On Saturday, January 14, the City held one of many public meetings to discuss the 2008 budget. Saturday’s meeting pertained to internal service funds and capital expenditures. Internal funds are transfers between departments that pay for such things as health care insurance; capital improvement funds are those used to buy equipment that exceed a certain dollar amount.

Present for the meeting were Council President Dever, Vice President Madigan, and Councilmen Summers, Butler, and Bullock. Mayor Fitzgerald and his administration’s representatives, such as Finance Director Jennifer Pae, were there to explain the complex and sometimes confusing process of budgeting. The audience consisted of a large contingency of city employees, but very few Lakewood citizens.

The atmosphere seemed cordial, but somber. Mayor FitzGerald explained the financial strain the city is under and his administration's plans that will be implemented to get expenditures under control. He also emphasized that change will occur rapidly and efficiently, such that a single change will right the City’s financial course, rather than a series of smaller changes over an extended period of time.

The discussion then migrated to health care benefits and what can be done to control the City’s spiraling health care costs. Many options were brought to the table which, if implemented, could potentially save the city over ten percent. It became evident that a combination of health care plan changes and a series of little cuts could be transformed into large cost savings.

The administration faces a challenge with the bargaining units who have already settled contracts ending in 2009. Adjustments in benefits for these employees would be contingent upon the contracts being reopened, whereas non-bargaining unit employees, who number roughly 48, can have their benefits adjusted by ordinance changes.

The conversation then proceeded to outline the City’s debt and credit outlook. Lakewood currently has a bond rating well within the top third of communities in Cuyahoga County. The Mayor asked if the former administration's promise of an income tax increase may have artificially boosted Lakewood’s credit rating, and the bond consultant agreed that it may have had some effect.

The complex formula to determine how much money any municipality may borrow and the difference between bonds and notes were briefly discussed. The City is anticipated to have a General Obligation (GO) credit limit of $14 million. This number is affected by the tax pressure imposed by all government agencies in the county, and with the anticipation of Cuyahoga County borrowing $150 million in the second quarter of 2008, Lakewood’s credit limit would shrink to $11 million. This is still an improvement over last year.

The ability to borrow translates into machinery being purchased and projects, such as road improvements, being done. The administration has wisely decided to lease some capital equipment for those with a useful life of under 5 years. This allows the city to pay off the equipment when it is being used instead of financing for 20 years something that will be in the scrap heap in 10.

Road rating procedures, types of resurfacing, and currently scheduled projects were also discussed. External funding for the resurfacing of Bunts, sadly, did not come through. The city's portion of these funds has been redistributed to do other needed road projects within the city.

Other capital projects of interest were computer software and hardware to make the City’s operations more efficient. New personnel management systems by Kronos would ease the administrative load on individual departments so that more actual work could be done.

The issue of capital improvement with money from the $2 million levy for wastewater plant improvements was discussed. Nearly half of this money is to be used for other projects, such as streets, after passage of issue 14 in 2005. Conspicuously missing from many of the capital budget projections were future expenditures beyond this year.

As the City tightens its belt, the residents will be called upon to make decisions about the quality of life in our city. The general population would be well advised to attend some of these meetings to gain a better understanding of the difficult task of distributing funds for city operations.

The administration and council seem to be working well together toward a difficult but needed solution to Lakewood’s potential financial crisis. This cooperation may be just what is needed to steer clear of the financial iceberg that lies just off of Lakewood’s bow.