Agenda Packets - 2015/04/27 - Laserfiche WebLink

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Investments & Economy: The City will experience lower investment earnings as a result of world-wide economic weakness. Investment income for 2015 is $51,414 compared with $52,247 for the same period in 2014. Our portfolio for March 31, 2015 was 24,893,114 compared with $25,674,816 for 2014. The Federal Open Market Committee (FOMC) continues to maintain the discount rate at 0% - .25%, which is the same level as in 2014, 2013, 2012, 2011, 2010, and 2009. The FOMC would like to increase rates and has indicated that may happen in late summer or early fall but is data dependant. Many countries are showing economic weakness which may eventually affect the United States. The European Union, Japan and other countries have commenced some form of a quantitative easing program . (bond buying) The Euro and other currencies have declined significantly against the U.S. Dollar as a result. This makes goods and services we sell internationally more expensive. This could slow our trade internationally. Another impact of these actions is lower yields on sovereign debt. Many international investors looking for yield have bid up US Treasury bond prices, which lowers the investment yield. Treasury bills are presently providing the following rates-of-return: Treasury Securities 2015 2014 2 year .490 .390 5 year 1.300 1.650 10 year 1.890 2.610 30 year 2.570 3.440 Cert. of Deposit 1 year .450 .350 State unemployment for March was 3.7% which compares favorably to national unemployment of 5.5% for March. GDP for the 1st quarter has not been released but expectations are that it will be 1.2% – 1.5%. 4th quarter GDP was revised downward from 2.6% to 2.2%. Inflation continues to remain modest at around 1.5%. At the state level, the legislature is working with a 1.9 billion surplus over the next two years beginning in July which is based on the February revenue forecast. This may change if future growth forecasts are revised. The state’s economist released the April forecast which indicates slower than initially forecast growth for 2014. Based on the current forecasts, we should not see our LGA reduced for 2015. 2016 is estimated to increase by $11,000. Finance Department Operations: The audit fieldwork is complete for the 2014 audit and MMKR has presented their management report at the April 13, 2015 Council meeting. Staff is continuing work on the five year financial plan and has started work on the 2016 City budget. Budget work will continue thru the summer and into the fall. Respectfully Submitted, Mark Beer, Finance Director