07-11-2011 Council Minutes - Laserfiche WebLink

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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, July 11, 2011 7:00 o'clock p.m. • (3. 2010 COMPREHENSIVE ANNUAL FINANCIAL REPORT, Continued) Popenhagen noted the internal controls are based on the number of staff currently employed by the City and that their comments concerning that area are fairly common for the majority of smaller cities they audit. As it relates to the City's revenue, the majority of the City's revenue is generated through property taxes, followed by user fees, licenses and permits, and intergovernmental transfers. The City's general fund - unreserved, other government funds reserved, and other government funds - unreserved were looked at during this year's audit. Popenhagen noted the yellow bar on the chart basically is reserved for debt service and that the majority of the increase seen in 2010 is from the refunding bonds issued in December of last year, which were used to pay off the 2003 fire hall bonds in February of 2011. The purple shaded bar also depicts an increase due to the 2010 bond issue, with the proceeds being expended in 2011 on such projects as the Old Crystal Bay Road project and Orono Orchard Road. The chart covering government funds — revenue consists of basically the same set of funds. These funds are fairly consistent from year to year and in 2010 total approximately $7.3 million. On the expenditure side of the governmental funds, those are also fairly consistent from year to year. In 2006 there was a spike in spending due to the purchase of the Big Island park. The red bar depicted on the chart will fluctuate from time to time depending on the projects that are ongoing in that year. The enterprise funds basically consist of the assets the city owns, what the city owes, and then what is left • over. Revenues in the utility funds were flat from the prior year at about 1.5 million. There are some rate increases built in, but the rate increases in the water fund were offset by consumption decreases. Popenhagen commented that a couple of advantages with the enterprise funds are the water tower leases, which contribute $100,000 per year, and connection fees for the storm water fund also contributed $100,000 in revenue in 2010. Popenhagen noted the golf course fund again had an operating loss. The most noteworthy item is that on November 1, 2010, the golf course fund was folded back in the general fund and will be reported as part of park and recreation expenditures in the general fund moving forward. As it relates to government -wide financial data, that basically consists of the City's assets, such as infrastructure, buildings, streets, bridges, and also includes long -term debt. The top line on the chart basically reflects cash investments, which is expendable net assets. Normally that line will trend almost exactly with the change in cash investments but you will not see that relationship in 2010 due to the bond that was issued in December of 2010. The red line depicts the operating expenses of the City, including approximately $750,000 in depreciation on capital assets. It is a slightly downward trending line due to some controls, that were put in place, which has resulted in a stable financial performance by the City. The last graph is a snapshot of future debt service and is based on 2010 expenditures. The future debt service from 2011 through 2015 has been projected based on outstanding debt that existed as of December 31, 2010. Michelle Hoffinan noted there were some new standards issued which the City will be required to comply with beginning in 2011. GASB No. 54 relates to fund balance reporting and will go into effect in 2011. It regulates the delegation of authority and special revenue bonds. Currently there are three categories and this will increase. it to five. Hoffman noted that it will be necessary for the City Council to approve • someone in the finance department to work with that category of fund balance. Page 2 of 19