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2018 Adopted Annual Operating & Capital Improvement Budget

OTHER SOURCES & USES

OTHER SOURCES & USES Overview Since governmental funds focus on near-term liquidity (current financial resources), two categories in addition to revenues and expenditures are used in the governmental fund financial statements to classify events that do not generate or spend near-term, liquid resources. Other Financing Sources, increases in the net position of the government, are used to report events such as the issuance of long-term debt, sales of capital assets and transfers between funds. Other Financing Uses, decreases in the net position of the government, also classify events associated with long-term debt, such as, the recording of original issue discounts and payments to escrow agents for advanced refundings and transfers between funds. Interfund Transfers To meet the ever-changing needs of the community, the City is often required to transfer non-restricted revenues from one fund to another. In 2018, the City plans for a single interfund transfer from the General Fund to the Capital Projects Fund in the amount of $4.7 million to support the future capital improvement efforts of the City. Sale of Capital Assets Each year the City evaluates the condition, disposal and replacement of its capital assets. The proceeds from the disposition of worn out assets are received and accounted for within the other sources category. In 2018, the City anticipates the sale of such property will generate approximately $75,000. 32

FUND BALANCE ANALYSIS Changes in Fund Balance Following sound financial management, the City confines the use of fund balance to items which are commonly regarded as one-time or limited in duration. By maintaining appropriate fund balances in each of its funds, the City is able to adapt to changing market conditions, take advantage of unforeseen opportunities, and maintain adequate cash balances given the cyclical nature of the local economy. In some cases, funds are designed to accumulate fund balance in order to finance future projects and/or purchases. As shown in the following table, 2018 expenditure requests exceed revenue forecasts by $5.5 million resulting in an overall decrease in fund balance. 2018 Beginning Fund Balance Revenues & Other Sources Expenditures & Other Uses Surplus/ (Deficits) 2018 Ending Fund Balance General Fund $ 24,966,098 $ 41,806,483 $ 41,806,483 $ - $ 24,966,098 Capital Projects Fund 12,461,042 11,823,640 17,338,430 (5,514,790) 6,946,252 $ 37,427,140 $ 53,630,123 $ 59,144,913 $ (5,514,790) $ 31,912,350 A discussion of the changes in fund balance for each fund is included below: General Fund – Fund balance is forecasted to remain unchanged from the prior year as the annual operating surplus of $4.7 million is slated for transfer to the Capital Projects Fund to support future reinvestment in the community’s capital infrastructure. Capital Projects Fund – Fund balance is forecasted to decrease by 44.3% or $5.5 million. As designed, resources within the fund are accumulated over a period of time for the purposes of supporting future capital reinvestment. The use of fund balance is entirely attributable to the planned $7.8 million redesign and construction of the maintenance facility, for which funding was previously accumulated as an assigned fund balance. Restrictions, Commitments & Assignments Due to limitations placed on the purposes for which portions of the City’s financial resources may be used, it is necessary to classify various components of fund balance. The components are developed in such a manner as to identify the extent to which the City is bound to the constraints and specific purposes for which amounts in the fund can be spent. Restricted Fund Balance – Describes the portion of fund balance which reflects resources that are subject to externally enforceable legal restrictions. Committed Fund Balance – Describes the portion of fund balance which represents resources that are constrained by self-imposed limitations. Commitments of this type are made by the City Council via ordinance or resolution and may only be abolished in the same manner. Assigned Fund Balance – Describes the portion of fund balance which reflects the government’s intended use of resources. Assignments are often made by the governing body, committee or executive of the organization. Unassigned Fund Balance – If funds are not restricted, committed or assigned, they could not properly be reported in a fund other than the General Fund, as such, resources are in fact assigned in conjunction with the overall, non-specific purposes of the funds themselves. Therefore, only the General Fund can technically report a positive amount of unassigned fund balance. 33