Comprehensive Annual Financial Report 12/31/2017

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Management's Discussion and Analysis The combined fund balance of other governmental funds decreased $3,567,167 during 2017. Primary reasons for the decrease include the issuance of $1,600,000 of G.O. Tax Abatement Refunding Bonds, Series 2016C, the proceeds from which were used to pay-off the G.O. Tax Abatement Bonds of 2006C on February 1, 2017. Also, the fund balance of the Municipal State Aid (MSA) Construction fund decreased $1,169,000 as MSA funds were used to prepay the 2009A Note with Anoka County for the city's share of the 35E Interchange project. Proprietary funds. The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. The water fund has total net position at year-end of $22,621,564, of which $5,455,247 is unrestricted. The increase in net position of $602,293 was primarily due to capital contributions, partially offset by a net operating loss. The sewer fund has total net position at year-end of $24,056,431, of which $9,390,798 is unrestricted. The increase in net position of $351,645 was primarily due to capital contributions, partially offset by a net operating loss. Budtetary Highlights General Fund The General Fund budget was amended several times during the year to reflect increased revenues relative to building and licensing activities, state aid, and other operating transfers, as well as changes in expenditure areas due to personnel vacancies, changes to professional and contracted services, variances in supplies, investment in the Civic Complex air conditioning units, and finally the transfer for the park land loan and the comprehensive plan update budgeted over 3 years (2016-2018). The final amended expenditure budget was $150,759 less than the original adopted budget. Revenues were $5,934 over budget for the year. General property tax, intergovernmental revenue, and miscellaneous refunds and reimbursements were $66,444 under budget; however, this variance was more than offset by greater than anticipated license and permit revenues, fines and forfeits, and investment earnings. Expenditures came in under budget by $311,492 due to many factors including lower than expected personal service costs from vacant positions. Fuel and fleet maintenance supply costs were much lower than anticipated and the Civic Complex air-conditioning upgrades were not completed in 2017, resulting in favorability in capital outlay. 27