CITY OF WILLOUGHBY, OHIO

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED DECEMBER 31, 2008

At the end of the current fiscal year, the City is able to report positive balances in governmental activities
and the total government categories of net assets. Business-type activities show a net unrestricted deficit
of $2,269,805 which is primarily attributable to liabilities of the Airport fund consisting of amounts that
are due to other funds.

In order to further understand what makes up the changes in net assets for the current year, the following
table gives readers further details regarding the results of activities for the current and prior year.

City of Willoughby's Change in Net Assets

Governmental Business-type
Activities Activities Total
2008 2007 2008 2007 2008 2007
Revenues
Program Revenues
Charges for Services 4,797,851 4,802,946 4,801,526 5,273,752 9,599,377 10,076,698
Operating Grants, Contributions & Interest 233,398 118,956 233,398 118,956
Capital Grants & Contributions 287,167 110,980 239,440 247,053 526,607 358,033
General Revenues
Municipal Income Taxes 16,591,292 15,570,705 200,000 16,591,292 15,770,705
Property & Other Local Taxes 4,544,357 4,981,602 4,544,357 4,981,602
Grants & Entitlements 5,342,717 4,797,309 5,342,717 4,797,309
Investment Earnings 733,253 990,190 51,342 53,393 784,595 1,043,583
Miscellaneous 106,277 7,511 14,812 3,012 121,089 10,523
Total Revenues 32,636,312 31,380,199 5,107,120 5,777,210 37,743,432 37,157,409
Expenses
General Government 7,464,343 7,037,479 7,464,343 7,037,479
Security of Persons & Property 14,184,392 13,355,856 14,184,392 13,355,856
Public Health & Welfare 475,828 474,422 475,828 474,422
Community Environment 985,934 1,028,496 985,934 1,028,496
Leisure Time Activities 2,319,489 2,162,931 2,319,489 2,162,931
Transportation 3,526,993 3,316,323 3,526,993 3,316,323
Basic Utility Services 1,648,956 1,517,825 1,648,956 1,517,825
Interest & Fiscal Charges 842,569 879,804 842,569 879,804
Golf Course 992,417 923,882 992,417 923,882
Sewer 5,086,763 4,898,045 5,086,763 4,898,045
Airport 558,209 540,352 558,209 540,352
Total Expenses 31,448,504 29,773,136 6,637,389 6,362,279 38,085,893 36,135,415
Transfers (295,000) (68,000) 295,000 68,000 0 0
Change in Net Assets 892,808 1,539,063 (1,235,269) (517,069) (342,461) 1,021,994
Net Assets Beginning of Year 61,036,153 59,497,090 32,379,735 32,896,804 93,415,888 92,393,894
Net Assets End of Year 61,928,961 61,036,153 31,144,466 32,379,735 93,073,427 93,415,888

Governmental Activities

Income tax in governmental funds shows an increase of 6.55% because of increase in collections as well
as a change in allocation of revenue away from Business-type activity funds.

Property and other local taxes decreased by more than 8% with the change in state law which effectively
eliminated the personal property tax. Grants and entitlements increased by 11.3% and interest earnings
were down 26% in a declining interest rate environment. The overall increase in revenue of 4% is a result
of higher collection of income taxes and an increase in grants and entitlements, including an increase in
estate tax collections.
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