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income tax funding, and that Lakewood's tax base is more diversified. This helps the city when it <br /> goes to market to fund debt. 19% of the city's budget is made up from property tax. <br /> Director Rancatore referred to more graphs and charts, indicating that there is a general upward <br /> trend in income tax structure over the years. Chair Shachner spoke to the increase displayed from <br /> 2012-2021 and inquired whether the city has been at or outpacing the normal rate of inflation in <br /> terms of income tax collections. Director Rancatore clarified that the biggest increases in cost the <br /> city is seeing is in capital ones, and capital projects are funded from property tax. Chair Shachner <br /> pointed to a 6% increase in revenue collection in 2019, with only a half point drop in revenue, <br /> pondering whether that meant more people were employed or working from home or whether <br /> more businesses and restaurants had opened. <br /> Director Rancatore explained the different types of taxes, highlighting that municipal tax is paid <br /> based on where one physically works. One may owe extra based off the credit structure in his or <br /> her community. Withholding tax is taken directly out of the paychecks of people that work in <br /> Lakewood. He then provided an example of a Lakewood resident that physically worked in <br /> Cleveland, who now works at home and demonstrated the difference in revenue retention to <br /> Lakewood. Councilmember Kepple asked if there is any data or projections available on whether <br /> the work from home trend will continue or grow. Mr. Rancatore stated that there is no other way <br /> to tell other than what the city is currently observing and that it seems like a permanent change. <br /> Director Rancatore then went on to explain property tax assessments that occur during a triennial <br /> update. Lakewood saw the greatest increase in property tax in the county, which benefitted the <br /> city's budget in 2022. <br /> Director Rancatore reviewed the projections for year-end revenue, noting the need for savings <br /> for separation payments, as the city has experienced turnover in the last couple years, and to <br /> maintain the budget stabilization account, which allows a maximum of 5% of the previous year's <br /> revenue to be saved as a rainy-day account. He also noted that there is a separate savings fund <br /> which accounts for a 27�'pay period that occurs every several years for city employees due to the <br /> calendar. <br /> Councilmember Rader asked, considering the city wants to save as much as it can in reserve, <br /> whether it was capped by statute to keep a 60-day reserve and whether that amount was <br /> adequate. Mr. Rancatore indicated that 60 days of reserves is a best practice in government <br /> accounting and that the city tries to balance out the need to save with the city operations and <br /> services, collective bargaining agreements, and capital needs. <br /> Chair Shachner asked what some of the biggest drivers in differences in expenditures there might <br /> be from 2022 to 2023. Mr. Rancatore noted that the ARPA funds entire balance was included in <br /> the budget so that it can be appropriated. It may not all be spent during the year, but it will be <br /> there. <br /> The committee then briefly discussed various general fund uses and the fluctuation of interest <br /> rates and debt service on the city's bonding capacity. <br /> 2 <br />