2006-12-31 Management Letter - Laserfiche WebLink

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City of Centerville May 3, 2007 Page Six 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 fmance the General fund expenditures until these revenue sources are received. . The City is vulnerable to legislative actions at the State and Federal level. The State eliminated HACA aid with the 2001 legislative session and imposed reductions of market value credit aid and local government aid for some cities. Levy limits have also been implemented for municipalities 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 fmancing 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 2006 operations is as follows: Variance with Final Final Budget Budgeted Actual Positive Amounts Amounts (Negative) $ 2,200,500 $ 2,241,937 $ 41,437 2,019,600 2,087,458 (67,858) 180,900 154,479 (26,421 ) Revenues Expenditures Excess of revenues over expenditures Other financing sources (uses) Transfers in Transfers out 65,400 (205,900) (140,500) 13,979 1,549,356 $ 1,563,335 $ 65,400 (25,000) (180,900) Total other financing sources (uses) (180,900) 40,400 Net change in fund balances 13,979 Fund balances, January 1 1,549,356 Fund balances, December 31 $ 1,549,356 13,979 952.835.9090 . Fax 952.835.3261 www.aemcpas.com