Earlier this year, Lakewood Patch reported a series of stories about the city’s 2012 income tax projections.
It was expected that the city would experience a steady, continued growth.
Turns out, Lakewood’s forecast was about 4 percent higher than estimated. Instead of the projected $18.5 million in income tax collections, the city brought in $19.25 million.
All revenue from income tax goes directly into the city’s general fund.
(For a complete breakdown of the city’s 2012 financial overview, check out the city’s website, or check out the PDFs at the right)
Judging by the city’s income tax collection alone, Lakewood appears to be climbing out of the Great Recession.
But there’s still more work to do.
“As we’ve seen our income tax revenues decline over the past couple years, we’ve definitely seen the drop based on the economy and the slow increase the past couple years, but it hasn’t been huge,” finance director Jenn Pae said earlier this year.
“It’s a slow climb up.”
Lakewood’s climb started shortly after voters rejected the West End Development project. A community group, Grow Lakewood, was formed to look at the city’s strengths and weaknesses, what it should focus on and how to build financial strength. Regarding the last point, the group concluded the city was at financial risk because officials spent the general fund reserves that were at one point in excess of $6 million.
When Ed FitzGerald became mayor in 2008, he brought in the state auditor's office to conduct a performance review of city finances. State auditors confirmed what Lakewood’s finance office had predicted: the city would face a projected $4 million deficit unless it cut costs.
“Compared to other cities we were, by our own doing, forced to start making some changes before changes in the economy started to hit,” Pae said.
City council voted to have balanced budgets, so projected expenditures could not exceed projected revenues. Essentially, city officials couldn’t dip into reserves to make up the difference. Officials cut expenses to do so, and then in 2009 the city’s revenue started falling — primarily in income tax collections.
Income tax revenues were down about 5.5 percent in 2010 compared with 2009. The city needed to cut expenses again. Staffing levels stayed the same and city departments either saw expenditures frozen or got less money. The city stopped backyard trash collections and offered a tax amnesty program that waived some late fees for late filers. That helped the city collect about $500,000.
Total income tax collections were:
- $18.2 million in 2008
- $18.5 million in 2009
- $17.7 million in 2010
- $18.8 million in 2011
- $19.3 million in 2012
“I think our income taxes have been reflective of what the overall economy has been,” Pae said earlier this year. “The city of Lakewood is unlucky in that way because we’re primarily residential in make up. We have some commercial but no malls, no big box stores, very little industrial. What’s good about that is we’re relatively stable, not relying on one big industrial (employer) like Ford or American Greetings.”
Pae said the challenge now is looking at how the city can sustain and continue to grow while staying fiscally strong.
Nicole Stempak contributed to this report.