|
Transmittal Letter
<br />Apdl 2_3 .2001
<br />In order to offer guidance to future councils and staff, a fund balance policy will be presented to
<br />the City Council for review and adoption this summer. This is one of the policies being reviewed
<br />as part of a financial planning project currently underway. This Key Financial Strategies process
<br />includes several workshop meetings with the City Council to discuss financial policies and key
<br />financial issues facing the City. The City has retained a consultant to assist the Council with this
<br />financial planning project.
<br />ENTERPRISE FUNDS
<br />The City operates five enterprise funds including garbage collection, municipal water, sewer and
<br />electric utifities and an off -sale liquor store. In 2000 each of the enterprise funds had a positive
<br />income after transfers.
<br />Garbage Collection
<br />Charges for services in the Garbage Fund decreased from $754,801 to 686,815 in 2000. User
<br />rates were decreased in 2000 to offset a reimbursement from Sherburne County that funded part
<br />of the recycling costs previously paid by customers. The reduction of rates was also an attempt to
<br />draw down the retained earnings balance in this fund. A large sales tax rebate in 1999 for sales
<br />tax collected in error on tipping fees paid from 1997 to October 1999 and a change in payment of
<br />the tipping fee have caused a higher than needed retained earnings balance, In order to further
<br />reduce the balance, garbage rates will not increase until the balance is reduced to approximately
<br />$75,000.
<br />Liquor Store
<br />The Liquor Store had its best year ever with a gross profit of 24.86 percent on sales of
<br />$3,788,048 in 2000, almost a nine percent increase. Income before transfers totaled $496,502;
<br />this increase of $148,919 is the result of increased sales, decreased operating expenses, and
<br />increased interest income. The Liquor fund net income, after transfers of $146,400 to the
<br />General Fund and a debt service fund, totaled $350,102, an increase of $143,769.
<br />Sewage Disposal Fund
<br />There were 485 unit connections to the sewer system in 2000, the most the City has ever had in
<br />one year. Due to many new service connections, charges for services increased ten percent to
<br />$877,655. There was an inflationary increase in rates in 2000 and again in 2001. User rates will
<br />be adjusted annually for inflation and will be monitored and adjusted as necessary to fund
<br />operating and capital needs. Given the recent plant expansion, the only capital needs are for
<br />replacing and maintaining some of the buildings and equipment that were not updated during the
<br />expansion because they had not reached their full useful life.
<br />01
<br />Charges for
<br />Income Before
<br />Income After
<br />Fund
<br />Services/Sales
<br />Transfers
<br />Transfers
<br />. ............. . .......
<br />2.000
<br />1999
<br />2000
<br />1999
<br />2000
<br />1999
<br />Garbage
<br />$ 686,815
<br />$ 754,804
<br />$ 20,343
<br />$ 122,714
<br />$ 20,343
<br />$ 122,714
<br />Liquor
<br />3,788,048
<br />3,478,938
<br />496,502
<br />347,583
<br />350,102
<br />206,333
<br />Sewer
<br />877,654
<br />797,101
<br />758,664
<br />373,532
<br />738,328
<br />365,532
<br />Water
<br />755,462
<br />627,449
<br />618,449
<br />530,346
<br />561,828
<br />(77,001)
<br />Electric
<br />9,389,846
<br />8,902,004
<br />1,717,280
<br />1,873,820
<br />1,486,366
<br />1,651,846
<br />Garbage Collection
<br />Charges for services in the Garbage Fund decreased from $754,801 to 686,815 in 2000. User
<br />rates were decreased in 2000 to offset a reimbursement from Sherburne County that funded part
<br />of the recycling costs previously paid by customers. The reduction of rates was also an attempt to
<br />draw down the retained earnings balance in this fund. A large sales tax rebate in 1999 for sales
<br />tax collected in error on tipping fees paid from 1997 to October 1999 and a change in payment of
<br />the tipping fee have caused a higher than needed retained earnings balance, In order to further
<br />reduce the balance, garbage rates will not increase until the balance is reduced to approximately
<br />$75,000.
<br />Liquor Store
<br />The Liquor Store had its best year ever with a gross profit of 24.86 percent on sales of
<br />$3,788,048 in 2000, almost a nine percent increase. Income before transfers totaled $496,502;
<br />this increase of $148,919 is the result of increased sales, decreased operating expenses, and
<br />increased interest income. The Liquor fund net income, after transfers of $146,400 to the
<br />General Fund and a debt service fund, totaled $350,102, an increase of $143,769.
<br />Sewage Disposal Fund
<br />There were 485 unit connections to the sewer system in 2000, the most the City has ever had in
<br />one year. Due to many new service connections, charges for services increased ten percent to
<br />$877,655. There was an inflationary increase in rates in 2000 and again in 2001. User rates will
<br />be adjusted annually for inflation and will be monitored and adjusted as necessary to fund
<br />operating and capital needs. Given the recent plant expansion, the only capital needs are for
<br />replacing and maintaining some of the buildings and equipment that were not updated during the
<br />expansion because they had not reached their full useful life.
<br />01
<br />
|