2017.07.17 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 79 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 $19,838,631 at December 31, 2016. The proprietary fund's net position increased by $959,451 due largely to one-time infrastructure fees for new development and noncash capital contributions from developers. Although metered water connections increased 2.8% in 2016, revenue from the sale of water decreased 1.0%. This was primarily due to a decrease in water sold for irrigation purposes due to record rainfall. Increasing calls for higher water conservation may lead to the need to adjust rates in 2017. Although sewer connections increased 2.7% in 2016, revenue remained relatively the same. The sewer utility had operating income of $73,682 in 2016, a decrease of $55,155 from 2015. This was primarily due to increasing sewage treatment costs imposed by the Metropolitan Council. Sewer utility rates were last adjusted in 2013 and may need to be readjusted in 2017. 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 $2.6 million is a substantial 60% 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 $283,475 due primarily to higher than budgeted building permit revenue as a result of increased construction in the City. • Charges for services revenue exceeded budget by $186,717 due primarily to various fees related to increased construction in the City. • General government expenditures were less than budget by $93,161 due primarily to lower than budgeted legal services and insurance premiums paid for governmental buildings. • Public safety expenditures were less than budget by $61,316 due primarily to lower than budgeted police and fire protection services. • Highways and streets expenditures were less than budget by $261,083 due primarily to lower than expected street materials and repairs and maintenance costs. • Parks expenditures were less than budget by $73,912 due primarily to lower than expected insurance premiums for park facilities and lower expenses for park programming activities. 12