12/10/81 Agenda & Packet - Laserfiche WebLink

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TO: Mayor and Council fiac)-) FROM: Don arager, Finance Director DATE: December 7 , 1981 RE: DELAYED LOCAL GOVERNMENT AIDS & THE CITY 'S CASH POSITION Pursuant to the Mayor' s request I have estimated the City's cash flows to determine the effect of the delayed November & December 1981 payments of Local Government Aids and Homestead Credits . These payments total $204,263.26. Delay of these payments will affect the City in two ways : cause a 1981 General Fund budget deficit and cause a General Fund cash shortage in 1982. If these payments are not received within a reasonable period of time after the end of the year they would not be considered revenues of 1981. This would cause a deficit on our 1981 Financial Statement since expenditures would exceed revenues. Previous estimates have indicated that if these revenues were received there would be $59 ,486 more revenues than expenses in 1981. If the payments were not received, a deficit of $144,777.26 would result. The General Fund's cash position would also be affected by the delay of these payments. The General Fund' s cash position normally is in fairly good condition in December because of receipt of these Aids plus the second half of • property tax payments . These payments plus the fact that most of the fund balance is cash, enable the City to have cash on hand to operate until Local Government Aids and taxes are received in July. The delay of the payments from the State is causing us to use this cash earlier than we would normally. It is estimated that the General Fund's cash on December 31 , 1981 will be $145 ,494. In contrast, 1 December 31, 1980 General Fund cash was $251 ,425. This indicates that we will be using cash on hand to meet expenses during December. Without these payments we have approximately two months of cash on hand for operations in the General Fund. (Cash needed for operations in January and February is estimated to be $80,000 - $85 ,000. ) This would cause us to look toward temporarily borrowing from other funds to pay for General Fund operations. Possible funds would be Water, Sewer and Improvement Revolving Funds. These funds would provide only a few months of operating cash. Hopefully the legislature will act before this becomes a necessity. If you have any questions do not hesitate to contact me.