first half of 2006 by 12.4%.  Golf Course Fund expenses were 42.2% of budget and down 5.9% from expenditures made in the first six months of 2006, despite moving the debt service payments from this fund to the sales tax reserve fund in 2007.  Included in expenditures are a number of encumbrances including security service, golf cart leases, chemicals, and gas and diesel fuel.


III. REVENUE – EXPENDITURE TABLES

 

Second Quarter Fund Analysis

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

III. INVESTMENTS

 

Short-term investment rates are higher than the first half of last year.  As a result, interest earnings are greater than the first half of 2006 for most funds.  Interest revenue should meet the budget in 2007 for most funds. 

 

As of June 30, 2007, the City of Lawrence had over $127 million in cash and investments.  Over $95 million was invested in securities.  Approximately 35% of our investments were in certificates of deposits, 16% in government agencies, 24% in the Municipal Investment Pool, and 25% 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 the Bank of Kansas City and U.S. Bank.  The average rate of return on our investments during the third quarter was 5.11%. 

 

The City’s entire portfolio has an original maturity of less than twenty-four months.  More than 40% of our securities had a maturity longer than six months.  The City plans to hold 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 revenue debt issuance on June 21, 2007.  The issue was a $19,800,000 water and sewer revenue bond.  The debt was issued to pay for the expansion of the Clinton water treatment plant and the new water reclamation facility.

 

The following table shows the current total outstanding debt for the City and the different funding sources.  A preliminary analysis has shown that the City can issue approximately $4.5 – 5.0 million in at-large general obligation annually without having an adverse impact on the debt levy.

 

City of Lawrence Estimated Debt

6/30/07

 

GO Debt

Enterprise
Fund Debt

Less Enterprise Portion of

GO Debt

Total

Long term debt, 1/1/07

 $ 85,070,000

$ 76,972,324

$(7,569,873)

 $154,472,451 

 

 

 

 

 

Debt, added  2007

0

19,800,000

(0)

   19,800,000

 

 

 

 

 

Debt, added, Kansas Water Supply Loan

                    - 

0

-

     0

 

 

 

 

 

Less: Principal paid in 2007

(0)

(1,224,711)

0

(1,224,711)

 

 

 

 

 

Total long term debt, 6/30/07

$85,070,000 

$95,547,613 

$ (7,569,873)

$ 173,047,740

 

 

 

 

 

 

 

 

 

 

Total long term debt is composed of:

 

 

 

 

Enterprise fund portion

  7,569,873

$87,977,740 

$ -

$95,547,613 

   Sales tax portion

       10,978,206

-

-

       10,978,206

   Benefit District Debt (estimated)

       13,036,051

                 -  

-

       13,036,051

  

Net long term debt, city at large, 6/30/07

       53,485,870

7,569,873

    (7,569,873)

       53,485,870

                                               Total long term debt, 6/30/07

     85,070,000

   95,547,613

    (7,569,873)

     173,047,740

 

 

 

 

 

 

 

 

 

 

Future long term debt will result from:

 

 

 

 

Notes currently outstanding which will be bonded (includes fall note issue)

 $16,345,000

$ -

$ -

$16,345,000