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City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2009 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 $17,614,967, of which $3,634,255 are unrestricted. The increase in net assets of $568,512 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 2009 were $22,569,080, of which $6,477,952 was unrestricted. Net assets increased $214,087 during the current year resulting primarily from operating income and investment income. The water rates were adjusted in 2009, reflecting water conservation efforts through a tiered rate structure. Sewer Rates were unchanged in 2009. 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 $343,352 under budget for the year. This is due to a few major factors. The Governor used his unallotment powers to withhold the Market Value Credit the City was to receive from the State in 2009, amounting to over $241,000 of lost revenue. Property taxes were lower due to higher delinqencies in tax payments. Investment earnings, due to declining 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 at budgeted levels for the year due to sustained state funding in these areas. 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 greater than expected traffic control contracts. Fines and forfeitures were under budgeted amounts due to reduced funding for patrolling for vehicular violations. Expenditures came in under the budgeted revenues by $140,628 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 $579,745, $55,549 over budgeted transfers. This resulted in a net fund balance decrease of $196,177 for the fiscal year. 18