CCP 06-08-1998 - Laserfiche WebLink

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~!~~ City of Arden Hills W7.~ May 14, 1998 . .~~ Page Three A C.:" General Fund Actual revenue was greater than budget by $295,168. The total variance represents 12% of budget. The two areas with the greatest variances were property taxes and nonbusiness licenses and permits with variances of $83, 103 and $198,626, respectively. Expenditures were very close to budget, finishing $2,334 below a budget of$2,26I,337, The large increase in revenue allowed for more transfers out than what had been budgeted, Total transfers out totaled $440,300, $247,750 more than budget. Most of the general fund revenue comes from property taxes and property tax credits, They represent 82% of 1997 revenue. This type of revenue is received during the second half of the year. As a result, a reserve for working capital needs to be established equal to about 35% of planned expenditures and transfers out. The City has excellent reserves for working eapital from several sources. The amount designated for working capital in the general fund is $547,562. In addition to the fund balance in the general fund, the City can also draw working capital from one of the several permanent capital projects funds which total close to $6,000,000. It is important to maintain an adequate fund balance for the following reasons: . Expenditures are incurred somewhat evenly throughout the year. However, property tax and state aid revenues are not received until the second half of the year. An adequate fund balance will provide the cash flow required to finance the General Fund expenditures. . The City is vulnerable to legislative actions at the State and Federalleve!. In recent years, the State had adjusted the local government aid and property tax credit formulas and implemented levy limits. An adequate fund balance will . provide a temporary buffer against those aid adjustments and levy limits. . Expenditures not anticipated at the time the annual budget was adopted may need immediate Council action. These would include capital outlay replacement, lawsuits and other items. An adequate fund balance will provide the fmancing needed for such expenditures. . A strong fund balance has assisted the City in determining its bond rating. The City received an AAA rating from Standard and Poors on its 1998 bond issue, A summary of the 1997 operations is as follows: Variance - Favorable Budget Actual (Unfavorab]e) Revenue $ 2,432,512 $ 2,727,680 $295,]68 Expenditures 2.261.337 2.259.003 2.334 Excess of Revenue Over Expenditures 171.175 468.677 297.502 Other Financing Sources (Uses) Operating transfers in 21,500 - (21,500) Operating transfers out (] 92,550) (440.300) (247.750) Total Other Financing Sources (Uses) (]71.050) (440.300) (269.250 ) Excess of Revenue and Other Financing Sources Over Expenditures and Other Uses $ 125 28,377 $ 28,252 . Fund Balance, January 1 540.866 Fund Balance, December 31 $ 569.243