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<br />Investments: <br />The City has seen interest rates continue to trend lower as higher yielding agency bonds are called <br />by their issuers. Investment income for 2012 is $232,784 compared with $233,113 for the same <br />period in 2011. Our portfolio for June 30, 2012 was 29,384,194 compared with $30,384,194 for <br />2011. I have attached the June 30th cash balance and investment statements for your review. <br /> <br />The Federal Open Market Committee (FOMC) has maintained the current discount rate at 0% - <br />.25%. The FOMC has guided that they will keep rates low into late 2014. The Federal Reserve <br />cannot affect interest rates by lowering the discount rate so they have used various bond buying <br />programs (QE1, QE2), which has artificially lowered rates on those securities. There is some <br />speculation that QE3 may come depending on the softness in the economy. The state of the bond <br />market would indicate that recovery is going to be slow and lengthy. Treasury bills are presently <br />providing the following rates-of-return: <br /> <br />Treasury Securities <br />2012 <br /> <br />2011 <br /> 2 year .220 .300 <br /> 5 year .580 1.190 <br />10 year 1.440 2.550 <br />Cert. of Deposit <br /> 1 year .250 .250 <br /> <br />Inflation in the next 12 to 18 months does not seem to be a concern for the FOMC. State <br />unemployment for June was 5.6% compared to national unemployment of 8.2%. The job market <br />continues to be slow to recover and housing appears to be close to or at a bottom. About 20% of <br />mortgages are underwater. <br /> <br />FINANCE DEPARTMENT OPERATIONS: <br /> <br />Second quarter: <br />The annual financial audit and preparation of the 2011 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 2013 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 2013 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