City Commission Worksession Agenda Archive 04-07-2008

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                           CITY OF MUSKEGON
                     CITY COMMISSION WORKSESSION

                            Monday, April 7, 2008
                                  5:30 p.m.
                          City Commission Chambers



                                AGENDA


1.   2007 Audit Review. (Finance)

2.   Roadway Changes to Facilitate Bike Path on Lakeshore Drive.

3.   Any Other Business

4.   Adjournment
                                      City of Muskegon
                                City Commission Worksession
                                        April 7, 2008
                                 City Commission Chambers
                                           5:30 PM

                                         MINUTES


2008-32
Present: Commissioners Warmington, Gawron, Spataro, Wisneski, Shepherd, Gawron (arrived
at 5:45 p.m.), Carter, and Wierenga.
Absent: None.

2007 Audit Review (Finance)
Eric VanDop, of Brickley Delong, gave an overview of the 2007 audit. Mr. VanDop stated that
staff did a great job. The Mayor also thanked city staff.

Roadway Changes to Facilitate Bike Path on Lakeshore Drive
Mohammad Al-Shatel, City Engineer, presented a power point presentation for proposed
roadway changes for a bike path on Lakeshore Drive.

Pros are as follows:
Establish a trail connection between Lakeshore Trail to the new trail along Muskegon Lake to
McCracken
Cost will be less than $100,000
It will preserve on-street parking
There is no need for additional right-of-way

Cons are as follows:
It will be a street bike lane
Eliminates the left tum lane
The terminus points do not provide for a margin of error
Easterly movement bikers will be traveling along parked vehicles
Proposed bike lane is a new concept for residents which may cause confusion

Commissioners requested that staff look further into the proposal and report to Commission.

Any Other Business
Commissioner Gawron indicated that the City Commission will be voting on Community
Development Block Grant funds tomorrow and ask that the board consider adopting the
administration recommendations and include Commissioner Carter's recommendation from a
previous meeting.

Paul Veltkamp, 592 W Muskegon, Muskegon voiced concern regarding the removal of
streelights on Webster Avenue.
Adiournrnent
Motion by Commissioner Carter, seconded by Commissioner Shepherd to adjourn at 6:40
p.m.

                                                          MOTION PASSES



                                                  ~     ,--..,:,\ ~   y -'.,_
                                                     Ann Marie Becker, MMC
                                                                                ¼,I.A, JL,"
                                                         City Clerk
                                                    ,. / p I f 7 I~_,-,,_.,.-   _     /   --                 "'-




   l EOION
  "\ rr
                                           TWo ~ downtown
                                                     -
                                                    03
                                                          streets
                                           By Robert c_ Burns
                                                                  1:0 oe u1mm1:u    -~- f'1,,./
                                                                                    ~t1 1                                ':".i,•t_:.;.,'f•••;               •=:.:...:.:_· 1Twenty ml{!•         ~ill@@r Moh;mimed Al-Shatel.
                                           bburns@muskegonchronicle.com                     '     .,                                                                     block streetlights        By Al-Shatei's  ealc11.b1t!olli,
  ~t~                                                                                                                                                                    on Muskegon            removing the 20 streetlights will
                                             MUSKEGON - Now that Muskeg-
                                           on's Webster and Muskegon avenues                                                                                             Awnue - shown          cost the-city about $13,000. But it will
                                                                                                                                                                                                save the city about $3,600 a year in
                                           are no longer the eq_uivalent of                                                                                              here-and               enetgy costs.
                                           urban freeways, it's time to discon-                                                                                          Webster Avenue
IN                                         nect some of the freeway lighting,                                                                                            between Fourth
                                                                                                                                                                                                   Al-Shatel listed several other
                                                                                                                                                                                                advantages to the change, including
                                             By action of the Muskegon City                                                                                              and Ninth streets      removal of illumination some resi-
ire's liquor                               Commission Monday, 20 streetlights                                                                                            will soon be           dents might find undesirable, the
                                           will be removed from mid-b11lck
1e revoked                                 locations along a flve-block section
                                                                                                                                                                         removed.               possible discouragement of some
                                                                                                                                                                                                through traffic, less clutter along
                                           of Muskegon and Webster between                                                                                               Chronlcle photo        narrow terraces, and fewer light
,skegon City                               Fourth and Ninth streets.                                                                                                     • Robert C. Bums       poles to worry about during storms.
growing cho-                                  That's the residential portion of
ng a downtown                                                                                                                                                                                      One possible disadvantage: com-
                                           what used to be the downtown U.S.                                Spring streets.                              Many residents hlid urged the city     plaints from some homeowners who .
lquor license                              31 Business Route before that des-                                 Last November, Muskegon and             to turn the streets back into·the resi-    associate safety with illumination.
                                           ignation was shifted to Shoreline                                Webster. avenues were converted           dential neighborhood streets they            City commissioners weighed
tat45E.
.ble criminal                              Drive last July.                                                 back to the two-way streets they          were back then. The removal of mid-        those choices as well as a third
ily sold beer                                 All existing street.lWits will                                were until the late 1950s, and park-      b lock streetlights conforms to the        option of de-energizing some lights
1onNeiger-                                 remain along the much more com-                                  ing was again allowed on both sides       lighting standards of most other res-      before voting to reduce lighting in
' night of Dec.                             mercial section between Fourth and                              of the two streets.                       idential streets in the city, said City    the residential section only.
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                                                                                                                                                                                                              L/1'1'-fu  72-7-q9o'I>
                                                                       Finance
                                                                       Administration




Memo
To:      City Commission

From: Finance Director
Date: April 2, 2008
Re:     2007 Auditors Review - Monday April 7th



As noted in previous communications, printing and distribution of the City's 2007
Comprehensive Annual Financial Report (CAFR) will be delayed until June (possibly
May). We are delaying the CAFR so that we can incorporate information from the
12/31107 MERS actuarial valuations. Normally, year-old actuarial data would be
used; however, this is not possible this year due to the transition from local pension
funds to MERS during 2006-07.

Nonetheless, the auditors have concluded their fieldwork and we thought it better for
them to provide their summary of results at this time rather than waiting until June.
Attached is the Management Discussion and Analysis together with selected
financial statements from the 2007 CAFR that the auditors will focus on in their
comments.

Please let me know if you have any questions.

Thank you.




• Page 1




0 \FINANCEIPAUL\MyDocumenls\MEMO - CITY COMMISSION 2007 Audit Presentation.doc
                     MANAGEMENT'S DISCUSSION AND ANALYSIS

This section of the City of Muskegon's annual financial report presents our discussion
and analysis of the City's financial performance during the fiscal year ended December
31, 2007. Please read it in conjunction with the City's financial statements, which follow
this section.

FINANCIAL HIGHLIGHTS

  •   The assets of the City of Muskegon exceeded its liabilities by $131,868,102 as of
      December 31, 2007.        Of the total net assets, $18,143,248 (13.8%) was
      unrestricted and may be used to meet the City's ongoing obligations to citizens
      and creditors.

  •   The City's total combined net assets increased $2,346,908 during 2007. This
      increase is primarily the result of tight budget controls and investment in capital
      assets.

  •   The City's governmental funds reported combined ending fund balance of
      $12,233,731, a decrease of $998,380 from the         Figure A-1, Required Components of the
      prior year.    Most of the change results from             City's Annual Financial Report
      spending down proceeds from long-term debt                  --------------------,
      issued in the prior year for construction of the new        '
                                                                    ~~~-
                                                                           ..---       _..l..____

      Central Fire Station.                                1/uu«ujemeut 'a       Basic            Required
                                                                     v--.                       Financial   Supplementary
                                                                                                             Information
                                                                                               Statements
  •   The City's general fund reported a total fund balance          ad
      of $2,920,632, an increase of $230,593 over the prior          A""(<f,u

      year. The City also maintained a budget stabilization
      (or "rainy day") fund that reported a $1.75 million
      fund balance of at December 31, 2007, an increase
      of $250,000 from 2006.                                         ,                                                      .
                                                                     ,                     '                     ''
OVERVIEW OF THE FINANCIAL STATEMENTS                                                                        ?/,tu
                                                                         Government-Wide          Fund
                                                                            Financial           Financial
                                                                           Statements
                                                                                                            '"Me
                                                                                               Statements
This annual report consists of three parts-management's                                                     ?imwdd
                                                                                                            Stateme,tU
discussion and analysis (this section), the basic financial
statements, and required supplementary information. The
basic financial statements include two kinds of statements
that present different views of the City:                                                                             Detail
                                                                    Summary~

  •   The first two statements are government-wide financial statements that provide
      both long-term and short-term information about the City's overall financial status.

  •   The remaining statements are fund financial statements that focus on individual
      parts of the government, reporting individual City operations in greater detail than
      the government-wide statements.
         •     The governmental funds statements tell how general government services
               were financed in the short-term as well as what remains available for future
               spending.

         •      Proprietary fund statements offer short- and long-term financial information
                about activities the City operates like private businesses.

         •     Fiduciary fund statements provide information about the financial relationships
               in which the City acts solely as a trustee or agent for the benefit of others, to
               whom the resources in question belong.

The financial statements also include detailed notes that explain some of the
jn formation  jn   th 8 ~-F-,.-,-,-,A---,-.M-,j-,-,-F,-,-,,-ce-,-,-,,-.-,-C-ity-•,-G-,-v-ec_o_m_e_ot_-W_id-,-,-o,-F-,-"-'-,-F-io-..-,-,,-1~s1-,-,,-m-,o-,-,- - - - - -
fin an cia I    statements                                                                                                                     fund Statements
                                                                                              - __1_~----
                                                                                   overnmen t\V'd            G overnmen t aIF un d s         p      ' tarv Fun ds             F"d uciary F u nd
and provide additional                        _l)J!_l!_
                                               T
                                                        0
                                                        g(_s
                                                            1<11ements
                                                                         ' EntireGCily govemment          jThe activities of the City
                                                                                                                                      ' Activities
                                                                                                                                            --~~nc
                                                                                                                                                   the City                    '
                                                                                                                                                                        Instances in which the
                                                                                                                                                                                              - s -----


data. The statements                                                      (except fiduciary funds)
                                                                          and the City's component
                                                                                                        that arc not proprietary or
                                                                                                         fiduciary
                                                                                                                                        operates similar to private
                                                                                                                                        businesses.
                                                                                                                                                                       City is the trustee or
                                                                                                                                                                       agent for someone else's
                                              Scope
are followed by a                                                         units                                                                                        resources

section      of    required
                                                                           • Kfifrrnenc of nef assets -- •-earance·sncer   ---- -----
                                                                                                                                         ·• Sia!enient ol net assets    • Statement ol fiduciary
supplementary                                                                                                                                                           net assets
information that further                       Required financial          • Statement of activities     • Statement of revenues,
                                                                                                         expenditures & changes
                                                                                                                                         • Statement ofrevem1es,
                                                                                                                                         expenses and changes in
                                                                                                                                                                        • Statement of changes
                                                                                                                                                                        in fiduciary net assets
                                               statem ems
explains and supports                                                                                    in fund balances                fund net assets

the information in the
                                                                                                                                        : • Statement of cash flows    :Accmal accounting and _____
                                               Accozmtillg basis          Accrual accounting and        tModificd accrual               Accrual accounting and
financial      statements.                     and 111eas11reme111        economic resources focus      !acco1mting and current         economic resources foclls      ecm1omic resources focus
                                              {!_;c11s                                                  Ifinancial resources focus
                                                                 ------ -All assets and liabilities,
Figure A-1 shows how                                                                                    !Only assets expect-eiU!        Al! assets and liabilities,    All a:,sets and liabilities,
                                                                          both financial and capital,   !be used up and liabilities     both fmancial and capital,     both short-tenn and long-
the required parts of                          Type of
                                                                          short-tenn and long-term      !that come due during the       and short-tenn and long-       tenn; the City's funds do
                                               asset/liability
                                                                                                                                        term                           not currently contain
this annual report are                         i1!formalio11
                                                                                                        :year or soon thereafter;
                                                                                                         no capital assets included                                    capital assets, although
arranged and related to                                                                                 Revenues for which~;sh          All revenues and expenses
                                                                                                                                                                       Lh_ev can
                                                                                                                                                                       AH revenues and
                                                                                                                                                                                              ------
                                                                          All reve1111es and
one another.                                                              expenses during year,         is received during or soon      during year, regardless of     expenses durITTg year,
                                                                          regardless of when ca~h       after the end of the year;      when cash is received or       regardless ufll'hen cash
                                               1)•pe of                   is received or paid           expenditures when goods         paid                           is received or paid

Figure A-2 summarizes il!flowlouiflow
                          il!formalio11
                                                                                                        or services have been
                                                                                                        received and payment is
the major features of                                                                                   due during the year or
                                                                                                        soon thereafter
the   City's    financial
statements, including the portion of the City government they cover and the types of
information they contain. The remainder of this overview section of management's
discussion and analysis explains the structure and contents of each of the statements.


Government-Wide Statements

The government-wide statements report information about the City as a whole using
accounting methods similar to those used by private-sector companies. The statement
of net assets includes all of the government's assets and liabilities. All of the current
year's revenues and expenses are accounted for in the statement of activities
regardless of when cash is received or paid.

The two government-wide statements report the City's net assets and how they have
changed. Net assets-the difference between the City's assets and liabilities-is one
way to measure the City's overall financial health or position. Over time, increases or
decreases in the City's net assets are an indicator of whether its financial health is
improving or deteriorating, respectively. However, to assess the overall health of the
City, one needs to consider additional nonfinancial factors such as changes in the City's
tax base.

The government-wide financial statements include not only the City of Muskegon itself
(known as the primary government), but also legally separate component units for which
the City is financially accountable. Financial information for these component units is
reported separately from the financial information presented for the primary government
itself.

The government-wide financial statements of the City include the governmental
activities. Most of the City's basic services are included here, such as general
government, public safety, highways and streets, sanitation, economic development,
parks and recreation, and interest on long-term debt. Income taxes, federal grants,
property taxes and revenues from the State of Michigan finance most of these activities.

Also included in the government-wide statements are the City's business-type activities:
water, sewer and marina operations.


Fund Financial Statements

The fund financial statements provide more detailed information about the City's major
funds-not the City as a whole. Funds are accounting devices that the City uses to
keep track of specific sources of funding and spending for particular purposes.

  •   Some funds are required by State law or other legal requirements.

  •   The City Commission establishes other funds to control and manage money for
      particular purposes or to show that it is properly using certain taxes and grants.

The City has the following kinds of funds:

  •   Governmental funds-Most of the City's basic services are included in
      governmental funds, which focus on (1) how cash and other financial assets that
      can readily be converted to cash flow in and out and (2) the balances left at year-
      end that are available for spending. Consequently, the governmental fund
      statements provide a detailed short-term view that helps the user determine
      whether there are more or fewer financial resources that can be spent in the near
      future to finance the City's programs.         Because this information does not
      encompass the additional long-term focus of the government-wide statements, we
      provide additional information on the subsequent page of the governmental funds
      statements that explain the relationship (or differences) between them.
  •   Proprietary funds-Services for which the City charges customers a fee are
      generally reported in proprietary funds. The City uses three proprietary funds:
      water, sewer, and marina.         Proprietary funds, like the government-wide
      statements, provide both long-term and short-term financial information.

  •   We use internal service funds to report activities that provide supplies and services
      for the City's other programs and activities.

  •   Fiduciary funds-The City is the trustee, or fiduciary, for certain funds. It is also
      responsible for other assets that-because of a trust arrangement-can be used
      only for the trust beneficiaries. The City is responsible for ensuring that the assets
      reported in these funds are used for their intended purposes. All of the City's
      fiduciary activities are reported in a separate statement of fiduciary net assets and
      a statement of changes in fiduciary net assets. We exclude these activities from
      the City's government-wide financial statements because the City cannot use
      these assets to finance its operations.

  •   Component units - Finally, the City of Muskegon's Comprehensive Annual
      Financial report includes five component units: the Downtown Development
      Authority (DOA), the Tax Increment Finance Authority (TIFA) and, three Local
      Development Finance Authorities (LDFAs). Component units are separate legal
      entities for which the City of Muskegon has some level of financial accountability.
      The component units of the City exist primarily for the issuance and repayment of
      debt to finance projects in specific areas of the City. Accordingly, they are
      discussed below under the Capital Assets and Debt Administration heading.


FINANCIAL ANALYSIS OF THE CITY AS A WHOLE

Net assets. The Statement of Net Assets provides an overview of the City's assets,
liabilities and net assets. Over time this can provide a good indicator of the City's fiscal
health. The total net assets of the City were $131,868,102 as of December 31, 2007.
This is an increase of $2,346,908 over reported net assets for the prior year, as
restated. A summary of the City's net assets follows:
                                                    City's Net Assets
                                                  (In thousands of dollars)
                                                                                                                 Total
                               Governmental                  Business-Type                                 Percentage
                                 Actlvities                    Activities                Total                Change
                                2007      2006                 2007       2006        2007         2006    2007-2006

Current and other assets      $25,758   $27,617               $9,542      $9,804    $35,300      $37,421        -5.7%
Capital assets                 78,496    78,137               60,994      62,036    139,490      140,173        -0.5%
Total Assets                  104,254   105,754               70,536      71,840    174,790      177,594        -1.6%

Long-term liabilities           9,083    10,043               19,337      21,629     28,420       31,672       -10.3%
Other liabilities              11,463    13,365                3,039       3,036     14,502       16,401       -11.6%
Total Liabilities              20,546    23,408               22,376      24,665     42,922       48,073       -10.7%

Net Assets
Invested in capita! assets,
  net of related debt          68,060    68,189               39,357     39,442     107,417    107,631         -0.2%
Restricted                      5,485     5,378                  822        822       6,307      6,200          1.7%
Unrestricted                   10,163     8,779                7,981      6,911      18,144     15,690         15.6%
Total Net Assets              $83,708   $82,346              $48,160    $47,175    $131,868   $129,521          1.8%




The bulk of the City's net assets ($107,416,592 or 81%) reflect investment in capital
infrastructure assets less the remaining balance of debt issued to acquire those assets.
Infrastructure assets are used to provide public services to citizens and are not
available for spending. Another 4.8% ($6,308,262) of the City's net assets are legally
restricted as to use. The remaining net assets ($18,143,248) are unrestricted and may
be used to meet the City's operating needs and ongoing obligations.

Changes in net assets. The City's total revenues were $46,768,399. Just over a third of the
City's revenue stream came from
                                                                    Figure A-3
charges to users of specific                                  Gty of Mlskegon
services such as water or sewer                  Sources of Revenue for Fiscal Year 2007
(See Figure A-3).          Another
eighteen percent came from                        ~atir,g & cap;tal &ants
various grants from the state and                         IB%


federal governments and thirty-
four percent was from local
property and income taxes. The                                                         ln::oTe Taxes
remainder was comprised of state                                                            '7%

revenues and various other                                             OU,e<   State~e

sources such as interest income.
                                                                        4%
                                                                                 ""
The total cost of all City programs
and services during 2007 was
$44,421,491, an increase of $1,862,908 from 2006. Seventy-five percent of these costs
were for governmental activities such as police and fire protection, streets, parks, and
general administration. The remainder represents business-type activities operated by
the City, specifically, water, sewer and marina operations.

The difference between the City's total revenues and expenses ($2,346,908) represents
the increase in total net assets for 2007. The following table (Changes in City's Net
   Assets) further breaks down the change in total net assets into year-to-year changes in
   individual revenue and expense categories:

                                                  Changes in City's Net Assets
                                                     (In thousands of dollars)
                                                                                                                        Total
                                        Governmental                   Business-Type                               Percentage
                                          Activities                     Activities              Total                Change
                                         2007        2006               2007       2006       2007         2006    2007-2006

Program revenues
 Charges for services                    $4,109       $4,967         $12,030     $11,413    $16,139      $16,380       -1.5%
 Operating grants and contributions       5,229        5,093                                  5,229        5,093        2.7%
 Capital grants and contributions         3,348        5,360                        711       3,348        6,071      -44.9%
General revenues
 Property taxes                           8,014        7,847                                  8,014        7,847        2.1%
 Income taxes                             7,758        7,674                                  7,758        7,674        1.1%
 State shared revenues                    4,475        4,674                                  4,475        4,674       -4.3%
 All other                                1,634        1,263             170         122      1,804        1,385       30.3%
Total revenues                           34 567       36 878          12 200      12 246     46 767       49124        -4.8%

Governmental actlvlties expenses
 PubHc representation                       925          904                                    925          904        2.3%
 Administrative seNices                     784          733                                    784          733        7.0%
 Financial services                       2,205        2,062                                  2,205        2,062        6.9%
 Public safety                           12,802       13,059                                 12,802       13,059       -2.0%
 Public works                             2,989        3,089                                  2,989        3,089       -3.2%
 Highways, streets and bridges            7,272        5,672                                  7,272        5,672       28.2%
 Community and economic development       3,054        3,383                                  3,054        3,383       -9.7%
 Culture and recreation                   2,433        2,465                                  2,433        2,465       -1.3%
 General administration                     358        1,144                                    358        1,144      -68.7%
 Interest on long-term debt                 343          207                                    343          207       65.7%
Business-type activities expenses
 Water                                                                 5,795       4,500      5,795        4,500       28.8%
 Sewer                                                                 5,067       5,007      5,067        5,007        1.2%
 Marina                                                                  393         333        393          333       18.0%
Total expenses                           33165        32 718          11 255       9 840     44 420       42 558        4.4%

Change in net assets before transfers     1,402        4,160             945       2,406      2,347        6,566      -64.3%
Transfers                                   40          540               40         540
Change in net assets                      1,362        3,620             985       2,946      2,347        6,566      -64.3%

Net assets at beginning of year          82,346       80,351          47,175      44,229    129,521      124,580       32.0%

Restatement at January 1                              (1,625)                                          (1,625)
Net assets at end of year               $83,708      $82,346         $48,160     $47,175   $131,868   $129,521          1.8%



   Net assets for governmental activities increased $1,361,278 primarily due to strong
   local income and property tax collections and continued tight cost controls. Business-
   type activities saw an increase in net assets of $985,630, down from last year's
   increase of $2,945,927.

   Governmental Activities
   The following table (Net Cost of Selected City Functions) presents the cost of each of
   the City's largest functions as well as each function's net cost (total cost less fees
   generated by the activities and intergovernmental aid specifically related to the
   function). The net cost reflects the portion of costs funded by local tax dollars and other
   general resources.
  •     The operational cost of all governmental activities during 2007 was $33,166,525.
  •     The net cost that City taxpayers paid for these activities through local taxes was
        $15,771,809, or 48% of the total.
  •     The remaining cost was paid by user charges to those who directly benefit from
        the programs or by state and federal grants and contributions


                                      Net Cost of Selected City Functions
                                            (in thousands of dollars)

                                          Total Cost of                        Net Cost of
                                            Services           % Change         Services         % Change
                                        2007        2006                    2007        2006
Governmental activities
 Public safety                          $12,802     $13,059        -2.0%    $11,476   $11,678       -1.7%
 Community and economic development       3,054       3,383        -9.7%        620        675      -8.1%
 Culture and recreation                   2,433       2,465        -1.3%      1,801        425     323.8%
 Highways, streets and bridges            7,272       5,672       28.2%        773     (1,508)    -151.3%
 Public works                             2,989       3,090        -3.3%      2,554      2,454       4.1%
 All other                                4,615       5,049        -8.6%      3,257      3,575      -8.9%
Total governmental activities           $33,165     $32,718         1.4%    $20,481   $17,299       18.4%



Business-Type Activities

The financial goal of the City's business-type activities (i.e. water, sewer and marina
operations) is to operate on a more or less "break-even" basis without making
significant profit or needing general tax subsidies. For 2007 this goal was achieved with
the City's total business-type activities realizing an overall increase in net assets of
$985,630.

Most of the increase ($873,278) is attributable to water fund operations which
experienced strong sales and lower than anticipated costs in 2007. Sewer fund net
assets increased $92,803 as higher than expected wastewater treatment costs largely
offset the effects of a mid-year user rate increase. Marina and launch ramp fund net
assets decreased $73,740 as the struggling economy continued to impact boating
activity in the area.


FINANCIAL ANALYSIS OF THE CITY'S FUNDS

The fund financial statements provide detailed information about the major City funds,
not the City as a whole. The City's major funds for 2007 were the general fund, the
major and local street funds, and the public improvement fund.

General Fund Highlights

The general fund receives the most public attention since it is where local tax revenues
are accounted for and where the most visible municipal services such as police, fire and
parks are funded. The City reforecasts its general fund budget on a quarterly basis to
take into account changing economic conditions and policy priorities. The following
table shows the general fund year-end fund balance for the last five years:
                                                                   Fund Balance as a% of
              Year-End Fund     Year-to-Year%     Prior Year's     Prior Year Expenditures
    Year         Balance           Change       Expenditures and    (Policy Target= 10%)
                                                  Other Uses
    2007           $2,920,632       +8.6%           $24,498,778           11.92%
    2006            2,690,039       +6.8%             23,658,227          11.37%
    2005            2,519,605      +3.0%              23,388,020          10.77%
    2004            2,445,191      +0.5%              23,705,334          10.31%
    2003            2,431,418      -13.4%             23,971,536          10.14%

Actual 2007 general fund expenditures were $714,309 less than the final amended
budget amount. Most of this variance resulted from budgeted contingency reserves that
were not used and from position vacancies and other operating savings as the City
continued to manage its way through a difficult economy.           Significant budget
amendments made during the year included:

   •   City Attorney - amended to account for legal costs incurred as result of several
       development initiatives.
   •   Parks Maintenance - amended to increased maintenance costs resulting from
       completion of the lakeshore bike trail system.
   •   Capital Outlay - amended to account for necessary improvements to the police
       locker room not foreseen in the original budget.

General fund revenues for 2007 were $652,643 higher than the final amended budget.
This positive variance is almost entirely attributable to higher than expected local
income tax collections.

The favorable variances on both the revenue and expenditure sides of the budget
allowed the City to make several year-end transfers to other funds including: $250,000
to the budget stabilization fund, $300,000 the sidewalk replacement fund, $200,000 to
the major street fund and, $150,000 to the state grants fund.

Major and Local Street Fund Highlights

The major and local street funds account for all of the city's street construction and
maintenance activities. Primary funding comes from the State of Michigan. During
2007, the fund balance of the major street fund increased $461,032 due to a $200,000
transfer from the general fund and higher than anticipated grant revenues. The local
street fund balance increased $741,680 during 2007 due mostly to the unanticipated
early payoff of a large special assessment.

Public Improvement Fund Highlights

The public improvement fund is used to account for the financing of large scale general-
purpose projects not readily accounted for in other funds. Resources come from the
sale of land, annual transfers from the general fund and periodic issuance of long-term
debt. In 2007, the fund balance of the public improvement fund decreased $2,691,274
as proceeds from bonds issued in late 2006 were spent on construction of a new
downtown fire station.
  CAPITAL ASSETS AND DEBT ADMINISTRATION

  Capital Assets

  At the end of 2007, the City and its component units had invested $139,775,629 in a
  variety of capital assets, including land, equipment, buildings, water and sewer lines,
  and vehicles. Note D of the notes to the basic financial statements provides detailed
  information on the City's capital asset investment.

  The City's largest capital asset project during 2007 was construction of a new $4.0
  million Central Fire Station.

  Long-Term Debt

  At year-end 2007, the City had $31,974,002 in bonds and other long-term obligations
  outstanding. This represents a decrease of 10% from the prior year. The City did not
  issue new debt during 2007.
                                                                                          Bond Ratings
  Additional information concerning the City's long-term debt is                          The City's limited full faith
  presented in Note I to the basic financial statements.                                  and credit bonds (i.e. bonds
                                                                                          guaranteed by the City's
                                                                                          general    taxing    powers)
                                                                                          presently carry a Standard &
                                                                                          Poors rating of "A".


                                   City's Long Term Debt - Bonds and Other Obligations
                                                      In thousands of dollars
                                                                                                                      Total
                                   Governmental                  Business-Type                                  Percentage
                                     Activities                    Activities               Total                  Change
                                    2007      2006                2007          2006     2007         2006       2007-2006

Due within one year                $1,224    $1,468             $2,330       $2,308     $3,554       $3,776          -5.9%
Due in more than one year           9 083    10 043             19 337       21 629     28 420       31 672         -10.3%
Total bonds & other obligations   $10,307   $11,511            $21,667      $23,937    $31,974      $35,448          -9.8%




  In addition to direct City debt, component units such as the Downtown Development
  Authority (ODA) and Local Development Finance Authority (LDFA) had outstanding debt
  totaling $8,543,719 at year-end as shown in the table below. Debt issued by these
  component units typically is secured by the limited full faith and credit of the City and so
  is an important consideration in assessing the City's overall fiscal health. Additional
  information concerning component units' long-term debt is presented in Note I to the
  basic financial statements and is summarized as follows:
                                  Component Unit Long Term Debt- Bonds and Other Obligations
                                                         (In thousands of dollars)
                                                                                                                         Total
                                        Downtown                  Local Development                                   Percentage
                                     Finance Authority             Finance Authority                 Total             Change
                                    2007         2006              2007          2006         2007           2006     2007-2006

Due within one year                    $210        $200                $80             $80     $ 290          $ 280         3.6%
Due in more t:han one year            3 695        3 905             4 559            4 638    8 254          8 543        -3.4%
Total bonds & other obligations      $3,905       $4,105            $4,639           $4,718   $8,544         $8,823        -3.2%




  ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES

  The City's fiscal year 2008 capital budget anticipates spending $8,408,250 for capital
  projects, principally street improvements, water and sewer system improvements, and
  scheduled equipment replacements. These improvements will be funded through grants
  and revenues generated by operations. For 2008, the only new debt anticipated is a
  $250,000 low interest loan from the State of Michigan for cleanup of a brownfield site.
  Although the loan will be made to the City, it will be secured and repaid by the private
  developer of the brownfield site.

  From an operations standpoint, the City's 2008 budget plan is to maintain current
  service levels with no new expenditure initiatives.

  To fund operations, the City depends on five major sources of revenue: local income
  taxes, local property taxes, state-shared revenues, state street funds, and water and
  sewer utility fees. Together, these five income sources account for about three-quarters
  of the City's total revenues. Meaningful discussion of the City's financial outlook needs
  to center on these major income sources.


  Local Income Tax

  The City income tax was approved by voters in 1993 and now is the primary source of
  funding for police, fire, parks and other general operations. The income tax rate is 1%
  on City residents and ½ of 1% on non-residents working in the City. The income tax
  provides key advantages for core cities such as Muskegon. First, it allows the City to
  regionalize its tax structure by taxing non-residents who work here and use City
  services. Second, it allows the City to benefit from development occurring outside City
  limits because City residents employed by non-City employers pay income taxes.
  Finally, the income tax generates revenue from employees working at hospitals,
  churches, government agencies, colleges and other institutions traditionally exempt
  from paying property taxes. This is particularly important for Muskegon since six of the
  ten largest income tax sources are such institutions.

  Income tax revenues increased from $7,425,173 in 2006 to $7,618,461 for 2007
  (+2.6%). For 2008, the City is conservatively estimating income tax revenues at
  $6,900,000. The following table shows the makeup of the City's income tax base:
                       Number of      2007          Percent of      Average         Average
      Category          Payers     Amount Paid           Total     Amount Paid     Amount Paid
                                                                     2007             2006

      City Resident        7,308    $2,903,361           39%             $ 397        $ 391
      Non-Resident        13,983     3,548,550           48%               254          248
      Corporate            1,850     1,166,550           13%               631          539
        Total             23,141    $7,618,461          100%             $ 329         $316



Local Property Tax

The City's 2007 property tax millage consisted of 11 mills: 8.5 mills for general
operations and 2.5 mills levied for sanitation. City charter authorizes a general
operating millage up to 10 mills and state law permits a maximum sanitation millage of 3
mills. Millage rates are applied to the taxable value of property in the City to arrive at
the City's property tax levy. As shown below, the City's property values have grown
modestly over the last few years. For 2008, the City is projecting $7,708,000 in property
taxes, a 4.9% increase over the $7,345,550 collected in 2007.

                                                                                    Percent
              Year           Real                Personal              Total        Change
             2007          $739,050,597          $143,249,691       $882,300,288     +3.1%
             2006           706,285,650           149,374,300        855,659,950     +2.9%
             2005           673,785,278           158,140,600        831,925,878     +0.3%
             2004           661,233,389           168,106,228        829,339,617     -1.2%
             2003           661,692,712           177,348,400        839,041,112     +1.6%



State Shared Revenues

State shared sales tax revenues represent about twenty-percent of total general fund
revenue. The City's state shared revenue allocation is made up of two approximately
equal parts. The constitutional component is a fixed percentage of total stale sales tax
collections that is allocated to cities on a per capita basis and that cannot be reduced by
the legislature. The statutory component is determined by a complex formula and is
subject to adjustment through the State's budget process. Both constitutional and
statutory components depend, of course, on overall state sales tax collections. Over
the last several years, state shared revenues have fallen sharply due to the faltering
economy and to executive order budget cuts in the statutory share. The City's recent
state shared revenue history is summarized below:
                                     State Shared                Percent
                         Year         Revenues                   Change

                         2007             $4,475,462             -1.8%
                         2006              4,556,801             -0.1%
                         2005              4,592,852             -1.1%
                         2004              4,645,348             -5.9%
                         2003              4,938,861             -7.8%


Continued erosion of the state shared revenue component constitutes the single biggest
threat to the stability of City finances at this time. Due to the local income tax,
Muskegon is somewhat less dependent on this revenue source than most Michigan
cities.

For 2008, the City projects $4,487,972 based on current information available from the
state. This is little changed from the $4,475,462 received during 2007.

Street Funds

The State also returns to the City a share of gasoline tax revenues to help fund
maintenance and construction of major and local streets within the City. These
revenues have not suffered to the extent that general state sales tax revenues have:
                                Street Revenues      Percent
                        Year       from State        Change

                        2007      $3,288,098         -0.2%
                        2006       3,297,183         -0.7%
                        2005       3,319,131         -4.1%
                        2004       3,459,503         +9.2%
                        2003       3,166,406         -1.7%

For 2008, the City is projecting a modest increase in street funds from the State of
Michigan.

Water and Sewer Fees

From a government-wide entity perspective, combined water and sewer fees represent
the City's largest income stream totaling $11,509,536 in 2007. Charges to customers
are based on the amount of metered services used times rates periodically set by the
City Commission. During 2007, sewer rates were increased as result of higher
wastewater treatment and debt service charges enacted by Muskegon County.          A
further sewer rate increase may be needed in 2008 as Muskegon County embarks on a
costly sewer forcemain replacement project.


CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and
investors and creditors with a general overview of the City's finances and to
demonstrate the City's accountability for the money it receives. If you have questions
about this report, need additional financial information, or wish to obtain separate
financial statements for the City's component units, contact the City's Finance
Department at (231) 724-6713 or by e-mail (finance@shorelinecity.com).
                                                                                   City of Muskegon
                                                                    BUDGETARY COMPARISON SCHEDULE
                                                                                     General Fund
                                                                        For the year ended December 31, 2007
                                                        (with comparative actual amounts for the year ended December 31, 2006)


                                                                                                                                     2007                                                    2006
                                                                                                                                                                     Variance with
                                                                                                                                                                     final budget-
                                                                                          Budgeted amounts                          A(:'.,!                             positive
                                                                                     Original            Final                <--:. JY            Actual              {!_"!~_gative)         Actual
REVENUES
  Taxes                                                                                                             ,:;;~i+
     City income tax                                                           $      6,980,000        $      ,a:tt'o,ooo ~1s,                   7,618,461       $        618,461       $   7,425,173
     Property taxes                                                                   7,361,472        _,,i/()'7,353,521                  '"":t'.:'?>7,345,550             (7,971)          7,142,298
     Industrial facilities taxes                                                            ?
                                                                                       351,8-8    .7
                                                                                                , _.,/,,';/        35J,8-8 ?                   "'hi>        ?
                                                                                                                                                   ,;,,364,6_8             12,800             396,366
     Payments in lieu of taxes                                                          89,000 { /                 ,.,89,-000                        91,393                 2,393              88,871
     Delinquent chargeback collected                                                     12,000   ';'~\i\-    .,,,_z:{:_£'.f2,ooo                                         (12,000)
             Total taxes                                                                              "-"'~ ,,,J4~806,349                       15,420,032                613,683           15,052,708
                                                                                                            ·,>'
                                                                                                               ,,
  Licenses and pennits
     Business licenses                                                                                                                               3:2,025                  (475)            33,656
     Liquor licenses                                                                                                                                 37,000                   (500)            36,452
     Cable TV fees                                                                                                                                  297,200                  1,700            285,124
     Housing licenses                                                                                                                                81,640                  6,640             55,623
     Rental property registration                                                                                                                        695                  (805)            12,980
     Burial permits                                                                                                                                 117,703                 (2,297)           118,399
     Building permits                                                                                              325,000                          348,349                 23,349            306,791
     Electrical pennits                                                                                            105,000                          106,607                  1,607             76,535
     Plumbing permits                                                                                               35,000                           34,540                   (460)            34,367
     Mechanical permits                                                                  52,500                     52,500                           56,016                  3,516             45,978
     Cat licenses                                                                         2,500                      2,850                             3,740                   890              3,115
     Police gun registration                                                                                             3                                 3                                          3
             Total licenses and pennits                                               1,015,000                 1,082,353                         1,115,518                 33,165           1,009,023

  Intergovernmental revenues
     Federal grants                                                                      88,325                       84,993                          84,162                    (831)          172,881

     State
        Grants                                                                           18,000                    18,500                            18,373                    (127)            18,302
        State shared revenue                                                          4,628,616                 4,479,345                         4,475,462                  (3,883)         4,556,801
             Total intergovernmental revenues - state                                 4,646,616                 4,497,845                         4,493,835                  (4,010)         4,575,103

     Local                                                                               60,000                       60,000                          60,000
                                                                         City of Muskegon
                                                         BUDGETARY COMPARISON SCHEDULE
                                                                           General Fund
                                                              For the year ended December 31, 2007
                                              (with comparative actual amounts for the year ended December 31, 2006)



                                                                                                            2007                                             2006
                                                                                                                                       Variance with
                                                                                                                                       final budget-
                                                                                Budgeted amounts            <<'t·                         positive
                                                                           Original            Final        "'✓        Actual            (negative)          Actual
Charges for services
  Tax administration fees                                            $       216,541      $                             212,530    $           (970)     $     219,172
   Utility administration fees                                               180,000                                    I 80,000                               180,000
  Downtown Development Authority administration fees                                                                                         (5,000)             5,000
   Reimbursement for elections                                                                                                                  (58)            13,762
   Indirect cost reimbursements                                                                                        1,024,932                             1,045,539
   Site plan review fee                                                                                                    5,870                (130)            5,650
   Sale of cemetery lots                                                                                                  38,182                 (I 8)          27,190
   Police miscellaneous                                                                                                  120,470             26,470             97,093
   Police impound fees                                                                                                    43,234             (1,766)            49,206
   Landlord's alert fee                                                                                                      220                 (80)              355
   Fire protection-state property                                                                                         87,601            (20,399)           121,131
   Zoning fees                                                                                                            10,362               1,362            13,352
   Clerk fees                                                                                                              3,115                (385)            3,330
   Clerk fees - passport fees                                                                                              8,240                (260)            2.520
   Tax abatement application fees                                                                                         16,411                (589)           10,080
   Treasurer fees                                                                                                         61,277            (28,723)            73,030
   False alarm fees                                                                                12,000                 12,525                 525            14,130
   Miscellaneous cemetery income                                                                   22,000                 20,536              (1,464)           22,772
   Senior transit program fees                                                                      9,000                  9,254                 254            10,13 I
   Fire miscellaneous                                                                               5,000                  3,494              (1,506)            3,763
   Sanitation stickers                                                                            110,000                 84,735            (25,265)            87,263
   Lot cleanup fees                                                                               115,000                 70,987            (44,013)            74,581
   Reimbursements - lot mowing and demolitions                                50,000               40,000                 55,484             15,484             65,994
   Special events reimbursements                                             115,000              120,000                 92,041            (27,959)            96,691
   Recreation program fees                                                    30,000               40,000                 41,457               1,457            78,877
         Total charges for services                                         2,207,373           2,338,032              2,224,999           (113,033)         2,320,612
                                                                          City of Muskegon
                                                          BUDGETARY COMPARISON SCHEDULE
                                                                            General Fund
                                                               For the year ended December 31, 2007
                                               (with comparative actual amounts for the year ended December 31, 2006)



                                                                                                                2007                                         2006
                                                                                                                                        Variance with
                                                                                                                                        final budget-
                                                                                                                                           positive
                                                                            Original              Final                 Actual            (negative)         Actual
Fines and forfeitures                                                                                 :'\\J.:i>_r
   Income tax - penalty and interest                                  $       200,000      $      ,;i,o;ooo'<; , $       240,315    $         10,315    $     192,822
   Late fees on current taxes                                                                                             38,931             (36,069)          35,701
   Interest on !ate invoices                                                                                               2,151                 151            2,112
   Parking fines                                                                                                          13,354              (6,646)          87,060
   Court fines                                                                                                           190,651                 651          208,356
          Total fines and forfeitures                                                                                    585,402             (31,598)         526,05 l

Interest and rental income
    Investment earnings                                                                                                  456,224             131,224          416,856
    Flea market                                                                                                           22,064              (6,936)          20,736
    Farmers' market                                                                                                       40,325               2,825           34,719
    City right of way rental                                                                                               4,400                                4,400
   Arena events                                                                                                                                               137,977
    Advertising                                                                                      2,000                                    (2,000)             284
    Fire station lease - Central Dispatch                                                            6,180                 6,180
    Parking rentals                                                                                  2,700                 2,800                 100            2,800
    McGraft park rentals                                                                            45,000                42,114              (2,886)          44,008
    Other park rentals                                                                              29,000                302.920              1,920           30,403
          Total interest and rental income                                                         480,780               605,027             124,247          692,183
Other
   Sale of land and assets                                                      1,000                1,000                                    (1,000)
   Police sale and auction proceeds                                             1,500                1,500                                    (1,500)
   CDBG program reimbursements                                                188,000              205,000               225,149              20,149          240,!43
   Contributions                                                               11,000               52,000                50,499              (1,501)          17,992
   Contribution - Veteran's Park maintenance                                   17,250               17,250                18,328               1,078           17,977
   Community Foundation for Muskegon County                                                         13,000                 3,000             (10,000)          11,675
   Miscellaneous reimbursements                                                  1,000               1,000                                    (1,000)
   Miscellaneous and sundry                                                     15,000              29,000                 53,794             24,794            11,894
          Total other                                                         234,750              319,750               350,770              31,020          299,681
          Total revenues                                                    24,047,264          24,227,102             24,939,745            652,643        24,648,242
                                                                              City of Muskegon
                                                               BUDGETARY COMPARISON SCHEDULE
                                                                         General Fund
                                                                   For the year ended December 31, 2007
                                                   (with comparative actual amounts for the year ended December 31, 2006)



                                                                                                                         2007                                           2006
                                                                                                                                                 Variance with
                                                                                                                                                 final budget-
                                                                                      Bud_£eted amounts                                             positive
                                                                                Ori_£inal             Final                      Actual           (ne_£ative)           Actual
EXPENDITURES
  Current
     Public representation services
        City commission                                                   $        86,156                                          80,462    $          3,661      $      88,670
        City promotions and public relations                                        9,029                  12,729                  11,696               1,033              5,402
        City manager                                                                                      Z,6,800                 213,848               6,952            209,693
        Contributions to outside agencies                                                      <''C;   ?,;:_.187,824              180,880               6,944            176,013
        City attorney                                                                           '\!:-·,, ,'.•' 440,000            440.434                (434)           424,117
            Total public representation services                                                       \/94.5,476                 927,320              18,156            903,895
     Administrative services
       Administration                                                                                                             126,444               5,281            159,841
       City clerk                                                                                         312,042                 277,610              34,432            297,542
       Civil service                                                                                      188,609                 163,761              24,848            175,899
       Julia Hackley internships                                                                            5,374                   5,374                                  4,350
       Affirmative action                                                                                  78,232                  71,724               6,508             32,157
            Total administrative services                                                                 715,982                 644,913              71,069            669,789

     Financial services
        Finance administration                                                    421,292                 420,922                 423,512              (2,590)           430,314
        Assessing                                                                 427,490                 454,800                 459,837              (5,037)           442.617
        Arena administration                                                      175,300                 175,300                 269,434             (94,134)           141,032
        Income tax administration                                                 358,668                 381,668                 373,433               8,235            335,776
        Information systems                                                       349,989                 356,089                 364,246              (8,157)           315,066
        City treasurer                                                            346,522                 346)22                  341,057             ~                  391,775
            Total financial services                                             2,079,261              2,135,301               2,231,519             (96,2 I 8)       2,056,580
     Public safety
        Police department                                                        8,470,172              8,307,989               8,235,772              72,217          8,232,492
        Fire department                                                          3,759,363              3,777,363               3,652,524             124,839          3,719,404
        Fire safety inspections                                                  1,014,248              1,017,548                 966,136              51,412            994,574
            Total public safety                                                 13,243,783             13,102,900               12,854,432            248,468          12,946,470
                                                                         City of Muskegon
                                                         BUDGETARY COMPARISON SCHEDULE
                                                                           General Fund
                                                              For the year ended December 31, 2007
                                              (with comparative actual amounts for the year ended December 31, 2006)



                                                                                                                2007                                              2006
                                                                                                                                              Variance with
                                                                                                                                              final budget-
                                                                                    Bud_£eted amounts                                            positive
                                                                         _____ Original ____        Final       ,,/           Actual            (negative)        Actual
Public works
   Street lighting                                                   $         572,325      $       ,i~p;OOD'z,;\     $        593,486    $         (3,486)   $     563,184
  Community event support                                                       34,750               '32,600      '-</.X,\      28,837               3,763           25,456
   Senior citizen transit                                                       54,306                57,708          "<si \    59,824              (2,116)          51,039
  General sanitation
   Recycling
   Storm water management
                                                                             1,664,506
                                                                               163,368
                                                                                16,991
                                                                                                   i,1!1)~~:
                                                                                                    ,;:16,991
                                                                                                                             "I,~:~: :
                                                                                                                                16,991
                                                                                                                                                    16,518
                                                                                                                                                      (331)
                                                                                                                                                                  1,650,354
                                                                                                                                                                    159,751
                                                                                                                                                                     16,384
   City hall maintenance                                                                             256,988                   256,581                 407          264,247
      Total public works                                                                        "?('183,661                   2,768,906             14,755        2,730,415
Community and economic development
  Planning, zoning and economic development                                                                                    462,113              39,452         437,715
  Environmental services                                                                                                       332,766              20,485         325,496
  Edison Landing subsidy                                                                                                       I 00,000
                                                                                                                                                     --
      Total community and economic development                                                      954,816                    894,879              59,937         763,211
Culture and recreation
   Parks maintenance                                                                               1,353,670                  1,340,824             12,846        1,231,852
   McGraft park maintenance                                                                           50,000                     46,376              3,624           69,399
   General and inner city recreation                                                                 266,744                    264,522              2,222          299,460
   Cemeteries maintenance                                                                            572,581                    545,975             26,606          528,446
   Graffiti removal                                                              4,792                 4,792                      3,213              1,579            2,751
   Parking operations                                                            7,500                 7,500                      6,605                895           13,522
   Farmers' market and flea market                                              37,826                42,500                     43,578             (1,078)          45,405
      Total culture and recreation                                           2,181,609             2,297,787                  2,251,093             46,694        2,190,835

Other governmental functions
   Insurance premiums                                                         347,304                351,270                    350,385                885         334,748
   Other                                                                      400,000                350,000                                       350,000         222,802
      Total other governmental functions                                       747,304               701,270                    350,385            350,885          557,550
                                                                                City of Muskegon
                                                                BUDGETARY COMPARISON SCHEDULE
                                                                                  General Fund
                                                                     For the year ended December 31, 2007
                                                     (with comparative actual amounts for the year ended December 31, 2006)



                                                                                                                                       2007                                                            2006
                                                                                                                                                                                 Variance with
                                                                                                                                                                                 final budget-
                                                                                        Budgeted amounts                                <h:5                                        positive
                                                                                   Original            Final                         :,·;:/                 Actual                 {negative)         Actual
   Debt service
     Interest and fees                                                      $        261,194             $
                                                                                                                        .,~Jp,tob''t .- -•~-                  2os,ss9        $          1,141    $        3,336

   Capital outlay                                                                                                           65,000
                                                                                                                                        "~?,,
                                                                                                                                          ,, '                 65.578                    (578)            5,435
                                                                                                   __   .-,-, _,.-
                                                                                                             _                                     ""''·-
            Total expenditures                                                    23,874,740 /.:':';)Y               23,912,193                       23'j97,884                     7I4,309         22,827,516

                                                                                     ]77 574
                                                                                               '                      ,,c,,j/
                                                                                                   "-:-'; \,, ·-ti,;'14 909
Excess of revenues over expenditures                                                                                                                        1,741,861               1,366,952         1,820,726
                                                                                       -, -        "(,<~'~/' _, '
OTHER FINANCING SOURCES (USES)
                                                                                                                     "--<
  Transfers in                                                                                                                                             91,658                    (133,342)           20,970
  Transfers out                                                                                                                                        (1,602,926)                   (904,880)       (1,671,262)
            Total other financing sources (uses)                                                                                                       (1,5 I 1,268)               (1,038,222)       (1,650,292)

Net change in fund balance                                                                               $              (I 58,1_37)_                          230,593        $       388,730            170,434

Fund balance at beginning of year                                                                                                                           2,690,039                                 2,519,605

Fund balance at end of year                                                                                                                    $            2,9291~?_2 ___                       $    2,690,039



Note: Both budgets and actual figures are prepared                  geperally accepted accounting principles.
                                                                           City of Muskegon
                                                             BUDGETARY COMPARISON SCHEDULE
                                                                  Major Street and Trunkline Fund
                                                                For the year ended December 31, 2007

                                                                                                                                                     Variance with
                                                                                                                                                     final budget-
                                                                                               Budfe1ed amounts                                        positive
                                                                                         Original              Final                Actual            (negative)
REVENUES
  Intergovernmental revenues
      Federal                                                                       $      264,700        ,. >;? 1,254,700     S   1,108,348     £      (146,352)
      State                                                                              4,143,269    '},i        4,143,269        3,825,191            (J 18,078)
   Charges for services                                                                    300,000    '    ~""'",.175,000            370,376             195,376
   Investment earnings                                                                                         ~.;JJ 5,000           116,227                1,227
   Other                                                                                                          'iso,ooo           272_:291              22,291
                                                                                                                     "-'/
         Total revenues                                                                                           5,937;969        5,692,433            (245,536)

EXPENDITURES
  Current
    Highways, streets and bridges                                                                                 4,392,900        4,462,763             (69,863)
   Debt service
      Principal                                                                                                    639,750           640,000                (250)
      Interest and fees                                                                                             28,387            28,638                (25 I)
         Total expenditures                                                                                       5,061,037        5, 131,40 I           (70,364)

Excess of revenues over expenditures                                                        27,378                 876,932           561,032            (315,900)

OTHER FINANCING SOURCES (USES)
  Transfers in                                                                                                                       200,000             200,000
  Transfers out                                                                                                    (600,000)        (300,000)            300,000
         Total other financing sources (uses)                                                                      (600,000)        (I 00,000)           500,000

Net change in fund balance                                                           $      27,378           $     276,932           461,032     $       184,100

Fund balance at January 1, 2007                                                                                                      708,102

Fund balance at December 31, 2007                                                                                              $   1,169,134




Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.
                                                           City of Muskegon
                                               BUDGETARY COMPARISON SCHEDULE
                                                            Local Street Fund
                                                  For the year ended December 31, 2007


                                                                                                                                                          Variance with
                                                                                                                                                          final budget•
                                                                           Bud_g_eted amounts                                                                positive
                                                                      Ori~inal            ,,Final                                         Actual            (negative)
REVENUES
  Intergovernmental revenues
                                                                                            ,,,,<)::~:)'.\-,,
     Federal                                                     $    1,300,000 (j;Y $ '<<l),5)5,000                                 $    192,000     $    (1,323,000)
                                                                                ,_  '     ,. _. _,:,,_          _


     State                                                              844,79.7;;,         ~4,797                                        846,397               1,600
                                                                                ,':.;,,C/                           '-' ·••
  Charges for services                                                     5;000                                    l 6;000                13,382              (2,618)
                                                                         /';-.. /                                             ""Y"
  Investment earnings                                                 ,,r;,ooo <i                                25,000                   243,947             218,947
  Other                                                                \:'!Ji;ooo,i /                           600,000                   708,106             108,106
         Total revenues                                                                                   3,000,797                      2,003,832           (996,965)

EXPENDJTURES
  Current
      Highways, streets and bridges                                                                       3,263,000                      2,042,152          1,220,848

Excess of revenues over (under) expenditures                                                                (262,203)                      (38,320)           223,883

OTHER FINANCJNG SOURCES
  Transfers in                                                         480,000                             1,080,000                      780,000            (300,000)

Net change in fund balance                                       $       28,360                   $             817,797                   741,680     $       (76,117)


Fund balance at January l, 2007                                                                                                           648,230

Fund balance at December 31, 2007                                                                                                    $   1,389,910




Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.
                                                                                 City of Muskegon
                                                      STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
                                                                                 Proprietary Funds
                                                                       For the year ended December 31, 2007

                                                                                                                                                                                                Governmental
                                                                                                                                                                                                 Activities -
                                                                                                  Business-type Activities - Enterprise Funds                                                     Internal
                                                                                                                             Marina and                                                            Service
                                                                                    Sewer                Water              Launch Ramp                                         Total               Funds
OPERA TING REVENUES
  Charges for services                                                         s   5,091,215       $            6,418,321                             $        248,004     $   11,757,540   $       8,087,546
  Other                                                                               87,880                      150,907\,,                                    33,675            272,462             148,155
                                                                                                                             ;, ,.,,,,
           Total operating revenues                                                5,179,095                    6,569:"7'.t8                                   281,679         12,030,002          8,235,70 I
                                                                                                                      ;'..',,>,
OPERATING EXPENSES
  Administration
  Insurance premiums and claims
                                                                                                        <:Ji"'      -;:\tl>··            ··\.'    -
                                                                                                                                                                22,680           814,376             290,568
                                                                                                                                                                                                   3,967,287
  Wastewater treatment                                                                                                                           '\;'     ,
                                                                                                                                                                               4,138,818
  Filtration plant operations                                                                                .-.-l~J 18.009                           '0'',                    1,418,009
  Water distribution                                                                                      -;\'it',491,337                                                      1,491,337
  Other operations                                                                                                                                             241,760           241,760           2,850,308
  Depreciation and amortization                                                                    j}
                                                                                                                1,784,768                                      131,017         2,575,690             568,841
                                                                                                •s;~,v•
           Total operating expenses                                                                             5,189,417                                      395,457         10,679,990          7,677,004
                                                                                                           ''ii:~
           Operating income (loss)                                                                                  1,379,811                                  (113,778)        1,350,012            558,697

NON OPERATING REVENUES (EXPENSES)
  Investment earnings                                                                                                136,511                                         38          170,594             145,290
  Gain on sale of capital assets                                                                                                                                                                      12,000
  Interest expense                                                                                                  (642.594)                                                   (667,815)
           Total nonoperating revenue (expenses)                                                                    (506,083)                                        38         (497,221)            157,290

           Income (loss) before transfers                                             92,803                         873,728                                   (113,740)         852,791             715,987

Transfers in                                                                                                                                                    40,000            40,000              28,046
                                                                                      ---
           Change in net assets                                                       92,803                         873,728                                    (73,740)         892,791             744,033

Net assets at January 1, 2007                                                      14,450,264                28,915,964                                       1,403,359                         __6_,009,699

Net assets at December 31, 2007                                                $   14,543,067      $         29,789,692                               $       2,329,619                     $      6,753,732

Adjustments to reflect the consolidation of internal service fund activities
  related to enterprise funds                                                                                                                                                     92,839
Change in net assets of business-type activities                                                                                                                                 985,630
                                                                                                                                                                           '
The accompanying notes are an integral part ofthis statement.

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