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Regular City Council Meeting Monday, May 17, 2010 Page 11 Mr. Eichten highlighted challenges being experience by cities with declining market values and tax capacities; budget cuts; and additional reporting and con- trols the state and federal government upon receipt of grant funds; and reductions in taxable market values impacting local tax capacities and tax rates. Mr. Eichten further reviewed Government Funds Revenue on a per capita basis and comparables with other jurisdictions; commended the City on their debt ser- vice ration; and briefly reviewed Individual Fund Descriptions and Financial Posi- tions, noting that the City's General Fund was at 31% of operations, with the City's policy reflecting reserve capacity of 50 However, Mr. Eichten noted that this was within the State Auditor's, as well as his firm's recommendation of between 30 -50 Mr. Eichten noted that the 50% is recommended, based on the City's receipt of property tax payments only twice per given calendar year. Mr. Eichten noted decreased revenue during 2009, mostly related to state cuts to in- tergovernmental aid; and less than budgeted related to the unallotment process and substantially reduced investment income. Mr. Eichten commended the City on reacting to those cuts at 4.2% reduction from the prior year, and the end results of being $72,000 under budget at year end, and for doing an exceptional job in meeting standards for budgetary compliance. Mr. Eichten concluded by reviewing the City's major financial operations (i.e., Enterprise Funds), those showing positive results with income before depreciation and those showing dramatic declines due to impacts of rate changes (sanitary sewer and water funds); and significant increases in operating expenses in the wa- ter fund, mostly related to the increased rates in purchasing water through St. Paul Regional Water. Mr. Eichten noted the need for the City to react in the near fu- ture to these overall financial results. Mr. Eichten noted the increased overall re- sults in the Golf Course due to expenditure cutbacks and the number of rounds played; the economic impacts and less revenue sharing generated by the recycling contract in the Solid Waste Recycling Fund; and positive operating results in the Storm Drainage Fund. Mr. Eichten noted new accounting standards being implemented in 2011; and en- couraged that the City continue with their ongoing assessment of financial projec- tions for the General as well as other operations and enterprise fund activities for any evident and significant areas of concern. Discussion among Mr. Eichten, Councilmembers and Mr. Miller included confir- mation that staff was working on a formal disaster plan for the City, in conjunc- tion with the other 23 Information Technology (IT) partners; compliments to staff in addressing and eliminating the five findings from 2008; confirmation by staff of an improved procedure for authorizing and monitoring purchase card transac- tions through the addition of several additional steps; and different foci recom- mendations and alerts provided each year by the State Auditor.