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A FIVE-YEAR FINANCIAL MANAGEMENT REVIEW AND STRATEGY FOR THE CITY OF LEBANON Prepared under a Grant from the Department of Community and Economic Development Early Intervention Program Prepared by: Pennsylvania Economy League, Central PA, LLC 88 North Franklin Street, 2 nd Floor Wilkes-Barre, PA 18701-1393 March 2013

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Page 1: A FIVE-YEAR FINANCIAL MANAGE STRATEGY...the 23.4 acre Northeast Park/Youth Center, 4.4 acre Beautex Park, 2.3 acre Southeast Playground, 2.3 acre Progressive Playground, East End Playground,

A FIVE-YEAR

FINANCIAL MANAGEMENT

REVIEW AND STRATEGY FOR

THE CITY OF LEBANON

Prepared under a Grant from the Department of Community and Economic Development

Early Intervention Program

Prepared by:

Pennsylvania Economy League, Central PA, LLC 88 North Franklin Street, 2nd Floor

Wilkes-Barre, PA 18701-1393

March 2013

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ii

Table of Contents

Page CHAPTER 1 INTRODUCTION AND SCOPE ...................................................... 1-1 CHAPTER 2 LOCATION AND FORM OF GOVERNMENT .............................. 2-1 CHAPTER 3 HISTORICAL REVENUE OF CITY FINANCES ........................... 3-1 CHAPTER 4 2012 ACTUAL AND BUDGET FULL YEAR COMPARISION .... 4-1

CHAPTER 5 GENERAL FUND FISCAL PROJECTIONS 2013-2017................. 5-1 CHAPTER 6 CONCLUSIONS AND RECOMMENDATIONS ............................ 6-1

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CHAPTER 1

INTRODUCTION AND SCOPE

In 2012, the Pennsylvania Economy League, Central PA Division (PEL), undertook an

analysis of the financial condition of the City of Lebanon. There were two primary goals of the

analysis. The first was to determine the City’s current and future overall financial condition. The

second was to provide a guide for fiscal planning. The overall objective of the study was to

assist the City in the development of a five-year financial management strategy based on a

review of the City’s present and prior five-year financial results.

The current analysis involved a review of the City’s year-end financial reports;

independent audits; bond and note payment schedules; authority agreements; pension

obligations; collective bargaining agreements; the 2011, 2012 and 2013 budgets; audit reports;

other fiscal data; and other relevant information and factors that may affect the current and future

financial condition of the City, including socio-demographic data. In addition, PEL staff

participated in discussions with City officials. PEL acknowledges and appreciates the full

cooperation of all who contributed in the preparation of this study. The analysis could not have

been successfully completed without this assistance.

In the course of this project PEL:

Analyzed the City’s financial history from 2005 through 2011 focusing on such

factors as revenues, expenditures, tax base, operating positions, and debt structure.

Examined the historical data and the 2012 and 2013 budgets in relation to ongoing

operations, collective bargaining agreements, other salary and benefit requirements,

financial inter-relationships among the City’s component units, funds, and other

obligations of the City.

Reviewed all tax bases and revenues, major user fees, and other revenue sources.

Projected, to the extent possible based on known factors and available data, revenues

and expenditures for 2013 through 2017 assuming continuation of obligated levels of

wages and operations, existing revenue patterns, and other operating trends. The goal

of these projections is to permit City officials to better anticipate potential

deficits and take proactive steps to address any expected shortfalls.

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CHAPTER 2

LOCATION AND FORM OF GOVERNMENT

Introduction

The existence of municipal governments in Pennsylvania is authorized by the

Pennsylvania Constitution and state law. All land within the Commonwealth is “incorporated”

by law as a municipality with its own government. There are three primary types or

“classifications” of municipal governments: cities (of the first, second, or third class), boroughs

and townships (of the first or second class).

Municipal governments in Pennsylvania are the principal providers of direct public

services to citizens. Services often include, among others, police and fire protection;

construction and maintenance of roadways and bridges; street lighting; parks and recreation

facilities and programs; planning and zoning activities; enforcement of building and related

codes; water treatment and distribution; sewage collection and treatment; storm water

management; solid waste collection and disposal; recycling; etc.

Location and Population

Lebanon is located 21 miles north of Lancaster, 26 miles northeast of Harrisburg and 29

miles east of Reading in the Harrisburg-Lebanon-Carlisle metropolitan statistical area. The City,

which is 4.2 square miles, is accessible from the south via the Pennsylvania Turnpike and from

the north by I-81 and I-78. Lebanon’s population is 25,477 residents, according to the 2010

United States Census.

Government Structure

Founded in 1740 and originally known as Steitztown after founder George Steitz,

Lebanon was incorporated as a third-class city in 1885. The City has operated under a Home

Rule Charter since 1994 with a mayor-council form of government. The mayor, who serves a

four-year term, handles day-to-day operations of Lebanon as the Chief Executive and

Administrative Officer. All legislative powers are vested in the five-member council. Council

members are elected at-large and also serve four-year terms.

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Pennsylvania Economy League, Central PA Division 2-2

City of Lebanon March 2013

Overview of Government Services, Staffing, Taxes, and Fees

Lebanon provides police protection to its residents with 40 full-time officers and a police

chief. Fire protection is handled by the Bureau of Fire, which includes a Fire Commissioner, who

also serves as the Director of Public Safety, and 21 career firefighters. The Bureau is

supplemented by two volunteer Fire Chiefs and numerous volunteer firefighters, as well as a Fire

Police unit. City public works services include recycling drop off centers, street sweeping, traffic

sign maintenance, engineering functions, snow plowing and leaf collection. Residents contract

with private haulers for refuse collection and curbside recycling. Water and sewer services are

provided by the City of Lebanon Authority. Other services provided by the City are community

development, code enforcement, and permits and licensing.

Lebanon has an extensive park system. Facilities and amenities include camping, fishing,

hiking and canoeing at the 124-acre Stoever’s Dam Park; playing fields, courts and playgrounds

at Southwest Park; and swimming facilities, miniature golf, playground and hiking trails at the

92-acre Coleman Park and Lauther Water Complex. Additional parks and recreation facilities are

the 23.4 acre Northeast Park/Youth Center, 4.4 acre Beautex Park, 2.3 acre Southeast

Playground, 2.3 acre Progressive Playground, East End Playground, two Tot Lots, Fisher

Veterans’ Memorial Park and Veterans’ Memorial Walkway. Fees are charged for pavilion

rental, boat storage, camping, garden plot rental and pool admission at the various facilities. The

parks system also includes the Lebanon Community Theater and an amphitheater at Coleman

Park.

Lebanon levies a 3.581-mill real estate tax for general purposes, and also collects a 1.4

percent earned income tax, a $47 local services tax, and a 0.5 percent real estate transfer tax, as

well as a $100 mechanical devices fee. Various fees are also charged for eating and drinking

licenses, residential rental licenses, and buyer notification certificates.

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CHAPTER 3

HISTORICAL REVIEW OF CITY FINANCES

2007 THROUGH 2011

Introduction

After balancing its budget for two years with one-time revenue sources that were

exhausted in 2009, Lebanon implemented a series of bold measures in 2010 that turned the city’s

finances around by 2011. Lebanon officials reigned in deficits by using a combination of tax

increases and cost reductions, including the elimination of 17 jobs and cuts to non-personnel

spending such as supplies, materials, maintenance and repairs. The City went from an almost

$1.2 million operating budget shortfall in 2009 to a $617,394 surplus in 2011. Lebanon’s efforts

to improve city finances without resorting to borrowing or the use of additional one-time

revenues are commendable.

Methodology

PEL compiled this historical review on Lebanon’s general fund through analysis of year-

end financial reports, independent audits, annual budgets, debt obligation documents, salary and

benefit data, pension obligations and other financial obligations, as well as interviews with City

officials.

Revenues and Expenditures

Lebanon’s revenues and expenditures both declined from 2007 to 2011. The City showed

surpluses in 2007 and 2008 of $581,592 and $82,616, respectively. However, the surplus shifted

to a deficit in 2009, when revenues dropped to just over $9.8 million and expenditures grew to

$11 million. The situation improved in 2010 when the deficit shrank from approximately $1.2

million in 2009 to $601,628. In 2011, fiscal actions taken by City officials resulted in a $617,396

surplus. Overall, revenues fell from 2007 to 2011 by 3.8 percent, declining from $11.2 million to

$10.8 million. Expenses decreased even more, falling by 4.4 percent from $10.6 million in 2007

to $10.2 million in 2011. (See Table 3-1 and Graphs 3-1 and 3-2.)

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Pennsylvania Economy League, Central PA Division 3-2

Table 3-1

CITY OF LEBANON Revenues and Expenditures, Yearly Surplus/Deficit

2007 through 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Revenues $11,216,371 $10,296,662 $9,856,597 $9,973,144 $10,787,347 -429,024 -3.8 Expenditures 10,634,779 10,214,046 11,024,477 10,574,772 10,169,953 -464,826 -4.4 Surplus/Deficit $581,592 $82,616 -$1,167,880 -$601,628 $617,394 35,801 6.2

Graph 3-1 CITY OF LEBANON

Yearly Surplus (Deficit) 2007 through 2011

$581,592

$82,616

-$1,167,880

-$601,628

$617,394

-$2,000,000

-$1,500,000

-$1,000,000

-$500,000

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

2007 2008 2009 2010 2011

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-3

Graph 3-2 CITY OF LEBANON

Annual Revenue and Expenditure Change 2007 through 2011

Annual Revenue Change $

Annual Expenditure Change $

-$1,000,000

-$800,000

-$600,000

-$400,000

-$200,000

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

Annual Revenue Change $ -919,709 -440,065 116,547 814,203

Annual Expenditure Change $ -420,733 810,431 -449,706 -404,818

2008 2009 2010 2011

Deficits and One-Time Revenues

Although Lebanon experienced surpluses in 2007 and 2008, the City was only able to

remain in the black for those years through the use of one-time funding sources, as well as the

use of City of Lebanon Authority revenue and insurance reimbursements that Lebanon received

in 2007 and for several years prior. Without those funds, Lebanon would have seen deficits in

both 2007 and 2008 of over $1.6 million. In 2009, once the authority revenues and one-time

asset sales were exhausted, the surplus quickly turned to a deficit. Tax increases in 2010 and

2011, along with spending cuts in those same years, worked to erase the deficits. Lebanon’s 2010

revenues increased by 1.2 percent and expenditures decreased by 4.1 percent compared to 2009

levels. The trend continued in 2011, when annual revenues grew by 8.2 percent and yearly

expenditures fell by 3.8 percent. (See Table 3-2 and Graph 3-3.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-4

Table 3-2

CITY OF LEBANON Yearly Surplus/Deficit Without One Time Revenues

2007 - 2011

2007 2008 2009 2010 2011 Actual Actual Actual Actual Actual Surplus/Deficit $581,592 $82,616 -$1,167,880 -$601,628 $617,394 One Time Events Sale of Property, Vehicles, Equip., Land $785,900 $16,400 $5,109 $2,156 — Sewer Fund Excess Capacity $358,250 $1,717,419 — — —

Authority Transfers $1,079,962 $2,791 — — —

Donations from Private Sources — $351,958 $5,639 — —

Prior Year Expense Adjustment — -314,809 -53,465 2,333 -118,201 Total Adjustments $2,224,112 $1,773,759 -$42,717 $4,489 -$118,201 Surplus/Deficit without One-time Events -$1,642,519 -$1,691,143 -$1,125,163 -$606,117 $735,594

Graph 3-3 CITY OF LEBANON

Yearly Surplus (Deficit) Without One-Time Occurrences 2007 - 2011

-$1,642,519 -$1,691,143

-$1,125,163

-$606,117

$735,594

-$2,000,000

-$1,500,000

-$1,000,000

-$500,000

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual

Surplus/Deficit without One-Time Occurrences

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-5

Revenue Components

Total General Fund Taxes

Total tax revenue dropped from $6.1 million in 2007 to $5.7 million in 2008 before

rebounding to $7.1 million in 2009 and climbing steadily through 2011, ending at $7.9 million.

The change from 2007 to 2011 was $1.7 million or an increase of 28.0 percent.

Tax revenue as a percentage of total revenue jumped from approximately 55 percent in

2007 and 2008 to about 72 percent from 2009 through 2011 once City of Lebanon Authority

payments and one-time revenues were eliminated. (See Tables 3-3 and 3-4 and Graph 3-4.)

Table 3-3

CITY OF LEBANON Total Revenues

2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Tax Revenue $6,142,462 $5,715,768 $7,106,224 $7,203,026 $7,860,297 1,717,835 28.0 Non Tax Revenue 5,073,909 4,580,894 2,750,373 2,770,117 2,927,050 -2,146,859 -42.3 Total $11,216,371 $10,296,662 $9,856,597 $9,973,144 $10,787,347 -429,024 -3.8

Graph 3-4

CITY OF LEBANON Percentage of Total Revenues from Tax and Non-Tax Sources

2007 - 2011

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Tax Revenue 54.8 55.5 72.1 72.2 72.9

Non Tax Revenue 45.2 44.5 27.9 27.8 27.1

2007 2008 2009 2010 2011

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-6

Table 3-4 CITY OF LEBANON

General Fund – Revenue by Source 2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Real Property Taxes $1,957,803 $2,091,624 $2,044,354 $2,890,929 $2,963,594 1,005,791 51.4 EIT 3,292,362 2,934,106 4,460,084 3,766,524 4,262,736 970,374 29.5 Local Service Tax 543,202 452,491 433,023 367,972 474,332 -68,870 100.0 Enabling Taxes 349,095 237,547 168,763 177,601 159,635 -189,460 -54.3 Licenses and Permits 429,302 430,426 429,303 395,482 459,157 29,855 7.0 Fines and Forfeits 558,918 557,231 565,663 500,258 482,563 -76,355 -13.7 Interest Income and Rents 125,475 105,583 158,649 117,049 133,856 8,382 6.7 Intergovernmental Revenues 1,002,328 883,577 929,276 868,878 1,315,618 313,289 31.3 Revenues from Services 476,875 491,042 427,152 626,158 492,188 15,314 3.2 Miscellaneous Revenue 1,196,861 559,025 100,221 117,802 47,369 -1,149,493 -96.0 Sale of Fixed Assets 1,144,150 1,733,819 5,109 2,156 0 -1,144,150 -100.0 Transfers 140,000 135,000 135,000 140,000 114,500 -25,500 -18.2 Refund of Prior Year Expense 0 -314,809 0 2,333 -118,201 -118,201 100.0 Total $11,216,371 $10,296,662 $9,856,597 $9,973,144 $10,787,347 -$429,024 -3.8

Real Estate Taxes and Assessments

Despite a 28.7 percent rise in Lebanon’s market value from 2005 to 2012 as estimated by

the State Tax Equalization Board, Lebanon County’s assessed value for the City increased by

less than one percent. As a result, the City was unable to capture market value growth that might

have lessened the need for property tax increases or reduced the amount of property tax increases

that were required to meet expenses. (See Table 3-5 and Graph 3-5.)

Table 3-5 CITY OF LEBANON

Real Estate Market Value, Assessed Value, Mills, Tax Levy and Collection Rate 2005 through 2011

Year Market Value Assessed Value Millage Tax Amount Current RE Taxes

Collected* % Collected

2005 $508,629,000 $122,074,100 17.00 $2,075,260 $1,938,380 93.4

2006 $569,942,000 $121,976,800 15.86 $1,934,552 $1,766,775 96.8

2007 $565,727,700 $121,178,900 15.86 $1,921,897 $1,849,476 97.0

2008 $613,753,227 $121,309,700 17.00 $2,062,265 $1,966,407 97.2

2009 $619,285,887 $122,330,900 17.00 $2,079,625 $1,891,287 93.3

2010 $655,237,181 $122,325,000 24.00 $2,079,525 $2,727,717 91.9

2011 $654,498,323 $122,249,200 25.00 $3,056,230 $2,783,331 93.6

*Does not include delinquent tax

collections

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-7

Graph 3-5 CITY OF LEBANON

Real Estate Market Value and Assessed Value 2005 — 2011

$0

$100,000,000

$200,000,000

$300,000,000

$400,000,000

$500,000,000

$600,000,000

$700,000,000

$800,000,000

$900,000,000

$1,000,000,000

2005 2006 2007 2008 2009 2010 2011

Market Value

Assessed Value

The City’s real estate tax was 15.86 mills in 2007. The real estate tax was increased to

17.00 mills in 2008, which then became the assumed millage cap for 2009 and 2010 under the

City’s Home Rule Charter. The applicable Charter language is as follows:

“Subject and rates of taxation in the City shall be those allowable under the Third (3rd)

Class City Code of the Commonwealth of Pennsylvania on the effective date of this Charter and

those allowable from time to time under the general law and other laws of the Commonwealth

applicable to the City of the Third (3rd) Class except as follows: 1. Real Estate – The rate of

taxation on real estate shall not be increased during the first two (2) years of the operation of this

government and thereafter and then the same shall not increase by more than two mills (2) unless

approved through action of Public Referendum.”

In order to close a funding gap in the City’s 2010 budget, Lebanon sought and received

Court approval to raise the tax rate consistent with the state’s Third Class City Code. The City

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-8

increased the tax rate to 24 mills in 2010 and to 25 mills in 2011. Twenty-five mills is the

maximum property tax rate allowed under the Third Class City Code.

The increase in millage rates resulted in substantial growth in Lebanon’s real estate tax

revenue. Collections surged from a low of just under $2 million in 2007 to a high of almost $3

million in 2011, an increase of $1 million or 51.4 percent. (See Table 3-6 and Graph 3-6.)

Table 3-6 CITY OF LEBANON Tax Revenue by Source

2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Real Estate Taxes $1,957,803 $2,091,624 $2,044,354 $2,890,929 $2,963,594 1,005,791 51.4 Real Estate Transfer Tax 338,381 227,442 161,311 169,922 152,143 -186,238 -55.0 Earned Income Tax 3,292,362 2,934,106 4,460,084 3,766,524 4,262,736 970,374 29.5 LST Tax 543,202 452,491 433,023 367,972 474,332 -68,870 -12.7 Other Enabling Taxes 10,714 10,105 7,452 7,679 7,492 -3,222 -30.1 Total $6,142,462 $5,715,768 $7,106,224 $7,203,026 $7,860,297 1,717,835 28.0

Graph 3-6 CITY OF LEBANON

Real Estate Taxes and Total Taxes 2007 - 2011

$0

$2,500,000

$5,000,000

$7,500,000

$10,000,000

Real Estate Taxes $1,957,803 $2,091,624 $2,044,354 $2,890,929 $2,963,594

Tax Revenue $6,142,462 $5,715,768 $7,106,224 $7,203,026 $7,860,297

2007 2008 2009 2010 2011

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-9

As a result of the three real estate tax increases, property taxes as a percentage of total

taxes jumped from 31.9 percent in 2007 to 37.7 percent in 2011. Despite the growth, Lebanon

continues to receive more revenue from the earned income tax than from the property tax. (See

Table 3-7 and Graph 3-7.)

Table 3-7 CITY OF LEBANON

Tax Revenue as Percentage of Total Taxes 2007 - 2011

2007 2008 2009 2010 2011 Actual Actual Actual Actual Actual Real Estate Taxes 31.9 36.6 28.8 40.1 37.7 Real Estate Transfer Tax 5.5 4.0 2.3 2.4 1.9 Earned Income Tax 53.6 51.3 62.8 52.3 54.2 LST Tax 8.8 7.9 6.1 5.1 6.0 Other Enabling Taxes 0.2 0.2 0.1 0.1 0.1 Total 100.0 100.0 100.0 100.0 100.0

Graph 3-7 CITY OF LEBANON

Tax Revenue Sources as Percentage of Total Taxes 2007 - 2011

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual

Earned Income Tax Real Estate Taxes LST Tax Real Estate Transfer Tax Mechanical Device Tax

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-10

Non Real Estate (Act 511) Taxes

The City levies earned income, real estate transfer, local services and mechanical devices

taxes. The earned income tax is 1.4 percent. The local services tax is $47 annually, and the

realty transfer tax is 0.5 percent.

As noted above, earned income is Lebanon’s most productive tax, accounting for over 50

percent of total tax revenues from 2007 to 2011. During the review period, earned income tax

amounts varied, starting at $3.3 million in 2007, decreasing to $2.9 million in 2008, and then

hitting the highest point at almost $4.5 million in 2009. In 2010, the earned income tax declined

to just under $3.8 million before rebounding to almost $4.3 million in 2011.

The Lebanon County Earned Income Tax Bureau mistakenly over compensated or under

compensated county municipalities and school districts for earned income taxes from 2004

through 2007. It is estimated that the City was under paid earned income tax of $1.4 million. As

a result of the underpayment, Lebanon City entered into an agreement in 2011 to receive the

money due over ten years. However, not all of the impacted school districts and municipalities

have agreed to the deal. The City intends to take legal action to recover the funds if necessary.

The real estate transfer tax, which reflects activity in the City’s real estate market,

reached its highest point in 2007 at $338,381. The tax then began a steady decline, ultimately

dropping to $152,143 in 2011. The real estate transfer tax represented 5.5 percent of total taxes

in 2007 but became less of a factor in 2011 when it declined to 1.9 percent of total taxes. In fact,

from 2007 to 2011, the tax decreased by $186,238 or 55.0 percent.

The local services tax is levied on residents and nonresidents working within the City.

The maximum rate that a municipality can charge for the tax is $52. Under state law, a school

district located within a municipality is eligible to receive up to $5 of that amount. In the case of

the City of Lebanon, the Lebanon School District collects $5, which caps the City at $47. Based

on the average receipts for the review period, over 9,000 employees were paying the tax each

year.

Local services tax collection peaked in 2007 at $543,202. Revenues fell over the next

three years to a low of $367,972 in 2010. Collections rebounded to $474,332 in 2011, but the

amount received was down by 12.7 percent or $68,870 from 2007. As a percentage of total taxes,

the local services tax ranks third, remaining at under 10 percent of total taxes from 2007 to 2011.

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-11

Non-Tax Revenue Non-tax revenue totaled $5 million in 2007 or 45.2 percent of total revenue. Receipts

dipped in 2008 before falling significantly in 2009, remaining at about 27 percent of total

revenue through 2011, when the amount collected was just under $3 million. Decreases of over

$2 million in two non-tax revenue categories, miscellaneous revenue and the sale of fixed assets,

accounted for much of the decline.

Sales of fixed assets ballooned in 2007 and 2008, with over $1.1 million and $1.7 million

collected, respectively, due to one-time sales of City property and of excess sewer capacity. In

2009, the sale of fixed assets plummeted to $5,109 and eventually hit zero in 2011.

Miscellaneous revenue peaked in 2007 at almost $1.2 million. At the time, the City

covered authority employees under its insurance policies and was reimbursed for the expense

under miscellaneous revenue. The reimbursement for 2007 was $476,335. In addition, the City

received authority revenue of $603,626 in 2007. Payments from the authority were eliminated in

2008. Miscellaneous revenue that year dropped to $559,025 but included a one-time contribution

of $352,000 for the Schropp Estate Fund. By 2009, miscellaneous revenue had plunged to

$100,221 with most of the funds coming from insurance proceeds. The category eventually fell

to $47,369 in 2011.

As discussed previously, it was the use of one-time fixed asset sales and miscellaneous

revenue from the authority that kept Lebanon from sinking into a deficit in 2007 and 2008.

Transfers, which is money the City uses from the federal Community Development

Block Grant fund for community policing, decreased by 18.2 percent or $118,201 from $140,000

in 2007 to $114,500 in 2011.

Intergovernmental revenue was the only non-tax category to experience significant

growth, increasing by 31.3 percent or $313,289 from 2007 to 2011. However, intergovernmental

revenue for 2008 through 2010 was actually lower than the $1 million collected in 2007, and

much of the spike in 2011 is attributed to additional one-time state aid for police and fire

pensions. There was modest growth in licenses and permits, interest income and rents, and

revenue from services of less than 10 percent. (See Table 3-8)

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Pennsylvania Economy League, Central PA Division 3-12

Table 3-8 CITY OF LEBANON

Non-Tax Revenue by Source 2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Licenses and Permits $ 429,302 $ 430,426 $ 429,303 $ 395,482 $459,157 29,855 7.0 Fines and Forfeits 558,918 557,231 565,663 500,258 482,563 -76,355 -13.7 Interest Income and Rents 125,475 105,583 158,649 117,049 133,856 8,382 6.7 Intergovernmental Revenues 1,002,328 883,577 929,276 868,878 1,315,618 313,289 31.3 Revenues from Services 476,875 491,042 427,152 626,158 492,188 15,314 3.2 Miscellaneous Revenue 1,196,861 559,025 100,221 117,802 47,369 -1,149,493 -96.0 Sale of Fixed Assets 1,144,150 1,733,819 5,109 2,156 0 -1,144,150 -100.0 Transfers 140,000 135,000 135,000 140,000 114,500 -25,500 -18.2 Refund of Prior Year Expense 0 -314,809 0 2,333 -118,201 -118,201 -100.0 Total $5,073,909 $4,580,894 $2,750,373 $ 2,770,117 $2,927,050 -2,146,859 -42.3

Percentage of Total Non-Tax Revenue Licenses and Permits 8.5 9.4 15.6 14.3 15.7 Fines and Forfeits 11.0 12.2 20.6 18.1 16.5 Interest Income and Rents 2.5 2.3 5.8 4.2 4.6 Intergovernmental Revenues 19.8 19.3 33.8 31.4 44.9 Revenues from Services 9.4 10.7 15.5 22.6 16.8 Miscellaneous Revenue 23.6 12.2 3.6 4.3 1.6 Sale of Fixed Assets 22.5 37.8 0.2 0.1 0.0 Transfers 2.8 2.9 4.9 5.1 3.9 Refund of Prior Year Expense 0 -6.9 0 0.1 -4.0 Total 100.0 100.0 100.0 100.0 100.0

Expenditure Components

Departmental Expenditures

Lebanon’s departmental expenses generally declined or remained flat from 2007 to 2011

because of substantial efforts to reduce or hold the line on costs that were driving deficits. The

most significant decrease was in Public Works, which dropped by 39.4 percent or $604,354 from

2007 to 2011. Spending in the Police and Administration departments inched up in 2009 and

2010, but expenditures decreased in 2011 to end relatively flat in comparison to 2007. Police

Department expenses grew by 1.0 percent or $38,400, from just under $4 million in 2007 to just

over $4 million in 2011. Administration Department costs for the review period declined by 0.9

percent or $27,313, remaining at around $2.9 million for both 2007 and 2011. The Public Safety

Department, which includes the Bureau of Fire, was the only department to experience any

significant increase. Expenses in the department rose by 5.9 percent or $128,442, increasing

from approximately $2.2 million in 2007 to $2.3 million in 2011. (See Table 3-9 and Graph 3-8.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-13

Table 3-9 CITY OF LEBANON

Expenditures by Department 2007 - 2011

Change 2007 -2011

Department 2007

Actual 2008

Actual 2009

Actual 2010

Actual 2011

Actual $ %

Administration $2,946,026 $2,489,630 $3,099,974 $3,146,653 $2,918,712 -27,313 -0.9

Police 3,995,129 4,023,401 4,205,415 4,225,663 4,033,529 38,400 1.0

Fire/Public Safety 2,159,466 2,256,133 2,367,905 2,227,872 2,287,908 128,442 5.9

Public Works 1,534,159 1,444,882 1,351,183 974,584 929,805 -604,354 -39.4

Total $10,634,779 $10,214,046 $11,024,477 $10,574,772 $10,169,953 -464,826 -4.4

Graph 3-8 CITY OF LEBANON

Expenditures by Department 2011

Police$4,033,529

40%

Administration$2,918,712

29%

Fire/Public Safety$2,287,908

22%

Public Works$929,805

9%

Police Department

The Police Department is Lebanon’s largest departmental expense, with the patrol

division accounting for more than half of the department’s total costs. Spending for patrol rose

several hundred thousand dollars in 2009 and 2010 but dropped back to 2007 and 2008 levels in

2011. The change between 2007 and 2011 spending was less than one percent, remaining at

about $2.5 million. Expenses rose for the city/county narcotics team, up by 23.0 percent over the

period from $131,606 in 2007 to $161,917 in 2011, and support services, which increased by

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Pennsylvania Economy League, Central PA Division 3-14

23.4 percent from $158,335 in 2007 to $195,442 in 2011. The majority of other expenditures

declined during the review period. (See Table 3-10.)

Table 3-10 CITY OF LEBANON

Police Department Expenditures 2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Headquarters Staff $515,557 $501,820 $344,489 $418,302 $487,253 -28,304 -5.5 Detectives 452,008 462,650 429,014 421,006 426,833 -25,174 -5.6 Patrol 2,452,399 2,470,236 2,797,360 2,726,683 2,472,272 19,873 0.8 Dispatchers 165,200 171,022 184,437 187,580 176,213 11,013 6.7 Record Clerks 37,546 30,913 35,696 35,868 35,572 -1,973 -5.3 Support Services 158,335 168,299 185,770 192,713 195,442 37,107 23.4 City/County Narcotics TM 131,606 138,467 149,511 160,584 161,917 30,312 23.0 Humane Officer & Assistant 2,644 2,454 1,691 1,271 1,271 -1,373 -51.9 Education Services 79,835 77,540 77,447 81,656 76,754 -3,081 -3.9 Total $3,995,129 $4,023,401 $4,205,415 $4,225,663 $4,033,529 38,400 1.0

Public Safety/Fire Bureau

In Public Safety, Bureau of Fire expenses experienced the largest increase, rising by 15.2

percent or $276,899 from $1.8 million in 2007 to $2 million in 2011. Costs for Fire Stations #1,

#2 and #3 jumped by 75 percent or more from 2007 to 2011. Health and housing declined by

57.2 percent or $175,934, primarily due to the 2010 employee reduction, as well as decreases in

expenses for vehicles and contracted services. Expenses in health and housing fell from

$307,309 in 2007 to $131,375 in 2011. (Table 3-11.)

Table 3-11 CITY OF LEBANON

Public Safety/Fire Bureau Department Expenditures 2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Fire Station #1 $16,070 $22,750 $17,114 $0 $29,110 13,040 81.1 Fire Station #2 10,955 12,656 10,567 0 19,101 8,147 74.4 Fire Station #3 5,577 10,387 6,555 0 11,867 6,290 112.8 Bureau of Fire 1,819,555 1,975,611 2,114,474 2,104,383 2,096,454 276,899 15.2 Health & Housing 307,309 234,729 219,195 123,489 131,375 -175,934 -57.2 Total $2,159,466 $2,256,133 $2,367,905 $2,227,872 $2,287,908 128,442 5.9

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-15

Total Taxes and Public Safety Services

Police Department and Public Safety/Fire Bureau costs exceeded the amount collected

for total taxes in 2007 and 2008 by $12,133 and $563,766, respectively. The trend signaled

growing fiscal problems since departmental expenses for the two categories amount to

approximately 60 percent of total expenses. However, the situation was turned around by 2009

when real estate millage increases, combined with higher collections of earned income taxes,

resulted in public safety services expenditures that were less than total taxes collected. The gap

between total taxes and total amount spent on police, fire and public safety continued to widen

over the next two years, indicating a more healthy financial position for the City. By 2011,

Lebanon collected $1.5 million more in total taxes than spending in the two departments. (See

Table 3-12 and Graph 3-9.)

Table 3-12

CITY OF LEBANON Total Taxes, and Police, Public Safety/Fire Expenditures

2007 - 2011

2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual

Total Taxes $6,142,462 $5,715,768 $7,106,224 $7,203,026 $7,860,297

Total Police, Public Safety/Fire 6,154,595 6,279,534 6,573,320 6,453,534 6,321,437

Difference -$12,133 -$563,766 $532,904 $749,492 $1,538,860

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-16

Graph 3-9

CITY OF LEBANON Total Taxes and Police, Public Safety and Fire Costs

2007 - 2011

$0

$2,500,000

$5,000,000

$7,500,000

$10,000,000

Public Safety/Fire Expenditures $2,159,466 $2,256,133 $2,367,905 $2,227,872 $2,287,908

Police Expenditures $3,995,129 $4,023,401 $4,205,415 $4,225,663 $4,033,529

Total Taxes $6,142,462 $5,715,768 $7,106,224 $7,203,026 $7,860,297

2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual

Administration Department

The Administration Department saw the most significant growth in Insurance and Other

Benefits, which increased from almost $1.7 million in 2007 to just over $2.0 million in 2011, a

growth of $354,338 or 21.0 percent. Data Processing expenditures rose by 67.8 percent or

$26,733 after the City entered into an annual maintenance agreement. Most other categories

decreased, including various recreation and parks line items, some of which were moved to

Public Works, and executive, legislative and administrative costs, which declined by $120,120 or

22.7 percent. Expenses fell by $107,200 after 2007 when employees who processed tax

collections were eliminated as the county took over that function. Debt repayment decreased by

52.4 percent or $64,638. Debt costs fluctuated considerably from a high of $123,371 in 2007 to a

low of $16,806 in 2008. City debt payments include costs associated with a County bond issue,

which was floated in 2009. Administration costs also included one-time transfers for the Bridge

over Norfolk South of $219,565 in 2009 and $48,656 in 2010. (See Table 3-13.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-17

Table 3-13

CITY OF LEBANON Administration Department Expenditures

2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Exec./Legis./Admin. $529,930 $467,329 $353,245 $359,759 $409,810 -120,120 -22.7 Culture & Rec.Contributions 67,500 74,500 74,500 74,500 76,500 9,000 0.0 Culture - Recreation 13,269 208 49 0 0 -13,269 -100.0 Swimming Pool 85,194 69,401 75,321 78,155 73,502 -11,691 -13.7 Stoevers Dam 13,793 11,166 10,895 11,575 11,585 -2,208 -16.0 Financial 218,798 118,903 184,482 215,516 167,293 -51,505 -23.5 Insurance & Other Benefits 1,684,387 1,573,116 1,980,955 2,166,265 2,038,725 354,338 21.0 Data Processing 39,406 79,208 65,913 63,880 66,139 26,733 67.8 Tax Collection Employees 107,200 0 0 0 0 -107,200 -100.0 Real Estate Tax Collection 11,011 33,260 11,359 12,672 13,139 2,128 19.3 Debt Repayment 123,371 16,806 47,928 100,469 58,734 -64,638 -52.4 Parks & Playground 47,165 45,701 22,297 15,205 0 -47,165 -100.0 Interfund Operating Transfers 5,000 32 219,565 48,656 3,285 -1,715 -34.3 Total $2,946,026 $2,489,630 $3,046,509 $3,146,653 $2,918,712 -27,313 -0.9

Public Works

Large decreases were recorded in Public Works due to employee reductions in 2010.

Expenses plummeted by 39.4 percent or $604,354 from 2007 to 2011. Declines were steady over

the five years, starting at $1.5 million in 2007, falling to $1.4 million in 2008 and $1.3 million in

2009, dropping again to $974,584 in 2010 and to $929,805 in 2011. Traffic control, highway

maintenance and repairs, and municipal building expenses fell by over 60 percent. Building and

zoning dropped by over 40 percent. Highway general services and other expenses related to

Public Works, primarily recycling, declined by almost 20 percent. Costs shrank despite the fact

that expenses for parks and playgrounds totaling $144,276 were moved from Administration to

Public Works in 2011. Engineering experienced the only significant increase in Public Works,

growing by 16.9 percent or $22,139, from $130,925 in 2007 to $153,065 in 2011. (See Table 3-

14.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-18

Table 3-14 CITY OF LEBANON

Public Works Department Expenses 2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Engineering $130,925 $145,561 $149,811 $163,020 $153,065 22,139 16.9 Highway General Services 196,171 188,585 252,667 100,923 159,204 -36,967 -18.8 Traffic Control 294,700 355,037 146,699 99,279 102,241 -192,459 -65.3 Highway Maintenance & Repairs 386,194 269,500 245,244 163,836 119,972 -266,222 -68.9 Street Cleaning 0 122 0 0 0 0 0.0 Parks and Playgrounds 0 0 0 9,336 144,276 144,276 100.0 Municipal Building 353,384 327,879 385,623 289,738 134,364 -219,021 -62.0 Building & Zoning 103,970 107,922 118,153 96,769 59,550 -44,420 -42.7 Shade Trees 0 0 20 0 0 0 0.0 Recycling Expense 68,814 50,276 52,966 51,683 57,133 -11,681 -17.0 Total $ 1,534,159 $1,444,882 $ 1,351,183 $ 974,584 $ 929,805 - 604,354 -39.4

Personnel vs. Non-Personnel Expenditures

Personnel costs rose by 5.4 percent or $453,067 from 2007 to 2011, increasing from $8.4

million in 2007 to $8.8 million in 2011, peaking at $9 million in 2009. As previously noted, City

officials eliminated 17 positions in 2010 and instituted a wage freeze in 2011 in order to control

costs and overcome budget deficits. The result was a decline in personnel spending in 2010 and

2011.

Both non-personnel expenditures and debt service dropped dramatically from 2007 to

2011, decreasing by 39.8 percent and 52.4 percent, respectively. The City’s non-personnel costs

hit their peak at $2.1 million in 2007 then steadily declined to $1.3 million in 2011. Debt service

also peaked in 2007 at $123,371, and then fluctuated somewhat before ending at $58,734 in

2011. Transfers primarily reflected the City’s five percent share for the bridge over Norfolk

South project, with payments made in 2009 and 2010. (See Table 3-15 and Graph 3-10.)

Table 3-15 CITY OF LEBANON

Personnel, Non-Personnel, Debt Service and Transfers 2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Personnel $8,368,184 $8,482,487 $9,044,361 $8,831,391 $8,821,251 453,067 5.4 Non-personnel 2,138,224 1,714,721 1,712,623 1,594,256 1,286,683 -851,540 -39.8 Debt Service 123,371 16,806 47,928 100,469 58,734 -64,638 -52.4 Transfers 5,000 32 219,565 48,656 3,285 -1,715 -34.3 Total $10,634,779 $10,214,046 $11,024,477 $10,574,772 $10,169,953 -464,826 -4.4

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-19

Graph 3-10 CITY OF LEBANON

Personnel, Non-Personnel, Debt Service and Transfers 2011

Personnel86.74%

Debt Service0.58%

Transfers0.03%

Non-personnel12.65%

As a percentage of total expenditures, personnel costs increased from 78.7 percent in

2007 to 86.7 percent in 2011. Non-personnel costs steadily fell from 20.1 percent in 2007 to 12.7

percent in 2011. Debt service was 1.2 percent of total revenue in 2007 and ended 2011 at 0.6

percent of total revenue. (See Table 3-16.)

Table 3-16

CITY OF LEBANON Personnel, Non-Personnel, Debt Service and Transfers

as a Percentage of Total Expenditures 2007 - 2011

2007 2008 2009 2010 2011 Actual Actual Actual Actual Actual Personnel 78.7 83.0 82.0 83.5 86.7 Non-personnel 20.1 16.8 15.5 15.1 12.7 Debt Service 1.2 0.2 0.4 1.0 0.6 Transfers 0.0 0.0 2.0 0.5 0.0 Total 100.0 100.0 100.0 100.0 100.0

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-20

Personnel Expenses

Salaries and wages, which are Lebanon’s highest personnel cost, dropped by 6.3 percent

or $314,096 from 2007 to 2011, reflecting the employee reduction in 2010 and wage freeze in

2011. In 2007, salaries and wages were almost at $5 million. They steadily fell to $4.6 million by

2011. Part-time employee costs, FICA and other employee expenses also decreased. Legacy

costs rose considerably from 2007 to 2011, particularly for retiree medical benefits, which

surged by 71.8 percent or $309,883. Pension costs increased by 38.5 percent or $282,554 from

$734,449 to $1.0 million. Health insurance for active employees also grew, rising from $910,973

in 2007 to $1.1 million in 2011 for a 15.3 percent increase. Other more nominal increases came

in life insurance, workers’ compensation and overtime. Volunteer fire relief expenditures, which

are a pass through revenue from the state, also increased. (See Table 3-17.)

Table 3-17 CITY OF LEBANON

Personnel Expenditures by Type 2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Salaries & Wages $4,953,998 $4,914,904 $4,887,693 $4,803,532 $4,639,903 -314,096 -6.3 Part Time Employees 173,136 187,683 194,228 133,997 149,065 -24,071 -13.9 Overtime 583,689 684,451 587,233 585,862 619,215 35,526 6.1 FICA 213,690 210,820 202,597 195,291 194,113 -19,577 -9.2 Health Insurance 910,973 876,612 1,176,543 1,096,317 1,050,572 139,600 15.3 Medical Benefit Retirees 431,867 503,026 680,135 705,034 741,750 309,883 71.8 Life Insurance 14,614 14,273 18,038 15,621 15,093 479 3.3 Life Insurance - Retirees 1,116 1,085 1,266 1,869 1,899 783 70.2 Pension 734,449 762,944 947,261 939,320 1,017,003 282,554 38.5 Volunteer Fire Relief 91,103 91,734 79,855 80,251 135,184 44,081 48.4 Workers' Compensation 188,457 180,045 214,810 225,417 216,545 28,089 14.9 Other Employee Expense 71,091 54,910 54,702 48,882 40,911 -30,181 -42.5 Total $8,368,184 $8,482,487 $9,044,361 $8,831,391 $8,821,251 453,067 5.4

Salaries and wages represented more than half of total expenditures, ranging from a high

of 59.2 percent in 2007 to a low of 52.6 percent in 2011. Employee health insurance was the next

highest percentage of total expenditures, varying from a low of 10.3 percent of total expenditures

in 2008 to a high of 13.0 percent in 2009. Pension costs ranged from 8.8 percent of total

expenditures in 2007 to 11.5 percent in 2011. Medical benefits for retirees and overtime were the

only other areas that were above five percent of total expenditures from 2007 to 2011. Retiree

medical benefits steadily grew from 5.2 percent to 8.4 percent. Overtime fluctuated, beginning

and ending at 7.0 percent, with the highest point in 2008 at 8.1 percent, dropping to 6.5 percent

in 2009 and 6.6 percent in 2010. (See Table 3-18.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 3-21

Table 3-18 CITY OF LEBANON

Percentage of Personnel Expenditures by Type 2007 - 2011

2007 2008 2009 2010 2011 Actual Actual Actual Actual Actual Salaries & Wages 59.2 57.9 54.0 54.4 52.6 Part Time Employees 2.1 2.2 2.1 1.5 1.7 Overtime 7.0 8.1 6.5 6.6 7.0 FICA 2.6 2.5 2.2 2.2 2.2 Health Insurance 10.9 10.3 13.0 12.4 11.9 Medical Benefit Retirees 5.2 5.9 7.5 8.0 8.4 Life Insurance 0.2 0.2 0.2 0.2 0.2 Life Insurance - Retirees 0.0 0.0 0.0 0.0 0.0 Pension 8.8 9.0 10.5 10.6 11.5 Volunteer Fire Relief 1.1 1.1 0.9 0.9 1.5 Workers' Compensation 2.3 2.1 2.4 2.6 2.5 Other Employee Expense 0.8 0.6 0.6 0.6 0.5 Total 100.0 100.0 100.0 100.0 100.0

Non-Personnel Expenses

Insurance costs experienced the steepest dollar decline in non-personnel spending,

shrinking from $504,667 in 2007 to $260,405 in 2011, a decrease of 48.4 percent or $244,262.

Costs declined after Lebanon stopped providing insurance coverage for authority employees.

Vehicle expenses came in second, falling from $279,334 to $142,359, a drop of 49.0 percent or

$136,976. Materials and supplies, repairs and maintenance, and capital expenses all decreased

during the review period by 60 percent or more, although the dollar amounts were less than those

for insurance and vehicles. Contracted services and utilities experienced modest increases during

the review period of 10.7 percent and 9.7 percent, respectively. Contributions held fairly steady

at approximately $130,000 annually. All other non-personnel expenses fluctuated but ended the

review period down significantly, from $475,917 in 2007 to $153,931 in 2011, a decrease of

$321,986 or 67.7 percent. (See Table 3-19.)

Table 3-19 CITY OF LEBANON

Non-Personnel Expenditures by Type 2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Contracted Services $280,694 $232,214 $221,823 $227,018 $310,796 30,102 10.7 Insurance 504,667 291,400 265,798 369,605 260,405 -244,262 -48.4 Utility 200,412 212,172 157,981 292,209 219,770 19,358 9.7 Vehicle Expense 279,334 239,123 190,514 142,135 142,359 -136,976 -49.0 Contributions 131,992 136,402 136,177 124,179 131,244 -748 -0.6 Materials & Supplies 113,380 81,832 202,165 83,574 44,360 -69,019 -60.9 Repairs & Maintenance 82,937 82,347 88,449 48,006 23,819 -59,118 -71.3 Capital 68,891 83,122 0 4,343 0 -68,891 -100.0 Other Expenditures 475,917 356,109 449,716 303,187 153,931 -321,986 -67.7 Total $2,138,224 $1,714,721 $1,712,623 $1,594,256 $1,286,683 -851,540 -39.8

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Pennsylvania Economy League, Central PA Division 3-22

City of Lebanon March 2013

As a percentage of non-personnel expenditures, contracted services jumped from 13.1

percent of the total in 2007 to 24.2 percent in 2011. Insurance, utilities and vehicle expenses

varied throughout the review period but accounted for the next largest group of non-personnel

expenses with the exception of other expenditures. (See Table 3-20.)

Table 3-20 CITY OF LEBANON

Percentage of Non-Personnel Expenditures by Source 2007 - 2011

2007 2008 2009 2010 2011 Actual Actual Actual Actual Actual Contracted Services 13.1 13.5 13.0 14.2 24.2 Insurance 23.6 17.0 15.5 23.2 20.2 Utility 9.4 12.4 9.2 18.3 17.1 Vehicle Expense 13.1 13.9 11.1 8.9 11.1 Contributions 6.2 8.0 8.0 7.8 10.2 Materials & Supplies 5.3 4.8 11.8 5.2 3.4 Repairs & Maintenance 3.9 4.8 5.2 3.0 1.9 Capital 3.2 4.8 0.0 0.3 0.0 Other Expenditures 22.3 20.8 26.3 19.0 12.0 Total 100.0 100.0 100.0 100.0 100.0

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CHAPTER 4

2012 ACTUAL AND BUDGET FULL YEAR COMPARISONS

Introduction

Lebanon’s 2012 budget initially estimated a deficit that the city planned to eliminate with

its fund balance. However, the City instead ended fiscal year 2012 with an estimated operating

surplus because of higher than anticipated revenues, particularly for the earned income tax, and

lower than expected expenses, mostly in the Police Department and Administration. The

estimated operating surplus is based upon the City’s financial reports as reviewed by PEL. These

pre-audit financial reports may be revised upon the review of the City’s independent auditor.

2012 Actual versus 2012 Budget Revenues and Expenditures

The City’s actual 2012 revenues were approximately $10.9 million, compared to the 2012

budget figure of $10.1 million, for an overall difference of $776,873 above budget. Actual

expenditures were down $475,417, or $10.3 million actually spent versus just under $10.8

million budgeted. As a result, Lebanon ended 2012 with a surplus of $583,445 as opposed to a

deficit of $668,845. Despite the variances between the budgeted and actual amounts, the City

generally remained within the acceptable projection range of 10 percent. (See Table 4-1 and

Graph 4-1.)

Table 4-1 CITY OF LEBANON

Revenues and Expenditures 2012 Actual and 2012 Budget

2012

Actual 2012

Budget Actual vs. Budget

$

Revenues $10,866,418 $10,089,545 776,873

Expenditures 10,282,973 10,758,390 -475,417

Surplus/(Deficit) $583,445 -$668,845 1,252,290

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Pennsylvania Economy League, Central PA Division 4-2

Graph 4-1 CITY OF LEBANON

Revenue, Expenditures and Surplus/(Deficit) 2012 Actual and 2012 Budget

$10,866,418$10,282,973

$583,445

$10,089,545$10,758,390

-$668,845

-$3,000,000

$0

$3,000,000

$6,000,000

$9,000,000

$12,000,000

2012 Actual 2012 Budget

Revenues Expenditures Surplus/(Deficit)

Revenues

Actual total revenues for 2012 were higher than budgeted for both taxes and non-taxes,

although the more significant difference was on the tax side. Actual taxes collected were $8.2

million compared to the budgeted amount of $7.6 million, an increase of $595,371 or 7.9

percent. Actual non-tax revenue was $181,502 or 7.2 percent more than budgeted at $2.7 million

compared to $2.5 million. (See Table 4-2.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 4-3

Table 4-2

CITY OF LEBANON Tax Revenue and Non Tax Revenue

2012 Actual and 2012 budget

Actual vs. Budget

2012

Actual 2012

Budget $ %

Tax Revenue $8,170,581 $7,575,210 595,371 7.9

Non Tax Revenue 2,695,837 2,514,335 181,502 7.2

Total Revenue $10,866,418 $10,089,545 776,873 7.7

Tax Revenue

Earned income tax came in the most over budget, at $4.5 million actual versus just under

$4 million budgeted, an increase of $503,661 or 12.6 percent. Although earned income tax

collections were slightly over the 10 percent range, one reason for the disparity was likely the

2012 payment to Lebanon of $179,000 under a 10-year agreement in which the City is being

compensated for underpayment of earned income taxes that occurred from 2004 through 2007.

The consolidation of collections under Act 32 might be another factor for the increased receipts.

Real estate taxes, the next most significant source of tax revenue, were almost right at the

budgeted level. Enabling taxes, including real estate transfer tax, were 51.0 percent or $87,968

over budget at $260,486 versus the budgeted figure of $172,500. The higher amount was the

result of two unanticipated large property transfers that are not expected to reoccur. (See Table 4-

3 and Graph 4-3.)

Table 4-3

CITY OF LEBANON Total Taxes

2012 Actual and 2012 Budget

Actual vs. Budget

2012

Actual 2012

Budget $ %

Real Estate Taxes $2,998,003 $3,021,974 -23,971 -0.8

Real Estate Transfer Tax 252,641 165,000 87,641 53.1

Earned Income Tax 4,488,163 3,984,502 503,661 12.6

LST Tax 423,930 396,234 27,696 7.0

Other Enabling Tax 7,845 7,500 345 4.6

Total Taxes $8,170,581 $7,575,210 595,371 7.9

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 4-4

Non-Tax Revenue

The City received $915,744 in intergovernmental revenues for 2012, an increase of 10.6

percent or $88,137 over the budgeted figure of $827,607. Fines and forfeits were also higher than

anticipated, at $484,350 budgeted compared to $529,136 actual, a difference of 9.2 percent or

$44,786. Miscellaneous revenue, revenues from services, and fines and forfeits collections were

greater than expected as well. The amounts received over budget were miscellaneous revenues,

$31,474; revenues from services, $22,186; and fines and forfeits, $44,786. Miscellaneous

revenues were higher primarily due to increased proceeds from insurance and donations from

private sources. Interest income and rents and transfers were slightly lower than budgeted. (See

Table 4-4.)

Table 4-4 CITY OF LEBANON

Non Tax Revenue 2012 Actual and 2012 Budget

Actual vs. Budget

2012

Actual 2012

Budget $ %

Licenses and Permits $438,907 $438,452 455 0.1

Fines and Forfeits 529,136 484,350 44,786 9.2

Interest Income and Rents 139,145 148,216 -9,071 -6.1

Intergovernmental Revenues 915,744 827,607 88,137 10.6

Revenues from Services 528,296 506,110 22,186 4.4

Miscellaneous Revenue 35,074 3,600 31,474 874.3

Sale of Fixed Assets 0 1,000 -1,000 -100.0

Transfers 93,000 105,000 -12,000 -11.4

Refund Prior Year Expense 16,535 0 16,535 0.0

Total

$2,695,837

$2,514,335 181,502 7.2

Expenditures

Departmental

Departmental expenditures as a whole were 4.4 percent under budget. Spending in the

Police Department, which accounts for over one-third of Lebanon’s total expenditures, was the

most significantly under budget. Actual costs for the department were $3.8 million compared to

the budgeted amount of $4.2 million, a difference of 9.1 percent or $382,908. Anticipated costs

were down across the board, but most significantly in patrol, detectives and the city/county

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 4-5

narcotics team. Administration expenditures were also lower than expected, with actual spending

at $2.8 million compared to $3.0 million budgeted, for a difference of $124,200 or 4.2 percent.

The most significant decrease was in insurance and other benefits, which was $98,506 lower than

expected. Actual spending was slightly higher than budgeted in Public Works by $28,617 or 2.3

percent and in Public Safety/Fire by $3,074 or 0.1 percent. (See Tables 4-5 through 4-9.)

Table 4-5 CITY OF LEBANON

Departmental Expenditures 2012 Actual and 2012 Budget

Actual vs. Budget

2012 Actual

2012 Budget $ %

Administration $2,849,608 $2,973,808 -124,200 -4.2 Police 3,818,184 4,201,092 -382,908 -9.1 Fire/Public Safety 2,329,259 2,326,185 3,074 0.1 Public Works 1,285,922 1,257,305 28,617 2.3 Total Expense $10,282,973 $10,758,390 -475,417 -4.4

Table 4-6 CITY OF LEBANON

Police Department Expenditures 2012 Actual and 2012 Budget

Actual vs. Budget

2012

Actual 2012

Budget $ %

Headquarters Staff $544,368 $590,745 -46,377 -7.9

Detectives 349,111 448,549 -99,438 -22.2

Patrol 2,492,368 2,640,955 -148,587 -5.6

Dispatchers 1,011 4,428 -3,417 -77.2

Record Clerks 36,581 36,511 70 0.2

Support Services 206,744 198,652 8,092 4.1

City/County Narcotics TM 110,372 172,779 -62,407 -36.1

Humane Officer & Assistant 1,254 2,949 -1,695 -57.5

Education Services 76,375 105,524 -29,149 -27.6

Total $3,818,184 $4,201,092 -382,908 -9.1

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 4-6

Table 4-7 CITY OF LEBANON

Administration Department Expenditures 2012 Actual and 2012 Budget

Actual vs. Budget

2012

Actual 2012

Budget $ %

Executive $65,691 $66,170 -479 -0.7

Legislative 4,814 8,318 -3,504 -42.1

Administration 364,010 381,387 -17,377 -4.6

Culture & Rec.Contributions 76,500 77,000 -500 -0.6

Swimming Pool 77,046 80,984 -3,938 -4.9

Stoevers Dam 12,054 13,910 -1,856 -13.3

Financial 169,407 176,066 -6,659 -3.8

Insurance & Other Benefits 1,922,164 2,020,670 -98,506 -4.9

Data Processing 69,347 74,322 -4,975 -6.7

Real Estate Tax Collection 16,107 15,621 486 3.1

Debt Repayment 57,226 59,360 -2,134 -3.6

Refund Prior Years Expense 15,242 0 15,242 100.0

Total $2,849,608 $2,973,808 -124,200 -4.2

Table 4-8 CITY OF LEBANON

Public Safety/Fire Department Expenditures 2012 Actual and 2012 Budget

Actual vs. Budget

2012

Actual 2012

Budget $ %

Fire Station #1 $28,023 $28,850 -827 -2.9

Fire Station #2 17,170 19,650 -2,480 -12.6

Fire Station #3 12,749 16,350 -3,601 -22.0

Bureau of Fire 2,119,734 2,095,649 24,085 1.1

Health & Housing 133,749 147,852 -14,103 -9.5

Emergency Management 17,834 17,834 0 0.0

Total $2,329,259 $2,326,185 3,074 0.1

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 4-7

Table 4-9 CITY OF LEBANON

Public Works Expenditures 2012 Actual and 2012 Budget

Actual vs. Budget

2012

Actual 2012

Budget $ %

Engineering $176,066 $153,744 22,322 14.5

Highway General Services 176,210 174,312 1,898 1.1

Traffic Control 190,157 185,918 4,239 2.3

Highway Maintenance & Repairs 200,201 182,455 17,746 9.7

Street Cleaning 126,666 133,625 -6,959 -5.2

Parks and Playgrounds 167,078 158,310 8,768 5.5

Municipal Building 123,855 137,858 -14,003 -10.2

Building & Zoning 71,182 74,272 -3,090 -4.2

Shade Trees 0 200 -200 -100.0

Recycling Expense 54,507 56,611 -2,104 -3.7

Total $1,285,922 $1,257,305 28,617 2.3

Personnel and Non-Personnel

Personnel expenditures were $331,766 or 3.7 percent lower than anticipated, with actual

spending at just under $8.8 million compared to the $9 million budgeted amount. Non-personnel

costs were lower than expected as well by $141,517 or 8.8 percent. Actual spending was

approximately $1.5 million compared to $1.6 million budgeted. Debt service was $2,134 lower

than budgeted. Personnel expenditures made up 85.1 percent of the City’s budget, while non-

personnel spending accounted for 14.3 percent. (See Tables 4-10.)

Table 4-10 CITY OF LEBANON

Personnel and Non-Personnel Expenditures 2012 Actual and 2012 Budget

Actual vs. Budget

2012

Actual 2012

Budget $

Personnel $8,753,775 $9,085,541 -331,766

Non-Personnel 1,471,972 1,613,489 -141,517

Debt Service 57,226 59,360 -2,134

Total $10,282,973 $10,758,390 -475,417

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 4-8

Actual salaries and wages, which accounted for over half of the City’s budget, were

approximately $4.7 million compared to about $4.9 million budgeted, a difference of 3.6 percent

or $172,716. All other personnel expenditures were lower than budgeted as well with the

exception of medical benefits for retirees, which was slightly higher by $7,012 or 1.0 percent.

(See Table 4-11.)

Table 4-11 CITY OF LEBANON

Personnel Expenditures 2012 Actual and 2012 Budget

Actual vs. Budget

2012

Actual 2012

Budget $ %

Salaries & Wages $4,687,853 $4,860,569 -172,716 -3.6

Part Time Employees 190,822 215,881 -25,059 -11.6

Overtime 613,217 634,323 -21,106 -3.3

FICA 203,839 209,398 -5,559 -2.7

Health Insurance 1,038,199 1,125,588 -87,389 -7.8

Medical Benefit Retirees 739,515 732,503 7,012 1.0

Life Insurance 14,652 15,622 -970 -6.2

Life Insurance - Retirees 1,766 1,881 -115 -6.1

Pension 921,311 921,761 -450 < 0.1

Volunteer Fire Relief 77,730 80,000 -2,270 -2.8

Workers' Compensation 208,054 224,968 -16,914 -7.5

Other Employee Expense 56,816 63,047 -6,231 -9.9

Total $8,753,775 $9,085,541 -331,766 -3.7

Non-personnel expense categories were all lower than budgeted. The most significant

drops were in insurance, $239,863 spent versus $295,025 budgeted, and utilities, $217,168 spent

versus $240,754 budgeted. (See Table 4-12.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 4-9

City of Lebanon March 2013

Table 4-12 CITY OF LEBANON

Non-Personnel Expenditures 2012 Actual and 2012 Budget

Actual vs. Budget

2012

Actual 2012

Budget $ %

Contracted Services $341,971 $359,876 -17,905 -5.0

Insurance 239,863 295,025 -55,162 -18.7

Utility 217,168 240,754 -23,586 -9.8

Vehicle Expense 174,649 187,550 -12,901 -6.9

Contributions 120,653 133,000 -12,347 -9.3

Materials & Supplies 84,052 86,500 -2,448 -2.8

Repairs & Maintenance 31,238 32,900 -1,662 -5.1

Other 262,378 277,884 -15,506 -5.6

Total $1,471,972 $1,613,489 -141,517 -8.8

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CHAPTER 5

GENERAL FUND FISCAL PROJECTIONS

2013 - 2017

Introduction

Pennsylvania Economy League projections indicate that relatively flat revenue growth

combined with higher expenses will result in moderate operating deficits for the City of Lebanon

from 2013 through 2017. The greatest increase in expenditures is expected in personnel costs,

particularly salaries and wages, with the largest departmental growth in Police Department

expenses.

Methodology

PEL prepared its general fund operating projections using the 2013 budget, the historical

revenue and expenditure patterns outlined in Chapter 3, the 2012 budget versus actual financial

data in Chapter 4, and the current collective bargaining agreements, actuarial pension data,

amortization tables and similar information.

Revenue Projection Assumptions

The City’s 2013 budget was used as the base for projections.

Rates for the City’s real estate tax, earned income tax, real estate transfer tax and all

other taxes and fees remain at the adopted 2013 level.

Given Lebanon’s recent minimal assessment growth and the implementation of the

countywide reassessment, PEL projects that future real estate assessment valuations

will only grow by 0.3 percent per year. Consequently, PEL projects that current real

estate taxes will have a minimal increase in the near future.

Earned income tax revenue was projected at $4,379,505 in 2013, and then increased

by 1.25 percent per year thereafter to reflect growth in the wage base of taxpayers. As

with real estate growth tax, given the uncertain economy, it is quite possible that the

EIT may have a period of even lower growth than the projected rate.

Local services tax revenue projections assumed an increase of $1,175 per year or the

equivalent of 25 additional jobs multiplied by the net LST rate of $47 annually.

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Pennsylvania Economy League, Central PA Division 5-2

Other enabling tax revenues were increased at 1.25 percent annually.

Other revenues and transfers from other funds were either held at budgeted levels or

at the 2009-2011 average.

Expenditure Projection Assumptions

The total personnel count was kept at the 2013 budget level.

The projections assume no new debt.

Salary and wage increases for employees covered by collective bargaining

agreements were calculated using the rates in the respective labor contracts. The

AFSCME contract expires at the end of 2013. The police contract expires at the end

of 2014. After the contract period, a two percent annual increase was used going

forward.

The 2013 budgeted salaries for non-bargaining and management personnel were used

as the baseline with two percent annual increases calculated for 2014 through 2017.

Self-funded healthcare accrual costs were held at the monthly rate of $1,000 per

employee. Receipted medical benefits costs were also held flat based on the 2013

budgeted amount. Dental and vision costs were increased based on industry standards

as follows: 2014, 3.9 percent; 2015, 4.5 percent; 2016, 6.1 percent; and 2017, 5.6

percent. Retiree healthcare costs were increased at the same rates.

Police pension costs were increased to reflect contractual increases.

Other items were adjusted using the Producer Price Index for the appropriate

categories.

Total General Fund Revenues and Expenditures

PEL projects that total revenues will increase by 2.4 percent or $251,537 from an

estimated $10.5 million in 2013 to a projected $10.7 million in 2017. Total expenditures are

projected to increase by 9.9 percent or approximately $1.1 million, from an estimated $11.1

million in 2013 to $12.2 million in 2017. The 2013 estimated deficit of $644,710 increases to a

projected deficit of $846,376 in 2017. The City’s adopted 2013 budget is balanced by the use of

the prior year fund balance. (See Tables 5-1 and 5-2 and Graphs 5-1 and 5-2.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-3

Table 5-1 CITY OF LEBANON

Revenues, Expenditures and Surplus/(Deficit) 2013 - 2017

2013 2014 2015 2016 2017 Change

2013 - 2017 Projected Projected Projected Projected Projected $ %

Revenues $10,462,259 $10,524,092 $10,581,619 $10,649,851 $10,713,796 $251,537 2.4 Expenditures $11,106,969 $11,362,077 $11,637,535 $11,909,217 $12,204,882 1,097,913 9.9 Surplus/(Deficit) -$644,710 -$837,985 -$1,055,915 -$1,259,366 -$1,491,086 -$846,376 131.3

Table 5-2 CITY OF LEBANON

Yearly Revenue and Expenditure Changes 2013 - 2017

2013 2014 2015 2016 2017 Projected Projected Projected Projected Projected Revenues $10,462,259 $10,524,092 $10,581,619 $10,649,851 $10,713,796 Revenue Change $ 61,832 57,528 68,232 63,945 Revenue Change % 0.6 0.5 0.6 0.6 Expenditures $11,106,969 $11,362,077 $11,637,535 $11,909,217 $12,204,882 Expenditure Change $ 255,108 275,458 271,683 295,665 Expenditure Change % 2.3 2.4 2.3 2.5

Graph 5-1 CITY OF LEBANON

Projected Expenditures and Revenues 2013 - 2017

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-4

Graph 5-2

CITY OF LEBANON Projected Surplus (Deficit)

2013 - 2017

Revenue Projections Total tax revenue is expected to remain at just over 76 percent of total revenues

throughout the five-year projection period, increasing slightly from 76.0 percent or $7.9 million

in 2013 to 76.6 percent or $8.2 million in 2017. Non-tax revenue is anticipated to modestly

decline as a percentage of total revenues from 24.0 percent in 2013 or $2.5 million to 23.4

percent in 2017 or $2.5 million. (See Table 5-3.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-5

Table 5-3 CITY OF LEBANON

Tax and Non Tax Revenue 2013 through 2017

2013 2014 2015 2016 2017 Change 2013 - 2017 Projected Projected Projected Projected Projected $ %

Tax Revenue $7,947,481 $8,010,313 $8,073,841 $8,138,073 $8,203,018 255,537 3.2

Non Tax Revenue 2,514,778 2,513,778 2,507,778 2,511,778 2,510,778 -4,000 -0.2

Total $10,462,259 $10,524,092 $10,581,619 $10,649,851 $10,713,796 $251,537 2.4

Percentage of Total Revenue

Tax Revenue 76.0 76.1 76.3 76.4 76.6

Non Tax Revenue 24.0 23.9 23.7 23.6 23.4

Total 100.0 100.0 100.0 100.0 100.0

Taxes

Total taxes are projected to grow by 3.2 percent or $255,537 from 2013 to 2017, with the

anticipated collection of $7.9 million in 2013 and $8.2 million in 2017.

The earned income tax is expected to remain the largest source of tax revenue, growing as a

percentage of total taxes from 55.1 percent in 2013 to 56.1 percent in 2017. Revenues from the

earned income tax are projected to jump from approximately $4.4 million in 2013 to $4.6 million

in 2017, an increase of $255,537 or 3.2 percent.

Real estate taxes, meanwhile, are anticipated to decrease slightly as a percentage of total

taxes, dropping from 37.8 percent in 2013 to 37.0 percent in 2017. Revenue from real estate

taxes should remain flat at $3 million throughout the projection period.

The local services tax, at just over 5.0 percent of total taxes throughout the projection period,

also remains relatively flat at $410,000 in 2013 compared to $414,700 in 2017.

Other enabling taxes are expected to remain a small revenue generator. Projected collections

in 2013 are $7,500, growing to $7,882 by 2017.

Real estate transfer tax revenue is not anticipated to change for purposes of the projections.

The tax is projected to generate $147,000 annually or about two percent of total taxes. (See Table

5-4.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-6

Table 5-4 CITY OF LEBANON

Tax Revenue 2013 - 2017

2014 2015 2016 2017

2013 Projected Projected Projected Projected Projected

Real Estate Taxes $3,003,476 $3,010,985 $3,018,512 $3,026,058 $3,033,624 Real Estate Transfer Tax 147,000 147,000 147,000 147,000 147,000 Earned Income Tax 4,379,505 4,433,560 4,488,290 4,543,705 4,599,812 LST Tax 410,000 411,175 412,350 413,525 414,700 Other Enabling Taxes 7,500 7,594 7,689 7,785 7,882 Total Taxes $7,947,481 $8,010,313 $8,073,841 $8,138,073 $8,203,018 Percentage of Total Taxes Real Estate Taxes 37.8 37.6 37.4 37.2 37.0 Real Estate Transfer Tax 1.8 1.8 1.8 1.8 1.8 Earned Income Tax 55.1 55.3 55.6 55.8 56.1 LST Tax 5.2 5.1 5.1 5.1 5.1 Other Enabling Taxes 0.1 0.1 0.1 0.1 0.1 Total Taxes 100.0 100.0 100.0 100.0 100.0

Non-Tax Revenue

Non-tax revenues are projected to remain at either budgeted 2013 levels or historical

averages throughout the study period. There are two exceptions. The first is a slight decline of

4.3 percent or $4,000 in federal Community Development Block Grant funds used by the Police

Department. The second is $5,000 in intergovernmental revenues for the county drug task force

that the City will not receive in 2015 under the terms of the existing funding agreement.

Intergovernmental revenues are expected to remain the largest source of non-tax revenue,

accounting for approximately one-third of the total. The next most significant areas are fines and

forfeits, revenues from services, and licenses and permits, each of which accounts for almost 20

percent of total non-tax revenues. Interest income and rents are less than five percent of the total.

(See Table 5-5.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-7

Table 5-5 CITY OF LEBANON

Non-Tax Revenue 2013-2017

2013 2014 2015 2016 2017 Projected Projected Projected Projected Projected Licenses and Permits $462,175 $462,175 $462,175 $462,175 $462,175 Fines and Forfeits 494,650 494,650 494,650 494,650 494,650 Interest Income and Rents 110,471 110,471 110,471 110,471 110,471 Intergov’t Revenues 861,270 861,270 856,270 861,270 861,270 Revenues from Services 490,612 490,612 490,612 490,612 490,612 Miscellaneous Revenue 3,600 3,600 3,600 3,600 3,600 Transfers (CDBG Funds) 92,000 91,000 90,000 89,000 88,000 Total $2,514,778 $2,513,778 $2,507,778 $2,511,778 $2,510,778 Percentage of Total Non-Tax Revenue Licenses and Permits 18.4 18.4 18.4 18.4 18.4 Fines and Forfeits 19.7 19.7 19.7 19.7 19.7 Interest Income and Rents 4.4 4.4 4.4 4.4 4.4 Intergov’t Revenues 34.2 34.3 34.1 34.3 34.3 Revenues from Services 19.5 19.5 19.6 19.5 19.5 Miscellaneous Revenue 0.1 0.1 0.1 0.1 0.1 Transfers (CDBG Funds) 3.7 3.6 3.6 3.5 3.5 Total 100.0 100.0 100.0 100.0 100.0

Expenditure Projections

Departmental Expenses

Following historical trends, Police Department expenditures are projected to increase

more than any other department, growing by 12.7 percent or $531,117. Police Department costs

are expected to jump from $4.2 million in 2013 to $4.7 million in 2017. Administration and

Public Safety/Fire are expected to grow by roughly the same amount, with Administration

anticipated to increase by $239,213 or 7.6 percent and Public Safety/Fire projected to rise by

$250,242 or 10.4 percent. Public Works is anticipated to have the least growth at 5.8 percent or

$77,341. (See Table 5-6 and Graphs 5-3 and 5-4.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-8

Table 5-6 CITY OF LEBANON

Departmental Expenditures 2013 - 2017

2013 2014 2015 2016 2017 Change 2013 -2017 Projected Projected Projected Projected Projected $ % Administration $3,164,751 $3,192,751 $3,236,759 $3,312,265 $3,403,965 239,213 7.6 Police 4,198,243 4,347,933 4,499,607 4,612,423 4,729,360 531,117 12.7 Public Safety/Fire 2,405,732 2,465,265 2,526,329 2,589,879 2,655,974 250,242 10.4 Public Works 1,338,243 1,356,128 1,374,839 1,394,650 1,415,584 77,341 5.8 Total $11,106,969 $11,362,077 $11,637,535 $11,909,217 $12,204,882 1,097,913 9.9

Graph 5-3 CITY OF LEBANON

Departmental Expenditures 2013 - 2017

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-9

Graph 5-4 CITY OF LEBANON

Departmental Expenditures as Percentage of Total 2017

Police$4,729,360

38%

Administration$3,403,965

28%

Fire/Public Safety$2,655,974

22%

Public Works$1,415,584

12%

Public Safety Services Expenditures and Total Taxes

During the historical review period, expenditures for public safety services exceeded total

tax revenue in 2008, indicating growing financial problems. That trend reversed in later years as

the City raised revenues and lowered costs. Growing public safety expenditures are expected to

remain below total tax collection throughout the projection period. However, the gap between

total taxes and total public safety spending narrows over the five year projection period. The

narrowing gap signals the potential for increased fiscal difficulty in providing the same level of

service, since total public safety spending amounts to approximately 60 percent of total City

expenditures. (See Graph 5-5.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-10

Graph 5-5 CITY OF LEBANON

Police, Public Safety/Fire Expenditures and Total Taxes 2013 - 2017

Police Department

Patrol expenditures are expected to grow the most from $2.7 million in 2013 to $3

million in 2017, an increase of $344,427 or 12.8 percent. Other significant increases are in

detectives, increasing by $86,753 or 20.1 percent; headquarters staff, rising by $45,559 or 8.0

percent; and city/county narcotics team, growing by $31,277 or 19.6 percent. (See Table 5-7.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-11

Table 5-7

CITY OF LEBANON Police Department Expenses

2013 - 2017

2013 2014 2015 2016 2017 Change 2013 - 2017 Projected Projected Projected Projected Projected $ % Headquarters Staff $566,194 $576,332 $587,172 $598,849 $611,753 45,559 8.0 Detectives 430,847 453,198 492,408 504,821 517,600 86,753 20.1 Patrol 2,698,552 2,800,461 2,888,126 2,964,458 3,042,979 344,427 12.8 Record Clerks 0 0 0 0 0 0 0.0 Support Services 37,033 37,528 38,034 38,553 39,081 2,048 5.5 City/County Narcotics Team 208,510 204,823 211,051 216,417 221,941 13,431 6.4 Humane Officer & Assistant 159,816 176,453 181,791 186,377 191,093 31,277 19.6 Education Services 2,977 3,034 3,092 3,152 3,212 235 7.9 Total 94,314 96,105 97,933 99,798 101,701 7,387 7.8

Administration

Administration is the next highest departmental increase in terms of cost, growing by 7.6

percent or $239,213 from $3.2 million in 2013 to $3.4 million in 2017. The bulk of the increase

is the result of a 13.5 percent growth in insurance and other benefits, which rise from $2.1

million in 2013 to $2.4 million in 2017. In addition, the administration category is projected to

grow by $25,648 or 6.6 percent. Debt repayment has the most significant drop, falling by 75.4

percent or $47,925 from $63,560 in 2013 to $15,635 in 2017. Additionally, Interfund Operating

Transfers to the Capital Fund are suspended as the deficit increases. (See Table 5-8.)

Table 5-8 CITY OF LEBANON

Administration Expenses 2013 - 2017

2013 2014 2015 2016 2017 Change 2013 - 2017 Projected Projected Projected Projected Projected $ % Executive $66,114 $66,116 $66,118 $66,121 $66,123 9 < 0.1 Legislative 8,314 8,343 8,374 8,409 8,448 134 1.6 Administration 390,363 397,431 403,319 409,483 416,011 25,648 6.6 Culture & Rec. Contributions 82,000 82,000 82,000 82,000 82,000 — — Swimming Pool 92,338 92,707 93,105 93,554 94,066 1,728 1.9 Stoevers Dam 18,475 18,181 17,892 17,615 17,357 -1,118 -6.1 Financial 168,237 169,948 171,673 173,446 175,228 6,990 4.2 Insurance & Other Benefits 2,138,816 2,198,692 2,265,233 2,346,847 2,428,586 289,770 13.5 Data Processing 79,872 80,857 81,919 83,114 84,471 4,599 5.8 Real Estate Tax Collection 16,040 16,040 16,040 16,040 16,040 — — Debt Repayment 63,560 62,435 31,085 15,635 15,635 -47,925 -75.4 Interfund Operating Transfers 40,622 0 0 0 0 -40,622 -100.0 Total $3,164,751 $3,192,751 $3,236,759 $3,312,265 $3,403,965 239,213 7.6

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-12

Public Safety/Fire

Public safety expenses are projected to rise by 10.4 percent or $250,242, growing from

$2.4 million in 2013 to just under $2.7 million in 2017. The greatest increase is anticipated in

Bureau of Fire costs, which are expected to rise by 11.5 percent or $249,381, from $2.2 million

in 2013 to $2.4 million in 2017. Health and housing is the only other public safety area projected

to increase, growing by 6.3 percent or $9,358. All other expenses are expected to fall, including

costs for Fire Stations #1, #2 and #3, by 13.1 percent, 11.1 percent and 16.9 percent,

respectively. (See Table 5-9.)

Table 5-9

CITY OF LEBANON Public Safety Expenses

2013 - 2017

2013 2014 2015 2016 2017 Change 2013 - 2017 Projected Projected Projected Projected Projected $ % Fire Station #1 $30,850 $29,825 $28,804 $27,793 $26,806 -4,044 -13.1 Fire Station #2 19,100 18,559 18,022 17,492 16,970 -2,130 -11.1 Fire Station #3 12,875 12,332 11,787 11,242 10,701 -2,174 -16.9 Bureau of Fire 2,175,496 2,234,884 2,295,844 2,359,182 2,424,877 249,381 11.5 Health & Housing 149,577 151,878 154,135 156,484 158,935 9,358 6.3 Emergency Management 17,834 17,788 17,738 17,685 17,685 -149 -0.8 Total $2,405,732 $2,465,265 $2,526,329 $2,589,879 $2,655,974 250,242 10.4

Public Works

Costs in Public Works are expected to grow across the board, rising overall by 5.8

percent or $77,341 from $1.3 million in 2013 to $1.4 million in 2017. Anticipated increases

averaging approximately $10,000 over the five-year projection period are expected in

engineering, highway general services, traffic control, highway maintenance and repairs, street

cleaning, and parks and playgrounds. (See Table 5-10.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-13

Table 5-10

CITY OF LEBANON Public Works Expenditures

2013 - 2017

2013 2014 2015 2016 2017 Change 2013 - 2017 Projected Projected Projected Projected Projected $ % Engineering $138,811 $140,992 $143,227 $145,528 $147,883 9,072 6.5 Highway General Services 183,925 185,922 188,042 190,305 192,784 8,859 4.8 Traffic Control 191,088 193,584 196,187 198,933 201,849 10,761 5.6 Highway Maintenance & Repairs 185,701 188,367 191,168 194,147 197,341 11,640 6.3 Street Cleaning 140,191 142,581 145,093 147,760 150,616 10,425 7.4 Parks and Playgrounds 164,903 167,529 170,286 173,199 176,295 11,393 6.9 Municipal Building 141,058 141,994 143,006 144,138 145,212 4,154 2.9 Building & Zoning 88,335 89,753 91,187 92,674 94,212 5,877 6.7 MS-4 Expenditures 41,879 41,966 42,065 42,176 42,303 424 1.0 Shade Trees 200 203 206 210 215 15 7.4 Recycling Expense 62,152 63,236 64,371 65,578 66,874 4,722 7.6

Total $1,338,243 $1,356,128

$1,374,839 $1,394,650 $1,415,584 $77,341 5.8

Personnel and Non-Personnel Expenses

Personnel expenses are likely to remain at around 85 percent of total expenditures from

2013 to 2017. Projections anticipate a hike in personnel spending of $1.1 million or 11.9 percent

over the five years, growing from $9.4 million in 2013 to $10.5 million in 2017. Meanwhile,

non-personnel costs are expected to remain at around 14 percent of total expenditures. Non-

personnel expenditures are projected to increase by 4.1 percent or $67,206, from $1.6 million in

2013 to $1.7 million in 2017. Debt service is estimated to remain at less than 1.0 percent of total

expenses, decreasing from $63,560 in 2013 to $31,085 in 2015 and ending at $15,635 in 2017.

The overall drop in debt service is 75.4 percent or $47,925. (See Table 5-11.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-14

Table 5-11 CITY OF LEBANON

Total Expenditures 2013 - 2017

2013 2014 2015 2016 2017 Change 2013 - 2017 Projected Projected Projected Projected Projected $ % Personnel $9,369,800 $9,653,127 $9,944,639 $10,214,205 $10,489,054 1,119,254 11.9 Nonpersonnel 1,632,987 1,646,515 1,661,810 1,679,378 1,700,193 67,206 4.1 Debt Service 63,560 62,435 31,085 15,635 15,635 -47,925 -75.4 Transfers 40,622 0 0 0 0 -40,622 -100.0 Total $11,106,969 $11,362,077 $11,637,535 $11,909,217 $12,204,882 1,097,913 9.9 Percentage of Total Expenditures Personnel 84.4 85.0 85.5 85.8 85.9 Nonpersonnel 14.7 14.5 14.3 14.1 13.9 Debt Service 0.6 0.5 0.3 0.1 0.1 Transfers 0.4 0.0 0.0 0.0 0.0 Total 100.0 100.0 100.0 100.0 100.0

Personnel

Salaries and wages experience the most growth, rising by 13.8 percent or $684,910, from

$5 million in 2013 to just under $5.7 million in 2017. The next most significant increases are in

retiree benefits and pension, growing by 21.6 percent or $154,727 and 11.3 percent or $122,272,

respectively. Overtime is also anticipated to rise, increasing by 13.5 percent or $95,246. Since

health care premiums are held at $1,000 per employee, projections indicate only a 0.9 percent

increase. Salaries and wages make up the greatest percentage of expected personnel expenses, at

approximately 54 percent, followed by pension and health insurance at around 11 percent each.

All other categories are under 10 percent of personnel expenditures. (See Table 5-12.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-15

Table 5-12 CITY OF LEBANON

Personnel Expenditures 2013 - 2017

2013 2014 2015 2016 2017 Change 2013 - 2017 Projected Projected Projected Projected Projected $ % Salaries & Wages $4,969,040 $5,157,655 $5,347,459 $5,498,454 $5,653,950 684,910 13.8 Part Time Employees 218,904 221,928 225,013 228,160 231,369 12,465 5.7 Overtime 703,417 726,092 749,508 773,690 798,663 95,246 13.5 FICA 213,609 220,311 226,316 232,504 238,882 25,273 11.8 Health Insurance 1,086,596 1,088,435 1,090,640 1,093,762 1,096,804 10,208 0.9 Medical Benefit Retirees 714,684 742,557 775,972 823,306 869,411 154,727 21.6 Life Insurance 15,622 15,711 15,808 15,913 16,032 410 2.6 Life Insurance - Retirees 1,836 1,855 1,876 1,898 1,924 88 4.8 Pension 1,082,583 1,111,809 1,141,913 1,172,919 1,204,855 122,272 11.3 Volunteer Fire Relief 78,000 78,000 78,000 78,000 78,000 — — Workers' Compensation 224,754 227,545 230,419 233,380 236,429 11,675 5.2 Other Employee Expense 60,755 61,229 61,717 62,219 62,735 1,980 3.3 Total $9,369,800 $9,653,127 $9,944,639 $10,214,205 $10,489,054 1,119,254 11.9 Percentage of Personnel Expenditures Salaries & Wages 53.0 53.5 53.8 53.9 54.0 Part Time Employees 2.3 2.3 2.3 2.3 2.3 Overtime 7.5 7.5 7.5 7.5 7.6 FICA 2.3 2.3 2.3 2.3 2.3 Health Insurance 11.6 11.3 11.0 10.7 10.4 Medical Benefit Retirees 7.6 7.7 7.8 8.0 8.2 Life Insurance 0.2 0.2 0.2 0.2 0.2 Life Ins. - Retirees <0.1 <0.1 <0.1 <0.1 <0.1 Pension 11.6 11.5 11.4 11.4 11.4 Volunteer Fire Relief 0.8 0.8 0.8 0.8 0.7 Workers' Comp. 2.4 2.4 2.3 2.3 2.2 Other Employee Expense 0.6 0.6 0.6 0.6 0.6 Total 100.0 100.0 100.0 100.0 100.0

Non-Personnel

Vehicle expenses are projected to grow the most among non-personnel expenditures,

rising by 18.4 percent or $34,334, from $186,790 in 2013 to $221,124 in 2017. Other non-

personnel expenditures are expected to increase by well under 10 percent. The projections

assume no capital expenses. (See Table 5-13.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-16

Table 5-13 CITY OF LEBANON

Non-Personnel Expenditures 2013 - 2017

2013 2014 2015 2016 2017 Change 2013 - 2017 Projected Projected Projected Projected Projected $ % Contracted Services 378,665 380,923 383,365 386,079 388,952 10,287 2.7 Insurance 270,213 272,971 275,972 279,224 282,895 12,682 4.7 Utility 242,309 240,524 238,870 237,436 236,505 -5,804 -2.4 Vehicle Expense 186,790 193,749 201,614 210,553 221,124 34,334 18.4 Contributions 141,000 141,000 141,000 141,000 141,000 0 0.0 Materials & Supplies 88,700 89,589 90,548 91,627 92,820 4,120 4.6 Repairs & Maintenance 41,000 41,551 42,146 42,816 43,584 2,584 6.3 Capital 0 0 0 0 0 — — Other 284,310 286,208 288,295 290,643 293,313 9,003 3.2 Total $1,632,987 $1,646,515 $1,661,810 $1,679,378 $1,700,193 67,206 4.1 Percentage of Non-Personnel Expenditures Contracted Services 23.2 23.1 23.1 23.0 22.9 Insurance 16.5 16.6 16.6 16.6 16.6 Utility 14.8 14.6 14.4 14.1 13.9 Vehicle Expense 11.4 11.8 12.1 12.5 13.0 Contributions 8.6 8.6 8.5 8.4 8.3 Materials & Supplies 5.4 5.4 5.4 5.5 5.5 Repairs & Maintenance 2.5 2.5 2.5 2.5 2.6 Capital 0.0 0.0 0.0 0.0 0.0 Other 17.4 17.4 17.3 17.3 17.3 Total 100.0 100.0 100.0 100.0 100.0

Cash and Cash Equivalents

Based on projections for yearly operational deficits, the City could experience a cash

crisis by 2015 unless steps are taken to address the ongoing deficit. The cash and cash equivalent

balance is projected at $1.3 million for 2013, dropping to approximately $450,000 in 2014. At

some point in 2014 or 2015, the City would no longer have cash reserves in excess of everyday

operating revenues. As cash reserves dwindle, officials would be forced to make decisions

regarding which obligations to pay and when to pay them. Generally, municipalities make

payroll their top priority, resulting in a failure to make timely payments to vendors and creditors.

Late payments could have implications for City short-term and long-term credit ratings, as well

as the City’s ability to purchase essential goods and services that are necessary to provide for the

health, safety and welfare of Lebanon’s citizens. (See Graph 5-6.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 5-17

City of Lebanon March 2013

Graph 5-6 CITY OF LEBANON

Cash and Cash Equivalents 2011 – 2017

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CHAPTER 6

CONCLUSION AND RECOMMENDATIONS

Introduction

Lebanon officials took steps to reduce costs and increase revenues during the five-year

historical review period that resulted in the elimination of operating deficits by 2011. Despite

those efforts, however, Pennsylvania Economy League projections indicate that a trend of flat

revenue growth coupled with higher expenditures will likely result in growing annual operating

shortfalls unless Lebanon officials take additional action to avert the problem. Municipal leaders

should continue to seek ways to reduce costs, but there appears to be little room to make

additional cuts without impacting services. As a result, PEL recommends that City officials

explore revenue and service delivery changes to eliminate the projected deficits and ensure

Lebanon’s continued fiscal health. In addition, officials should maintain three fund balance

accounts as a safety net for unexpected expenses and capital expenditures.

Conclusions

During the historical review period, Lebanon recorded operating surpluses for 2007 and

2008, fell into an operating deficit during 2009 and 2010, but ended 2011 with an operating

surplus after making significant changes in revenues and expenses. (See Table 6-1.)

Table 6-1

CITY OF LEBANON Revenues and Expenditures, Yearly Surplus/Deficit

2007 through 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Revenues $11,216,371 $10,296,662 $9,856,597 $9,973,144 $10,787,347 -429,024 -3.8 Expenditures 10,634,779 10,214,046 11,024,477 10,574,772 10,169,953 -464,826 -4.4 Surplus/Deficit $581,592 $82,616 -$1,167,880 -$601,628 $617,394 35,801 6.2

Although both 2007 and 2008 show an operating surplus, the surplus for those years was

based on the use of authority transfers and asset sales. The City would have experienced

operating shortfalls without those one-time revenue items. That scenario occurred in 2009 when

the authority transfers and one-time infusions evaporated, which led to an operating deficit. In

2010, Lebanon officials cut expenses by reducing employees and decreasing non-personnel

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Pennsylvania Economy League, Central PA Division 6-2

spending such as supplies, materials, maintenance and repairs. A 2011 wage freeze assisted with

the austerity measures. In addition, the City raised property taxes in 2008, 2010 and 2011.

Millage ultimately increased from 15.86 mills in 2007 to 25 mills in 2011. As a result of those

needed actions, Lebanon ended 2011 in the black. (See Graph 6-1.)

Graph 6-1 CITY OF LEBANON

Yearly Surplus (Deficit) Without One-Time Occurrences 2007 - 2011

-$1,642,519 -$1,691,143

-$1,125,163

-$606,117

$735,594

-$2,000,000

-$1,500,000

-$1,000,000

-$500,000

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual

Surplus/Deficit without One-Time Occurrences

The elimination of authority transfers and one-time revenue items forced Lebanon to fund

approximately three-quarters of the operating budget with tax revenue, up from 55.5 percent in

2008. The amount of money from real estate taxes jumped as millage increased, but the City

continued to receive more of its tax revenue from the earned income tax. (See Table 6-2 and

Graph 6-2.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 6-3

Table 6-2 CITY OF LEBANON Tax Revenue by Source

2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Real Estate Taxes $1,957,803 $2,091,624 $2,044,354 $2,890,929 $2,963,594 1,005,791 51.4 Real Estate Transfer Tax 338,381 227,442 161,311 169,922 152,143 -186,238 -55.0 Earned Income Tax 3,292,362 2,934,106 4,460,084 3,766,524 4,262,736 970,374 29.5 LST Tax 543,202 452,491 433,023 367,972 474,332 -68,870 -12.7 Other Enabling Taxes 10,714 10,105 7,452 7,679 7,492 -3,222 -30.1 Total $6,142,462 $5,715,768 $7,106,224 $7,203,026 $7,860,297 1,717,835 28.0

Graph 6-2

CITY OF LEBANON Percentage of Total Revenues from Tax and Non-Tax Sources

2007 - 2011

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Tax Revenue 54.8 55.5 72.1 72.2 72.9

Non Tax Revenue 45.2 44.5 27.9 27.8 27.1

2007 2008 2009 2010 2011

Despite a 28.7 percent rise in Lebanon’s market value from 2005 to 2012 as estimated by

the State Tax Equalization Board, Lebanon County’s assessed value for the City increased by

less than one percent. As a result, the City was unable to capture market value growth that might

have lessened the need for property tax increases or reduced the amount of property tax increases

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 6-4

that were required to meet expenses. That issue was corrected with the 2013 countywide

reassessment. (See Graph 6-3.)

Graph 6-3 CITY OF LEBANON

Real Estate Market Value and Assessed Value 2005 through 2011

$0

$250,000,000

$500,000,000

$750,000,000

$1,000,000,000

2005 2006 2007 2008 2009 2010 2011

Market Value

Assessed Value

On the expenditure side, growth in Police Department expenditures, which is Lebanon’s

highest departmental expense, was kept in check, as was Administration spending. Public Works

spending fell considerably since that department was impacted the greatest by employee

reductions. The Fire Bureau was the only departmental expense to experience any significant

growth during the historical review period. Still, combined Police, Fire and Public Safety

expenditures that exceeded total taxes collected in 2008 fell well below that mark by 2011

because of the actions taken by Lebanon officials to control costs and raise revenue. (See Table

6-3 and Graph 6-4.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 6-5

Table 6-3 CITY OF LEBANON

Expenditures by Department 2007 - 2011

Change 2007 -2011

Department 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual $ %

Administration $2,946,026 $2,489,630 $3,099,974 $3,146,653 $2,918,712 -27,313 -0.9

Police 3,995,129 4,023,401 4,205,415 4,225,663 4,033,529 38,400 1.0

Fire/Public Safety 2,159,466 2,256,133 2,367,905 2,227,872 2,287,908 128,442 5.9

Public Works 1,534,159 1,444,882 1,351,183 974,584 929,805 -604,354 -39.4

Total $10,634,779 $10,214,046 $11,024,477 $10,574,772 $10,169,953 -464,826 -4.4

Graph 6-4 CITY OF LEBANON

Total Taxes and Police, Public Safety and Fire Costs 2007 - 2011

$0

$2,500,000

$5,000,000

$7,500,000

$10,000,000

Public Safety/Fire Expenditures $2,159,466 $2,256,133 $2,367,905 $2,227,872 $2,287,908

Police Expenditures $3,995,129 $4,023,401 $4,205,415 $4,225,663 $4,033,529

Total Taxes $6,142,462 $5,715,768 $7,106,224 $7,203,026 $7,860,297

2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual

Non-personnel spending was cut almost in half during the historical review period and

debt service fell by 50 percent. As a result, personnel costs increased to well over 80 percent of

expenditures. Retiree benefits, including pension and health care, saw the largest absolute growth

in the personnel expenditures category, followed by health care, while salary and wages actually

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 6-6

declined. Despite the decline, salaries and wages remained the highest expenditure category.

(See Tables 6-4 and 6-5.)

Table 6-4 CITY OF LEBANON

Personnel, Non-Personnel, Debt Service and Transfers 2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Personnel 8,368,184 8,482,487 9,044,361 8,831,391 8,821,251 453,067 5.4 Non-personnel 2,138,224 1,714,721 1,712,623 1,594,256 1,286,683 -851,540 -39.8 Debt Service 123,371 16,806 47,928 100,469 58,734 -64,638 -52.4 Transfers 5,000 32 219,565 48,656 3,285 -1,715 -34.3 Total $10,634,779 $10,214,046 $11,024,477 $10,574,772 $10,169,953 -464,826 -4.4

Table 6-5 CITY OF LEBANON

Personnel Expenditures by Type 2007 - 2011

2007 2008 2009 2010 2011 Change 2007 - 2011 Actual Actual Actual Actual Actual $ % Salaries & Wages $4,953,998 $4,914,904 $4,887,693 $4,803,532 $4,639,903 -314,096 -6.3 Part Time Employees 173,136 187,683 194,228 133,997 149,065 -24,071 -13.9 Overtime 583,689 684,451 587,233 585,862 619,215 35,526 6.1 FICA 213,690 210,820 202,597 195,291 194,113 -19,577 -9.2 Health Insurance 910,973 876,612 1,176,543 1,096,317 1,050,572 139,600 15.3 Medical Benefit Retirees 431,867 503,026 680,135 705,034 741,750 309,883 71.8 Life Insurance 14,614 14,273 18,038 15,621 15,093 479 3.3 Life Insurance - Retirees 1,116 1,085 1,266 1,869 1,899 783 70.2 Pension 734,449 762,944 947,261 939,320 1,017,003 282,554 38.5 Volunteer Fire Relief 91,103 91,734 79,855 80,251 135,184 44,081 48.4 Workers' Compensation 188,457 180,045 214,810 225,417 216,545 28,089 14.9 Other Employee Expense 71,091 54,910 54,702 48,882 40,911 -30,181 -42.5 Total $8,368,184 $8,482,487 $9,044,361 $8,831,391 $8,821,251 453,067 5.4

Lebanon ended 2012 with another operating surplus, although the adopted budget

included a deficit that officials planned to eliminate with fund balance revenue. Actual 2012

spending was lower than anticipated while revenues were higher than expected, particularly in

terms of the earned income tax. (See Table 6-6.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 6-7

Table 6-6 CITY OF LEBANON

Revenues and Expenditures 2012 Actual and 2012 Budget

2012

Actual 2012

Budget Actual vs. Budget

$

Revenues $10,866,418 $10,089,545 776,873

Expenditures 10,282,973 10,758,390 -475,417

Surplus/(Deficit) $583,445 -$668,845 1,252,290

EIT collections benefited in part from a payment made under an agreement to recoup

prior years’ under payment of earned income taxes. Based upon the review period, Lebanon’s

conservative approach to budgeting earned income tax is appropriate given historical fluctuations

in that category. (See Table 6-7.)

Table 6-7 CITY OF LEBANON

Total Taxes 2012 Actual and 2012 Budget

Actual vs. Budget

2012

Actual 2012

Budget $ %

Real Estate Taxes $2,998,003 $3,021,974 -23,971 -0.8

Real Estate Transfer Tax 252,641 165,000 87,641 53.1

Earned Income Tax 4,488,163 3,984,502 503,661 12.6

LST Tax 423,930 396,234 27,696 7.0

Other Enabling Tax 7,845 7,500 345 4.6

Total Taxes $8,170,581 $7,575,210 595,371 7.9

Departmental spending, particularly for Police, was lower than expected with the

exception of Public Works. After severe cuts in Public Works, City officials budgeted for higher

expenditures in 2012. Actual Public Works spending was only slightly above budgeted levels.

Overall, personnel and non-personnel expenditures were both under budget. (See Tables 6-8 and

6-9.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 6-8

Table 6-8 CITY OF LEBANON

Departmental Expenditures 2012 Actual and 2012 Budget

Actual vs. Budget

2012

Actual 2012

Budget $ %

Administration $2,849,608 $2,973,808 -124,200 -4.2

Police 3,818,184 4,201,092 -382,908 -9.1

Fire/Public Safety 2,329,259 2,326,185 3,074 0.1

Public Works 1,285,922 1,257,305 28,617 2.3

Total Expense $10,282,973 $10,758,390 -475,417 -4.4

Table 6-9 CITY OF LEBANON

Personnel and Non-Personnel Expenditures 2012 Actual and 2012 Budget

Actual vs. Budget

2012

Actual 2012

Budget $

Personnel $8,753,775 $9,085,541 -331,766

Non-Personnel 1,471,972 1,613,489 -141,517

Debt Service 57,226 59,360 -2,134

Total $10,282,973 $10,758,390 -475,417

Despite the commendable actions taken by municipal officials to improve the City’s

fiscal situation, PEL projects that Lebanon will again experience growing operational deficits

starting in 2013. The projections are based on the assumptions that the current millage rate will

not increase, the City will experience only limited earned income tax growth of 1.25 percent

annually, and expenditures, particularly salaries and wages, will escalate. Regardless, efforts by

City officials starting in 2010 to control costs and raise revenues has better positioned Lebanon

to handle the upcoming potential financial difficulties. The countywide reassessment completed

in 2012 also gives the City more latitude to capture market growth and increase real estate taxes

if necessary. (See Table 6-10.)

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 6-9

Table 6-10 CITY OF LEBANON

Revenues, Expenditures and Surplus/(Deficit) 2013 - 2017

2013 2014 2015 2016 2017 Change

2013 - 2017 Projected Projected Projected Projected Projected $ %

Revenues $10,234,947 $10,293,938 $10,348,589 $10,413,908 $10,474,904 239,956 2.3 Expenditures 11,106,969 11,402,077 11,677,535 11,955,501 12,269,009 1,162,040 10.5 Surplus/(Deficit) -$872,022 -$1,108,139 -$1,328,946 -$1,535,309 -$1,769,979 -897,957 113.0

In addition to balancing its prior year budgets without resorting to borrowing for

operations, Lebanon also demonstrated good management practices by adopting a new financial

reporting system and the use of modified accrual accounting. The current system is beneficial in

preparing annual City budgets, assists in monitoring day-to-day expenses, and provides a timely

and correct picture of City finances.

Recommendations

Revenues

Municipal officials should consider generating revenue through increases in the City’s

real estate, earned income and real estate transfer taxes as appropriate to eliminate the

projected annual operating deficits.

City officials should take a balanced approach to tax increases by using a mixture of the

three tax levies so not to impact any one tax paying group disproportionately. For

example, officials should consider that retired individuals might pay property taxes but

do not pay earned income taxes. Wage earners pay the earned income tax and might also

be paying property taxes. Commercial and business entities would likely be more

affected by property tax and real estate transfer tax increases since their property values

and transactions tend to be on a larger scale.

Municipal officials also should keep in mind that no single tax should be raised to such a

degree that the costs to live or operate a business in the City outweigh the advantages.

Lebanon should perform a legal review and obtain a legal opinion to determine the City’s

ability to increase the earned income tax. The City’s Home Rule Charter limits the earned

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 6-10

income tax to the current 1.4 percent. However, recent case law has indicated that such

charter limitations on taxation are prohibited under state law.

Assuming a legal review shows that the City is permitted to increase the rate of EIT,

municipal officials should raise the tax to appropriate levels, taking into consideration

that each 10 percent increase in the EIT will generate approximately $425,000.

Officials should increase the current 3.581 real estate millage rate to appropriate levels

taking into consideration that each 10 percent increase in the millage would raise

approximately $300,000.

Projections estimate collecting approximately $150,000 annually from the real estate

transfer tax. Lebanon officials should consider increasing the current 0.5 percent tax in

order to benefit from potential large property transfers.

PEL’s five-year projection does not increase fines, fees and charges for services beyond

their current level. Municipal officials should examine the amounts charged in order to

guarantee the City is receiving an amount that, at a minimum, equals the provision and

administration of the services, taking into account expenses for personnel, supplies, etc.

Market-based revenue opportunities, such as allowing businesses to sponsor events or

advertise on City-owned property, should be explored.

PEL also recommends that Lebanon review the suitability of current exemptions from

property taxes to guarantee, for example, that property owned by tax exempt institutions

is not being used by for-profit ventures that should be subject to taxation.

Expenditures

Lebanon’s Fire Bureau spending has consistently risen since 2007. PEL recommends that the

City reduce overtime costs within the Fire Bureau by hiring two additional firefighters. Each

additional hire could save up to $30,000 annually

Hiring two firefighters would also ensure that the Fire Bureau maintains appropriate,

experienced staffing levels into the future in case of potential retirements. Five firefighters

are currently eligible to retire over the next several years. (See table below and detailed

schedule in Appendix).

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 6-11

2014 2015 2016 2017 Current Total Man Hours (Used to Calculate Hourly Rate) 45,864 45,864 45,864 45,864 Average Hourly Base Rate $24.41 $25.27 $26.15 $27.07 OT Rate (1.5 x Average Hourly Rate) $36.62 $37.90 $39.23 $40.60 Estimated Current Hours of OT 7,412 7,412 7,412 7,412 New Hire Available Hours Available Hours Per New Hire 2,486 2,390 2,390 2,390 OT Reduction $91,043 $90,590 $93,761 $97,043 Cost of a New Hire Total Cost of New Hire $61,441 $64,673 $67,259 $76,404 Net Savings (OT Reduction - Cost of New Hire)

$29,602 $25,917 $26,502 $20,639

Total Savings for Two New Employees $59,204 $51,834 $53,003 $41,278

Police Department expenditures account for the largest departmental expense in Lebanon.

Police spending is also projected to grow the most of any department over the next five

years. PEL suggests that the City explore regionalization opportunities with neighboring

police departments as a way to maintain or improve full-time service levels in order to

avoid cuts as a way of keeping costs under control.

Similarly, PEL recommends that the City explore cooperative agreements with other

communities in the area of public works, particularly in terms of equipment sharing.

Cooperative agreements might also allow the City to maintain current staffing levels,

which were cut in 2010 as a budgetary measure, while boosting service.

Health Care Fund

The City’s current method of financing its self-insured health care plan by budgeting

$1,000 per employee per month has provided sufficient funds to cover costs to date.

However, Lebanon should maintain its health care fund balance at least at its current

level of cash reserves in order to provide sufficient funding should employee health care

expenses escalate.

The City should also review its policy for a health care reserve for unexpected health care

occurrences with its health care consultant to certify that health care cash contingency

reserves are at an appropriate level.

City of Lebanon March 2013

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Pennsylvania Economy League, Central PA Division 6-12

City of Lebanon March 2013

Fund Balance

Lebanon budgeted approximately $90,000 in 2013 in order to develop a capital reserve

fund balance for vehicles and equipment. PEL recommends that the City continue this

practice.

In order to cover unforeseen expenses, PEL suggests that the City develop a dedicated

fund balance of two to three months of revenues and expenditures as recommended for

municipalities by the Government Finance Officers Association.

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APPENDIX A

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Appendix Table 1 Estimate of the Savings By Reduction of Overtime

Through the Hiring of New Firefighters

City of Lebanon Fire Department Savings Current 2013 2014 2015 2016 2017 Salaries & Wages 1,081,893 1,119,759 1,158,951 1,199,514 1,241,497 Overtime Pay - FLSA 119,210 123,382 127,701 132,170 136,796 Other OT 262,255 271,434 280,934 290,767 300,944 Personnel 21 21 21 21 21 Base Salary Hours per man per week 42 2,184 2,184 2,184 2,184 2,184 Total Man Hours (Used to Calculate Hourly Rate)

45,864 45,864 45,864 45,864 45,864

Average Hourly Base Rate $23.59 $24.41 $25.27 $26.15 $27.07 OT Rate (1.5 x Average Hourly Rate) $35.38 $36.62 $37.90 $39.23 $40.60 Estimated Current Hours of OT 7,412 7,412 7,412 7,412 7,412 New Hire Available Hours Total Hours (56*52) 1,456 2,912 2,912 2,912 2,912 Vacation Hours 56 112 112 112 112 Sick Hours (3 days, 1 day year one) 24 72 72 72 72 Bonus Hours (4 days 1-2 years,8 days 3-5)

96 96 192 192 192

Reduction for Emergency OT (5.0%) 73 146 146 146 146 Available Hours Per New Hire 1,207 2,486 2,390 2,390 2,390 OT Reduction (Available Hours X OT Rate Above)

$42,708 $91,043 $90,590 $93,761 $97,043

Cost of a New Hire Salary 18,000 37,500 40,000 42,000 48,110 Longevity 0 0 0 0 962 Base Hourly Rate (Salary+Longevity)/42

$16.48 $17.17 $18.32 $19.23 $22.47

Overtime Pay - FLSA (6.25 hours at 1.5 times base hourly rate every 2 weeks)

2,009 4,185 4,464 4,688 5,477

FICA 1,531 3,188 3,401 3,571 4,172 Uniform Allowance 800 350 350 350 350 Medical 6,000 12,000 12,000 12,000 12,000 Life Insurance 100 200 200 200 200 Receipted Medical 200 400 400 400 400 Pension (14.6%-5% contribution) 1,728 3,600 3,840 4,032 4,711 Total Cost of New Hire $30,384 $61,441 $64,673 $67,259 $76,404 Net Savings (OT Reduction - Cost of New Hire)

$12,324 $29,602 $25,917 $26,502 $20,639

Number of Employees Hired 2 2 2 2 2 Total Savings $24,648 $59,204 $51,834 $53,003 $41,278

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APPENDIX B

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City of LebanonGeneral Fund Summary

2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual 2012 ActualREVENUE

Real Property Taxes $1,957,803 $2,091,624 $2,044,354 $2,890,929 $2,963,594 $2,998,003EIT 3,292,362 2,934,106 4,460,084 3,766,524 4,262,736 4,488,163Local Service Tax 543,202 452,491 433,023 367,972 474,332 423,930Enabling Taxes 349,095 237,547 168,763 177,601 159,635 260,486Licenses and Permits 429,302 430,426 429,303 395,482 459,157 438,907Fines and Forfeits 558,918 557,231 565,663 500,258 482,563 529,136Interest Income and Rents 125,475 105,583 158,649 117,049 133,856 139,145Intergovernmental Revenues 1,002,328 883,577 929,276 868,878 1,315,618 915,744Revenues from Services 476,875 491,042 427,152 626,158 492,188 528,296Miscellaneous Revenue 1,196,861 559,025 100,221 117,802 47,369 35,074Sale of Fixed Assets 1,144,150 1,733,819 5,109 2,156 0 0Transfers 140,000 135,000 135,000 140,000 114,500 93,000Refund of Prior Year Expense 0 -314,809 0 2,333 -118,201 16,535

Total General Fund Revenue $11,216,371 $10,296,662 $9,856,597 $9,973,144 $10,787,347 $10,866,418

Pennsylvania Economy League, Central Division

Appendix BGeneral Fund Revenues and Expenditures

Actual 2005 - 2012 Page 1 of 6

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City of LebanonGeneral Fund Summary

2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual 2012 ActualEXPENDITURES

Administration Executive $46,764 $43,320 $54,830 $65,697 $67,990 $65,691 Legislative 6,395 6,645 6,020 6,308 4,013 4,814 Administration 476,771 417,364 292,395 287,754 337,807 364,010 Culture & Recreation Contributions 67,500 74,500 74,500 74,500 76,500 76,500 Culture - Recreation 13,269 208 49 0 0 0 Swimming Pool 85,194 69,401 75,321 78,155 73,502 77,046 Stoevers Dam 13,793 11,166 10,895 11,575 11,585 12,054 Financial 218,798 118,903 184,482 215,516 167,293 169,407 Insurance & Other Benefits 1,684,387 1,573,116 1,980,955 2,166,265 2,038,725 1,922,164 Data Processing 39,406 79,208 65,913 63,880 66,139 69,347 Real Estate Tax Collection 118,211 33,260 11,359 12,672 13,139 16,107 Debt Repayment 123,371 16,806 47,928 100,469 58,734 57,226 Parks & Playground 47,165 45,701 22,297 15,205 0 0 Refund Prior Years Expense 0 0 53,465 0 0 15,242 Interfund Operating Transfers 5,000 32 219,565 48,656 3,285 0

$2,946,026 $2,489,630 $3,099,974 $3,146,653 $2,918,712 $2,849,608

Police Department Headquarters Staff $515,557 $501,820 $344,489 $418,302 $487,253 $544,368 Detectives 452,008 462,650 429,014 421,006 426,833 349,111 Patrol 2,452,399 2,470,236 2,797,360 2,726,683 2,472,272 2,492,368 Dispatchers 165,200 171,022 184,437 187,580 176,213 1,011 Record Clerks 37,546 30,913 35,696 35,868 35,572 36,581 Support Services 158,335 168,299 185,770 192,713 195,442 206,744 City/County Narcotics TM 131,606 138,467 149,511 160,584 161,917 110,372 Humane Officer & Assistant 2,644 2,454 1,691 1,271 1,271 1,254 Education Services 79,835 77,540 77,447 81,656 76,754 76,375

$3,995,129 $4,023,401 $4,205,415 $4,225,663 $4,033,529 $3,818,184

Pennsylvania Economy League, Central Division

Appendix BGeneral Fund Revenues and Expenditures

Actual 2005 - 2012 Page 2 of 6

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City of LebanonGeneral Fund Summary

2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual 2012 Actual

Public Safety Fire Station #1 $16,070 $22,750 $17,114 $0 $29,110 $28,023 Fire Station #2 10,955 12,656 10,567 0 19,101 17,170 Fire Station #3 5,577 10,387 6,555 0 11,867 12,749 Bureau of Fire 1,819,555 1,975,611 2,114,474 2,104,383 2,096,454 2,119,734 Health & Housing 307,309 234,729 219,195 123,489 131,375 133,749 Emergency Management 0 0 0 0 0 17,834

$2,159,466 $2,256,133 $2,367,905 $2,227,872 $2,287,908 $2,329,259

Public Works Engineering $130,925 $145,561 $149,811 $163,020 $153,065 $176,066 Highway General Services 196,171 188,585 252,667 100,923 159,204 176,210 Traffic Control 294,700 355,037 146,699 99,279 102,241 190,157 Highway Maintenance & Repairs 386,194 269,500 245,244 163,836 119,972 200,201 Street Cleaning 0 122 0 0 0 126,666 Parks and Playgrounds 0 0 0 9,336 144,276 167,078 Municipal Building 353,384 327,879 385,623 289,738 134,364 123,855 Building & Zoning 103,970 107,922 118,153 96,769 59,550 71,182 MS-4 Expenditures 0 0 0 0 0 0 Shade Trees 0 0 20 0 0 0 Recycling Expense 68,814 50,276 52,966 51,683 57,133 54,507

1,534,159$ 1,444,882$ 1,351,183$ 974,584$ 929,805$ 1,285,922$

Total General Fund Expenditures $10,634,779 $10,214,046 $11,024,477 $10,574,772 $10,169,953 $10,282,973

General Fund Excess of Revenues over /(under) Expenditures $581,592 $82,616 -$1,167,880 -$601,628 $617,394 $583,445

Pennsylvania Economy League, Central Division

Appendix BGeneral Fund Revenues and Expenditures

Actual 2005 - 2012 Page 3 of 6

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City of LebanonGeneral Fund Summary

2013 Projected 2014 Projected 2015 Projected 2016 Projected 2017 ProjectedREVENUE

Real Property Taxes $3,003,476 $3,010,985 $3,018,512 $3,026,058 $3,033,624EIT 4,379,505 4,433,560 4,488,290 4,543,705 4,599,812Local Service Tax 410,000 411,175 412,350 413,525 414,700Enabling Taxes 154,500 154,594 154,689 154,785 154,882Licenses and Permits 462,175 462,175 462,175 462,175 462,175Fines and Forfeits 494,650 494,650 494,650 494,650 494,650Interest Income and Rents 110,471 110,471 110,471 110,471 110,471Intergovernmental Revenues 861,270 861,270 856,270 861,270 861,270Revenues from Services 490,612 490,612 490,612 490,612 490,612Miscellaneous Revenue 3,600 3,600 3,600 3,600 3,600Sale of Fixed Assets 0 0 0 0 0Transfers 92,000 91,000 90,000 89,000 88,000Refund of Prior Year Expense 0 0 0 0 0

Total General Fund Revenue $10,462,259 $10,524,092 $10,581,619 $10,649,851 $10,713,796

Pennsylvanis Economy League, Central Division

Appendix BGeneral Fund Revenues and Expenditures

Projected 2013 - 2017 Page 4 of 6

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City of LebanonGeneral Fund Summary

2013 Projected 2014 Projected 2015 Projected 2016 Projected 2017 Projected

EXPENDITURESAdministration Executive $66,114 $66,116 $66,118 $66,121 $66,123 Legislative 8,314 8,343 8,374 8,409 8,448 Administration 390,363 397,431 403,319 409,483 416,011 Culture & Recreation Contributions 82,000 82,000 82,000 82,000 82,000 Culture - Recreation 0 0 0 0 0 Swimming Pool 92,338 92,707 93,105 93,554 94,066 Stoevers Dam 18,475 18,181 17,892 17,615 17,357 Financial 168,237 169,948 171,673 173,446 175,228 Insurance & Other Benefits 2,138,816 2,198,692 2,265,233 2,346,847 2,428,586 Data Processing 79,872 80,857 81,919 83,114 84,471 Real Estate Tax Collection 16,040 16,040 16,040 16,040 16,040 Debt Repayment 63,560 62,435 31,085 15,635 15,635 Parks & Playground 0 0 0 0 0 Refund Prior Years Expense 0 0 0 0 0 Interfund Operating Transfers 40,622 0 0 0 0

$3,164,751 $3,192,751 $3,236,759 $3,312,265 $3,403,965

Police Department Headquarters Staff $566,194 $576,332 $587,172 $598,849 $611,753 Detectives 430,847 453,198 492,408 504,821 517,600 Patrol 2,698,552 2,800,461 2,888,126 2,964,458 3,042,979 Dispatchers 0 0 0 0 0 Record Clerks 37,033 37,528 38,034 38,553 39,081 Support Services 208,510 204,823 211,051 216,417 221,941 City/County Narcotics TM 159,816 176,453 181,791 186,377 191,093 Humane Officer & Assistant 2,977 3,034 3,092 3,152 3,212 Education Services 94,314 96,105 97,933 99,798 101,701

$4,198,243 $4,347,933 $4,499,607 $4,612,423 $4,729,360

Pennsylvanis Economy League, Central Division

Appendix BGeneral Fund Revenues and Expenditures

Projected 2013 - 2017 Page 5 of 6

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City of LebanonGeneral Fund Summary

2013 Projected 2014 Projected 2015 Projected 2016 Projected 2017 Projected

Public Safety Fire Station #1 $30,850 $29,825 $28,804 $27,793 $26,806 Fire Station #2 19,100 18,559 18,022 17,492 16,970 Fire Station #3 12,875 12,332 11,787 11,242 10,701 Bureau of Fire 2,175,496 2,234,884 2,295,844 2,359,182 2,424,877 Health & Housing 149,577 151,878 154,135 156,484 158,935 Emergency Management 17,834 17,788 17,738 17,685 17,685

$2,405,732 $2,465,265 $2,526,329 $2,589,879 $2,655,974

Public Works Engineering $138,811 $140,992 $143,227 $145,528 $147,883 Highway General Services 183,925 185,922 188,042 190,305 192,784 Traffic Control 191,088 193,584 196,187 198,933 201,849 Highway Maintenance & Repairs 185,701 188,367 191,168 194,147 197,341 Street Cleaning 140,191 142,581 145,093 147,760 150,616 Parks and Playgrounds 164,903 167,529 170,286 173,199 176,295 Municipal Building 141,058 141,994 143,006 144,138 145,212 Building & Zoning 88,335 89,753 91,187 92,674 94,212 MS-4 Expenditures 41,879 41,966 42,065 42,176 42,303 Shade Trees 200 203 206 210 215 Recycling Expense 62,152 63,236 64,371 65,578 66,874

1,338,243$ 1,356,128$ 1,374,839$ 1,394,650$ 1,415,584$

Total General Fund Expenditures $11,106,969 $11,362,077 $11,637,535 $11,909,217 $12,204,882

General Fund Excess of Revenues over /(under) Expenditures -$644,710 -$837,985 -$1,055,915 -$1,259,366 -$1,491,086

Pennsylvanis Economy League, Central Division

Appendix BGeneral Fund Revenues and Expenditures

Projected 2013 - 2017 Page 6 of 6