2003-03-26 CC Packet - Laserfiche WebLink

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City of Centervi11e February 6, 2003 Page Five Fund balance should be maintained for the following reasons: Purposes and Benefits . Expenditures are incurred somewhat evenly throughout the year. However, currently, 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 until these revenue sources are received. . The City is vulnerable to legislative actions at the State and Federa1leveL The State eliminated HACA aid with the 2001 legislative seSsion and has proposed significant reductions in local government aid. Levy limits have also been implemented for nnmicipalities in past legislative sessions. 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 financing needed for such expenditures. . A strong fund balance will assist the City in obtaining, maintaining or improving its bond rating. The result will be better interest rates in future bond sales. A summary of the 2002 operations is as follows: Variance - Favorable Budget Actual (pnfavorable) Revenue $ 1,797,613 $ 1,995,888 $ 198,275 Expenditures 1.671.830 1.542.948 128.882 Excess (deficiency) of revenUe over expenditures 125.783 452.940 327.157 Other financing sources (uses) Operating transfers in 121,499 121,499 Operating transfers out (125.783) (349.587) (223.804 ) Total other financing sources (uses) (125.783) (228.088 ) (102.305) Excess (deficiency) of revenue and other financing sources over expenditures and other financing uses $ - 224,852 $ 224.852 Fund balance, January 1 713.080 Fund balance, December 31 $ 937.932 . The majority of the favorable revenue variance resulted from intergovernmental revenue in excess of budget by $227,833. The majority of this variance resulted from the market value credit that was not anticipated at the time of budget adoption. . The majority of the favorable expenditure variance resulted from capital outlay under budget by $108,953. . The City does not budget for the Fire aid revenue and subsequent payment to the Relief Association. The payment to the Relief Association was $119,468 and resulted in a favorable variance on the revenue side and an unfavorable variance in expenditures for that amount. We recominend the Fire aid and payment be reflected in the budget. . Transfers out were over budget because of the fund closings complete4 in 2002.