Comprehensive Annual Financial Report 12/31/2012

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CITY OF LINO LAKES, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2012 FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS (CONTINUED) Governmental Funds (Continued) The Traffic Signal Fund ended the year with a total fund balance of $463,247. The GO Bond 2012A was issued during the year to finance this improvement. Intergovenmental revenues from Anoka County also contribute toward the cost of this project. The total fund balance is assigned toward the completion of this project, expected to be done in 2013. 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 position at year -end of $18,313,145, of which $4,330,637 are unrestricted. The increase in net position of $455,348 was primarily due to operating income and investment earnings. Total net position in the sewer fund at the end of 2012 were $22,586,963, of which $7,771,376 was unrestricted. While operations for the year resulted in a net loss of ($21,856), net position increased $26,532 during the current year resulting primarily investment earnings. The water rates, which reflect water conservation efforts through a tiered rate structure, and sewer Rates were unchanged in 2012. A review of utility rates, begun in 2012, is scheduled for for completion in 2013. GENERAL FUND BUDGETARY HIGHLIGHTS The original budget was amended several times during the year reflecting reductions licences and permits, public safety charges for services and gas franchise fees, increases in MSA maintenance aid and fines revenue, and reallocating resources within the original budget. Revenues were $133,851 under budget for the year. This is due primarily to delinqencies in property tax collections. 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 below budgeted levels for the year due to position vacancies. Other state aids were lower due to the elimiation of a grant - eligible position, reducing the amount of grant reimbursments. Public safety charges for service were over budget due to higher than expected traffic control contracts. A reduction in the gas franchise fee rate also resulted in reduced revenue. Expenditures came in under budget by $130,671 due mainly to lower than expected personal services costs from vacant positions and reduced benefit costs. Energy costs for fuels and electricity were higher than budgeted amounts, and supplies costs were generally lower than anticipated. There were also net transfers from the general fund of $842,250. This resulted in a net fund balance decrease of $371,363 for the fiscal year, slightly more than the planned reduction of $368,183. 19