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CITY OF LINO LAKES, MINNESOTA
<br />MANAGEMENT’S DISCUSSION AND ANALYSIS
<br />DECEMBER 31, 2012
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<br />FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS
<br />As noted earlier, the City of Lino Lakes uses fund accounting to ensure and demonstrate compliance with
<br />finance related legal requirements.
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<br />Governmental Funds – The focus of the City of Lino Lakes’ governmental funds is to provide information
<br />on near-term inflows, outflows, and balances of spendable resources. Such information is useful in
<br />assessing the City of Lino Lakes’ financing require ments. GASB Statement 54, implemented for 2011,
<br />divides fund balances into five categories: Nonspendable, Restricted, Committed, Assigned and
<br />Unassigned. Definitions of these categories can be found in Note 1.O in the Notes to the Financial
<br />Statements. I n particular, unassigned fund balance may serve as a useful m easure of a government’s net
<br />resources available for unrestricted spending at the end of the fiscal year. Approximately 8% of the total
<br />fund balance amount, or $1,790,303, constitutes unassigned fund balance , which is available for
<br />spending at the government’s discreti on. The remainder of fund balance is not available for new spending
<br />because it has already been committed for other purposes . As of the end of the current fiscal year, the
<br />City of Lino Lakes’ governmental funds repor ted combined ending fund balances of $21,524,101, an
<br />increase of $4,590,561, or 27%, from t he previous year. This increase is primarily due to the receipt of an
<br />advance on future MSA allocations.
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<br />The general fund is the primary operating fund of the Ci ty of Lino Lakes. At the end of the current fiscal
<br />year, unassigned fund balance of the general fund stood at $5,053,031, wh ile the total fund balance was
<br />$5,233,817. As a measure of the gener al fund’s liquidity, it may be useful to compare unassigned fund
<br />balance and total fund balance to total fund expenditures and financing uses. Unassigned fund balance
<br />represents 56% of total general fund expenditure s and financing uses, while total fund balance
<br />represents 58% of that same amount.
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<br />The fund balance of the City of Lino Lakes’ general fund decreased by $371,363 during the current fiscal
<br />year, while the city budget anticipat ed the use of up to $368,183 of the general fund balance. Overall, the
<br />continued soft real estate market again resulted in r educed building activities this year which decreased
<br />permit revenue. Even as signs of economic recovery were being seen, the remaining effects of the
<br />recession also had an impact on property tax delinquencie s. In addition, reduced expenditures, primarily
<br />for personal services through vacant positions, and contractual services helped to offset the reduced
<br />revenues. Overall, the general f und’s revenues were within approx imately 1.5% of the amended budget,
<br />while expenditures and transfers were 1.4% below budgeted levels.
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<br />The G.O. improvement bonds 2005A fund has a total fund deficit of ($2,003,261). This fund is related to
<br />the bonds issued for the Legacy Woods Edge improvem ent project. The payment of debt service and
<br />delinquency in the collection of special assessment s dedicated to this issue caused a significant
<br />decrease in this fund. An interfund loan from the C apital Improvements fund has aided in the payment of
<br />debt service for this issue.
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<br />The Improvement Note 2009A fund, to service the debt issued to Anok a County as the City’s financial
<br />commitment for the I-35E interchange project, ended the year with a fund balance of $491. This note,
<br />which was originally in the amount of $4,260,000, was reduced in 2011 to the current amount of
<br />$3,695,000 to reflect cost savings duri ng the contruction of this project.
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<br />The Municipal State Aid fund, a capital projects fund used to finance reconstruction of state aid eligible
<br />streets, ended the year with a f und balance of $5,037,136. As stated ear lier, this fund received a large
<br />advance from the Minnesota Municipal State Aid equal to the next five annual construction installments.
<br />These funds will be used over the next several year s to pay debt service on the Tax Increment Bonds
<br />2007A and the Improvement Notes 2009A, and for future MSA projects.
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<br />The area and unit charge fund has a total f und balance of $3,972,716, of which $496,000 is
<br />nonspendable due to advances to other funds, and $3,476,716 is assigned for financing capital
<br />improvements. The fund balance duri ng the current year increased by $144,080, due in large part to the
<br />partial repayment of an interfund l oan from the Dedicated Parks fund.
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