9.0. SR 05-25-1993 - Laserfiche WebLink

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rei ---\.) ( )j rIi~ ITEM 9. FROM: MAYOR & CITY COUNCIL PAT KLAERS, CITY AD~\ MAY 20, 1993 \J .Y TO: DATE: SUBJECT: 1992 CITY AUDIT Mr. Gary Groen, of Abdo, Abdo, Eick, will be attending this City Council meeting to make a presentation on the 1992 City Audit. Additionally, Finance Director, Lori Johnson, and I will be present to discuss the status of City funds. Attached for your review is the 1992 City Audit and, within this document, a letter from the Finance Director to the City Council regarding the status of City finances. e As reviewed in the previous City audits, it is a goal of the City to have a fund balance, for cash flow purposes, of approximately 35-40% of the total General Fund Budget. These monies are necessary in order to finance the operation of the City until the State funds and tax revenues become available in July of each year. The City did add to the cash flow fund balance in 1992, but this fund is still below the level necessary to finance City expenditures until State funds become available. The City annually has to borrow funds internally to meet cash flow needs. The City was very fortunate to add monies to the cash flow fund balance in 1992, when taking into consideration the court determination on the tax status of the UPA improvements. An adequate fund balance is necessary not only for cash flow reserves, but also for emergency reserves. Some individuals may believe that the fund balance should not be as high as what the City of Elk River has, but comparisons to other growing communities show that we are behind in having an appropriate level of reserves. It should be noted that if all of the City cash flow reserve was put into the general operating budget in one year, the total tax bill for everyone in the City would only decrease about ten percent. This is an incredibly small reward for what would offset years and years of hard work. Regarding the topic of City fund balances, attached for your information is an article from the 5/14/93 League of Cities-Cities Bulletin. e Most of our attention is placed on the general fund which finances the day to day operation of the City. However, another major concern of the City is the funding of capital improvements. In this regard, everyone is well aware of the fact that there are insufficient funds available to finance all of the projects that are desired within the next few years. Accordingly, projects must be prioritized and additional reserves accumulated for the most highly ranked projects. P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425