City of Methuen Annual Report: 2012

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C i t y o f M e t h u e n A n n u a l R e p o r t : 2 0 1 2Undesignated Fund Balance and Free CashUnder Massachusetts law an amount known as "free cash" is certified as of the beginning of eachfiscal year by the Massachusetts Department of Revenue, Bureau of Accounts, and this, togetherwith certain subsequent tax receipts, is used as the basis for subsequent appropriations fromavailable funds, which are not required to be included in the annual tax levy. Subject to certainadjustments, free cash is unreserved fund balance adjusted to a cash basis.The following table sets forth the trend in Undesignated General Fund balance and in free cash ascertified by the Bureau of Accounts.GAAPFiscal Undesignated/Unassigned Free CashYear General Fund Balance (1) (July 1)2012 $1,082,763 $799,5062011 1,787,974 989,140 (2)2010 897,686 0 (3)2009 48,009 121,3952008 613,371 (16,404)_______________(1) Reflects Unassigned Fund Balance in fiscal 2011 in accordance with GASB requirements.(2) Most of which was appropriated in setting the fiscal 2012 tax levy.(3) A certification of the City’s Free Cash position at July 1, 2010 was not performed due to a healthinsurance deficit resulting from an aberration in usage, of approximately $3.2 million, whichdespite having been subsequently covered by the City’s school department ($1.3 million) andan appropriation of stabilization funds ($1.9 million), would have been charged to Free Cash,had it been certified. The City’s Free Cash at July 1, 2011 reflects the appropriation in fiscal2011 to cover the deficit. The fiscal 2012 budget included a $500,000 appropriation to theStabilization Fund.25
C i t y o f M e t h u e n A n n u a l R e p o r t : 2 0 1 2Stabilization FundThe City maintains a Stabilization Fund which is accounted for in the Special Revenue Funds. TheStabilization Fund plus interest income may be appropriated by a two-thirds vote of the City Councilfor any project.JuneStabilization Fund30 Balance2012 $ 349,1192011 950,266 (1)2010 2,020,5242009 486,0802008 55,365_______________(1) See footnote 3 above for further explanation. At November, 2011, the City had approximately$350,000.Tax Increment Financing for Development DistrictsUnder recent legislation, cities and towns are authorized to establish development districts toencourage increased residential, industrial and commercial activity. All or a portion of the taxes ongrowth in assessed value in such districts may be pledged and used solely to finance economicdevelopment projects pursuant to the city or town’s development program for the district. Thisincludes pledging such “tax increments” for the payment of bonds issued to finance such projects.As a result of any such pledge, tax increments raised from new growth properties in developmentdistricts are not available for other municipal purposes. Tax increments are taken into account indetermining the total taxes assessed for the purpose of calculating the maximum permitted tax levyunder Proposition 2 ½ (see “Tax Limitations” under “PROPERTY TAXATION” above.)26IndebtednessAuthorization Procedure and LimitationsSerial bonds and notes are authorized by vote of two-thirds of all the members of the City Council.Provision is made for a referendum on the borrowing authorization if there is a timely filing of apetition bearing the requisite number of signatures. Refunding bonds and notes are authorized bythe City Council. Borrowings for some purposes require State administrative approval. When serialbonds or notes have been authorized, bond anticipation notes may be issued by the officersauthorized to issue the serial bonds or notes. Temporary loans in anticipation of the revenue of thefiscal year in which the debt is incurred or in anticipation of authorized federal and state aidgenerally may be made by the treasurer with the approval of the Mayor.
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City of Methuen Annual Report: 2012

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