Lawrence staff outline $6.6M preliminary 2026 shortfall; commission urges fund‑balance restoration and wage maintenance

Lawrence — City staff told the Commission April 1 that preliminary figures for the 2026 budget show a $6.6 million deficit and recommended a combination of spending reductions, fee increases and one‑time measures to close the gap.

Budget staff and department directors presented background and suggested targets. City Manager Craig said the city faces four principal structural pressures: a growing residential share of property valuation relative to commercial property; an $11 million permanent increase in payroll costs created by a prior market pay plan; increased infrastructure and regulatory costs for utilities and stormwater systems; and ongoing investments to address homelessness that were initially funded with one‑time ARPA dollars.

Budget Manager Ally told commissioners the city’s preliminary 2026 revenue projection is about $116.47 million with updated assessed‑valuation growth at 5 percent (the staff projection had been 6.25 percent earlier). With updated expenditure assumptions the preliminary shortfall stood at approximately $6.6 million. Ally said the city used a public engagement tool called Balancing Act to collect 637 public submissions and developed four priority tiers to translate qualitative…