Mayor's Corner

Lakewood, like all other municipalities in Ohio, has experienced negative effects from Covid-19 and the corresponding shutdown. Unlike other governments that are primarily reliant upon property taxes, Lakewood’s major revenue source is income tax, which is economically sensitive.

The last compiled numbers Lakewood has from July indicated that the City’s General Fund revenue is down roughly $2.6 million from last year’s actual collections. We are working hard to be back into the black before year end, but it’ll be a tough trudge.

To combat the loss in revenue, we continuously analyze our operations, and have worked to do things differently than in the past. However, reducing General Fund costs in our case means reducing payroll for Lakewood’s outstanding and dedicated public service workforce. To help accomplish this, I have been asking employees to voluntarily furlough, and the response has been tremendous. The City will have saved roughly $320,000 including roughly $200,000 in the General Fund because of the voluntary time off, which helps plug the huge hole in this year’s income tax revenue.

Additionally, overtime (OT) has been scaled back to emphasize only necessities in Police and Fire, as well as Public Works emergencies. To date, OT is down over $368,000 compared to last year, including $239,000 in the General Fund.

Although CARES Act funding will help us, ($2.3 million with a projected $1.9 million to the General Fund) it is not a silver bullet. With both the income tax deadline and the property tax deadline extended, our financial picture remains foggy, but we’ll continue to gain more clarity as the year progresses. A by-product of the tax deadline extension is that it both pushes back and shortens our revenue collection cycle, especially for income tax.

Moving Forward: That all said about this year, we are also looking toward next year realizing that the 2021 budget will be especially challenging, given this year’s unemployment (that will negatively effect next year’s income tax receipts), our contractual commitments (to essential personnel like our first responders), and the tremendous amount of uncertainty in our hopefully recovering but still very pandemic economy. These factors make estimating income tax much more difficult.

Additionally, large capital projects, even popular ones like Cove Church, have been put on hold as we wrestle with the desire to move forward with our planned business while weighing the realization that we must balance those interests with the prospect of becoming overly debt laden and/or eating into our cash reserves to the point where the City’s bond rating may be negatively impacted. A lower bond rating will cost the City more in interest on its new debt, and we are working hard to be mindful of the long-term ramifications of today’s decisions as we look at the big picture in reducing overall costs.

With the month coming to a close, we are optimistic that August revenues will improve and that the overall revenue shortfall will improve dramatically by year end while we also make the necessary sacrifices and adjustments to balance the 2020 budget.

Read More on
Volume 16, Issue 17, Posted 3:41 PM, 08.19.2020