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GENERAL FUND FINANCIAL POSITION
<br />The City's General Fund accounts for the financial activity of the basic services provided to the
<br />community. The primary services included within this fund are the administration of the municipal
<br />operation, police and fire protection, building inspection, streets and highway maintenance, culture and
<br />recreation, and economic development. The graph below illustrates the change in the General Fund
<br />financial position over the last 10 years. We have also included a line representing annual revenues to
<br />reflect the change in the size of the General Fund operation over the same period.
<br />$12,000,000
<br />$11, 000,000
<br />$10,000,000
<br />$9,000,000
<br />$8,000,000
<br />$7,000,000
<br />$6,000,000
<br />$5,000,000
<br />$4,000,000
<br />$3,000,000
<br />$2,000,000
<br />$1,000,000
<br />$—
<br />General Fund Financial Position
<br />Year Ended December 31,
<br />2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
<br />� Fund Balance O Cash Balance Revenue
<br />The City's General Fund cash and investments balance at December 31, 2023 was $8,674,288, a decrease
<br />of $2,156,454 from the previous year. Total fund balance at year-end was $8,551,350, a decrease of
<br />$1,601,278 from the prior year, as compared to the final budget that projected a decrease of $2,821,240.
<br />The City Council approved significant increases in transfers out to other funds in the current year for
<br />street and other special projects, largely accounting for the decrease in the cash and fund balance levels.
<br />As the graph illustrates, the City has generally been able to maintain healthy cash and fund balance levels
<br />as the volume of financial activity has fluctuated. This is an important factor because a government, like
<br />any organization, requires a certain amount of equity to operate. A healthy financial position allows the
<br />City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the
<br />adequate and consistent funding of services, repairs, and unexpected costs; and is a factor in determining
<br />the City's bond rating and resulting interest costs.
<br />A trend that is typical to Minnesota local governments, especially the General Fund of cities, is the
<br />unusual cash flow experienced throughout the year. The City's General Fund cash disbursements are
<br />made fairly evenly during the year, other than the impact of seasonal services, such as snowplowing,
<br />street maintenance, and park activities. Cash receipts of the General Fund are quite a different story.
<br />Property taxes comprise about 60.4 percent of the fund's total annual revenue. Approximately half of
<br />these revenues are received by the City in July and the rest in December. Consequently, the City needs to
<br />have adequate cash reserves to finance its everyday operations between these payments.
<br />The City's unassigned General Fund balance at the end of the 2023 fiscal year represents 67.6 percent of
<br />annual expenditures based on 2023 levels.
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