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MINUTES OF THE ORONO CITY COUNCIL MEETING Tuesday, June 10, 2013 7:00 o’clock p.m. _____________________________________________________________________________________ Page 2 of 32 (4. 2012 COMPREHENSIVE ANNUAL FINANCIAL REPORT, Continued) Hoffman stated the first graph depicts the general fund - unreserved/unassigned fund balance for the past four years. The general fund did decrease by approximately $400,000 in 2012, which was a planned decrease by the City Council. The second graph depicts the revenue deposited into the general fund over the same period of time and reflects approximately a $100,000 decrease in licenses and permits. Hoffman noted the City’s residents did experience some storm damage in 2011 which accounted for the higher licenses and permit fees. Overall the general fund revenues remained consistent with the prior years. The third graph reflects the expenditures out of the general fund. Public safety decreased by approximately $100,000 but otherwise it was very similar to 2011. Overall there was a decrease in total fund balance, which was largely due to a decrease in the pavement management fund as a result of some projects undertaken by the City in 2012. As it relates to other governmental funds not included in the general fund, total revenue was approximately $1.5 million, which was basically the same as 2011. Hoffman noted the other fund expenditures for 2012 were $3.3 million as compared to $3.4 million in 2011. The largest increase in capital outlay expenditures mainly related to the Orono Orchard Road project and the pavement management fund. This was offset by a significant decrease in debt service expenditures. Overall the expenditures were very similar to prior years. As it relates to the enterprise funds, overall there was not a significant change between 2011 and 2012. Operating income in the water fund did increase slightly from 2011, stormwater remained consistent, and the sewer fund increased slightly. The main increase for the water fund was a slight increase in user rates and usage. Hoffman stated as it relates to the graph entitled government-wide financial data, this incorporates all of the other graphs into one graph. The cash line did decrease quite a bit from the prior year but the chart does not include non-spendable assets, such as infrastructure. Cash reserves decreased but the City’s capital assets increased and were mainly related to some road projects. Projection of future debt service envisions no additional debt service and is projected to decrease in each of the next five years assuming no new debt is taken out. The tax rate comparison according to the League of Minnesota Cities shows that the City of Orono is down around 15 percent, which is the lowest among neighboring communities as well as being significantly lower than the statewide city average. Orono is included in Region 11 and the graph shows that Orono is quite low compared to a number of similarly sized cities. Hoogeveen stated GASB 62 and 63 affected the terminology used in the government-wide and proprietary fund statements but will have no financial impact on the City. GASB 68 will become effective in 2015 and will require the City to report a net pension liability for their allocation of the state- administered pension plans. Hoogeveen noted this requirement is not as significant for a city as it is for a school district since the city only has PERA. Hoogeveen commented that funding of pensions in Minnesota is better than other states. Item #02 - CC Agenda 06/24/2013 Approval of Council Minutes 06/10/2013 [Page 2 of 32]