Management Report and Recommendations 12/31/1990

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_ VOTO, TAUTGES, REDPATH & CO., LTD. MEIER CERTIFIED PUBLIC ACCOUNTANTS VI:Kw Birch Lake Professional Building • 1310 E. Hwy. 96 • White Bear Lake, MN 55110 • Fax (612) 426 -5004 • Phone (612) 426 -3263 To the Honorable Mayor and Members of the City Council City of Lino Lakes, Minnesota ROBERT J. VOTO, CPA ROBERT G. TAUTGES, CPA JAMES 5. REDPATH, CPA D. KENNETH GEORGE, CPA DAVID J. MOL, CPA Minnesota cities are facing a financial crisis which is unsurpassed in recent years. The legislative climate indicates that the State's deficit management policies will have a severe ripple effect on local government. The first part of this report analyzes the actual and proposed changes in funding for cities. This information is presented to allow for an understanding of 1) aid cuts and shifts on a State- wide basis and 2) aid cuts and shifts as they specifically affect the City of Lino Lakes. This report also presents updated trend analysis to illustrate the impact of the changes on the overall funding of basic governmental services of the City. We urge the City to increase efforts to communicate to legislators the potentially devastating effects of continued restrictions in funding required levels of city services. The balance of this report updates financial analysis of funds and account balances of the City. Financial areas which may be of particular interest to the City are as follows: Pee 1. The State continues to make significant changes to the property tax and State aid funding systems. 2 2. The City's current special assessment collection rate was 69% in 1990. 17 3. General Fund Balance increased by $139,600 during 1990. 20 4. The Area and Connection Fund reflects fund balance improvement, however, comparison to fmancing plan projections should continue to be updated. 34 5. Water and sewer rates require annual review in light of a) increased construction/bonding; and, b) escalating MWCC charges. The City updated the 1988 utility rate study and increased rates effective July 1, 1991. 44 6. The City is considering the purchase of the Lino Lakes Gas Utility from the City of Circle Pines. 46 The challenges facing local government in Minnesota continue to increase as financing becomes less stable. We are available to discuss this report with the City upon request. Respectfully submitted, x.^4412-, 240-171 VOTO, TAUTGES, REDPATH & CO., LTD. Certified Public Accountants Junc 21, 1991 MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS • PRIVATE COMPANIES PRACTICE SECTION MINNESOTA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS GOVERNMENT FINANCE OFFICERS ASSOCIATION • MINNESOTA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS