Comprehensive Annual Financial Report - City of Santa Monica

CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2009
The Bayside District Corporation, formerly the Third Street Development Corporation, combats
community deterioration by developing and improving the aging areas in and around the City’s
central business district and coordinating public and private sector activities.
The Santa Monica Arts Foundation promotes the arts by raising funds to finance art programs. On
June 8, 1990, the City Council merged the City’s Arts Commission with the Santa Monica Arts
Foundation.
B. BASIC FINANCIAL STATEMENTS
Basic financial statements consist of the following:
• Government-wide financial statements,
• Fund financial statements, and
• Notes to the basic financial statements.
The government-wide financial statements consist of the statement of net assets and the statement of
activities and report information on all of the non-fiduciary activities of the primary government and
its component units. As a general rule, the effect of interfund activity has been eliminated from the
government-wide financial statements. All internal balances in the statement of net assets have
been eliminated, with the exception of those representing balances between the governmental
activities and the business-type activities, which are presented as internal balances and eliminated in
the total government column. In the statement of activities, internal service fund transactions have
been eliminated; however, those transactions between governmental and business-type activities
have not been eliminated. Exceptions to this general rule are charges between the City’s Water
Fund and various other functions of the government. Elimination of these charges would distort the
direct costs and program revenues reported for the various functions concerned. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business-type activities, which rely to a significant extent on fees and charges for
support.
Both of the government-wide financial statements distinguish functions of the City that are
principally supported by taxes and intergovernmental revenues (governmental activities) from other
functions that are intended to recover all or a significant portion of their costs through user fees and
charges (business-type activities). The governmental activities of the City include public safety
(police and fire), streets, public improvements, library, cultural, recreation and parks, planning and
zoning, housing and community development and general administrative support services. The
business-type activities of the City include water, wastewater, storm water, solid waste
management, pier, civic auditorium, airport, special aviation services, cemetery, bus lines, and
parking structures and lots.
The statement of activities demonstrates the degree to which the direct and indirect expenses of a
given function are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Indirect expenses are allocated based on the annual
cost allocation plan. Program revenues include: 1) charges to customers or applicants who
purchase, use, or directly benefit from goods, services, or privileges provided by a given function or
segment, and 2) grants and contributions, including special assessments that are restricted to
meeting the operational or capital requirements of a particular function. Taxes and other items not
properly included among program revenues are reported instead as general revenues.
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