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Honorable Mayor and Members of the City Council . City of St. Anthony, Minnesota Financial Summary, continued Enterprise Funds Liquor Fund - Income from liquor operations increased to $195,676 for 1998, a 363% increase over the income for 1997. From this income, tranfers of $65,000 to the General Fund (budgeted) and $96,676 to the Revolving Improvement Fund for park improvements were made. Utility Fund - The Utility Fund maintained its strong financial position. Revenues generated were sufficient to meet current operating expenses. Internal Service Fund - Funding for the payment of accrued vacation and severance was maintained at $250,000. Funding of this liability has been limited due to the unlikelihood that this entire amount would be expended in one year for such payments. Special Revenue Funds - Budgets In 1997, management determined the activities of certain programs were significant enough to warrant presentation of these activities as separate funds. These funds have been classified as special revenue funds. According to generally accepted accounting principles operating budgets are required for all special revenue funds. Future budgets adopted by the City should include separate operating budgets for each of the special revenue funds. The current budget reflects only a budget for operations of the community center and the Housing and Redevelopment Authority. ' The accompanying financial statements include budgeted amounts for the other funds based on the level of funding received during the year to make the financial statements more readable. Park Improvements With the greater emphasis on park improvements and renovations, and funding of these projects, a recommendation would be for the City to create a Park Improvement Fund. Funding and expenditure for park improvements would be accounted for this fund and provide the City with a better method of tracking expenditures. Currently, $360,559 of the Revolving Improvement Fund has been designated for park improvements and renovations. These funds could be transferred to this fund when such a fund is established by the City. In this manner park related expenditures would be identified and accounted for in this fund rather than in several funds depending on the financing/funding of these expenditures. Liquor Inventroy System At year end an adjustment to liquor inventory was required to reflect the inventory balance per the valuation report provided by the liquor inventory system. Part of this problem was in the method of accounting for freight costs and the other related to adjustments of inventory based on physical counts and corrections. In both of these areas, adjustments to the accounting and reporting systems were recommended and these procedures already have been adopted for the current year.