City Finance Lesson

[Chris Trapp]

With all of this discussion about the city's future...and much of it centered on city finances, could someone please give me a quick, basic lesson on city finances? I am embarrassingly ignorant on this subject.

1. What are the city's revenue streams (and approximate contribution of each to the total)? Income Taxes, Property Taxes (how much of our yearly tax goes to the schools, city, county?), Traffic Tickets, Fines, Other???

2. Is there one operating fund, or various funds for specific purposes?

3. The schools are completely seperate from the city, correct?

Thanks!

[Stan Austin]

Chris--- Very good set of questions that you have asked.

Finance Director Jennifer Pae will respond but in the meantime here's a link that will give you an overview
http://www.ci.lakewood.oh.us/soc_financial.html

Stan Austin

[Dan Slife]

Stan,

Is there something you're hiding from us?

Are you on the city's payroll?

[dl meckes]

Stan is the first reporter who has sat through nearly every budget hearing that the city had, as he reported about them for the Observer.

He should have been on somebody's payroll for that...

None of the other news outlets were represented.

[Jennifer Pae]

Hi Chris,

I'm sorry it took me awhile, but here are the answers to your questions:

1. What are the city's revenue streams (and approximate contribution of each to the total)? Income Taxes, Property Taxes (how much of our yearly tax goes to the schools, city, county?), Traffic Tickets, Fines, Other???

Please note that these are currently unaudited figures since the City's Financial Audit is still underway and will be released publicly in October 2006.

The income tax revenue for 2005 was $16,537,268. Of the $50,593,853 in total revenues, income tax accounts for 33 percent of that total. Property taxes of $12,162,282 account for 25 percent of total revenues, operating grants, capital grants, contributions, and general revenues from grants and entitlements account for 28 percent of total revenues, and charges for services and other revenue make up the remaining 14 percent.

2. Is there one operating fund, or various funds for specific purposes?

The City currently has approximately 50 separate funds. The largest fund is the General Fund, which receives funding primarily from income taxes, property taxes, intergovernmental sources, and fees and permits. The General Fund provides funding for the personnel and operational costs for the majority of the City's Departments like police, fire, and public works.

The next largest funds are enterprise, or "business-type", funds for the Water and Sewer Utilities. Revenue from these utility funds is generated primarily through user fees (i.e. water & sewer bills), which provides funding for the personnel, operations, capital outlay, and debt service costs for these operations.

3. The schools are completely seperate from the city, correct?

Yes. The schools are completely separate from the City, both financially and operationally. However, both the City and the Schools receive property taxes.

The County Auditor's Office collects property taxes from residents on behalf of the various government entities that can levy property taxes. Currently (tax year 2005, collection year 2006), residents of Lakewood pay 85.42 effective mills of property tax. Here is the break out of those mills:
- Lakewood City Schools = 49.57 mills
- City of Lakewood = 17.40 mills
- Cuyahoga County = 11.72 mills
- Lakewood Public Library = 2.44 mills
- Cuyahoga Community College = 2.34 mills
- Metro Parks = 1.85 mills
- Cuyahoga Co. Port Authority = 0.10 mills

Here is a break-out of the revenue streams of the 17.40 mills levied by the City as designated by Charter:
- General Fund = 8.65 mills
- Bond Retirement Fund = 3.47 mills
- Wastewater Improvement Fund = 2.00 mills
- Fire Pension Fund = 1.68 mills
- Police Pension Fund = 1.60 mills

As noted above, the City collected approximately $12.16 million in property taxes in 2005 (unaudited).

Another good source to look at the City of Lakewood's finances is its Comprehensive Annual Financial Report (CAFR), which can be found at the Auditor of State's website under 'Audit Search': http://www.auditor.state.oh.us/AuditSearch/Search.aspx

The CAFR gives an extensive reporting of all of the City's finances, and I recommend reading the Transmittal Letter, the Management's Discussion & Analysis, and the Statistical Sections. The CAFR on the Auditor's website is for 2004, and as noted previously, the 2005 CAFR will be released next month.

Please do not hesitate to ask any more questions. I will be happy to help!

Jennifer R. Pae
Director of Finance
City of Lakewood
jennifer.pae@lakewoodoh.net
(216) 529-6092

[Jim O'Bryan]

Jennifer

Welcome aboard and thanks for stopping in and proving once again that Mayor Tom George's open door policy includes the 3% of Lakewood that is part of the Observer, and another 20% that merely lurks on our boards.

Thanks again.


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[Chris Trapp]

Jennifer,
Thank you very much for the informative post. I will indeed follow up on the resources you mentioned.
One quick question: regarding the 28% of the revenue stream that comes from grants - are these grants from the federal government and/or state?
Thank you again,
Chris Trapp

[Jennifer Pae]

The City receives grants from a combination of Federal, State, county, and private sources.

[Jim O'Bryan]

The City receives grants from a combination of Federal, State, county, and private sources.

Jennifer

I just noticed your time stamp at 6:21 a.m.!

Are you trying to give Melissa Garrett a run for the money as the hardest working person in City Hall?


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[Kenneth Warren]

Ms. Pae:

Congratulations on your promotion and best wishes for success.

I sincerely appreciate your commitment to the LO Deck. I salute you for taking time to educate and inform readers with your professional and civic perspective on city finance.

Thank you again.

Kenneth Warren