Council approves $96 million operating budget for 2011

LAKEWOOD – City Council Monday night unanimously approved a $96 million general fund budget for 2011 that calls for dipping into reserve funds to balance what could be a $1.6 million revenue shortfall.

But the revenue projections of $94.5 million are based on what the city’s finance director called “conservative” estimates and could follow the trend of the past two years when plans to dip into reserves fell in the face of higher than expected sales tax revenues, said Larry Dorr, who heads the city’s Department of Finance.

“Last year the city was able to increase reserves, in a very difficult economy, by $397,000,” Dorr told Council during Monday night’s budget hearing.

That makes Lakewood one of only a few metro-area cities that actually added money to their reserve funds, which serves as a savings account. State law requires cities to maintain a 3 percent reserve under the voter-approved Taxpayers Bill of Rights (TABOR), and City Council policy calls for a 10 percent reserve fund. At the beginning of the current budget year, the fund stood at 26 percent of the annual budget.

Much of difference came through higher-than-expected sales tax revenues and “expense controls” such as delaying essential hires as much as three months, by a fiscal quarter, according to Dorr.

And 2010 year-to-date sales tax revenues, which have posted increases in each of the past seven months, suggest revenue is up about 3.1 percent. Sales tax is by far the largest single component of the city’s tax structure, which also levies property taxes and collects a number of fees, including such things as the cost of building permits. Sales tax income represents 59.2 percent of the city’s operating budget.

Dorr said he now expects revenues for the entire current budget year to post a 2.1 percent increase over 2009 revenues. For 2011, Dorr’s “conservative” estimates call for revenues to increase 2.1 percent to $94.5 million against an expected $96 million in expenses.

The projected cost of city government in the 2011 budget is down almost $2.3 million from the 2008 general fund budget of $98.3 million, but up about $2 million over the current year’s projected $94.1 million revised budget.

“There’s a track record here that should instill confidence,” Mayor Bob Murphy said after Dorr’s presentation.

Murphy also urged vigilance to ensure the city doesn’t hit an unforeseen bump in the economic road.

“We still live in turbulent times and there could be a few big waves waiting to crash on shore,” Murphy warned.

No members of the public offered an opinion of the budget.