April 8th City of Lakewood Balanced Budget Update

[Jennifer Pae]

Good Afternoon,

These periodic updates provide the status of the City of Lakewood, Ohio's concurrent initiatives to create financial strength and flexibility for 2009 and beyond as prescribed by Joint Resolution #8167-07 and Resolution #8292-08.

For the pdf version of the report click here:
http://media.lakewoodobserver.com/media ... 232956.pdf
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It has been a few months since the last City of Lakewood Balanced Budget Update, but I wanted to wait until the 1st Quarter of 2009 was under our belt before reporting out.

The Monthly Financial Report (formerly known as Report 52) as of March 31, 2009 was released today and can be found at http://www.onelakewood.com/fin_main.html and is the Monthly Budgeted vs. Actual Report pdf found on the left-hand side of the webpage.

It reflects the revised budget numbers passed by Council on April 6th, and year-to-date expenditure versus budget benchmark of 25%.

The most notable item in the revised budget is a $600,000 increase in the reserve balance account, bringing the City's budgeted General Fund reserves to $850,000. The target balance goal is $4.4 million, so there still is a ways to go.

As shown on page 5 of the document, overall General Fund expenditures are 2% below budget as of today's date, but it is still early in the year, and the automated refuse collections change over has not yet begun, but will beginning in May. This will be the true test of keeping the City's budgeted expenditures on track for the year.

The City's greatest challenge (as well as everyone else's these days) and the biggest unknown because of economic conditions, are revenues.

The following are the 1st Quarter 2009 Revenue Updates as prepared by Keith Schuster, the City's Assistant Finance Director (Thanks Keith!!)
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General Fund

· Municipal Income Taxes: Represent the largest revenue source to the City and is generated by a 1.5% tax on wages and corporate earnings. Because the income tax accounts for such a large proportion of estimated general fund revenues (50%), the amount of financial resources available to provide city services is directly related to the health of the local economy. Total income tax collections through March are $4,203,000 compared to $4,111,000 through March 2008. Income tax returns filed through March 2009 approximate 600 more than for the comparable period in 2008. A better feel for our income tax collections will be after the filing deadline of April 15th.

· Property Taxes: During FY 2006, there was a reappraisal of properties within Cuyahoga County. As a result, the City of Lakewood realized an increase of real and personal property tax revenues of 9 percent in FY 2007 to $7,585,000. In FY 2008 property tax revenues fell by $135,000 over 2007 to $7,450,000. This is a result of local economic factors, and the ‘Housing Crisisâ€￾. Property tax collections for 2009 are estimated to be $7,141,000, a decrease of $308,000 due to revised estimates from the County Auditor that collections will be 94.17% of the current levy compared with 95.39% in 2008. Actual collections through March 2009 are $3,771,000 compared to $3,698,000 through March 2008. Actual collections are due to a timing difference from the County between 2009 and 2008. If we compare actual collections after the 2008 settlement the difference would be a reduction of $102,000.

· Intergovernmental Revenues: The City receives various shared revenues from the State of Ohio. These include the Local Government Fund, Estate Tax, and various fees paid from Cigarette and Liquor licenses, and reimbursements for Homestead exemptions, Rollback, and Corporate Activity (CAT) taxes. The Local Government Fund revenues were reduced by $309,000 on January 5, 2009 due to reduced collections statewide of income and sales taxes. Due to the continued economic downturn, it is likely that these estimates could be reduced further by July 1st.

· Interest Earnings: Since our original October estimate the Federal Reserve has reduced rates to 0%-.25%. This change will decrease interest earnings by approximately $80,000 for 2009 to $205,000 from the original estimate of $285,000 in October. The average interest rate on the bulk of our short-term portfolio ($13,000,000) has averaged approximately .51% through March. Our long-term portfolio ($6,000,000) is yielding an average of 3.93%

Other Funds:

· Lakewood Hospital Fund: Total revenues are expected to decrease by $89,000 due to the transfer of Health operations to the County Board of Health in 2008. EMS fees are expected to increase by $59,000 due to the increase in Advanced Life Support (ALS) fees in 2008. Through March 31, EMS revenues have increased by $25,000 over the same time period of 2008.

· Water Operating Fund: Total operating revenues are expected to increase $148,000 over 2008 due to having a full 12 months of collections of the increased water rates effective January 1, 2008. The revenues for 2009 reflect no increase in water rates for 2009. Through March 31st, operating revenues have increased by $33,000 over 2008.

· Wastewater Collection Fund: Total operating revenues are expected to increase $119,000 over 2008 due to having a full 12 months of collections of the increased sewer rates effective January 1, 2008. The revenues for 2009 reflect no increase in sewer rates for 2009. Through March 31st, operating revenues have increased $44,000 over 2008.

· Parking Facilities Fund: Total revenues through March 2009 have increased by $16,000 compared with March 2008. This is mainly due to the installment of the new parking meters.

· Winterhurst Ice Rink Fund: Total estimated revenues include reimbursement of utility costs and $75,000 rental fee per the contract.
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For more information regarding the City of Lakewood's Finances, go to: http://www.onelakewood.com/fin_main.html

And as always, if you ever have any questions or need clarification regarding a City of Lakewood Financial matter or issue, please feel free to contact me.
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Thanks for reading & have a great day!
~Jenn
Jennifer R. Pae
Director of Finance
City of Lakewood
(216) 529-6092
http://www.onelakewood.com