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Investments: <br />The City has seen interest rates continue to trend lower as higher yielding bonds are called <br />by their issuers. Investment income for 2010 is $311,331 compared with $605,476 for the <br />same period in 2009. Our portfolio for June 30, 2010 was 30,040,358 compared with <br />$30,319,153 for 2009. I have attached the June 30th cash balance and investment <br />statements for your review. <br /> <br />The Federal Open Market Committee (FOMC) has maintained the current discount rate at <br />0% - .25%. The Federal Reserve cannot affect interest rates by lowering the discount rate <br />so they continue purchasing treasury securities, which has artificially lowered rates on <br />those securities. The yield curve has flattened on the long-term side. The state of the <br />bond market would indicate that recovery is going to be slow and lengthy. Treasury bills <br />are presently providing the following rates-of-return: <br /> <br />Treasury <br />Securities <br /> <br />2010 <br /> <br />2009 <br /> 2 year .625 1.170 <br /> 5 year 1.750 2.650 <br />10 year 2.625 3.690 <br />Cert. of Deposit <br /> 1 year .400 .900 <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 decreased to 6.8% compared to national unemployment of 9.5%. <br />The job market is a lagging indicator of an economic recovery so will be one of the last <br />things to show improvement. <br /> <br />FINANCE DEPARTMENT OPERATIONS: <br /> <br />Second quarter: <br />The annual financial audit and preparation of the 2009 comprehensive annual financial <br />report consumes a lot of staff time during the second quarter. Staff also began and <br />completed work on the five year financial plan and began work on the 2010 budget. <br /> <br />Third and fourth quarters: <br />The third and fourth quarters will be dominated with budget related work which will <br />culminate with a truth-in-taxation hearing and adoption of the 2011 budget and tax levy in <br />December. The third quarter will also include certifying assessments for delinquent <br />utilities, diseased trees, abatements and other charges due to the City. W ork on insurance <br />policy renewal occurs in the fourth quarter. <br /> <br />Respectfully Submitted, <br /> <br /> <br /> <br /> <br />Mark Beer