Balanced Budget Update

The Finance Department has issued the Financial Overview for the City of Lakewood for Fiscal Year 2008. This document diagrams the how much was earned (revenues), where did it go (what it funded), and what do we owe (debt for streets, vehicles, parks, etc.) as of December 31, 2008. Governments are required to follow fund accounting. In other words, by law, dollars from specific sources can only be use for specific sources.

The City of Lakewood has three major, specific "buckets" as shown on this diagram from left to right: General Fund, Capital Investment & Debt Retirement, and Enterprise Funds.

General Fund

In 2008, City Council requested and passed a budget that was structurally balanced. That means that total estimated revenues were to exceed estimated expenditures, and that any carry over from the prior year could not be used to balance the budget.

Passing a structurally balanced budget contributed to the 2008 year-end actual General Fund revenues exceeding actual expenditures by over $500,000. The City experienced a significant reduction in revenues in 2008, which made the need to reduce expenditures necessary, and to be structurally balanced an even greater challenge.

Here is the General Fund comparison for the past 4 years and the current 2009 budget:

Revenues:

2005 Actual = $35,400,543

2006 Actual = $37,271,284

2007 Actual = $37,109,124

2008 Actual = $36,383,736

2009 Estimate = $37,070,844

Expenditures

2005 Actual = $35,691,476

2006 Actual = $36,970,229

2007 Actual = $37,756,664

2008 Actual = $35,875,703

2009 Budget = $36,871,066

Year-End Structural Balance / (Imbalance)

2005 Actual = $(290,933)

2006 Actual = $301,115

2007 Actual = $(647,540)

2008 Actual = $508,033

2009 Projected = $199,778

During 2008, the City established Reserve Balance Accounts to create a way to set-aside portions of positive fund balances for known future or possible expenditures such as separation pay outs and other "rainy day" issues that may arise.

Although a balance of over $500,000 appears significant, it is only slightly more than 1% of overall revenues in 2008. To put this amount in perspective, this would not cover even one General Fund pay period expenditure, which is nearly a $800,000 pay out 26 times a year. And $800,000 per pay period only is the amount for salaries; it does not include benefits like health insurance and retirement.

The General Fund receives almost 50% of its revenues from Income Tax collections, and in 2008 collections were slightly down by approximately $53,000 from the 2007 total. Property Tax revenues were also down slightly by $18,000, but the largest decrease in revenues was in interest earnings and estate tax receipts which combined were over $650,000 lower than 2007 amount.

On average over the past 20 years, the City would realize 2% growth in General Fund Revenues each year. Due to the challenging economic climate, the 2008 actual General Fund Revenues were lower than 2006 receipts.

To be structurally balanced, 2008 expenditures were reduced nearly 2005 levels. The General Fund supports the core operations of the City with over 50% of expenditures funding Public Safety, over 25% supporting Public Works, and the remaining 25% support General Government, Human Services and Administrative Costs.

General Fund Public Works (Parks, Refuse, Fleet, Forestry, Engineering) operations experienced the greatest reduction in overall expenditures from 2007 to 2008 of nearly $800,000. Human Services (Aging, Youth and Early Childhood) saw the next largest decrease of nearly $525,000, and General Government (Mayor's Office, Court, Finance, Planning & Development, Law, HR) decreased by over $275,000. Public Safety (Police, Fire, Building & Housing) increased slightly by nearly $55,000, and Administrative Costs (primarily city-wide insurance and professional services) were $8,000 higher than the 2007 levels.

Capital Investment & Debt Retirement

Many ask why the City of Lakewood can continue to invest in reconstructing roads or purchasing new equipment when it is reducing General Fund expenditures. The reason is that the General Fund does not support these types of expenditures, since the General Fund's purpose is for salaries & benefits and operating costs of the core services detailed above.

The City of Lakewood has a dedicated property tax amount that supports the debt service payments for bonds, leases and loans. As long as the City can afford the debt service payments, it can continue to invest in its Streets, Parks, Buildings, Vehicles and Equipment. For example, a $1.0 million street improvement has an approximate debt service payment of over $80,000 a year over 20 years. The City has to budget for the $80,000 not the $1.0 million.

In 2008, all types of debt service principal and interest payments totaled $10.245 million for current and prior year infrastructure improvements and vehicle and equipment purchases.

Enterprise / Revenue Funds

The City of Lakewood has five separate enterprise or "business" operations: Water, Sewer, Wastewater Treatment, Parking and Winterhurst Ice Rink. These are supported solely by the fees charged to operate these enterprises. These operations also support the debt service for improvements in the water and sewer lines, the wastewater treatment plant, and parking meters.
In 2008, the City of Lakewood leased its Ice Rink to private firm for operation. In 2009, the City will undergo utility rate studies to determine the rate structure required to continue operations, while meeting EPA regulations and to support past and future capital investment debt service.

Other Major Funds

The City has several other special revenue funds with dedicated revenue sources for dedicated purposes. The City receives Community Development Block Grant Funds from the Federal Government. Most of these funds are used for street improvements, economic and community development, and to fund community organizations, and have many restrictions on how the funds can be used. The Lakewood Hospital Fund receives funds from the City's lease with the Cleveland Clinic and from EMS billing. This fund primarily supports the City's paramedics and EMTs, and other health-related endeavors. The Street Construction, Maintenance & Repair (SCMR) Fund comes from gasoline excise & motor vehicle license taxes, and supports the City's Streets department and road salt purchases.

For more information, visit www.onelakewood.com or call the Department of Finance at (216) 529-6090.

Green Refuse Iniative

The City has made important improvements to the way refuse is collected to be more efficient, more economical and more environmentally responsible.

Over time, the City’s Green Refuse and Recycling Initiative will benefit Lakewood by saving millions of dollars, dramatically increasing citizen recycling, and reducing Lakewood’s carbon footprint by hundreds of tons every year.

The way refuse is collected from your home will change. Starting in May 2009, each Lakewood home will receive a special 96 gallon refuse collection container. When the wheeled container is delivered to your home, begin using it for all general refuse.

Residents will be responsible for placing the container on their tree lawns by

6:30 A.M. on their collection day. The City will make accommodations for those with special needs.

Watch for more information regarding this new program, and the rest of the Green Refuse Initiative in the coming months. For more details visit www.OneLakewood.com.

Hisoric Preservation Designation

The new Historic Preservation Ordinance, passed in 2008, is now in effect and provides an opportunity for our community to locally designate our City’s great cultural and architectural resources. It is the first, official recognition that Lakewood’s historic resources give it its special character and cultural depth and provide tangible links to the community’s historical and cultural heritage.

In addition to being a proven tool to enhance property values while protecting the diverse and harmonious architectural styles of Lakewood while encouraging complementary design and construction.

Historic preservation is proven to enhance property values. This voluntary program is a great means to help protect our heritage and sends a clear message to residents and visitors that Lakewood is proud of our history. For more information contact the Department of Planning & Development at (216) 529-6630.

The Government Might Owe YOU Money

If you:

-earned under $38,646 and have more than one qualifying child ($41,646 if married filing jointly), or

-earned under $33,995 and have one qualifying child. ($36,995 if married filing jointly), or

-earned under $12,880 and have no qualifying child. ($15,880 if married filing jointly), then

Attend the free Earned Income Tax Credit Clinics where trained volunteers will help you at no charge. All returns are filed electronically and refunds are sent to you in as little as 10 business days!

Step 1:

Choose any of the following dates:

January 31; February 7 or 21,

March 7, 14, 21 or 28; April 4

Choose an appointment: 10am, 11am, 12pm, or 1pm

Step 2:

To schedule your appointment, call the Lakewood Public Library

at 216-226-8275, ext. 127

(Registration begins Friday, January 2, 2009)

Step 3:

Attend your appointment at the

Lakewood Public Library Learning Lab, 15425 Detroit Avenue

DON’T FORGET TO BRING

• ¨ Social Security cards (or photocopies) for you, your spouse & dependents
• ¨ Last year’s tax return (if available)
• ¨ Any W2s, 1099s and receipts of deductible expenses (if filing Schedule A)
• ¨ Your spouse, if married and filing jointly (for signing forms)
• ¨ Your bank account and routing information, if you are applying for direct deposit
• ¨ Notice of Economic Stimulus payment amount or Economic Stimulus amount received in 2008
• ¨ Any paperwork from the City of Lakewood tax department (if filing Lakewood income tax)

Lakewood Tax Clinics are brought to you by the Lakewood Initiative for Financial Education (L.I.F.E.), Internal Revenue Service, Volunteer Income Tax Assistance (VITA), the City of Lakewood, and the Lakewood Public Library.