View the PDF version Google Docs PDF Viewer
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. \. ,..;4-\.,. ..,.4-,...,..1,,,.,,... tteffl~ . '/1(!-5 . /SS/Yf:!' 15 /1 ,?'i:JJ!Xe:-/11 · I l{)ol<I<. 5es1ov J f Ml/1111. 41e'l!'T1/ll'j /°d ,1d eJ¥V;e.,r t"o ~ (71(5 //d"T'I.$' l(eC/A¼'<ZlJ. ;71.c:' A ,/JO; ON lt/J11:!:-1'v,t:l/l /IJ~. 1:.yaJ> L/"fd/Alf ,, £lt!'Zl51tJIJ PAIL.5 /0 51t=-W-<_ 70 t3. C:?.1£/1- 5. OC/1' OF ,Vkl!V. 11/e Nl:!l:f:J @ 171e· ?e"Ofl<:J ,1-.v/J fP,4/,S ,, ro c. • /IJO :5rJ.,ft'1£'r' or ,ec_,,-_;;r!L-?JT5 1 /7-f,1-IA/i?J-/N ·of'E;I) 0!7#o~r1:C:. P00-<'-5 . p. N o -;5/Tt!T A-/11-4-£., Y'Sis //11 M/-:J/<J'f 1U5 /55t1/c ~e f!!_ e, 012 m10-e:t.,X/G t-11J/t5 /!ef4;(){/,4t,; (20.) ,OOE5 JJOT (:4/1,/r<J~/11 ro 771e-~~v19- //P'R..ft..- , . tz ;~, 41r A!i.Of'/d'JlfJ ,07;c;,<,J;011/IJ -::,1-!U:!lf/3 A,U-0 f ~ { , ,!v:f}£1L /?;l~ofA4T76"l 7 tJt!S I ' J:IJ od/.e i!Pf-/! ,;!p'V.O ovr 7ZflE o;-J(t!fZ., fltl ~;,17 J?,/.4-T 7111!" //q1e- EJE /<ECIN,tliE.Cl 'SO //7d,L?;t2d;O/t//f-72' /fe,10 f /1,11u ?f<!:l//ltJ§ A ~ESS'/a/1/'AL.-- -S/'ffe' , ;{le-Cef5,S/IR-f' '7/ri, //J,l"O 6,/f~ "lJf:? ,4:?ll.4-t.. "r5J5 NJ.Im me: pc::;o!<.5 777 r11E OeJ?tci:-,4/J:;7e,, &JA.15/tJt,.J?ttefJ , ;r/1~ ,4(1/NL.A-{j/e 7'/ZOCe'$S /11'?,,e de-U ,/fN(} ,4 ,4?.l!'C.0N'5t/JS::-/f/ffe.,,J Or 1f)tJ!lf ,1-;tit! Ttlmm OT-l.f/{/1{/ /fr- Pf/5 Jldr/5 /s M/ft:1.e ,Po$it3t:e< ~1.., f71 ~-<A:"1PiJ Z, {'II• l f / f l ~ d l ' 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.
Sign up for City of Muskegon Emails