City of Lake Forest Park News Release

The City of Lake Forest Park faces continued deteriorating financial news

Due to the continuing decline in expected revenues, the City is looking at reducing services, increasing revenues, and using reserves to maintain a balanced budget. The Mayor and the City Council will be making another round of changes to the City budget as early as May 14. By law the City is required to have a balanced budget. The City is constantly monitoring the City’s fiscal health and well being. If revenues decline, then the City must take action to realign its budget.

The City has already made significant reductions in services and other changes to maintain a balanced budget:

eliminated five positions (or 8% of the full-time staff), including two police officers;
shifted additional costs onto employees;
reduced hours of service; and,
increased revenues.

Additional changes of $150,000 will be presented to the City Council on May 14, 2009 at the regular City Council meeting. These recommendations will balance the budget in the face of declining revenues.

The City is experiencing a structural problem as well as a decline in revenues.

Structural Problem The City, even before this current fiscal slowdown, was facing a structural problem. Property taxes, which are 40% of the budget, are capped at a 1 percent annual increase unless authorized by the voters, at the same time the inflation rate hovers between 3-4 percent. The result is a widening gap between revenue and the actual cost to maintain current levels of service. More than 50 percent of the City’s budget funds police and criminal justice.

During the past five years, the City made changes in order to address this structural problem. These included the establishment of a passport program which brings in about $125,000 per year, interest on City reserves was placed in the general fund starting in 2006, and the debt for the City Hall building was shifted to capital dollars. These savings and innovations helped to push out the impact of the structural gap between revenues and expenditures.

Declining Sales Tax Revenues The current financial picture has worsened. The City has seen a significant decline in most of its revenues, including sales and business taxes (17% of budget), construction and land use permits (3% of budget), passport program (2% of budget) and investment interest.

The City has already taken significant steps to balance this year’s budget.

The City has already taken an aggressive approach to reducing costs, however with the ongoing financial deterioration, additional changes will be necessary.

The original 2008 budget included these reductions:

Eliminated School Resource Officer Program & Position
Implemented a janitorial contract rather than a position
Changed the cash flow reserve from 12% to 10%
Increased building permit fees to be more in line with surrounding cities
Non-represented employees pay a higher share of dependent health coverage
Reduced hours of Passport Clerks
Implemented Traffic Safety Cameras
Required Council reauthorization for all vacant positions
No overtime except for police and public works
No out-of-state travel unless reimbursed
City implemented 6% franchise fee on water districts operating in the City and using City’s rights-of-way
City implemented an annual $20 per vehicle license fee to fund street improvements

In February 2009, the Budget Amendment added these reductions:

Eliminated the Associate Planner position
Eliminated the Public Safety Admin. Assistant position
Eliminated the part-time State Lobbyist
Reduced the vehicle replacement program
Implemented a 2010 salary freeze on non-represented employees
Implemented an additional $50,000 in annual expenditure reductions

In April 2009, the City eliminated funding for a vacant police officer position

This vacant police position will save over $130,000 over the next two years.

The City budget is everyone’s concern; the mayor, council and the people who live and work and raise families here. A statistically valid survey of citizens will be conducted in May to determine resident’s views on current city services. People will be asked how best to balance the budget, either through a reduction in services, an increase in revenues, or a combination of both. This phone survey will also be posted on the website where everyone can reply. The mayor and councilmembers want to know what level of service people in Lake Forest Park believe are important to the community. If you have suggestions about which governmental functions you wish to maintain and/or cut please provide your input at the May 14, 2009 Council meeting or email you suggestions to cc@cityoflfp.com or mayordave@cityoflfp.com.

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