Management Report and Recommendations 12/31/1982

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City of Lino Lakes Management Report, Page 27 One half of the General Property Tax Levy plus one half of State aids. The General Fund incurs operating expenditures throughout the year at a reasonably constant pace. Most of the anticipated revenue required to meet these expenditures for the first half of the year is, however, not available. The revenue referred to is property taxes and State aids. Property taxes are remitted to the City primarily in two installments (July and December). State aids are remitted to the City in monthly installments from July through December. Virtually, none of these monies are available to meet the expenditures of the first half of the year. Therefore, one -half of each of these revenue sources must be available at the start of the year to avoid cash overdrafts during that period. For the City of Lino Lakes, the minimum required surplus (applying the above criteria) is $303,000 computed as follows: 1983 Budgeted Levy (Includes Homestead Credit) 1983 Anticipated Local Government Aid Total $ 430,631 171,011 $ 606,663 Minimum Required Cash -Flow Reserve (One -Half of Total) $ 303,000 1 1 1 1 1 1 1�I 1 1 1 The above minimum reserve of $303,000 was increased greatly by the State's change in II timing of homestead credit and local government aid payments. The continued delay in State aid payments is likely. There may be some relief available, however, if the State II adopts a change in timing of property tax remittances from twice a year to four times a year. This situation should continue to be monitored and minimum cash flow requirements measured accordingly. 1 1 The City should begin the process of increasing the fund balance of the General Fund II in order to respond to cash flow needs of the City and State imposed changes. An appropriated level of operating reserve for the City's General Fund should be adequate to: • Meet the minimum cash flow needs of the General Fund. • Provide a source of funding for emergency and /or unanticipated expenditures. • Provide a means of dealing with further State and Federal aid cut -backs or delays in payment. • Establish reasonable assurance that the City's General Fund is in a position to provide back -up financing for other City funds should such circumstances arise.