Report of the State Auditor of MN Year Ended 6/30/1978

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Charges for services which totaled $104.6 million were $9.6 million or 10.2% higher than in 1976. Special assessments totaled $116.2 million and accounted for 11.7% of the total revenue compared with $113.5 million or 13.0% in 1976. The percentage of revenue from this source ranges from 2.5% in the over 100,000 population group to 20.1% in the 20,000 to 100,000 population group. Contributions from public service enterprises totaled $21.9 million or 2.2% of total revenue. This revenue is largely profits of municipal liquor stores and electric utilities, neither of which are operated by the three largest cities. This is an im- portant source of revenue in the under 2,500 group where it accounts for 6.2% of revenue. In a number of municipalities in this group it is the largest source of revenue and in some exceeds 50% of revenue. Interest on investments which totaled $27.1 million was up $.7 million and accounted for 2.7% of revenue from this source compared with 3.0% in 1976. Other sources of revenue together totaled $44.0 million and accounted for 4.5% of total revenue. EXPENDITURES Expenditures for governmental functions by all munici- palities in 1977 totaled $989.8 million which was $80.9 million or 8.9% higher than in 1976. The costliest governmental function was public safety where expenditures totaled $199.9 million. This was $16.9 million or 9.2% higher than in 1976. Municipalities in the over 100,000 population group accounted for $5.6 million of this increase and the cities in the 10,000 to 20,000 population group increased $4.0 million. Some $13.8 million or 6.9% of the expenditures for public safety are for new equipment or other capital outlay. Expenditures for highways or streets totaled $164.8 million. This was $5.53 million or 3.2% less than in 1976. Construction of highways totaled $81.1 million or 49.2% of these expenditures. Expenditures of $148.0 million for sanitation were up $17.2 million or 13.2 %. This is the most costly function in the 10,000- 20,000 population group, with expenditures of 20.3%. Percentages in the other groups ranges from 9.3% to 18.0 %. Expenditures for recreation including parks totaled $99.1 million and accounted for 10.0% of the total expenditures compared with $88.0 million or 9.7% in 1976. The unallocated expenditures classification this year has been further divided into five new categories: unallocated pension costs; unallocated community development block grants; urban redevelopment and housing; intergovernmental expenditures (which is primarily payments to the housing and redevelopment authorities); and miscellaneous - all other. The sum of these unallocated expenditures totaled $150.5 million, which was $18.1 million or 13.7% higher than in 1976. Interest payments which totaled $65.8 million increased 7.4% over the preceding year. This is accounted for by higher interest rates on bonds issued in recent years and by the increase in outstanding indebtedness. Figure 1 depicts the share each source of revenue provides and the proportionate cost of each governmental function. - 5 - Figure 2 shows the change in the total amount of govern- mental revenue and expenditures in the last 10 years. OPERATION OF PUBLIC SERVICE ENTERPRISES Municipalities in Minnesota operate several types of public service enterprises. Seven are presented on separate tables and others are combined in one table as "Other service enter- prises". Electric utilities which operate generation and dis- tribution systems are presented separately from those which operate distribution systems only. Some of the former, how- ever, purchase a part of the electricity needed from private or other public sources. When possible, the financial operations of these enter- prises are presented on the accrual basis rather than cash basis. The basis of accounting is disclosed by appropriate footnotes in the tables. The following two -year summary of operations by type of enterprise is presented for the purpose of comparison. Water Utilities Operating Revenue Operating Expense Income from Operations Electric Utilities Generation and Distribution Operating Revenue Operating Expense Income from Operations Distribution Systems Only Operating Revenue Operating Expense Income from Operation's Heat Utilities Operating Revenue Operating Expense Loss from Operations Gas Utilities Operating Revenue Operating Expense Income from Operations Hospitals Operating Revenue Operating Expense Income from Operations 1977 1976 $75,585,287 $74,228,095 69,086,985 62,565,879 $ 6,498,302 $11,662,216 $95,087,806 $83,563,102 79,600,793 70,163,162 $15,487,013 $13,399,940 $36,018,212 $31,967,112 29,925,783 26,023,584 $ 6,092,429 $ 5,943,528 $ 6,817,940 $ 7,065,467 7,047,379 7,265,156 $ (229,439) $ (199,689) $25,685,598 $24,208,609 24,381,213 21,746,707 $ 1,304,385 $ 2,461,902 $57,959,997 $54,655,168 57,299,612 54,116,693 $ 660,385 $ 538,475 Nursing Homes Operating Revenue $16,790,907 $15,815,765 Operating Expense 16,270,460 15,502,716 Income from Operations $ 520,447 $ 313,049 Other Service Enterprises Operating Revenue $ 860,565 $ 746,295 Operating Expense 1,154,199 950,058 Loss from Operations $ (293,634) $ (203,763) Operating revenue and expenses were both higher for all types of enterprises, except heat utilities, in 1977. The increase in operating revenue exceeded the increase in operat- ing expense for the water and gas utilities, resulting in sharp decreases in operating income. Other service enterprises include four transit systems.