The City of Lawrence is facing a budget deficit of nearly $4 million as of June and likely will have to dip into reserves to cover expenses through the end of the year.
Controller Humphrey Nagila gave a presentation to the Lawrence Common Council Aug. 5 and said he would be coming before the council again for its Aug. 21 midmonth meeting with requests for appropriations and budget transfers.
Nagila said the city’s expenses have been higher than anticipated and some revenue appears to be lower. Exact revenue numbers were not yet available, he said, because the city has been waiting for tax information from the state.
“We were anticipating that we would have gotten information by Aug. 1 on some of those shared revenues — the local income tax, the county income tax — (we) still have not gotten any information from the state,” he said. “That’s kind of what we are still waiting for. Us not knowing what they’re going to give us makes it a little bit challenging in terms of revenue projections.”
Councilor Tyrrell Giles (D-District 1) said those numbers are important to the discussion.
“That’s a huge question,” he said. “Really, none of this is relevant now, if we don’t know that.”
Giles asked for more specifics about unanticipated expenses.
Nagila pointed out that the budget was inherited from the previous administration.
“There’s a lot of different requests, different needs and different vision from the new administration,” he said. “For example, right now, we are going through (collective bargaining agreement) negotiations, right? We saw the need to get external attorney firms to help us with those CBA negotiations, because this is a new administration and we have never done this before. That was not budgeted for in the 2024 budget.”
Nagila added that the pension fund likely will need additional appropriations because of more retirements than anticipated. He said that the city expected the tax information from the state would be received in time to provide better details for the council’s next meeting.
“When we come back midmonth, we’re going to have a more detailed presentation on specific funds and line items that may have budget shortfalls,” he said. “So, for the purpose of this presentation today, it’s just to give you all an overall view of where the city stands financially year to date.”
Some numbers were available, though. Nagila said that through June, when the city’s expenses should have been 50 percent of the total year’s budget, the city had spent about 64 percent of the $27.4 million general fund. That’s about $3.8 million over budget if expenses continue to track as projected.
City code requires a minimum of 20 percent of annual expenses be kept in reserves for emergencies. Nagila said the city’s reserves are now at 26 percent. The 6 percent available to the city is about $420,000.
Nagila said that with the council’s recent approval of general obligation bonds, the city can move some expenses out of the general fund and into the bond fund, which would allow for budget transfers to cover the remaining unanticipated expenses.
The next Lawrence Common Council meeting is 6:30 p.m. Aug. 21 at Lawrence Government Center, 9001 E. 59th St. Meetings also are livestreamed on the city’s Facebook page, facebook.com/cityoflawrencein.
