Agenda Packets - 2009/04/27 - Laserfiche WebLink

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Investments & Economy: The City has and will continue to experience lower investment earnings as a result of lower rates thru 2010 and into 2011. Investment income for 2009 is $229,785 compared with $257,491 for the same period in 2008. Our portfolio for March 31, 2009 was 30,231,463 compared with $28,077,923 for 2008. I have attached the March 31st investment statements for you review. The Federal Open Market Committee (FOMC) has cut the current discount rate to 0% - .25%, compared to 2.25% for the same period in 2008. The Federal Reserve cannot affect interest rates by lowering the discount rate so they have been purchasing treasury securities, which has artificially lowered rates on those securities. This adversely affects other market rates, of course that depends on your perspective. Treasury bills are presently providing the following rates-of-return: 2 year - .91%; 5 year – 1.79%; and 10 year – 2.83%. The Jumbo CD market is presently providing returns for 1 year CD’s of 1.05% and 2 year CD’s of 2.30%. The federal government has passed a stimulus package and continues to work with banks thru various programs (TARP, TALF) to try and loosen credit, shore up balance sheets, and motivate spending. Consumers are saving and not spending which is not what the economy needs at this time. We may see weak growth thru 2010 and into 2011. Inflation will be the issue that we face in the coming years and a lot of things have to go right for that not to happen. State unemployment for March increased to 8.2% compared to national unemployment of 8.5%, economists see this number going higher by the end of 2009. The job market is a lagging indicator of an economic recovery so will be one of the last things to show improvement. At the state level, the legislature is still in session working toward a showdown with the governor. We do not have much direction on where this could all end the legislature must recess on or before May 18th. I would anticipate a special session. As of this report, we would have our Local Government Aid reduced in 2009 by about $225,000, and about $450,000 in 2010. There has not been much progress on mandate reform as was hopeful at the beginning of the session. Finance Department Operations: The audit fieldwork is complete for the 2008 audit and MMKR will present their management report at the May 11, 2009 Council meeting. Staff is also working on the five year financial plan and preparations for the 2010 City budget are underway. Respectfully Submitted, Mark Beer