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City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2010 FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS (CONTINUED) Proprietary funds The City of Lino Lakes' 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 assets at year -end of $17,722,683, of which $3,737,394 are unrestricted. The increase in net assets of $107,716 was primarily due to operating income, contributions from the private sources and the primary government, and investment earnings. Total net assets in the sewer fund at the end of 2010 were $22,654,404, of which $6,991,232 was unrestricted. Net assets increased $85,324 during the current year resulting primarily from operating income and investment income. The water rates, which reflect water conservation efforts through a tiered rate structure, and sewer Rates were unchanged in 2010. GENERAL FUND BUDGETARY HIGHLIGHTS The original budget was amended several times during the year reflecting donations and grants received primarily for police personnel and equipment, a reduction in expected state aid, and reallocating resources within the original budget. Revenues were $123,063 under budget for the year. This is due to a few major factors. Property taxes were lower due to higher delinqencies in tax payments. Investment earnings, due to historically low interest rates were also significantly under budget. Lower building activity due to the recessed economy and, therefore, fewer new construction building permits being issued was also a factor. State intergovernmental revenues for police PERA aid were below budgeted levels for the year due to position vacancies. Local government grants were slightly under budget due to lower grant funds allocated by the granting entity. Public safety charges for service were also well over budget due to higher than expected traffic control contracts. Fines and forfeitures were under budgeted amounts due to reduced funding for patrolling for vehicular violations and the success of the city's Achieving Compliance through Education (ACE) program. Expenditures came in under the budgeted revenues by $362,103 due mainly to lower than expected personal services costs from vacant positions and reduced benefit costs. Energy costs for fuels and electricity were lower than budgeted amounts, and supplies costs were generally lower than anticipated. There were also net transfers from the general fund of $612,699. This resulted in a net fund balance increase of $238,841 for the fiscal year. 18