2016.07.05 CC Packet - Laserfiche WebLink

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CITY OF HUGO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS Proprietary funds. The City of Hugo's proprietary funds statements found on pages 27-29 and 78 provide the same type of information found in the government -wide financial statements, but in more detail. The unrestricted net position in the respective proprietary fund totaled $18,934,340 at December 31, 2015. The proprietary fund's net position increased by $1,529,999 due largely to one-time infrastructure fees for new development and noncash capital contributions from developers. Water utility conservation rates were implemented in 2010. Although metered water connections increased 2.0% in 2015, revenue from the sale of water increased 6.0%. This was primarily due to an increase in residential and irrigation services. The water utility remains profitable but increasing calls for higher water conservation may lead to the need to increase rates in 2016. Sewer utility rates were decreased in 2013 to account for decreased sewage treatment costs imposed by the Metropolitan Council. Sewer connections increased 2.0% in 2015, resulting in a 5.5% increase in revenue. The sewer utility had operating income of $128,837 in 2015, primarily due to an increase in service charges revenue coupled with a decrease in sewer costs charged by the Metropolitan Council. General Fund Budgetary Highlights The city's general fund operations remain healthy due to historically sound financial management and conservative budgeting practices. The general fund balance of $2.4 million is a substantial 57% of general fund expenditures. The City's general fund year end results were better than budgeted, particularly in nonbusiness licenses revenue and charges for services, as well as highways and street expenses and park expenses for which the city traditionally budgets conservatively. The city no longer receives local government aid from the state. This loss in aid created short-term pressures which were offset by budget planning and the city now has more stability in its revenue stream as it will no longer be as vulnerable to additional state reductions. Significant differences between the final budget and actual results can be briefly summarized as follows: • Licenses and permits revenue exceeded budget by $192,888 due primarily to higher than budgeted building permit revenue as a result of increased construction in the City. • The City received a grant in the amount of $56,714 from the State of Minnesota to help with disaster clean-up. This amount was not included in the 2015 budget. • Charges for services revenue exceeded budget by $145,330 due primarily to various fees related to increased construction in the City. • Public safety expenditures were less than budget by $60,719 due primarily to lower than budgeted fire protection services. • Highways and streets expenditures were less than budget by $181,977 due primarily to lower than expected street materials and repairs and maintenance costs. • Parks expenditures were less than budget by $91,917 due primarily to lower than expected seasonal labor costs and equipment maintenance costs. 12