Item 3C: Adoption of Resolution Acknowledging Receipt of the FY10 CAFR

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The Municipal Airport Fund reported a $10.3 million increase in net assets. The increase was due to a $10.5 million increase in contributions related to FAA grants. The Parking Services Fund reported a $0.9 million decrease in net assets. Although operating income was break even, the decrease was the result of $0.4 million in interest expenses and $0.6 million in transfers out. The Stormwater Utility Fund reported a $1.0 million increase in net assets. The increase was principally due to $0.8 million in operating income and $0.1 million in interest revenue. The Wastewater Utility Fund reported a $1.0 million decrease in net assets. The decrease was mainly due to $1.5 million in operating losses that were offset by $0.5 million in capital contributions for wastewater improvements and infrastructure. Other factors concerning the finances of proprietary funds can be found in the previous discussion of the City’s business-type activities. General Fund Budgetary Highlights The City’s final budget differs from the original budget in that it contains carry-forward appropriations for various programs and projects, and supplemental appropriations approved during the fiscal year. The final fiscal year 2010 budget for the General Fund was increased by $5.9 million. The primary reasons for this increase are as follows: $2.7 million increase to police, including $1.4 million for grant-funded activities, $0.7 million in fire dispatch services, $0.2 million in regional radio user fees, and $0.1 million for equipment replacement. $0.7 million increase to planning and development, including $0.4 million in carry-forward appropriations and $0.2 million for energy conservation and downtown safety. $0.5 million increase to central services, including $0.3 million in carry-forward appropriations and $0.2 for equipment replacement. $0.4 million increase to library, recreation, and cultural services, including $0.2 million for grant funded- activities and $0.1 million in carry-forward appropriations. These changes were funded primarily by an increase of $1.9 million in intergovernmental revenues and $3.2 million in unspent resources from the prior year. The net increase of $7.1 million in budget-basis fund balance for the year ended June 30, 2010 was a significant improvement over the projected deficit of $4.8 million in the General Fund final amended budget. Actual revenues were $2.5 million higher than budget, primarily due to tax revenues being $6.3 million higher than expected, and intergovernmental revenues and charges for services that were $2.1 million and $1.3 million, respectively below budget projections. On the expenditure side, departments underspent their budgets by a total of $9.4 million. The significant changes were in Police ($3.8 million), Central Services ($1.7 million), and Library, Recreation, and Cultural Services ($1.5 million). Economic Factors and Next Year’s Budgets and Rates During the preparation of the budget for the ensuing fiscal year, the long-term impacts of the local economy were examined in conjunction with business decisions made by the City. The following are the major assumptions used in developing the FY 2011 budget: Interest rates on investments will be 0.75%. Property tax revenue is expected to increase 5.8% in FY 2011. Salaries for International Association of Fire Fighters union members will remain unchanged, while Non- represented employees and the other collectively bargained agreements will increase between 2.0% - 3.0%. Health benefit rates will increase by 2.5%. PERS costs are expected to be 22% of payroll. During the current fiscal year, budget-basis fund balance in the General Fund increased to $39.1 million, an increase of $7.1 million over the prior year. A portion of that increase was due to unanticipated revenues and underspending during the year. City staff will be submitting a FY 2011 supplemental budget to the City Council in December to determine how to allocate the unanticipated ending fund balance.