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<br />Investments: <br />The City has and will continue to experience modestly increasing investment earnings as a <br />result of stable to increasing rates in 2014 and 2015. Investment income for 2014 is $122,042 <br />compared with $151,827 for the same period in 2013. Our portfolio for June 30, 2014 was <br />26,869,243 compared with $27,592,004 for 2013. <br /> <br />The Federal Open Market Committee (FOMC) continues to maintain the discount rate at 0% - <br />.25%, which is the same level as in 2013, 2012, 2011, 2010, and 2009. Expectations are that <br />the Fed will start to move the discount rate up late in 2015 to early 2016 but that will be <br />dependent on economic data. The Federal Reserve cannot affect interest rates by lowering <br />the discount rate so they have been purchasing treasury securities and mortgage securities, <br />which has artificially lowered rates on those securities. The Fed has been tapering bond and <br />mortgage buying and will continue reducing the amount of purchases based on economic <br />conditions. Treasury bills are presently providing the following rates-of-return: <br /> <br />Treasury Securities 2014 2013 <br /> 2 year .460 .300 <br /> 5 year 1.640 1.380 <br />10 year 2.470 2.620 <br />30 year 3.270 3.720 <br />Cert. of Deposit <br /> 1 year .450 .350 <br /> <br />Inflation in the next 12 months does not seem to be a concern for the FOMC. GDP for the second <br />quarter was at 4.0% after a decline of (2.1%) in the first quarter. State unemployment for June was <br />4.5% compared to national unemployment of 6.1%. The job market continues to be slow to <br />recover and housing appears to be in the early stages of recovery. <br /> <br />FINANCE DEPARTMENT OPERATIONS: <br /> <br />Second quarter: <br />The annual financial audit and preparation of the 2013 comprehensive annual financial report <br />consumes a lot of staff time during the second quarter. Staff also began and completed work on <br />the five year financial plan and began work on the 2015 budget. <br /> <br />Third and fourth quarters: <br />The third and fourth quarters will be dominated with budget related work which will culminate with a <br />truth-in-taxation hearing and adoption of the 2015 budget and tax levy in December. The third <br />quarter will also include certifying assessments for delinquent utilities, diseased trees, abatements <br />and other charges due to the City. Work on insurance policy renewal occurs in the fourth quarter. <br /> <br />Respectfully Submitted, <br /> <br /> <br /> <br /> <br />Mark Beer