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<br />. <br /> <br />. <br /> <br />. <br /> <br />City of Arden Hills <br />April 8, 1999 <br />Page 1bree <br /> <br />Most of the general fund revenue comes from property taxes and property tax credits. They represent 72% of 1998 <br />revenue. This type of revenue is received during the second half of the year. As a result, a reserve for working capital <br />needs to be established equal to about 35 - 45% of planned expenditures and transfers out. The City has excellent <br />reserves for working capital from several sources. The amount designated for working capitai in tbe general fund is <br />$556,634. In addition to the fund balance in the general fund, the City can also draw working capital from one of the <br />several permanent capital projects funds which total about $7,700,000. <br /> <br />It is important to maintain an adequate fund balance for the following reasons: <br /> <br />Expenditures are incurred somewhat evenly throughout the year. However, property tax and state aid revenues are <br />not received until the second half of the year. An adequate fund balance will provide the cash flow required to <br />fmance the General Fund expenditures. <br /> <br />The City is vulnerable to legislative actions at the State and Federal level. In recent years, the State had adjusted the <br />local government aid and property tax credit formulas and implemented levy limits. An adequate fund balance will <br />provide a temporary buffer against those aid adjustments and levy limits. <br /> <br />Expenditures not anticipated at the time the annual budget was adopted may need immediate Council action. These <br />would include capital outlay replacement, lawsuits and other items. An adequate fund balance will provide the <br />fInancing needed for sucb expenditures. <br /> <br />A strong fund balance has assisted the City in determining its bond rating. The City received an AAA rating from <br />Standard and Pnors on its 1998 bond issue. <br /> <br />A summary of the 1998 operations is as follows: <br /> <br /> Variance - <br /> Favorable <br />Budget Actual (Unfavorable) <br />$ 2,491,445 $ 2,706,050 $ 214,605 <br />2.355.180 2.398.663 (43.483 ) <br />136.265 307,387 171.122 <br />49,000 (49,000) <br />082.550) 1302.450 ) 019.900) <br />(133.550) (302.450 ) 068.900) <br /> <br />Revenue <br />Expenditures <br /> <br />Excess of Revenue Over Expenditures <br /> <br />Other Financing Sources (Uses) <br />Operating transfers in <br />Operating transfers out <br /> <br />Total Other Financing Sources (Uses) <br /> <br />Excess of Revenue and Other Financing <br />Sources Over Expenditures and <br />Other Uses <br /> <br />2.715 <br /> <br />4,937 <br />573.349 <br />$ 578.286 <br /> <br />$ 2.222 <br /> <br />$ <br /> <br />Fund Balance, January I <br /> <br />Fund Balance, December 31 <br />