A Look at Past and Present City Finances

Audit of 2006-2007 Fiscal Year Shows Increase in Revenues

[December 31, 2007]  The city of Lincoln leaders remain focused on sticking to and creating a solid financial plan for future developments. The council and department heads have figures from the annual treasurer's report based on last year's audit, and now this year's tax levy. These figures will serve as a guide to decisions throughout the year and will be used to structure the next year's budget.

City Treasurer Les Plotner gave his annual report to city council members and departments, saying: "This will give city council members a comparative look as to revenues received, expenditures in various accounts, and the remaining fund balances, not only for the past fiscal year, but, at the close of the two previous fiscal years as well. Hopefully, this type of analysis of the annual treasurer's report will be most useful to council members at this time."

He urged council members to use the figures as they work on committee assignments and in structure the future budgets. "Since a budget is basically a working plan of estimated revenues and expenditures based upon past experiences and present needs, council members should look to past fiscal patterns to make decisions about spending and suggested improvements," he said.

What about current revenue trends? In the first five months of fiscal 2007-2008, the growth of revenues during that time span, as compared with those same five months last fiscal year, is very encouraging. Hopefully, that trend will continue.

On Oct. 1, the sales/use tax was up 15 percent; non-home rule tax was up 10 percent; income tax was up 10 percent; and replacement tax was up 29 percent. The telecommunications tax shows a decrease of 6 percent during this comparative period.

Projecting those figures over the remaining seven months of the 2007-2008 fiscal year, he said: "The city council needs to closely monitor the budget and expenditures not planned for the year unless they are emergency expenditures. They need to also monitor spending in the General Fund and keep aware of the cash balance in the fund when considering decisions, which might place undue pressures on the fund."

Plotner said that for projects like the proposed Fifth Street Road, the city would need to seek federal and/or state funding. "It's very unlikely that local sources of funding could handle such a project unless Lincoln residents approve issuing bonds for it," he said. "When large expenditures need to be made, large sources of revenues need to be secured to pay the bill."

He further cautioned: "In this age of ‘economic incentives' desired to promote economic growth, new and expanded business opportunities, and additional jobs for citizens in our community, the council must carefully evaluate both the immediate and the long-term advantages for the city when granting such incentives. Remember, ‘The acid test of a decision is whether you can live with it in the long run. -- Fred Smith.'"

The following report is based on the city's previous year's audit that began on May 1, 2006, and ended April 30, 2007. It lists a revenue summary, compensation summary, fire pension payments, police pension payments, expenditures (vendors) summary, and a statement of condition for the fiscal year. It is a cash basis for the 2006-2007 fiscal year.

The report includes several accounts that are not at the discretion of the city council, mayor or the city treasurer. These funds are managed by other parties or individuals within the framework of the city government. Distributions from these funds are at the sole discretion of those people and departments. Such funds include the Special Fire Department, DUI Fund, Drug Forfeiture Fund, Police Task Force Fund, Emergency Response Team and the D.A.R.E. Fund. These fund totals are reflected in the treasurer's report and also the audit totals for the city.

Plotner provides past years' figures for comparison for better analysis. He explains the funds below the figures.

(From ANNUAL TREASURER'S REPORT FOR FISCAL YEAR ENDING APRIL 30, 2007)

COMPARATIVE SUMMARY ON STATEMENT OF CONDITIONS

(See table below.)

COMPARATIVE EXPENDITURES OVER PAST 4 YEARS

(See table below.)

For those who read and try to interpret or analyze this report, we have provided some information below concerning the contents of the various accounts which are included in the FUND BALANCES mentioned on the previous page (table 1):

General Fund: Includes General Fund, Special Fire Dept., Drug Forfeiture, Police Task Force, E.R.T. Team, DUI Fund, D.A.R.E., Fire Protection, Police Protection and Streets and Alleys.

Special Rev.: Includes Audit, ESDA, Fire Protection, Forestry, Liability Insurance, Motor Fuel Tax, IMRF, Police Protection, Public Benefits, Streets & Alleys, and Crossing Guards.

Debt Service: Includes funds left over from payment of debt service fees.

Cap. Projects: Funds left over for capital improvement projects to be expended on future Projects.

Enterprise: Includes Sewer Operations & Administration, Illinois EPA Loan Fund, and Contingency and Depreciation.

Intern. Ser.: Includes only the Rental Equipment Fund.

Trust Fund: Includes Police Pension Fund, Firemen's Pension Fund, and the Revolving Fund.

The chart on the following page compares Revenues over the past four years. A written summary outlining some changes in Revenues as compared to last Fiscal Year is also included to assist Council Members. This summary may or may not be helpful in future Budget planning or in understanding the changes in revenues cited in the chart. If it raises questions, then, Council Members should follow up on those inquiries in the City Clerk's Office.

(See revenue chart.)

BUILDING PERMITS

The City had a 48% increase in building permit revenues compared to last year.

DONATIONS

We recorded a 55% decrease compared to last year in this revenue source.

CIRCUIT CLERK

Circuit Clerk collections for the city continued to decrease compared to the previous year. Over the past 5 years the collections have decreased from $171,346 in 2002-2003 to $94,670 in 2006-2007… a 44.7% decrease.

DRUG FORFEITURE FUND

This source of revenue did not produce funds this Fiscal Year.

FRANCHISE FEES

Franchise fees increased 4.4% as compared with last year.

GRANTS

$493,421 was received in 2005-2006… only $8,586 in 2006-2007.

INTEREST

The interest received totaled $1,351,639 compared to $1,336,332 last year. Hopefully, breakdown of interest will be presented October 15.

Police:	$768,530	57%
Fire:	$354,630	26%
City:	$228,479	17%

LICENSES

License fees increased 11.7% in 2006-2007 compared to last Fiscal Year.

MOTOR FUEL TAX

Big increase here... $258 over last year.

PARKING METER COLLECTION

Parking meter collections decreased 44.8% compared to last year. Evidently not a high priority revenue source.

PROPERTY TAX

The City experienced an increase of 7.7% in property tax revenues compared to last fiscal year. We had a 2.7% decrease in property taxes last year.

REPLACEMENT TAX

This tax source showed a 8.4% increase over the previous year.

SALES TAX

Sales tax receipts increased $59,451 last year and $118,076 this fiscal year which represents a 5.4% increase. Non-Home Rule sales tax increased 2.5% as compared to last year. This combined total gives the City a 4.74% increase in sales tax overall.

SEWERAGE RECEIPTS

Sewerage receipts were down 6.0% in 2006-2007. Any explanation???

STATE INCOME TAX

The State Income tax distribution for Lincoln was $113,593 higher this past fiscal year than in fiscal 2005-2006. This represents a 9.7% increase in receipts.

TELECOMMUNICATIONS INFRASTRUCTURE FEES

This source of revenue increased $221,452 in 2006-2007 compared to last fiscal year. That's an increase of 80.7%. This source of income should now stay pretty steady.

Property tax levy

The council approved and has submitted to the Logan County treasurer to levy city properties for a total sum of $1,567,679.25 for the 2007-2008 fiscal year. See the link to the levy for details.

Future financial planning

A few weeks ago Mayor Beth Davis-Kavelman addressed the council about the upcoming budget planning sessions. She said that she would like to see the council discuss the possibilities of a full-time mayor, city manager or city administrator.

She suggested that one way the council might be able to do this would be to redirect the $25,000 that is given to the Lincoln and Logan County Development Partnership every year. This is a yearly renewal.

She said that the new businesses that are currently under construction made their first phone call to her and often did not participate any with the partnership. It has been a lot of work, she told the council members.

She said that the council has not been represented at recent meetings as the development partnership searches for a new director. The last two meetings were scheduled on city meeting nights and the council could not have a member there to represent the city's interests.

She said they hired an interim person at $30 per hour to answer phone calls and e-mails.

"I have no ill feelings of any kind," she said.

A decision to change to a full-time mayor could not take effect until the next administration, beginning on May 1, 2009.

As of last week Davis-Kavelman had not decided if she would be running for another term.

Finance chairman Verl Prather agreed that it is time for the options to be discussed and asked council members to prepare to do that.

A meeting was set for Dec. 17, but that was canceled due to unforeseen circumstances. The mayor's son in the military was home for a surprise visit from Iraq. Prather was also unable to make the meeting. It has not been rescheduled.

[By ]

(City of Lincoln 2007-2008 fiscal year levy)

[To download Adobe Acrobat Reader for the PDF file, click here.]

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COMPARATIVE SUMMARY ON STATEMENT OF CONDITIONS

FUND BALANCES	2005	2006	2007
General Fund	$1,314,915	$665,822	$1,109,373
Special Revenue	$1,272,292	$1,046,728	$1,115,459
Debt Service	$42,216	$39,908	$59,271
Cap. Projects	$641,387	$ -0-	$625,471
Enterprise	($7,458,038)	($6,744,284)	($6,899,532)
Internal Service	$148,671	$93,944	$67,409
Trust	$16,414,500	$17,207,937	$17,813,506

NOTE: explanation of funds mentioned above follows expenditures.

COMPARATIVE EXPENDITURES OVER PAST 4 YEARS

	2004	2005	2006	2007
Salaries	$2,770,631	$2,724,642	$2,760,638	$2,851,265
Fire Pensions	$662,175	$650,458	$678,000	$800,063
Police Pensions	$509,412	$581,945	$645,956	$699,228
Vendors	$12,152,218	$5,693,192	$7,449,394	$7,092,643
TOTAL	$16,054,436	$9,650,237	$11,533,988	$11,443,199

Revenues over past four years 2003-2007

Source	2003-2004	2004-2005	2005-2006	2006-2007
2% Foreign Fire Insurance	$10,859	$8,780	$12,456	$11,406
Building Permits	$16,750	$26,618	$21,858	$32,362
Circuit Clerk	$138,181	$124,825	$107,595	$94,670
Donations	$21,661	$15,401	$51,447	$22,824
Drug Forfeiture Funds	$0	$0	$0	$0
Equipment Rental	$121,567	$103,211	$98,736	$132,332
Franchise Fees (Cable)	$121,452	$108,893	$113,651	$118,717
Grants	$34,562	$0	$493,421	$8,586
Insurance Reimbursement	$0	$0	$0	$0
Interest	$604,774	$589,548	$1,336,332	$1,351,639
Licenses	$70,328	$60,401	$69,220	$77,348
Miscellaneous	$47,283	$61,933	$55,798	$63,110
Motor Fuel Tax	$439,731	$634,716	$444,378	$444,636
Parking Meter Collection	$10,755	$11,111	$9,949	$5,482
Property Taxes	$1,437,689	$1,482,358	$1,441,694	$1,553,125
Payroll Deductions/Contributions	$192,307	$199,651	$201,697	$211,806
Replacement Tax	$174,627	$199,672	$258,492	$280,324
Sales Tax	$2,055,500	$2,124,829	$2,184,280	$2,302,356
Sewerage Receipts	$2,285,634	$2,410,600	$2,482,911	$2,340,318
State Income Tax	$930,126	$1,014,219	$1,167,125	$1,280,718
Violations	$110	$400	$1,715	$3,520
Bond Proceeds	$510,000	$0	$0	$615,000
Telecommunication Fees	$72,761	$171,453	$274,145	$495,597
Loan Proceeds	$7,590,947	$0	$0	$0
Non-Home Rule	$47,212	$616,500	$641,190	$657,220
State EDP Funds	$0	$0	$0	$921,005
TOTAL	$16,939,816	$10,007,501	$11,468,100	$13,024,101

[Financial report text copied from report from Lester D. Plotner, city treasurer]