The Observation Deck

These periodic e-mails are updates 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.
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Attached is the Monthly Financial Report as of July 31, 2009, and the benchmark of budget estimates versus the amount spent at this point in time is 58.3%.

A couple items to note include:

- General Fund Revenues are currently slightly above (at 66%) the overall estimate at this point of the year, but is due to the timing of Property Tax disbursements - the City receives all of theses funds during the first half of the year. Several revenues to watch since they are significantly below budget as of July 31st, and are indicative of the current economy, are: Building Permits (41%); Net Profit Income Taxes (48%); and Interest Earnings (37%).

- Overall General Fund Expenditures are still slightly below budget (54%), and are lower than actual expenditures at this point in time in 2007, which means the City is continuing to keep its expenditures in check.
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However, the City's greatest challenge currently is its revenues. Attached is an analysis of revenues as of July 31, 2009.

Combined known and projected decreases in Income Taxes, Property Taxes, Local Government Funds, and Interest Earnings has caused the City to project its 2010 General Fund Revenues at slightly above $34.0 million, or the City's 2005 revenue level.

Therefore, the City faces the challenge of expenditure levels for 2010 with revenue levels of five years ago.

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Finally, in an unfortunate era of local government corruption, I am happy to announce that on August 1, 2009 City of Lakewood took the pro-active step to have all of its 4,000 active vendors complete the attached "Code of Ethics for Vendors."
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For more information regarding the City of Lakewood's Finances, go to: http://www.onelakewood.com/Finance/Default.aspx

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

A couple surface observations.

I've heard that the bottom has fallen out of the market for recyclables. Revenues of $7,686 year to date probably doesn't cover the fuel cost of a separate pick up. Has mandatory recycling, never enforceable, been suspended?

4,000 vendors seems extremely high for a budget of $37.7 million. It costs a lot of money to manage that many accounts. I wonder how much we could save by aggregating our purchases with 400-500 key partners.

David.

Thanks for taking the time to read through the information in the latest Balance Budget Update, and you bring up some great points.

Although revenue derived from a recycling program is a bonus, it is really a cost saving measure since it diverts recyclable waste from the landfill, in which the City pays tipping fees of over $800,000 a year.

Less waste in landfill due to a strong recycling program = less tipping fees + possible recycling revenue.

Yes, 4,000 vendors do sound like a lot, but is the cumulative number over time. The City does not do business with this many vendors each year, and by sending out the Ethics Statement has allowed the City to clean up its vendor database of active and inactive vendors.

The City also takes advantage of consolidated purchasing for routine goods like office supplies, fuel, janitorial supplies, to name a few by issuing requests for proposals on a periodic basis for these items so there is only one vendor for the entire city providing the best price.

Also, through the City's bid and Request for Proposal processes, one vendor may be awarded a project one year, and another the next based on price, but both is still considered an "active" vendor.

Thanks Jennifer for the clarifications. I really appreciate the transparency of you posting up-to-the-month numbers. Keep up the good work.

D.