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City of Lino Lakes, Minnesota <br />Management Report, Page 22 <br />— <br />UMW <br />WWI <br />Immo <br />Immo <br />— <br />expenditures is not readily quantifiable. Rather, the level of this requirement must be established <br />by the City based on the history of the City and the philosophy of "adequate" reserve coverage. <br />* Cash flow timing differences. <br />Expenditures are incurred somewhat <br />evenly throughout the year. Property <br />taxes & State aids are not received <br />until the second half of the year. A <br />reserve of one -half of such revenues <br />is therefore recommended. <br />* Capital outlay replacement. <br />Internal escrow for purchases which <br />may exceed amounts available in <br />any single budget cycle. This may <br />also be accomplished through transfers <br />to dedicated replacement funds. <br />* Emergency or unanticipated <br />expenditures. Examples include natural <br />disasters, law suits, comparable worth <br />implementation and premature breakdown <br />of vital equipment. <br />* Special City Council Projects. <br />Preliminary studies, interfund loans <br />and minor improvement projects are <br />examples of reserve uses. <br />* Intergovernmental revenue cutbacks, <br />The City is vulnerable to legislative actions at <br />both the Federal & State level. Federal funding <br />to local government has been substantially <br />curtailed in recent years. Annual adjustment of <br />Local Government Aid & Homestead Credit <br />formulas is a constant threat. <br />The amount of General Fund reserve required to meet emergency and/or unanticipated <br />The reserve requirement to deal with unforeseen intergovernmental revenue reductions is also <br />—. difficult to quantify. State and Federal legislation dealing with shared aids is somewhat <br />unpredictable. The City must strive to remain current on the effects of changing legislation and <br />... budget such aids accordingly. A reserve balance in the City's General Fund will mitigate the <br />adverse effects of aid reductions which are received after expenditure budget commitments are <br />made. <br />