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City of Muskegon,
Michigan
Comprehensive Annual
Financial Report
For The Year Ended December 31, 2009
www.shorelinecity.com
CITY OF MUSKEGON,
MICHIGAN
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2009
Prepared By
FINANCIAL SERVICES DIVISION
Timothy Paul Derrick Smith
Director of Finance City Treasurer
Elizabeth Lewis Kenneth Grant
Assistant Finance Director Income Tax Administrator
Kathy Coleman James Maurer
Finance & Payroll Coordinator Information Systems Director
Cover Photo: The new Culinary Institute of Michigan in Downtown Muskegon (Courtesy of Ann Becker)
www.shorelinecity.com
City of Muskegon
TABLE OF CONTENTS
INTRODUCTORY SECTION
Letter of Transmittal ..................................................................................................................................5
Certificate of Achievement for Excellence in Financial Reporting .........................................................12
Organization Chart...................................................................................................................................13
List of Principal Officials.........................................................................................................................14
FINANCIAL SECTION
Independent Auditors’ Report..................................................................................................................17
Management’s Discussion and Analysis..................................................................................................19
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Assets (Deficits) ....................................................................................................34
Statement of Activities ......................................................................................................................35
Fund Financial Statements
Governmental Funds
Balance Sheet .................................................................................................................................36
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Assets ....................................................................................................37
Statement of Revenues, Expenditures and Changes
in Fund Balances.........................................................................................................................38
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances to the Statement of
Activities.....................................................................................................................................39
Proprietary Funds
Statement of Net Assets .................................................................................................................40
Statement of Revenues, Expenses and Changes in Fund Net Assets ............................................. 41
Statement of Cash Flows................................................................................................................42
Fiduciary Funds
Statement of Fiduciary Assets and Liabilities................................................................................43
Component Units
Statement of Net Assets (Deficits) ....................................................................................................44
Statement of Activities ......................................................................................................................45
Notes to Financial Statements ..............................................................................................................46
Required Supplementary Information
Budgetary Comparison Schedule—General Fund................................................................................74
Budgetary Comparison Schedule—Major Street and Trunkline Fund.................................................80
Schedule of Funding Progress ..............................................................................................................81
1
City of Muskegon
TABLE OF CONTENTS
Other Supplemental Information
Other Governmental Funds
Description of Other Governmental Funds .......................................................................................84
Combining Balance Sheet .................................................................................................................86
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances ................................................................................................................................87
Other Special Revenue Funds
Combining Balance Sheet ..............................................................................................................88
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances.............................................................................................................................89
Budgetary Comparison Schedule—Other Special Revenue Funds ...............................................90
Other Capital Projects Funds
Combining Balance Sheet ..............................................................................................................92
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances (Deficit) ..............................................................................................................93
Internal Service Funds
Description of Internal Service Funds...............................................................................................95
Combining Statement of Net Assets..................................................................................................96
Combining Statement of Revenues, Expenses and
Changes in Fund Net Assets ..........................................................................................................97
Combining Statement of Cash Flows ................................................................................................ 98
Fiduciary Funds
Description of Fiduciary Funds .........................................................................................................99
Agency Funds
Combining Statement of Assets and Liabilities ...........................................................................100
Statement of Changes in Assets and Liabilities ...........................................................................101
Component Units
Description of Component Units.....................................................................................................103
Combining Balance Sheet ...............................................................................................................104
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Assets (Deficits) .....................................................................................105
Combining Statement of Revenues, Expenditures and Changes
in Fund Balances (Deficit) ...........................................................................................................106
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances to the Statement of
Activities .....................................................................................................................................107
Schedule of Indebtedness ...................................................................................................................109
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City of Muskegon
TABLE OF CONTENTS
STATISTICAL SECTION
Financial Trends
Net Assets by Component ..................................................................................................................116
Changes in Net Assets ........................................................................................................................117
Fund Balances of Governmental Funds.............................................................................................. 118
Changes in Fund Balances of Governmental Funds...........................................................................119
Revenue Capacity
Governmental Activities Revenues by Source ...................................................................................120
Taxable, Assessed and Equalized and Estimated Actual Valuation of Property ................................121
Principal Property Taxpayers .............................................................................................................122
Property Tax Rates – Direct and Overlapping Government Units .....................................................123
Property Tax Levies and Collections..................................................................................................124
Segmented Data on Income Tax Filers, Rates and Liability ..............................................................125
Debt Capacity
Ratio of Outstanding Debt by Type....................................................................................................126
Direct and Overlapping Debt..............................................................................................................127
Legal Debt Margin Information..........................................................................................................128
Revenue Bond Coverage ....................................................................................................................129
Demographic and Economic Information
Demographic and Economic Statistics ............................................................................................... 130
Principal Employers............................................................................................................................131
Operation Information
Full-time Equivalent Government Employees ...................................................................................132
Operating Indicators by Function/Program ........................................................................................133
Capital Asset Statistics by Function/Program ....................................................................................134
SINGLE AUDIT OF FEDERAL FINANCIAL ASSISTANCE PROGRAMS
Independent Auditors’ Report on Internal Control over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in Accordance with
Government Auditing Standards ..................................................................................................... 136
Independent Auditors’ Report on Compliance with Requirements Applicable
to Each Major Program and Internal Control over Compliance in
Accordance with OMB Circular A-133 .......................................................................................... 138
Schedule of Expenditures of Federal Awards...................................................................................... 140
Schedule of Findings and Questioned Costs........................................................................................ 143
Client Documents
Summary Schedule of Prior Audit Findings ................................................................................... 146
Corrective Action Plan.................................................................................................................... 148
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4
Affirmative
Action
(231)724-6703
FAX (231)722-
1214
Cemetery
(231)724-6783
FAX (231)726-
5617
City Manager
(231)724-6724
FAX (231)722-
1214
April 5, 2010
Civil Service
(231)724-6716
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4405
Honorable Mayor and Members of the
Clerk
(231)724-6705 City Commission
FAX (231)724- City of Muskegon
4178
Muskegon, Michigan 49443
Comm. &
Neigh. Services
(231)724-6717
FAX (231)726-
2501
Ladies and Gentlemen:
Finance
(231)724-6713 We are pleased to present to you the Comprehensive Annual Financial Report (CAFR) for
FAX (231)724- the City of Muskegon, Michigan, for the year ended December 31, 2009. This report
6768
includes the City’s audited financial statements in accordance with the requirements of
Fire Department state law. The financial statements are presented in conformity with accounting principles
(231)724-6792
FAX (231)724- generally accepted in the United States of America (GAAP), and audited in accordance
6985
with generally accepted auditing standards by a firm of licensed certified public
Income Tax accountants. This annual report is formatted to comply with the financial reporting model
(231)724-6770
FAX (231)724- developed by the Government Accounting Standards Board (GASB) Statement 34.
6768
Inspection GAAP requires that management provide a narrative introduction, overview, and analysis
Services to accompany the basic financial statements in the form of Management’s Discussion and
(231)724-6715
FAX (231)728- Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and
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should be read in conjunction with the financial statements. The City of Muskegon’s
Leisure Services MD&A can be found immediately following the independent auditor’s report.
(231)724-6704
FAX (231)724-
1196
The Comprehensive Annual Financial Report is prepared by the City’s Finance
Mayor’s Office
(231)724-6701 Department and responsibility for both the accuracy of the data presented and the
FAX (231)722- completeness and fairness of the presentation, including all disclosures, rests with the
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City. We believe the data as presented is accurate in all material respects; that it is
Planning/Zoning
(231)724-6702
presented in a manner designed to set forth fairly the financial position and results of
FAX (231)724- operation of the City as measured by the financial activity of its various funds and
6790
component units; and that all disclosures necessary to enable the reader to gain the
Police maximum understanding of the City’s finances have been included. Brickley DeLong,
Department
(231)724-6750 P.C., Certified Public Accountants, performed the independent audit of all accounts of the
FAX (231)722- City as required by state law and their report and unqualified opinion is presented as the
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first component of the financial section of this report.
Public Works
(231)724-4100
FAX (231)722-
4188
Treasurer
(231)724-6720
FAX (231)724-
6768
City of Muskegon, 933 Terrace Street, P.O. Box 536, Muskegon, MI 49443-0536
http://www.shorelinecity.com
5
THE CITY AND THE REGION
The City of Muskegon is located in Western Michigan on the shores of Lake Michigan. The City covers
eighteen square miles and, with a population of approximately 40,000, is the largest city on the eastern
shore of Lake Michigan. The City is located in Muskegon County and is part of the Muskegon-Norton
Shores MSA.
Muskegon is home to many outstanding sports, recreation and cultural activities:
• Michigan Adventure, located north of the city, is the largest amusement park complex in
Michigan. The City provides water to both the amusement park and the water park located on the
site.
• For 50 years, Muskegon has been home to a minor league professional hockey franchise (IHL
Muskegon Lumberjacks). The team plays in the 5,000 seat L. C. Walker Arena in downtown
Muskegon.
• Muskegon is the eastern terminus for the high speed cross-lake ferry. Connecting Muskegon
with Milwaukee, Wisconsin, the service ferries 100,000-plus passengers each season between the
two cities. 2009 marked the ferry service’s sixth successful year of operations.
• Muskegon is home to the annual Miss Michigan pageant.
• Pere Marquette beach is nationally recognized as one of the best beaches in the nation and is
the only beach in Michigan to receive and maintain the Blue Wave Certification by the Clean
Beaches Council. The Blue Wave certification identifies the nation's cleanest, safest and most
environmentally well-managed beaches.
• Muskegon is home to successful summertime festivals that attract tens of thousands of visitors to
the community. These include Muskegon Summer Celebration which brings top name musical
groups to town for 11 days of waterfront music celebration and the Bike Time festival which attracts
thousands of motorcycle enthusiasts to the city each July.
• Muskegon is the cultural hub for West Michigan with numerous museums and live performances.
The Muskegon Museum of Art has one of the best art collections in the Midwest, and the Muskegon
County Museum provides insight into the area’s history. The former residences of Muskegon’s
lumber barons, Charles H. Hackley and Thomas Hume, proudly display the glory of the Victorian
ages. The Fire Barn Museum takes visitors back to a 1890s Muskegon Fire Station. The West Shore
Symphony and Muskegon Civic Theater bring the stage of The Frauenthal Center for the Performing
Arts to life throughout the year.
• Muskegon is home to three historic museum ships that attract thousands of visitors each year:
• USS Silversides, a rare surviving World War II submarine maintained in pristine condition;
• LST-393, a landing craft used in the D-day invasion and one of only two such vessels
remaining in existence; and the
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• Milwaukee Clipper, a Great Lakes passenger ship built before the Titanic that for many years
served as a cross-lake ferry between Muskegon and Milwaukee.
Muskegon operates under a Commission-Manager form of government and provides a full range of
traditional municipal services. These include police and fire protection, parks and recreation activities,
public works operations, water and sewer services, solid waste collection, community development and
general administrative support services. The City also provides treated water to several surrounding
communities on a wholesale basis.
COMPONENT UNITS
The City has four discretely presented component unit types. These entities are discretely presented in
the financial statements as the governing boards of the component units are appointed and approved
by the City’s governing board:
• The Downtown Development Authority (DDA) which exists primarily for the purpose of financing
redevelopment activities in the City’s downtown area. The DDA has issued bonds that are repaid
through tax increment revenues generated from development within the Authority’s boundaries.
• The Tax Increment Finance Authority (TIFA), which exists primarily for the purpose of financing
redevelopment activities in a sub-section of the City’s downtown area. The TIFA generates tax
increment revenues through development within the Authority’s boundaries.
• The Local Development Finance Authority (LDFA) issues bonds for development activities in the
City’s industrial park and high-tech park areas. Bonds are repaid through tax increment revenues
generated by development within the Authority’s boundaries.
• The Brownfield Redevelopment Authority (BRA), which exists primarily for the purpose of
financing redevelopment of designated environmental brownfields. The BRA generates tax
increment revenues through development within its boundaries.
LOCAL ECONOMIC CONDITION AND OUTLOOK
Muskegon is fortunate to have a diverse local economy. The manufacturing sector is strong in the
areas of aerospace, chemicals, plastics, paper products, metals and castings, office furniture and
automotive parts. The City of Muskegon also benefits from being home to large government,
corrections, healthcare, and educational employers. Local income tax withholdings remitted by these
employers provide stability to City finances in times of economic weakness.
Still, Muskegon has been heavily impacted by the current economic recession. Area unemployment
has reached 17 percent and the resultant impact in City income tax revenue has been severe. There
are signs, though, that recovery has started. According to the W.E. Upjohn Institute’s most recent local
economic forecast:
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“(T)he Muskegon region’s economic indicators moved in a positive direction last quarter,
which suggests that employment conditions may finally begin to improve during the first part
of 2010. Initial claims for unemployment insurance benefits fell by 9.1 percent last quarter
and were down by 36.9 percent over the past year—an indication that fewer layoffs have
been occurring in the area. Additionally, there are signs of life in the housing market: new-
dwelling-unit contracts rose by 23.9 percent during the quarter and are up slightly over the
past year.”
MAJOR INITIATIVES AND ACCOMPLISHMENTS
Among the City's major initiatives and accomplishments in 2009 were the following:
• Development activity in the City’s downtown continued:
• Baker College’s new $11.0 million culinary arts institute was opened to students in 2009, The
facility includes state-of-the-art training facilities as well as student-staffed restaurants open to
the public;
• Additional condominiums in the Heritage Square “live-work” development were started. A
total of twenty-two units are planned for this downtown development.
• Work continued on a major $12 million auto dealership expansion encompassing GM, Honda
and Hyundai brands. The City assisted in this project with the creation of a Brownfield
Redevelopment Authority and securing a low-interest state loan to help finance environmental
work.
• Muskegon Correctional Facility, a state prison that had been scheduled to close, instead will
remain open to house prisoners from the State of Pennsylvania. This innovative
intergovernmental contract will save 250 local jobs.
• Significant efforts at local intergovernmental cooperation and consolidation were made during the
year including:
• Discussions to consolidate Muskegon’s fire services with surrounding township and city
governments;
• Contract implemented with County Prosecutor Office to prosecute local ordinance violations.
This will save $100,000 annually over having private contracted attorneys perform service.
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OTHER INFORMATION
INTERNAL ACCOUNTING CONTROLS
The City’s management is responsible for establishing and maintaining an internal control structure that
is designed to ensure adequate protection of the City’s assets from loss, theft, or misuse, and adequate
accounting data to allow for preparation of financial statements in conformity with generally accepted
accounting principles. The internal control structure is designed to provide reasonable, but not absolute
assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the
costs of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and
benefits requires estimates and judgments by management.
All internal control evaluations occur within the above framework. We believe that the City’s internal
accounting controls adequately safeguard assets and provide reasonable assurances of proper
recording of financial transactions.
BUDGETARY CONTROL
Budgetary control is maintained through an annual budget resolution passed by the City Commission.
Budgetary control at the functional level is maintained by review of estimated expenditures prior to
making purchases. Encumbrances are not recorded in the City’s funds. The City does, however, utilize
an informal monitoring system to facilitate budgetary control over proposed purchases. Essentially, this
system entails the use of on-line budgetary information that details year-to-date “actual versus
budgeted” expenditure comparisons by budget category. This information is accessible to appropriate
personnel to enable them to ascertain the budget status of an expenditure category prior to authorizing
additional purchases.
FINANCIAL POLICIES
The City’s financial policies are reviewed and updated bi-annually. One of the more significant policy
standards provides that the City maintain a General Fund fund balance equal to at least 10% of prior
expenditures. The revenue falloff triggered by the 2008 financial crisis and recession caused the City to
fall short of this standard in 2009. Program and staff reductions were made, but were not sufficient to
keep the year-end fund balance from falling to 6.3% of prior year expenditures. Additional budgetary
adjustments will be implemented in the first half of 2010 to better align General Fund revenues and
expenditures. It should be noted too that the City maintains a separate Budget Stabilization fund that
had a $1.5 million balance at year-end.
DEBT ADMINISTRATION
At December 31, 2009, the total of City bonds and contractual debt outstanding (including discretely
presented component unit debt) was $35,345,733. No new long term debt was issued by the City or its
component units in 2009.
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In March 2010, Standard & Poor’s upgraded the City’s general obligation debt rating from A to A+. In
2009 Standard & Poor’s upgraded the City’s water system revenue debt from A- to AA-. The AA-
rating on water system revenue bonds was affirmed in March 2010 in conjunction with the refunding of
$6,030,000 in outstanding bonds. The refunding achieved net present value savings of $334,200 or,
5.54% of refunded principal.
PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS
The City has transferred administrative responsibility for defined benefit pensions to the statewide
Municipal Employees Retirement System (MERS) of Michigan. This was done to achieve the
economies of scale and investment diversification that the $5 billion MERS program offers. All new
employees hired by the City since 2007 are covered by a defined contribution retirement program.
The City also provides post-retirement healthcare benefits for retirees and their dependents. Since
1987, the City has had an actuarial valuation of its post employment healthcare obligation prepared
regularly and has followed a program of prefunding the obligation in the same manner as its pension
obligations. In 2005, the City implemented the requirements of GASB statements 43 and 45 –
“Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions.”
SINGLE AUDIT
The City is required to have an annual single audit in conformity with the provisions of the Single Audit
Act Amendments of 1996 and U.S. Office of Management and Budget Circular A-133, “Audits of State,
Local Governments and Non-Profit Organizations”. Information related to the single audit, including the
schedule of federal awards, findings and questioned costs, and auditors’ reports on internal control over
financial reporting and compliance with certain laws, regulations and grants are included herein. The
financial activities related to the single audit requirements, such as the Community Development Block
Grant Program, are also included in this financial report.
AWARDS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Muskegon for its
Comprehensive Annual Financial Report for the year ended December 31, 2008. This marked the
twenty-third consecutive year that the City has received this prestigious award. In order to be awarded
a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently
organized Comprehensive Annual Financial Report, whose contents conform to program standards.
Such reports must satisfy both generally accepted accounting principles and applicable legal
requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current report
continues to conform to the Certificate of Achievement Program requirements, and we are submitting it
to the GFOA to determine its eligibility for another certificate.
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ACKNOWLEDGEMENTS
We would like to thank the members of the City Commission for their continued interest and support in
conducting the financial affairs of the City in a responsible and progressive manner and for their efforts
in working for the betterment of the Muskegon community. We would also like to thank the many City
employees who participate in the preparation of this report.
Respectfully submitted,
Bryon L. Mazade Timothy J. Paul
City Manager Director of Finance
11
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Citizens of Muskegon
The 7-member
Commission
The Citizens of The 7-member
appoints various
Muskegon elect Commission
Boards and
this Commission appoints the City
Commissions
Attorney
Various Boards & 7-Member City
City Attorney
Commissions Commission
The 7-member
Commission
appoints the City
Manager
City Manager
Administrative Services Financial Services
Division Division
Leisure Services
Public Safety Division
Division
Community & Economic
Public Works Division
Development Division
13
COMPREHENSIVE ANNUAL FINANCIAL REPORT
CITY OF MUSKEGON, MICHIGAN
LIST OF PRINCIPAL OFFICIALS
December 31, 2009
ELECTED OFFICIALS
Mayor-Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Steve Warmington
At Large
Vice Mayor-Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Stephen J. Gawron
At Large
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chris Carter
Ward 1
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Clara Shepherd
Ward 2
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lawrence O. Spataro
Ward 3
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Steve Wisneski
Ward 4
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sue Wierengo
At Large
APPOINTED OFFICIALS
City Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bryon L. Mazade
City Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John C. Schrier
Director of Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Timothy J. Paul
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FINANCIAL SECTION
15
16
BRICKLEY DELONG
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS’ REPORT
April 5, 2010
City Commission
City of Muskegon
Muskegon, Michigan
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the aggregate discretely presented component units, each major fund, and the aggregate
remaining fund information of the City of Muskegon as of and for the year ended December 31, 2009,
which collectively comprise the City's basic financial statements as listed in the table of contents. These
financial statements are the responsibility of the City of Muskegon's management. Our responsibility is to
express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, the aggregate
discretely presented component units, each major fund, and the aggregate remaining fund information of the
City of Muskegon, as of December 31, 2009, and the respective changes in financial position, and cash
flows, where applicable, thereof for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and required supplementary information on pages 19 - 31 and 74 - 81 be presented
to supplement the basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America,
which consisted of inquiries of management about the methods of preparing the information and comparing
the information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We do not
express an opinion or provide any assurance on the information because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
316 Morris Ave., Suite 500 • P.O. Box 999 • Muskegon, MI 49443 907 S. State Street • P.O. Box 331 • Hart, MI 49420
PHONE (231) 726-5800 • FAX (231) 722-0260 17 PHONE (231) 873-1040 • FAX (231) 873-0602
City Commission
April 5, 2010
Page 2
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City of Muskegon’s financial statements as a whole. The introductory section, combining and
individual nonmajor fund financial statements, budgetary comparison information for nonmajor funds,
schedule of indebtedness, and statistical section, are presented for purposes of additional analysis and are not
a required part of the financial statements. The accompanying schedule of expenditures of federal awards is
presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular
A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of
the financial statements. The combining and individual nonmajor fund financial statements, budgetary
comparison information for nonmajor funds, schedule of indebtedness, and the schedule of expenditures of
federal awards are the responsibility of management and were derived from and relate directly to the
underlying accounting and other record used to prepare the financial statements. The information has been
subjected to the auditing procedures applied in the audit of the financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting and
other record used to prepare the financial statements or to the financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United State of
America. In our opinion, the information is fairly stated in all material respects in relation to the financial
statements as a whole. The introductory and statistical sections have not been subjected to the auditing
procedures applied in the audit of the basic financial statements and, accordingly, we do not express an
opinion or provide any assurance on them.
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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, 2009. 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 $129,474,312 as of
December 31, 2009. Of the total net assets, $14,904,556 (11.5%) was
unrestricted and may be used to meet the City’s ongoing obligations to citizens
and creditors.
• The City’s total combined net assets decreased $2,831,518 during 2009. This
decrease is primarily the result of sharply lower income tax and state shared
revenues.
• The City’s governmental funds reported combined ending fund balance of
$7,882,523, a decrease of $2,388,917 from the Figure A-1, Required Components of the
prior year. City’s Annual Financial Report
• The City’s General Fund reported a total fund
balance of $1,638,662, a decrease of $745,063 from
the prior year. The decrease is attributed to falling
income tax and state shared revenues brought about
by the economic recession.
• The City also maintains a Budget Stabilization (or
“rainy day”) Fund that reported a $1.5 million fund
balance of at December 31, 2009. During the year,
$500,000 of Budget Stabilization reserves were used
to help stabilize General Fund finances.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts—management’s
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.
• 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.
19
• 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
information in the Figure A-2. Major Features of the City's Government-Wide and Fund Financial Statements
financial statements Fund Statements
and provide additional Type of Statements EntireGovernment-Wide
City government
Governmental Funds
The activities of the City
Proprietary Funds
Activities the City
Fiduciary Funds
Instances in which the
data. The statements (except fiduciary funds)
and the City's component
that are 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
Statement of net assets Balance sheet Statement of net assets Statement of fiduciary
supplementary net assets
Statement Statement of changes
information that further Required financial Statement of activities expenditures
Statement of revenues,
& changes
of revenues,
expenses and changes in in fiduciary net assets
statements
explains and supports in fund balances fund net assets
Statement of cash flows
the information in the Accounting basis Accrual accounting and Modified accrual Accrual accounting and Accrual accounting and
financial statements. and
focus
measurement economic resources focus accounting and current
financial resources focus
economic resources focus economic resources focus
Figure A-1 shows how All assets and liabilities, Only assets expected to All assets and liabilities, All assets and liabilities,
both financial and capital, be used up and liabilities both financial and capital, both short-term and long-
the required parts of asset/liability
Type of
short-term and long-term that come due during the and short-term and long- term; the City's funds do
this annual report are information year or soon thereafter;
no capital assets included
term not currently contain
capital assets, although
arranged and related to All revenues and Revenues for which cash All revenues and expenses
they can
All revenues and
one another. expenses during year, is received during or soon during year, regardless of expenses during year,
regardless of when cash after the end of the year; when cash is received or regardless of when cash
Type of is received or paid expenditures when goods paid is received or paid
Figure A-2 summarizes inflow/outflow
information
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
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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
21
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 six component units: the Downtown Development
Authority (DDA), the Tax Increment Finance Authority (TIFA), three Local
Development Finance Authorities (LDFAs) and, the newly created Brownfield
Redevelopment Authority (BRA). 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 $129,474,312 as of December 31, 2009.
This is a decrease of $2,831,518 from reported net assets for the prior year. An
overview of the City’s net assets follows:
22
City's Net Assets
(In Thousands of Dollars)
Governmental Business-Type Percentage
Activities Activities Total Change
2009 2008 2009 2008 2009 2008 2009-2008
Current and other assets $23,192 $26,501 $7,510 $8,824 $30,702 $35,325 -13.09%
Capital assets 76,739 77,490 59,912 60,002 136,651 137,492 -0.61%
Total Assets 99,931 103,991 67,422 68,826 167,353 172,817 -3.16%
Long-term liabilities 8,492 9,000 17,105 18,240 25,597 27,240 -6.03%
Other liabilities 10,497 11,160 1,785 2,111 12,282 13,271 -7.45%
Total Liabilities 18,989 20,160 18,890 20,351 37,879 40,511 -6.50%
Net Assets
Invested in capital assets,
net of related debt 69,065 69,565 41,876 40,877 110,941 110,442 0.45%
Restricted 2,956 3,557 672 822 3,628 4,379 -17.15%
Unrestricted 8,921 10,709 5,984 6,776 14,905 17,485 -14.76%
Total Net Assets $80,942 $83,831 $48,532 $48,475 $129,474 $132,306 -2.14%
The bulk of the City’s net assets ($110,941,307 or 86%) represent investments 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 2.8% ($3,628,449) of the City’s net assets are legally
restricted as to use. The remaining net assets ($14,904,556) 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 $44,118,776, down 6.3% from
2008. About 36% of the City’s revenue stream came from charges to users of specific
services such as water or sewer. Another fifteen percent came from grants from the
state and federal governments and thirty-four percent was from local property and
income taxes. The remainder was comprised of state revenues and other sources such
as franchise fees and investment income.
The total cost of all City programs and services during 2009 was $46,950,294, an
increase of $309,727 from 2008. Seventy-five percent of these costs were for
governmental activities such as police and fire protection, streets, parks, and general
administration. The remaining twenty-five percent represents the costs of the City’s
business-type activities, specifically, water, sewer and marina operations.
The difference between the City’s total revenues and expenses ($2,831,518) represents
the decrease in total net assets for 2009. 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:
23
Changes in City’s Net Assets
(In thousands of dollars)
Governmental Business-Type Percentage
Activities Activities Total Change
2009 2008 2009 2008 2009 2008 2009-2008
Program revenues
Charges for services $3,875 $3,877 $11,846 $11,817 $15,721 $15,694 0.17%
Operating grants and contributions 6,443 5,367 - - 6,443 5,367 20.05%
Capital grants and contributions 2,106 3,445 5 - 2,111 3,445 -38.72%
General revenues
Property taxes 8,493 8,349 - - 8,493 8,349 1.72%
Income taxes 6,628 8,118 - - 6,628 8,118 -18.35%
State shared revenues 3,842 4,488 - - 3,842 4,488 -14.39%
All other 857 1,519 24 109 881 1,628 -45.90%
Total revenues 32,244 35,163 11,875 11,926 44,119 47,089 -6.31%
Governmental activities expenses
Public representation 924 987 - - 924 987 -6.38%
Administrative services 698 783 - - 698 783 -10.86%
Financial services 2,406 2,292 - - 2,406 2,292 4.97%
Public safety 13,614 13,956 - - 13,614 13,956 -2.45%
Public works 2,987 3,019 - - 2,987 3,019 -1.06%
Highways, streets and bridges 7,161 7,265 - - 7,161 7,265 -1.43%
Community and economic development 4,140 3,175 - - 4,140 3,175 30.39%
Culture and recreation 2,463 2,624 - - 2,463 2,624 -6.14%
General administration 452 575 - - 452 575 -21.39%
Interest on long-term debt 288 324 - - 288 324 -11.11%
Business-type activities expenses
Water - - 6,080 5,801 6,080 5,801 4.81%
Sewer - - 5,427 5,503 5,427 5,503 -1.38%
Marina and Launch Ramp - - 311 347 311 347 -10.37%
Total expenses 35,133 35,000 11,818 11,651 46,951 46,651 0.64%
Change in net assets before transfers (2,889) 163 57 275 (2,832) 438 -746.65%
Transfers - (40) - 40 - - -
Change in net assets (2,889) 123 57 315 (2,832) 438 -746.65%
Net assets at beginning of year 83,831 83,708 48,475 48,160 132,306 131,868 0.33%
Net assets at end of year $80,942 $83,831 $48,532 $48,475 $129,474 $132,306 -2.14%
Net assets for governmental activities decreased $2,889,272 as the economic recession
impacted income tax and other revenues. Net assets for business-type activities
changed only slightly (an increase of $57,754) from 2008.
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 2009 was $35,132,970.
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• The net cost that City taxpayers paid for these activities through local property
taxes and income taxes was $15,120,872, or 43% of the total.
• The remaining cost was paid by user charges to those directly benefitting from the
programs or by state and federal grants and contributions
Net Cost of Selected City Functions
(in thousands of dollars)
Total Cost of Services % Change Net Cost of Services % Change
2009 2008 2009-2008 2009 2008 2009-2008
Governmental activities
Public safety $13,614 $13,956 -2.45% $12,415 $12,670 -2.01%
Community and economic development 4,140 3,175 30.39% 500 742 -32.61%
Culture and recreation 2,463 2,624 -6.14% 1,996 2,157 -7.46%
Highways, streets and bridges 7,161 7,265 -1.43% 1,964 495 296.77%
Public works 2,987 3,019 -1.06% 2,561 2,610 -1.88%
All other 4,769 4,961 -3.87% 3,272 3,636 -10.01%
Total governmental activities $35,133 $35,000 0.38% $22,709 $22,310 1.79%
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 2009, the City’s total business-
type activities realized an overall increase in net assets of $57,754.
Sewer Fund net assets increased $316,473 as result of a twelve percent user fee
increase implemented on January 1, 2009. The Water Fund saw net assets fall
$142,852 as result of lower usage brought on by the economic recession and, also, a
one-time spike in operating costs resulting from a city-wide changeover in metering
technology. Marina and Launch Ramp Fund net assets decreased $62,133 due to
depreciation charges on state-funded dock improvements.
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 2009 were the General Fund and the
Major Street and Trunkline 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
25
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.
Prior Year’s Fund Balance as a % of
Year-End Fund Year‐to‐Year %
Year
Balance
Expenditures and Prior Year Expenditures
Change (Policy Target=10%
Other Uses
2009 $1,638,662 -31.26% $26,100,539 6.28%
2008 2,383,725 -18.38% 24,800,810 9.61%
2007 2,920,632 8.57% 24,498,778 11.92%
2006 2,690,039 6.76% 23,658,227 11.37%
2005 2,519,605 3.04% 23,388,020 10.77%
The September 2008 financial crisis and accompanying economic recession took a
heavy toll on the City’s 2009 General Fund operations. Actual 2009 General Fund
expenditures and other uses were $1,055,935 under the original 2009 budget amount
as significant program cuts were made during the year including:
• Elimination of the curbside recycling program;
• Restructuring of legal services including implementing a cost-saving contract with
the county prosecutor’s office to handle local ordinance violations;
• Layoff of several employees including two firefighters, the recycling coordinator,
an electrical inspector, a city planner and a clerical position.
• Various other positions were eliminated through attrition.
General Fund revenues for 2009 were $1,561,623 lower than originally budgeted. The
falloff is primarily attributable to lower income tax and state shared revenues resulting
from the recession. The City used $500,000 from its Budget Stabilization (“rainy day”)
Fund to help offset the decline in revenues.
The City’s General Fund ended 2009 with a fund balance that decreased significantly
from the prior year and fell short of the policy target (10% of prior year expenditures).
Further program cuts and restructuring will be made in 2010 to better align the City’s
revenues and expenditures.
Major Street and Trunkline Fund Highlights
The Major Street and Trunkline Fund accounts for all of the City’s street construction
and maintenance activities on its primary road system. Primary funding comes from the
State of Michigan. During 2009, the fund balance of the Major Street and Trunkline
Fund decreased $12,066.
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CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At the end of 2009, the City and its component units had invested $139,798,529 in a
variety of capital assets, including land, streets, 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. Major capital asset projects
during 2009 included the following:
• $3.2 million in street improvements
• $2.4 million in water and sewer system improvements
Long-Term Debt
Bond Ratings
At year-end 2009, the City had $27,390,885 in bonds and
The City’s limited full faith and
other long-term obligations outstanding. This represents a credit bonds (bonds guaranteed
decrease of 6.5% from the prior year. No new debt was by the City’s taxing powers)
issued in 2009. On April 1, 2010 $6,030,000 of were upgraded by Standard &
Poor’s from a rating of “A” to
outstanding Water System Revenue Bonds were refunded “A+” in early 2010. During 2009,
with new bonds issued at lower interest rates. The net the City’s Water System
present value savings from the refunding are $334,200 or revenue bonds were upgraded
from “A-” to “AA-“.
5.54% of the refunded principal amount.
Additional information concerning the City’s long-term debt is presented in Note H to the
basic financial statements.
City’s Long Term Debt – Bonds and Other Obligations
(In thousands of dollars)
Governmental Business-Type Percentage
Activities Activities Total Change
2009 2008 2009 2008 2009 2008 2009-2008
Due within one year $611 $909 $1,182 $1,139 $1,793 $2,048 -12.45%
Due in more than one year 8,493 9,000 17,106 18,241 25,599 27,241 -6.03%
Total bonds & other obligations $9,104 $9,909 $18,288 $19,380 $27,391 $29,289 -6.48%
In addition to direct City debt, component units such as the Downtown Development
Authority (DDA) and Local Development Finance Authority (LDFA) had outstanding debt
totaling $7,954,848 at year-end as shown in the table below. This represents a
decrease of 3.6% from the prior year. No new component unit debt was issued in 2009.
Debt issued by 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.
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Additional information concerning component units’ long-term debt is presented in Note
H to the basic financial statements and is summarized as follows:
Component Unit Long Term Debt – Bonds and Other Obligations
(In thousands of dollars)
Downtown Development Local Development Finance Percentage
Total
Finance Authority Authority Change
2009 2008 2009 2008 2009 2008 2009-2008
Due within one year $230 $220 $80 $80 $310 $300 3.33%
Due in more than one year 3,245 3,475 4,400 4,479 7,645 7,954 -3.88%
Total bonds & other obligations $3,475 $3,695 $4,480 $4,559 $7,955 $8,254 -3.62%
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The City’s fiscal year 2010 capital budget anticipates spending $5,576,000 for capital
projects, consisting of street improvements, water and sewer system improvements,
and scheduled equipment replacements. These improvements will be funded through
grants and revenues generated from operations. No new debt issuance is anticipated in
2010.
From an operating standpoint, the City’s 2010 budget will entail further program and
position cuts to better balance the City’s operating expenses with recurring revenue
streams.
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 total City
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 workers at hospitals, churches,
government agencies, colleges and other institutions traditionally exempt from paying
local property taxes. This is particularly important for Muskegon since it is the regional
center for most such institutions.
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Income tax revenues fell sharply from $7,694,780 in 2008 to $6,482,290 for 2009
(15.8%). For 2009, the City has revised its income tax revenue estimate at $6,200,000.
The following table shows the makeup of the City’s income tax base:
Average Amount Paid
Number of
Category 2009 Amount Paid Percent of Total 2009 2008
Payers
City Resident 6,788 $ 2,541,951 39% $ 374 $ 400
Non-Resident 12,433 3,106,829 48% 250 263
Corporate 1,850 833,510 13% 669 669
Total 21,071 $ 6,482,290 100% $ 341 $ 341
Local Property Tax
The City’s 2009 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. For 2010, the City is projecting $8,034,944 in property
taxes.
Total Assessed Percent Estimated Actual
Year
Value Change Value
2009 $867,330,950 -4.23% $1,734,661,900
2008 905,682,400 2.65% 1,811,364,800
2007 882,300,288 3.11% 1,764,600,576
2006 855,662,300 2.78% 1,711,324,600
2005 832,507,264 0.19% 1,665,014,528
2004 830,948,500 -0.97% 1,661,897,000
State Shared Revenues
State shared sales tax revenues represent about sixteen percent of total General Fund
revenue. The City’s state shared revenue allocation is made up of two parts. The
constitutional component is a fixed percentage of total state 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
29
components depend, of course, on overall state sales tax collections. The City’s recent
state shared revenue history is summarized below:
State Shared Percent
Revenues
Year Change
2009 $3,841,922 -14.4%
2008 4,487,698 0.3%
2007 4,475,462 -1.8%
2006 4,556,801 -0.8%
2005 4,592,852 -1.1%
2004 4,645,348 -5.9%
Continued erosion of the state shared revenue component constitutes a major on-going
problem for City finances.
For 2010, the City originally projected $4,071,393 in state shared revenues. However,
based on the most recent information available from the State, this estimate has been
reduced to $3,727,627.
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
from State Percent
Year
Change
2009 $3,177,862 -0.7%
2008 3,199,930 -2.7%
2007 3,288,098 -0.3%
2006 3,297,183 -0.7%
2005 3,319,131 -4.1%
2004 3,459,503 9.2%
For 2010, the City is projecting no material change 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 $11,311,367 in 2009. Charges to customers
are based on the amount of metered services used times rates periodically set by the
City Commission. During 2009, sewer rates were increased twelve percent as result of
higher wastewater treatment and debt service charges enacted by Muskegon County.
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A further sewer rate increases will likely be needed in 2010 due to the shutdown of a
major industrial sewer customer. Water rates are expected to remain stable in 2010.
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).
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32
FINANCIAL STATEMENTS
33
City of Muskegon
STATEMENT OF NET ASSETS (DEFICITS)
December 31, 2009
ASSETS
Governmental Business-type Component
activities activities Total units
CURRENT ASSETS
Cash and investments $ 11,189,821 $ 2,972,770 $ 14,162,591 $ 325,080
Receivables 8,834,401 2,093,448 10,927,849 518,573
Due from other governmental units 2,412,599 67,560 2,480,159 -
Internal balances (1,481,831) 1,481,831 - -
Due from component units 10,214 - 10,214 -
Inventories 23,750 138,808 162,558 -
Prepaid items 389,109 25,177 414,286 -
Total current assets 21,378,063 6,779,594 28,157,657 843,653
NONCURRENT ASSETS
Restricted assets - 672,000 672,000 -
Capital assets, net
Nondepreciable 18,655,233 2,587,805 21,243,038 400,000
Depreciable 58,083,425 57,324,084 115,407,509 2,747,982
Bond issuance costs, net 124,965 59,152 184,117 98,759
Special assessments receivable 1,440,526 - 1,440,526 -
Notes receivable 249,053 - 249,053 -
Total noncurrent assets 78,553,202 60,643,041 139,196,243 3,246,741
Total assets 99,931,265 67,422,635 167,353,900 4,090,394
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LIABILITIES AND NET ASSETS (DEFICITS)
CURRENT LIABILITIES
Accounts payable and accrued liabilities 961,345 271,392 1,232,737 42,400
Due to other governmental units - 331,070 331,070 -
Due to primary government - - - 10,214
Unearned revenue 8,924,896 - 8,924,896 518,573
Bonds and other obligations, due within one year 610,500 1,182,200 1,792,700 310,000
Total current liabilities 10,496,741 1,784,662 12,281,403 881,187
NONCURRENT LIABILITIES
Bonds and other obligations, less amounts due within one year 8,492,654 17,105,531 25,598,185 7,644,848
Total liabilities 18,989,395 18,890,193 37,879,588 8,526,035
NET ASSETS (DEFICITS)
Invested in capital assets, net of related debt 69,064,800 41,876,507 110,941,307 (1,233,107)
Restricted for:
Streets and highways 1,636,036 - 1,636,036 -
Debt service - 672,000 672,000 -
Perpetual care
Expendable 15,613 - 15,613 -
Non-expendable 1,304,800 - 1,304,800 -
Unrestricted 8,920,621 5,983,935 14,904,556 (3,202,534)
Total net assets (deficits) $ 80,941,870 $ 48,532,442 $ 129,474,312 $ (4,435,641)
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF ACTIVITIES
For the year ended December 31, 2009
Net (Expense) Revenue and Changes in Net Assets
Program Revenue Primary Government
Charges for Operating grants Capital grants Governmental Business-type Component
Functions/Programs Expenses services and contributions and contributions activities activities Total units
Primary government
Governmental activities
Public representation services $ 923,911 $ 213,885 $ - $ - $ (710,026) $ - $ (710,026) $ -
Administrative services 698,022 271,117 7,920 - (418,985) - (418,985) -
Financial services 2,406,517 818,845 60,347 - (1,527,325) - (1,527,325) -
Public safety 13,614,112 1,117,476 80,976 - (12,415,660) - (12,415,660) -
Public works 2,986,747 383,733 - 42,180 (2,560,834) - (2,560,834) -
Highways, streets and bridges 7,160,797 251,840 3,092,105 1,853,003 (1,963,849) - (1,963,849) -
Community and economic development 4,139,765 249,241 3,180,314 210,374 (499,836) - (499,836) -
Culture and recreation 2,463,375 445,891 21,561 - (1,995,923) - (1,995,923) -
General administration 451,651 123,426 - - (328,225) - (328,225) -
Interest on long-term debt 288,073 - - - (288,073) - (288,073) -
Total governmental activities 35,132,970 3,875,454 6,443,223 2,105,557 (22,708,736) - (22,708,736) -
Business-type activities
Sewer 5,426,321 5,720,171 - - - 293,850 293,850 -
Water 6,080,230 5,883,830 - - - (196,400) (196,400) -
Marina and Launch Ramp 310,773 242,055 - 5,179 - (63,539) (63,539) -
Total business-type activities 11,817,324 11,846,056 - 5,179 - 33,911 33,911 -
Total primary government $ 46,950,294 $ 15,721,510 $ 6,443,223 $ 2,110,736 (22,708,736) 33,911 (22,674,825) -
35
Component units
Local Development Finance Authority I $ 347 $ - $ - $ - - - - (347)
Local Development Finance Authority II 25,235 - - - - - - (25,235)
Local Development Finance Authority III 380,328 - - 195,000 - - - (185,328)
Downtown Development Authority 119,923 - - - - - - (119,923)
Tax Increment Finance Authority 60,000 - - - - - - (60,000)
Brownfield Redevelopment Authority 2,302 - - - - - - (2,302)
Total component units $ 588,135 $ - $ - $ 195,000 - - - (393,135)
General revenues
Property taxes 8,492,507 - 8,492,507 783,528
Income taxes 6,628,365 - 6,628,365 -
Cable franchises 321,852 - 321,852 -
Grants and contributions not restricted to specific programs 3,841,922 - 3,841,922 -
Unrestricted investment earnings 185,436 23,843 209,279 1,462
Miscellaneous 226,124 - 226,124 -
Gain on sale of capital asset 123,258 - 123,258 -
Total general revenues and transfers 19,819,464 23,843 19,843,307 784,990
Change in net assets (2,889,272) 57,754 (2,831,518) 391,855
Net assets (deficit) at January 1, 2009 83,831,142 48,474,688 132,305,830 (4,827,496)
Net assets (deficit) at December 31, 2009 $ 80,941,870 $ 48,532,442 $ 129,474,312 $ (4,435,641)
The accompanying notes are an integral part of this statement.
City of Muskegon
BALANCE SHEET
Governmental Funds
December 31, 2009
Major Street Other Total
General and Trunkline governmental governmental
Fund Fund funds funds
ASSETS
Cash and investments $ 2,312,423 $ - $ 4,505,142 $ 6,817,565
Receivables
Accounts and loans 318,751 35,878 662,462 1,017,091
Property taxes 5,801,920 - - 5,801,920
Income taxes 837,957 - - 837,957
Special assessments - 894,417 874,636 1,769,053
Due from other governmental units 691,338 387,172 1,334,089 2,412,599
Due from other funds 428,752 - 1,457,428 1,886,180
Due from component units - - 10,214 10,214
Prepaid items 177,633 9,807 4,314 191,754
Total assets $ 10,568,774 $ 1,327,274 $ 8,848,285 $ 20,744,333
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ 295,413 $ 86,143 $ 29,762 $ 411,318
Accrued liabilities 145,006 11,014 9,906 165,926
36
Due to other funds - 233,469 1,604,375 1,837,844
Deferred revenue 8,489,693 723,802 1,233,227 10,446,722
Total liabilities 8,930,112 1,054,428 2,877,270 12,861,810
Fund balances
Reserved for:
Prepaid items 177,633 9,807 4,314 191,754
Long-term loans receivable - - 224,431 224,431
Capital projects - - 2,080,506 2,080,506
Perpetual care 10,000 - 1,294,800 1,304,800
Unreserved
Designated, reported in capital projects funds - - 871,111 871,111
Undesignated, reported in
General Fund 1,451,029 - - 1,451,029
Special revenue funds - 263,039 1,797,078 2,060,117
Capital projects funds - - (316,838) (316,838)
Permanent funds - - 15,613 15,613
Total fund balances 1,638,662 272,846 5,971,015 7,882,523
Total liabilities and fund balances $ 10,568,774 $ 1,327,274 $ 8,848,285 $ 20,744,333
The accompanying notes are an integral part of this statement.
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
December 31, 2009
Total fund balance—governmental funds $ 7,882,523
Amounts reported for governmental activities in the Statement of Net Assets
are different because:
Capital assets used in governmental activities are not financial resources and
are not reported in the governmental funds.
Cost of capital assets $ 123,319,939
Accumulated depreciation (48,663,369) 74,656,570
Bond issuance costs are not capitalized and amortized in the governmental funds.
Bond issuance costs 160,106
Accumulated amortization (35,141) 124,965
Other receivables in governmental activities are not reported in the
governmental funds. 606,300
37
Accrued interest in governmental activities is not reported in the
governmental funds. (60,900)
Special assessment revenue is not recognized until it is receivable in the current
period and therefore is shown as deferred revenue in the governmental funds. 1,440,526
Long-term liabilities in governmental activities are not due and payable in the
current period and are not reported in the governmental funds.
Bonds and notes payable (7,798,823)
Compensated absences (1,210,635) (9,009,458)
Internal service funds are used by management to charge the costs of certain activities
to individual funds. The assets and liabilities of the internal service funds are reported
with governmental activities in the Statement of Net Assets. 5,301,344
Net assets of governmental activities in the Statement of Net Assets $ 80,941,870
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Governmental Funds
For the year ended December 31, 2009
Major Street Other Total
General and Trunkline governmental governmental
Fund Fund funds funds
REVENUES
Taxes $ 14,673,012 $ - $ - $ 14,673,012
Licenses and permits 1,032,681 - - 1,032,681
Intergovernmental revenues
Federal 64,613 1,593,425 3,085,102 4,743,140
State 3,858,285 2,558,600 939,801 7,356,686
Local 60,347 25,235 215,000 300,582
Charges for services 2,436,461 19,911 164,000 2,620,372
Fines and forfeitures 523,615 - 58,779 582,394
Interest and rental income 270,392 50,177 80,331 400,900
Other 552,845 233,245 375,457 1,161,547
Total revenues 23,472,251 4,480,593 4,918,470 32,871,314
EXPENDITURES
Current
Public representation services 923,923 - - 923,923
Administrative services 549,833 - - 549,833
Financial services 2,406,623 - - 2,406,623
Public safety 13,562,598 - 4,503 13,567,101
Public works 2,860,510 - - 2,860,510
38
Highways, streets and bridges - 4,692,659 1,870,305 6,562,964
Community and economic development 939,895 - - 939,895
Culture and recreation 2,193,060 - 3,126 2,196,186
Other governmental functions 438,292 - - 438,292
Debt service
Principal 50,000 - 613,371 663,371
Interest and fees 220,063 - 62,111 282,174
Capital outlay 167,239 - 3,820,270 3,987,509
Total expenditures 24,312,036 4,692,659 6,373,686 35,378,381
Excess of revenues under expenditures (839,785) (212,066) (1,455,216) (2,507,067)
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets - - 68,452 68,452
Transfers in 632,768 200,000 526,840 1,359,608
Transfers out (538,046) - (771,864) (1,309,910)
Total other financing sources (uses) 94,722 200,000 (176,572) 118,150
Net change in fund balances (745,063) (12,066) (1,631,788) (2,388,917)
Fund balances at January 1, 2009 2,383,725 284,912 7,602,803 10,271,440
Fund balances at December 31, 2009 $ 1,638,662 $ 272,846 $ 5,971,015 $ 7,882,523
The accompanying notes are an integral part of this statement.
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
For the year ended December 31, 2009
Net change in fund balances—total governmental funds $ (2,388,917)
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report outlays for capital assets and bond issuance costs as expenditures; in the Statement
of Activities, these costs are depreciated and amortized over their estimated useful lives, respectively.
Depreciation and amortization expense $ (4,142,384)
Capital outlay 3,517,831 (624,553)
Revenue reported in the Statement of Activities that does not provide current
financial resources are not reported as revenue in the governmental funds. (141,766)
Repayment of principal on long-term debt is an expenditure in the governmental funds, but
the repayment reduces long-term liabilities in the Statement of Net Assets. 662,404
Interest expense on long-term debt is recorded in the Statement of Activities
39
when incurred, but is not reported in the governmental funds until paid. 2,700
Compensated absences are reported on the accrual method in the Statement
of Activities and reported as expenditures when financial resources are
used in the governmental funds. 138,689
Governmental funds recognize special assessments as revenue as they become current,
however they are recognized in full when levied in the Statement of Net Assets. (394,295)
The internal service funds are used by management to charge the costs of certain activities to
individual funds. The net change of the internal service funds is reported with governmental
activities. (143,534)
Change in net assets of governmental activities $ (2,889,272)
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF NET ASSETS
Proprietary Funds
December 31, 2009
ASSETS
Governmental
Activities -
Business-type Activities - Enterprise Funds Internal
Marina and Service
Sewer Water Launch Ramp Total Funds
CURRENT ASSETS
Cash and investments $ 521,480 $ 2,301,294 $ 149,996 $ 2,972,770 $ 4,372,256
Accounts receivable 1,168,613 920,727 4,108 2,093,448 572,959
Due from other governmental units - 63,215 4,345 67,560 -
Inventories 46,619 92,189 - 138,808 23,750
Prepaid items 10,560 14,048 569 25,177 197,355
Total current assets 1,747,272 3,391,473 159,018 5,297,763 5,166,320
NONCURRENT ASSETS
Restricted assets - 672,000 - 672,000 -
Capital assets
Land 16,188 103,500 22,562 142,250 65,000
Land improvements - - 1,888,965 1,888,965 121,648
Buildings, improvements and systems 19,515,365 62,686,255 2,322,488 84,524,108 1,559,334
Machinery and equipment 39,722 2,788,156 - 2,827,878 7,439,725
Construction in progress 728,919 1,716,636 - 2,445,555 -
Less accumulated depreciation (6,960,072) (22,781,201) (2,175,594) (31,916,867) (7,103,619)
Net capital assets 13,340,122 44,513,346 2,058,421 59,911,889 2,082,088
Bond issuance costs, net - 59,152 - 59,152 -
40
Total noncurrent assets 13,340,122 45,244,498 2,058,421 60,643,041 2,082,088
Total assets 15,087,394 48,635,971 2,217,439 65,940,804 7,248,408
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable 22,576 113,374 6,297 142,247 309,261
Accrued liabilities 4,359 124,509 277 129,145 13,940
Due to other governmental units 305,595 25,475 - 331,070 -
Due to other funds - - - - 48,336
Bonds and other obligations, due within one year 13,500 1,168,600 100 1,182,200 15,700
Total current liabilities 346,030 1,431,958 6,674 1,784,662 387,237
NONCURRENT LIABILITIES
Bonds and other obligations, less amounts due within one year 67,726 17,037,309 496 17,105,531 77,996
Total liabilities 413,756 18,469,267 7,170 18,890,193 465,233
NET ASSETS
Invested in capital assets, net of related debt 13,340,122 26,477,964 2,058,421 41,876,507 2,082,088
Restricted for debt service - 672,000 - 672,000 -
Unrestricted 1,333,516 3,016,740 151,848 4,502,104 4,701,087
Total net assets $ 14,673,638 $ 30,166,704 $ 2,210,269 47,050,611 $ 6,783,175
Adjustment to reflect the consolidation of internal service fund activities
related to enterprise funds 1,481,831
Net assets of business-type activities $ 48,532,442
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
Proprietary Funds
For the year ended December 31, 2009
Governmental
Activities -
Business-type Activities - Enterprise Funds Internal
Marina and Service
Sewer Water Launch Ramp Total Funds
OPERATING REVENUES
Charges for services $ 5,624,838 $ 5,686,529 $ 226,290 $ 11,537,657 $ 7,493,915
Other 95,333 197,301 15,765 308,399 93,086
Total operating revenues 5,720,171 5,883,830 242,055 11,846,056 7,587,001
OPERATING EXPENSES
Administration 363,113 516,365 27,048 906,526 314,952
Insurance premiums and claims - - - - 4,147,899
Wastewater treatment 4,647,022 - - 4,647,022 -
Filtration plant operations - 1,409,738 - 1,409,738 -
Water distribution - 1,572,160 - 1,572,160 -
Other operations - - 162,009 162,009 2,827,361
Depreciation and amortization 394,160 1,974,113 121,073 2,489,346 568,578
Total operating expenses 5,404,295 5,472,376 310,130 11,186,801 7,858,790
Operating income (loss) 315,876 411,454 (68,075) 659,255 (271,789)
41
NONOPERATING REVENUES (EXPENSES)
Investment earnings 597 22,483 763 23,843 29,162
Gain on sale of capital assets - - - - 95,057
Interest expense - (576,789) - (576,789) -
Total nonoperating revenue (expenses) 597 (554,306) 763 (552,946) 124,219
Income (loss) before transfers 316,473 (142,852) (67,312) 106,309 (147,570)
Capital contributions - - 5,179 5,179 -
Transfers in - - - - 28,046
Transfers out - - - - (77,744)
Change in net assets 316,473 (142,852) (62,133) 111,488 (197,268)
Net assets at January 1, 2009 14,357,165 30,309,556 2,272,402 6,980,443
Net assets at December 31, 2009 $ 14,673,638 $ 30,166,704 $ 2,210,269 $ 6,783,175
Adjustments to reflect the consolidation of internal service fund activities
related to enterprise funds (53,734)
Change in net assets of business-type activities $ 57,754
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF CASH FLOWS
Proprietary Funds
For the year ended December 31, 2009
Governmental
Activities -
Business-type Activities - Enterprise Funds Internal
Marina and Service
Sewer Water Launch Ramp Total Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 6,124,499 $ 6,250,133 $ 248,699 $ 12,623,331 $ 86,326
Receipts from interfund services provided 23,898 146,335 - 170,233 7,493,915
Payments to suppliers (3,982,338) (1,723,263) (101,248) (5,806,849) (4,364,023)
Payments to employees (631,394) (1,322,615) (79,563) (2,033,572) (1,178,248)
Payments for interfund services used (486,661) (660,004) (9,372) (1,156,037) (710,733)
Net cash provided by operating activities 1,048,004 2,690,586 58,516 3,797,106 1,327,237
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in - - - - 28,046
Transfers out - - - - (77,744)
Interfund borrowing (249,387) - - (249,387) -
Net cash used for noncapital financing activities (249,387) - - (249,387) (49,698)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Capital contributions - - 5,179 5,179 -
Purchases of capital assets (277,734) (2,117,524) - (2,395,258) (446,534)
Principal paid on capital debt - (1,110,000) - (1,110,000) -
Interest paid on capital debt - (567,462) (567,462) -
Proceeds from sale of capital assets - - - - 107,039
42
Net cash provided by (used for) capital and related financing activities (277,734) (3,794,986) 5,179 (4,067,541) (339,495)
CASH FLOW FROM INVESTING ACTIVITIES
Investment earnings 597 22,483 763 23,843 29,162
Net increase (decrease) in cash and investments 521,480 (1,081,917) 64,458 (495,979) 967,206
Cash and investments at January 1, 2009 - 4,055,211 85,538 4,140,749 3,405,050
Cash and investments at December 31, 2009 $ 521,480 $ 2,973,294 $ 149,996 $ 3,644,770 $ 4,372,256
Reconciliation of cash and investments to the statement of net assets
Cash and investments $ 521,480 $ 2,301,294 $ 149,996 $ 2,972,770 $ 4,372,256
Restricted cash and investments - 672,000 - 672,000 -
$ 521,480 $ 2,973,294 $ 149,996 $ 3,644,770 $ 4,372,256
Reconciliation of operating income (loss) to net cash provided by
operating activities
Operating income (loss) $ 315,876 $ 411,454 $ (68,075) $ 659,255 $ (271,789)
Adjustments to reconcile operating income (loss) to net cash provided by
operating activities
Depreciation and amortization expense 394,160 1,974,113 121,073 2,489,346 568,578
Bad debt expense 5,088 5,296 - 10,384 -
Change in assets and liabilities
Receivables, net 463,198 532,825 6,644 1,002,667 1,036,229
Inventories (20,925) (1,173) - (22,098) (12,198)
Prepaid items 3,461 6,042 394 9,897 (18,593)
Accounts payable (90,510) (213,124) 516 (303,118) 8,639
Accrued liabilities (22,344) (24,847) (2,036) (49,227) (31,965)
Due to other funds - - - - 48,336
Net cash provided by operating activities $ 1,048,004 $ 2,690,586 $ 58,516 $ 3,797,106 $ 1,327,237
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES
Fiduciary Funds
December 31, 2009
Agency
Funds
ASSETS
Cash and investments $ 5,413,000
Receivables
Accounts 1,868
Property taxes 15,016,716
Total assets $ 20,431,584
LIABILITIES
43
Accounts payable $ 204,587
Due to other governmental units 19,997,247
Deposits held for others 229,750
Total liabilities $ 20,431,584
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF NET ASSETS (DEFICITS)
Discretely Presented Component Units
December 31, 2009
ASSETS
Local Local Local Tax
Development Development Development Downtown Increment Brownfield
Finance Finance Finance Development Finance Redevelopment
Authority I Authority II Authority III Authority Authority Authority Total
CURRENT ASSETS
Cash and investments $ - $ - $ 13,765 $ 289,526 $ 21,789 $ - $ 325,080
Property taxes receivable - - 71,360 390,662 40,634 15,917 518,573
Total current assets - - 85,125 680,188 62,423 15,917 843,653
NONCURRENT ASSETS
Capital assets, net
Nondepreciable - - 400,000 - - - 400,000
Depreciable - - 2,747,982 - - - 2,747,982
Net capital assets - - 3,147,982 - - - 3,147,982
Bond issuance costs, net - - 98,759 - - - 98,759
Total noncurrent assets - - 3,246,741 - - - 3,246,741
44
Total assets - - 3,331,866 680,188 62,423 15,917 4,090,394
LIABILITIES AND NET ASSETS (DEFICITS)
CURRENT LIABILITIES
Accrued liabilities - - 32,800 9,600 - - 42,400
Due to primary government - - - - - 10,214 10,214
Deferred revenue - - 71,360 390,662 40,634 15,917 518,573
Bonds and other obligations, due within one year - - 80,000 230,000 - - 310,000
Total current liabilities - - 184,160 630,262 40,634 26,131 881,187
NONCURRENT LIABILITIES
Bonds and other obligations, less amounts due
within one year - - 4,399,848 3,245,000 - - 7,644,848
Total liabilities - - 4,584,008 3,875,262 40,634 26,131 8,526,035
NET ASSETS (DEFICITS)
Invested in capital assets, net of related debt - - (1,233,107) - - - (1,233,107)
Unrestricted - - (19,035) (3,195,074) 21,789 (10,214) (3,202,534)
Total net assets (deficits) $ - $ - $ (1,252,142) $ (3,195,074) $ 21,789 $ (10,214) $ (4,435,641)
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF ACTIVITIES
Discretely Presented Component Units
For the year ended December 31, 2009
Program
Revenue Net (Expense) Revenue and Changes in Net Assets
Local Local Local Tax
Capital grants Development Development Development Downtown Increment Brownfield
and Finance Finance Finance Development Finance Redevelopment
Functions/Programs Expenses contributions Authority I Authority II Authority III Authority Authority Authority Total
Local Development Finance Authority I
Economic development $ 347 $ - $ (347) $ - $ - $ - $ - $ - $ (347)
Local Development Finance Authority II
Economic development 25,235 - - (25,235) - - - - (25,235)
Local Development Finance Authority III
Economic development 178,820 - - - (178,820) - - - (178,820)
Interest on long-term debt 201,508 195,000 - - (6,508) - - - (6,508)
Total Local Development Finance Authority III 380,328 195,000 - - (185,328) - - - (185,328)
Downtown Development Authority
Interest on long-term debt 119,923 - - - - (119,923) - - (119,923)
Tax Increment Finance Authority
45
Economic development 60,000 - - - - - (60,000) - (60,000)
Brownfield Redevelopment Authority
Economic development 2,302 - - - - - - (2,302) (2,302)
Total discretely presented component units $ 588,135 $ 195,000 (347) (25,235) (185,328) (119,923) (60,000) (2,302) (393,135)
General revenues
Property taxes - - 91,281 614,632 67,664 9,951 783,528
Unrestricted investment income - 143 179 998 142 - 1,462
Total general revenues - 143 91,460 615,630 67,806 9,951 784,990
Change in net assets (347) (25,092) (93,868) 495,707 7,806 7,649 391,855
Net assets (deficits) at January 1, 2009 347 25,092 (1,158,274) (3,690,781) 13,983 (17,863) (4,827,496)
Net assets (deficits) at December 31, 2009 $ - $ - $ (1,252,142) $ (3,195,074) $ 21,789 $ (10,214) $ (4,435,641)
The accompanying notes are an integral part of this statement.
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the City of Muskegon (City) have been prepared in conformity with accounting
principles generally accepted in the United States of America (GAAP) as applied to government units. The
Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing
governmental accounting and financial reporting principles. The more significant of the City's accounting
policies are described below.
Reporting Entity
The City of Muskegon was incorporated October 6, 1919, under the provisions of the Home Rule Act of the
State of Michigan. The City is a municipal corporation governed by an elected mayor and six-member City
Commission and is administered by a city manager appointed by the City Commission. The accompanying
financial statements present the government and its component units, entities for which the government is
considered to be financially accountable. Blended component units, although legally separate entities, are, in
substance, part of the government's operations. Each discretely presented component unit is reported in a
separate column in the government-wide financial statements (see note below for description) to emphasize
that it is legally separate from the government. Each discretely presented component unit has a December 31
fiscal year end.
Blended Component Unit
Building Authority. The Authority is governed by a three-member board comprised of the City Manager, City
Attorney and City Finance Director. For financial reporting purposes, the Building Authority is reported as if
it were part of the City’s operations since its sole purpose is to acquire and lease property to the City.
Currently, there is no outstanding Building Authority indebtedness.
Discretely Presented Component Units
Downtown Development Authority (DDA). The Authority’s sole purpose is the collection of property
tax incremental revenues, the issuance and repayment of debt and the construction of public facilities
to promote and facilitate economic growth in the downtown district. Members of the DDA are
appointed by the City Commission and the Authority is fiscally dependent on the City since the City
Commission approves the DDA budget and must approve any debt issuance. The DDA is presented
as a governmental fund type.
Tax Increment Finance Authority (TIFA). The Authority’s sole purpose is the collection of property tax
incremental revenues and promotion of economic development activities (including issuance of debt) in a
sub-section of the downtown district. Members of the TIFA are appointed by the City Commission and the
Authority is fiscally dependent on the City since the City Commission approves the TIFA budget and must
approve any debt issuance. The TIFA is presented as a governmental fund type.
Local Development Finance Authority (LDFA). The City has created three separate local development
finance authority districts under the aegis of the LDFA to promote and facilitate economic growth in the Port
City Industrial Park, the Medendorp Industrial Park, and the SmartZone Hi-Tech Park. The LDFA’s sole
purpose is the collection of property tax incremental revenues and the construction of public facilities within
the districts. Members of the LDFA are appointed by the City Commission and the Authority is fiscally
dependent on the City since the City Commission approves budgets and must approve any debt issuance. The
LDFA districts are presented as governmental fund types.
46
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Reporting Entity—Continued
Discretely Presented Component Units—Continued
Brownfield Redevelopment Authority (BRA). The Authority’s sole purpose is the collection of property tax
incremental revenues and promotion of environmental remediation (including issuance of debt) in designated
brownfield areas. Members of the BRA are appointed by the City Commission and the Authority is fiscally
dependent on the City since the City Commission approves the BRA budget and must approve any debt
issuance. The BRA is presented as a governmental fund type.
Complete financial statements of the component units can be obtained from their administrative offices,
933 Terrace Street, Muskegon, Michigan 49443.
Related Organizations
The following organizations are related to the City’s financial reporting entity:
Muskegon Hospital Finance Authority. The Muskegon Hospital Finance Authority was created by the City of
Muskegon in accordance with the laws of the State of Michigan. Members of the Hospital Finance Authority
are appointed by the City but the City is not financially accountable for the Authority and therefore the
Authority is excluded from the accompanying financial statements. The Hospital Finance Authority’s sole
purpose is to issue tax-exempt debt for the benefit of Mercy Health Partners Hospital which is located within
the City. The Authority has no assets or financial activity and does not prepare financial statements. The
Hospital Finance Authority has no taxing power. As of December 31, 2009, there was no outstanding debt
issued by the Hospital Finance Authority. The City is not obligated in any manner for repayment of debt
issued by the Hospital Finance Authority, as any debt is payable solely from contractual payments from the
hospitals.
Muskegon Housing Commission. The Muskegon Housing Commission was created by the City of Muskegon
in accordance with the laws of the State of Michigan. Members of the Housing Commission are appointed by
the City but the City is not financially accountable for the Commission and therefore the Commission is
excluded from the accompanying financial statements. The Housing Commission’s main purpose is to
administer activities that provide adequate housing facilities for low-income families and the elimination of
housing conditions that are detrimental to the public peace, health, safety, and welfare. The Commission’s
policy is to prepare its financial statements on the basis prescribed by the Department of Housing and Urban
Development. Accordingly, the summary information below (which is required by federal regulations), is not
intended to present financial position and results of operations in conformity with generally accepted
accounting principles. Summary financial information for the fiscal year ended September 30, 2008, the date
of its latest audited financial statements is as follows:
Total assets $ 5,160,382
Total liabilities (201,660)
Total net assets $ 4,958,722
Total operating income $ 343,420
Total operating expenses (2,005,893)
Total nonoperating revenues 1,547,276
Change in net assets $ (115,197)
47
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net
assets) report information on all of the nonfiduciary activities of the primary government and its component
units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are
reported separately from business-type activities, which rely to a significant extent on fees and charges for
support. Likewise, the primary government is reported separately from certain legally separate component
units for which the primary government is financially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given function or
segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific
function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or
directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and
contributions that are restricted to meeting the operational or capital requirement of a particular function or
segment. Taxes and other items not properly included among program revenues are reported instead as
general revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds,
even though the latter are excluded from the government-wide financial statements. Major individual
governmental funds and major individual enterprise funds are reported as separate columns in the fund
financial statements.
Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and
the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements excepting
agency funds which have no measurement focus. Revenues are recorded when earned and expenses are
recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are
recognized as revenues in the year for which they are levied. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus
and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable
and available. Revenues are considered to be available when they are collectible within the current period or
soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers
revenues to be available if they are collected within 60 days of the end of the current fiscal period.
Reimbursements due for expenditure-driven grants are accrued as revenue at the time the expenditures are
made, or when received in advance, deferred until expenditures are made. Expenditures generally are
recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as
well as expenditures related to compensated absences and claims and judgments, are recorded only when
payment is due.
Income taxes, property taxes, franchise taxes, licenses and interest associated with the current fiscal period are
all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal
period. Only the portion of special assessments receivable due within 60 days of the end of the current fiscal
period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are
considered to be measurable and available only when cash is received by the government.
48
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Measurement Focus, Basis of Accounting and Financial Statement Presentation—Continued
The City reports the following major governmental funds:
The General Fund is the government's primary operating fund. It accounts for all financial
resources of the general government, except those required to be accounted for in another fund.
The Major Street and Trunkline Fund accounts for gas and weight tax allocations to the City by
the Michigan Department of Transportation for construction and maintenance of major streets
within the City.
The City reports the following three major proprietary funds:
The Sewer Fund accounts for user charges and for operating expenses and debt service of the
City’s sewer system.
The Water Fund accounts for user charges and for operating expenses and debt service of the
City’s water system.
The Marina and Launch Ramp Fund accounts for user fees collected and operating expenses for
the Hartshorn Marina and boat launch ramp facilities.
Additionally, the City reports the following fund types:
Internal Service Funds account for internal engineering services for City projects; the purchase,
operation, and depreciation of all City owned equipment; the payment of insurance claims and
benefits; and the operation, maintenance, and depreciation of the City’s public service building to
other funds of the government on a cost reimbursement basis.
The Agency Funds are used to account for assets held by the City as an agent for another
organization or individual.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally
are followed in both the government-wide and proprietary fund financial statements to the extent that those
standards do not conflict with or contradict guidance of the Government Accounting Standards Board.
Governments also have the option of following subsequent private-sector guidance for their business-type
activities and enterprise funds, subject to this same limitation. The City has elected not to follow
subsequent private-sector guidance.
As a general rule the effect of interfund activity has been eliminated from the government-wide financial
statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the City's
water and sewer function and various other functions of the government. Elimination of these charges would
distort the direct costs and program revenues reported for the various functions concerned.
49
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Measurement Focus, Basis of Accounting and Financial Statement Presentation—Continued
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services or
privileges provided, 2) operating grants and contributions and 3) capital grants and contributions, including
special assessments. Internally dedicated resources are reported as general revenues rather than as program
revenues. Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues
and expenses generally result from providing services and producing and delivering goods in connection with
a proprietary fund's principal ongoing operations. The principal operating revenues are charges to customers
for sales and services. The enterprise funds also recognize as operating revenue the portion of tap fees
intended to recover the cost of connecting new customers to the system. Operating expenses for proprietary
funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All
revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted
resources first, then unrestricted resources as they are needed.
Assets, Liabilities and Net Assets or Equity
Deposits and Investments
The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term
investments with original maturities of three months or less from the date of acquisition.
The City reports its investments in accordance with GASB Statement No. 31, Accounting and Financial
Reporting for Certain Investments and for External Investment Pools. Under this standard, certain
investments are valued at fair value as determined by quoted market prices or by estimated fair values when
quoted market prices are not available. The standard also provides that certain investments are valued at cost
(or amortized cost) when they are of a short-term duration, the rate of return is fixed, and the City intends to
hold the investment until maturity.
The City has adopted an investment policy in compliance with State of Michigan statutes. Those statutes
authorize the City to invest in obligations of the United States, certificates of deposit, prime commercial
paper, securities guaranteed by United States agencies or instrumentalities, United States government or
federal agency obligation repurchase agreements, bankers acceptances, state-approved investment pools and
certain mutual funds.
The City maintains a cash and investment pool that is available for use by all funds and component units.
Each fund type’s or component unit’s portion of this pool is displayed on the combined balance sheet as “cash
and investments”. Cash overdrafts represent a deficit position in the pooled account and have been classified
as amounts due to other funds.
50
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities and Net Assets or Equity—Continued
Deposits and Investments—Continued
For the purpose of the statement of cash flows, the City considers all assets held in the cash and investment
pool to be cash and cash equivalents because the investments are not identifiable to the specific funds and the
assets can be withdrawn at any time, similar to a demand deposit account.
In accordance with State law, interest earned in the Budget Stabilization Fund is recorded in the General
Fund.
Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of
the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans)
or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding
balances between funds are reported as "due to/from other funds". Any residual balances outstanding
between the governmental activities and business-type activities are reported in the government-wide
financial statements as "internal balances".
Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve
account in applicable governmental funds to indicate that they are not available for appropriation and are not
expendable available financial resources.
All trade and property tax receivables are shown net of allowance for uncollectibles.
The City bills and collects its own property taxes and also collects taxes for the county, school and State of
Michigan. Taxes are levied on each December 1 on the taxable valuation of property (as defined by state
statutes) located in the Local Governmental Unit as of the preceding December 31. Uncollectible real
property taxes as of the following March 1 are turned over by the City to the County for collection. The
County advances the City all these delinquent real property taxes. The delinquent personal property taxes
remain the responsibility of the City. Taxes levied on December 1 are recorded as receivables and deferred
revenue. Taxes are recognized as revenue (and become available for appropriation) in the calendar year
following the levy.
The 2008 state taxable value for real/personal property of the City totaled approximately $724,211,000 of
which approximately $11,823,000 was captured by the component units. The ad valorem taxes levied
consisted of 8.5, 2.5, and .0682 mills for the City's general operating, sanitation, and community promotion
purposes. These amounts are recognized in the General Fund with captured amounts shown in the TIFA,
LDFA, DDA, and BRA component units.
Inventories and Prepaid Items
All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of business-type
funds are recorded as expenditures when consumed rather than when purchased.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid
items in both government-wide and fund financial statements.
51
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities and Net Assets or Equity—Continued
Restricted Assets
Certain proceeds of the Water Fund revenue bonds, as well as certain resources set aside for their repayment,
are classified as restricted assets on the statement of net assets because their use is limited by applicable bond
covenants.
Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges,
sidewalks and similar items), are reported in the applicable governmental or business-type activities columns
in the government-wide financial statements. Capital assets are defined by the government as assets with an
initial, individual cost of more than $10,000 and an estimated useful life in excess of two years. Such assets
are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets
are recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend
assets lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest
incurred during the construction phase of capital assets of business-type activities is included as part of the
capitalized value of the assets constructed.
In the case of the initial capitalization of general infrastructure assets (i.e., those reported by governmental
activities) the City chose to include all such items regardless of their acquisition date or amount. The City
was able to obtain the historical cost of the initial reporting of these assets by recording the actual costs
incurred by the City.
Property, plant and equipment of the primary government, as well as the component units, is depreciated
using the straight-line method over the following estimated useful lives:
Assets Years
Land improvements 5-25
Leasehold improvements 10-25
Buildings and improvements 25-50
Water and sewage mains 40-100
Furniture, vehicles and equipment 5-20
Infrastructure 15-50
Shared improvements 20
52
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities and Net Assets or Equity—Continued
Compensated Absences
City employees are granted vacation and sick leave in varying amounts based on length of service and
employee group. Unused vacation and sick leave days are paid to employees upon termination under limits
that vary by employee group. The liability for these compensated absences is accrued when incurred in the
government-wide and proprietary fund financial statements. The current portion of this debt is estimated
based on historical trends. A liability for these amounts is reported in the governmental funds only if they
have matured, for example, as a result of employee resignations and retirements.
Long-Term Obligations
In the government-wide financial statements and proprietary fund types in the fund financial statements, long-
term debt and other long-term obligations are reported as liabilities in the applicable governmental activities,
business-type activities or proprietary fund type statement of net assets. Bond premiums and discounts as
well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest
method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs
are reported as deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as
bond issuance costs, during the current period. The face amount of debt issued is reported as other financing
sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt
issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt
proceeds received, are reported as debt service expenditures.
Fund Equity
In the fund financial statements, governmental funds report reservations of fund balance for amounts that
are not available for appropriation or are legally restricted by outside parties for use for a specific
purpose. Designations of fund balance represent tentative management plans that are subject to change.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect certain reported amounts and
disclosures.
Comparative Data
Comparative total data for the prior year have been presented in selected sections of the accompanying
financial statements in order to provide an understanding of changes in the City’s financial position and
operations. However, comparative (i.e. presentation of prior year’s totals by fund type) data has not been
presented in each of the statements since its inclusion would make the statements unduly complex and
difficult to read. Also, certain items in the 2008 financial statements have been reclassified to conform to
the 2009 presentation.
53
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE B—STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Budgetary Information
Annual budgets are adopted on a basis consistent with generally accepted accounting principles for the
general fund and all special revenue funds. All annual appropriations lapse at fiscal year end.
The City follows these procedures in establishing the budgetary information provided in the financial
statements:
a. Prior to September 1, the City Manager submits to the City Commission a proposed
operating budget for the fiscal year commencing the following January 1. The
operating budget includes proposed expenditures and the means of financing them.
b. Public hearings are conducted at City Hall to obtain public comments.
c. Prior to September 25, the budget is legally adopted by the City Commission.
d. Supplemental appropriations, when required to provide for additional expenditures,
are matched by additional anticipated revenues or an appropriation of available fund
balance and must be approved by the City Commission.
The appropriated budget is prepared by fund, function and department. The City Manager may transfer
line-item budget amounts within departments. Transfers of appropriations between departments require
the approval of the City Commission. The legal level of budgetary control is the department level for the
General Fund and the total expenditure or “fund” level for all other funds. The City Commission made
several supplemental budgetary appropriations throughout the year.
Excess of Expenditures Over Appropriations
During the year ended December 31, 2009, actual expenditures exceeded appropriations for the police
department by $309,576 and fire department by $139,329 in the General Fund. These over-expenditures were
funded with available fund balance.
Fund Deficits
As of December 31, 2009, the BRA Fund had an unreserved fund deficit of $10,214, the Engineering Services
Fund had an unreserved fund deficit of $61,951, and the HOME Fund had an unreserved fund deficit of
$316,838. The deficits will be eliminated through future operations.
54
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE C—DEPOSITS AND INVESTMENTS
As of December 31, 2009, the City had the following investments:
Weighted
average
maturity
Fair value (Months) Moody's Percent
Investment Type
Money market funds $ 14,411 1.9 AAA 0.3 %
US Agency obligations 3,519,785 12.4 AAA 63.5
US Treasury notes 2,011,740 6.1 not rated 36.2
Total fair value $ 5,545,936 100.0 %
Portfolio weighted average maturity 10.1
Interest rate risk. The City has a formal investment policy that limits investment maturities as a means of
managing its exposure to fair value losses arising from increasing interest rates. At least 10% of the City’s
total portfolio must be in instruments maturing in 30 days or less and the weighted average maturity cannot be
over three years. US Agency obligations, federal instrumentality securities and time certificates of deposit
cannot have a final maturity exceeding five years, repurchase agreements cannot have a final maturity
exceeding one year, commercial paper cannot have a final maturity exceeding 270 days and eligible bankers’
acceptances cannot have a final maturity exceeding 180 days.
Credit risk. State law limits investments in commercial paper and corporate bonds to the two highest
classifications issued by nationally recognized statistical rating organizations. The City has no investment
policy that would further limit its investment choices.
Concentration of credit risk. Concentration of credit risk is the risk of loss attributed to the magnitude of
the City investment in a single issuer, by diversifying the investment portfolio so that the impact of potential
losses from any one type of security or issuer will be minimized. The City has a concentration of credit risk
policy that limits investment in commercial paper, eligible bankers acceptances and time certificates of
deposit to 25% each of the total portfolio. More than 5 percent of the City’s investments are in U.S. Agency
obligations issued by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association and the Federal Home Loan Bank. These investments are 18.26 percent, 36.16 percent and 9.04
percent, respectively, of the City’s investments.
55
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE C—DEPOSITS AND INVESTMENTS—Continued
Custodial credit risk - deposits. In the case of deposits, this is the risk that in the event of a bank failure, the
City's deposits may not be returned to it. As of December 31, 2009, the City's bank balance of $15,510,515
was not exposed to custodial credit risk because it was fully insured. The City’s investment policy sets
certain credit requirements that a bank must meet for the City to deposit funds in it.
Custodial credit risk - investments. This is the risk that, in the event of the failure of the counterparty, the
City will not be able to recover the value of its investments or collateral securities that are in the possession of
an outside party. The City has a custodial credit risk policy for investments that requires that all investments
that are held with a third-party for safekeeping be in the City’s name.
Foreign currency risk. The City is not authorized to invest in investments which have this type of risk.
Restricted Assets
Restrictions are placed on assets by bond ordinance and City Commission action. At December 31, 2009,
restricted cash and investments in the Water Fund of $672,000 were restricted by bond ordinance.
NOTE D—CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2009 was as follows:
Balance Balance
January 1, December 31,
2009 Additions Deductions 2009
Governmental activities:
Capital assets, not being depreciated:
Land $ 12,396,713 $ 27,461 $ - $ 12,424,174
Construction in progress 7,054,005 3,322,368 4,145,314 6,231,059
Total capital assets, not being depreciated 19,450,718 3,349,829 4,145,314 18,655,233
Capital assets, being depreciated:
Land improvements 4,118,319 - - 4,118,319
Leasehold improvements 304,365 39,249 - 343,614
Buildings and improvements 20,966,377 112,060 - 21,078,437
Furniture, vehicles and equipment 11,852,113 463,227 472,740 11,842,600
Infrastructure 67,595,870 4,145,314 850,642 70,890,542
Shared improvements 5,576,901 - - 5,576,901
Total capital assets, being depreciated 110,413,945 4,759,850 1,323,382 113,850,413
56
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE D—CAPITAL ASSETS—Continued
Balance Balance
January 1, December 31,
2009 Additions Deductions 2009
Governmental activities—Continued
Less accumulated depreciation:
Land improvements $ 520,516 $ 136,628 $ - $ 657,144
Leasehold improvements 106,249 29,732 - 135,981
Buildings and improvements 12,903,849 440,831 - 13,344,680
Furniture, vehicles and equipment 9,335,043 610,886 460,758 9,485,171
Infrastructure 27,870,272 3,206,409 850,642 30,226,039
Shared improvements 1,639,128 278,845 - 1,917,973
Total accumulated depreciation 52,375,057 4,703,331 1,311,400 55,766,988
Total capital assets, being
depreciated, net 58,038,888 56,519 11,982 58,083,425
Capital assets, net $ 77,489,606 $ 3,406,348 $ 4,157,296 $ 76,738,658
Business-type activities:
Capital assets, not being depreciated:
Land $ 142,250 $ - $ - $ 142,250
Construction in progress 2,589,533 1,171,386 1,315,364 2,445,555
Total capital assets, not being depreciated 2,731,783 1,171,386 1,315,364 2,587,805
Capital assets, being depreciated:
Land improvements 1,888,965 - - 1,888,965
Buildings and systems 83,209,430 1,314,678 - 84,524,108
Machinery and equipment 1,603,320 1,224,558 - 2,827,878
Total capital assets, being depreciated 86,701,715 2,539,236 - 89,240,951
Less accumulated depreciation:
Land improvements 1,637,329 28,099 - 1,665,428
Buildings and systems 27,046,578 2,234,036 - 29,280,614
Machinery and equipment 748,868 221,957 - 970,825
Total accumulated depreciation 29,432,775 2,484,092 - 31,916,867
Total capital assets, being
depreciated, net 57,268,940 55,144 - 57,324,084
Capital assets, net $ 60,000,723 $ 1,226,530 $ 1,315,364 $ 59,911,889
57
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE D—CAPITAL ASSETS—Continued
Depreciation
Depreciation expense was charged to functions as follows:
Governmental activities:
Administrative services $ 52,454
Public safety 105,126
Public works 74,442
Highways, streets and bridges 3,566,154
Community and economic development 75,717
Culture and recreation 247,501
General administration 13,359
Internal Service Fund depreciation is charged to the
various programs based on their usage of the assets 568,578
$ 4,703,331
Business-type activities:
Water $ 1,968,859
Sewer 394,160
Marina and Launch Ramp 121,073
$ 2,484,092
Balance Balance
January 1, December 31,
2009 Additions Deductions 2009
Component units:
Capital assets, not being depreciated:
Land $ 400,000 $ - $ - $ 400,000
Capital assets, being depreciated:
Building and improvements 3,798,258 - - 3,798,258
Less accumulated depreciation:
Buildings and improvements 877,628 172,648 - 1,050,276
Total capital assets, being
depreciated, net 2,920,630 (172,648) - 2,747,982
Capital assets, net $ 3,320,630 $ (172,648) $ - $ 3,147,982
Depreciation
Depreciation expense was charged to economic development.
58
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE E—BOND ISSUANCE COSTS
Bond issuance cost activity for the year ended December 31, 2009 was as follows:
Balance Balance
January 1, December 31,
2009 Additions Deductions 2009
Governmental activities:
Bond issuance costs $ 210,974 $ - $ 50,868 $ 160,106
Less accumulated amortization 78,378 7,631 50,868 35,141
Bond issuance costs, net $ 132,596 $ (7,631) $ - $ 124,965
Business-type activities:
Bond issuance costs $ 270,814 $ - $ - $ 270,814
Less accumulated amortization 198,116 13,546 - 211,662
Bond issuance costs, net $ 72,698 $ (13,546) $ - $ 59,152
Amortization
Amortization expense was charged to functions as follows:
Governmental Activities:
Interest on long-term debt $ 7,631
Business-type Activities:
Water $ 13,546
NOTE F—INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
The composition of interfund balances as of December 31, 2009 is as follows:
Due to/from other funds:
Receivable Fund Payable Fund Amount
General Fund Major Street and Trunkline Fund $ 233,469
General Fund Neighborhood Stabilization Fund 195,283
Budget Stabilization Fund Local Streets Fund 194,273
Budget Stabilization Fund Community Development Block Grant Fund 562,792
Budget Stabilization Fund HOME Rehabilitation Fund 414,406
Budget Stabilization Fund Lead Abatement Fund 134,911
Budget Stabilization Fund Engineering Services Fund 48,336
Lead Abatement Fund HOME Rehabilitation Fund 102,710
$ 1,886,180
59
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE F—INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS—Continued
The outstanding balances between funds result from the payable funds having negative positions in the City’s
cash and investment pool.
The BRA component unit owes the Budget Stabilization Fund $10,214 as a result of having a negative
position in the City’s cash and investment pool.
Interfund transfers:
Transfers in Amount Transfers out Amount
General Fund $ 555,024 Nonmajor Governmental Funds
Budget Stabilization Fund $ 500,000
Cemetery Fund 55,024
555,024 555,024
General Fund 77,744 Internal Service Funds
General Insurance Fund 77,744
Major Street and Trunkline Fund 200,000 Nonmajor Governmental Funds
Public Improvement Fund 200,000
Nonmajor Governmental Funds General Fund 510,000
Local Street Fund 510,000
Nonmajor Governmental Funds Nonmajor Governmental Funds
Local Street Fund 2,624 State Grant Fund 16,840
Public Improvement Fund 14,216
16,840 16,840
Internal Service Fund General Fund 28,046
General Insurance Fund 28,046
$ 1,387,654 $ 1,387,654
The General Fund transferred funds to the Local Street Fund to finance capital improvements. Other transfers
between funds are made to meet grant matching requirements or other operational needs.
60
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE G—DEFERRED REVENUE
Governmental funds report deferred revenue in connection with receivables for revenues that are not
considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue
recognition in connection with resources that have been received, but not yet earned. At the end of the current
fiscal year, the various components of deferred revenue reported in the governmental funds were as follows:
Unavailable Unearned
Property taxes $ - $ 8,423,403
Receivables 81,300 501,493
Special assessments 1,440,526 -
Total deferred revenue for governmental funds $ 1,521,826 $ 8,924,896
NOTE H—LONG-TERM DEBT
Summary of Changes in Long-Term Liabilities
The following is a summary of long-term liabilities activity for the City for the year ended December 31,
2009.
Balance Balance
January 1, December 31, Due within
2009 Additions Reductions 2009 one year
Governmental activities:
General obligation debt $ 5,339,357 $ - $ 49,033 $ 5,290,324 $ 70,000
Intergovernmental
contractual obligations 1,416,900 - 296,900 1,120,000 74,000
Special assessment obligations 1,255,000 - 260,000 995,000 190,000
Installment purchase
agreement 449,970 - 56,471 393,499 59,000
Compensated absences 1,447,580 2,530,973 2,674,222 1,304,331 217,500
Governmental activity
long-term liabilities $ 9,908,807 $ 2,530,973 $ 3,336,626 $ 9,103,154 $ 610,500
61
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE H—LONG-TERM DEBT—Continued
Summary of Changes in Long-Term Liabilities—Continued
Balance Balance
January 1, December 31, Due within
2009 Additions Reductions 2009 one year
Business-type activities:
Revenue obligations $ 19,196,800 $ - $ 1,102,265 $ 18,094,535 $ 1,150,000
Compensated absences 182,858 300,773 290,435 193,196 32,200
Business-type activity
long-term liabilities$ 19,379,658 $ 300,773 $ 1,392,700 $ 18,287,731 $ 1,182,200
Component units:
Revenue obligations $ 1,000,000 $ - $ - $ 1,000,000 $ -
General obligation debt 7,254,288 - 299,440 6,954,848 310,000
Component unit long-
term liabilities $ 8,254,288 $ - $ 299,440 $ 7,954,848 $ 310,000
Governmental activities:
General obligation debt:
$5,400,000 Limited Tax General Obligation Bonds of
2006 payable in annual installments of $70,000 to
$350,000 through October 2032; interest at 4% to 4.2% $ 5,305,000
Less bond discount (14,676)
Intergovernmental contractual obligations:
$700,000 Non-interest bearing State of Michigan urban land
assembly loan of 2005 payable in annual installments of
$20,000 to $120,000 through September 2015 620,000
$500,000 State of Michigan Brownfield Redevelopment loan
of 2008 payable in annual installments of $54,572 from
March 2010 through March 2019; including interest at 2% 500,000
62
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE H—LONG-TERM DEBT—Continued
Summary of Changes in Long-Term Liabilities—Continued
Governmental activities:—Continued
Special assessment obligations:
$825,000 Special assessment improvement bonds
of 2000 final payment of $70,000 due April 2010;
interest at 5% $ 70,000
$1,575,000 Capital improvement bonds of 2003 payable
in annual installments of $120,000 to $150,000
through June 2016; interest at 3.5% to 4.05% 925,000
Installment purchase agreement:
$605,824 Note payable to bank in annual installments of
$58,894 to $72,658 through April 2015; interest at
3.83% 393,499
7,798,823
Compensated absences 1,304,331
$ 9,103,154
Business-type activities:
Revenue obligations:
$5,465,000 Water supply system bonds of 1993 payable
in two installments of $450,000 from May 2012
through May 2013; interest at 4.5% $ 900,000
Less bond discount (6,093)
$9,575,000 Water supply system bonds of 1999 payable
in annual installments of $130,000 to $800,000 through
May 2019; interest at 4.20% to 4.75% 5,665,000
Less bond discount (34,372)
$13,900,000 Drinking Water State Revolving Fund loan
of 2004 payable in annual installments of $615,000 to
$840,000 through October 2025; interest at 2.13% 11,570,000
18,094,535
Compensated absences 193,196
$ 18,287,731
63
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE H—LONG-TERM DEBT—Continued
Summary of Changes in Long-Term Liabilities—Continued
Component units:
Revenue obligations:
$1,000,000 Non-interest bearing Downtown Development
Authority promissory note to Muskegon County
payable August 2019 $ 1,000,000
General obligation debt:
$4,005,000 Downtown Development Authority tax
increment refunding bonds of 2001 payable in annual
installments of $230,000 to $335,000 through June
2018; interest at 4.25% to 5% 2,475,000
$4,725,000 Local Development Finance Authority
tax increment bonds of 2002 payable in annual
installments of $80,000 to $400,000 through
November 2025; interest at 3.88% to 4.85% 4,485,000
Less bond discount (5,152)
$ 7,954,848
For governmental activities, claims and judgments and compensated absences are generally liquidated by the
General Fund.
The special assessment bonds are backed by the limited full faith and credit of the City.
In 2005, the County of Muskegon began making improvements to the regional sewer treatment facilities. The
project was funded with $17,500,000 bonds issued through the State of Michigan Clean Water Revolving
Fund Loan Program. The County operates the system and makes payments on the bonds with user charges to
the local units. The City has pledged its limited tax full faith and credit for the payment of its portion of the
debt should user charges collected by the County be insufficient to make the debt payments. The City’s
portion of the debt on December 31, 2009 was approximately $5,365,000. The City is unaware of any
circumstances that would cause a shortfall in the near future.
64
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE H—LONG-TERM DEBT—Continued
The $4,725,000 Local Development Finance Authority (LDFA) tax increment bonds of 2002 are partially
guaranteed by the Community Foundation for Muskegon County. If LDFA tax increment revenues are not
sufficient to cover debt service costs in any year, the Foundation has agreed to pay one-half of such shortfall,
up to $75,000 annually. This commitment extends through December 31, 2016.
The City was in compliance in all material respects with all the revenue bond ordinances at December 31,
2009.
Annual debt service requirements to maturity for debt outstanding as of December 31, 2009 follows:
Year ending Governmental activites Business-type activities Component units
December 31, Principal Interest Principal Interest Principal Interest
2010 $ 393,466 $ 272,949 $ 1,150,000 $ 533,023 $ 310,000 $ 307,811
2011 417,083 260,984 1,185,000 496,787 320,000 294,604
2012 425,632 250,438 1,220,000 458,514 425,000 280,834
2013 434,311 239,400 1,260,000 418,422 500,000 262,268
2014 443,127 227,914 1,305,000 376,686 575,000 240,715
2015-2019 1,319,880 1,002,622 7,215,000 1,186,266 4,020,000 793,683
2020-2024 1,595,000 767,125 3,960,000 345,207 1,495,000 280,680
2025-2029 1,735,000 433,485 840,000 17,850 315,000 15,278
2030-2032 1,050,000 88,198 - - - -
$ 7,813,499 $ 3,543,115 $ 18,135,000 $ 3,832,755 $ 7,960,000 $ 2,475,873
Annual debt service requirements to maturity by type of debt as of December 31, 2009 follows:
General Obligation Debt Revenue Obligations
Year ending Governmental Component Business-type Component
December 31, activities units activities units
2010 $ 285,345 $ 617,811 $ 1,683,023 $ -
2011 282,545 614,604 1,681,787 -
2012 279,745 705,834 1,678,514 -
2013 276,945 762,268 1,678,422 -
2014 274,145 815,715 1,681,686 -
2015-2019 1,553,725 3,813,683 8,401,266 -
2020-2024 2,362,125 1,775,680 4,305,207 1,000,000
2025-2029 2,168,485 330,278 857,850 -
2030-2032 1,138,200 - - -
$ 8,621,260 $ 9,435,873 $ 21,967,755 $ 1,000,000
65
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE H—LONG-TERM DEBT—Continued
Installment
Purchase Special
Intergovernmental Agreement Assessment
Year ending Governmental Governmental Governmental
December 31, activities activities activities
2010 $ 74,572 $ 72,838 $ 224,751
2011 174,572 73,059 148,805
2012 174,572 73,291 149,393
2013 174,572 73,534 149,610
2014 174,572 73,786 149,508
2015-2019 392,860 74,049 307,013
2020-2024 - - -
2025-2029 - - -
2030-2032 - - -
$ 1,165,720 $ 440,557 $ 1,129,080
NOTE I—DESIGNATED FUND BALANCE
Unreserved fund balances designated for specific purposes as of December 31, 2009 were as follows:
Public Improvement Fund
Designated for fire equipment replacement $ 736,275
Designated for Pere Marquette Park improvements 35,763
772,038
State Grants Fund
Designated for Smither Ryerson grant match 99,073
$ 871,111
66
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE J—OTHER INFORMATION
Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets;
errors and omissions; injuries to employees and natural disasters. The City manages its liability and property
risk by participating in the Michigan Municipal Risk Management Authority (MMRMA), a public entity risk
pool providing property and liability coverage to its participating members. The City pays an annual
premium to MMRMA for its insurance coverage. The MMRMA is self-sustaining through member
premiums and provides, subject to certain deductibles, occurrence-based casualty coverage for each incident
and occurrence-based property coverage to its members by internally assuring certain risks and reinsuring
risks through commercial companies. A $100,000 deductible is maintained to place the responsibility for
small charges with the City. Settled claims resulting from these risks have not exceeded insurance coverage
in any of the past three fiscal years. Changes in the fund’s claim liability amount in 2009 and 2008 were as
follows:
Current year
Balance claims and Balance
Year ended at beginning changes in Claims at end
December 31, of year estimates payments of year
2009 $ 180,353 $ 138,790 $ 132,577 $ 186,566
2008 44,125 269,792 133,564 180,353
The City manages its workers' compensation risk by participating in the Michigan Municipal Workers'
Compensation Fund (MMWCF), a public entity risk pool providing workers' compensation coverage to its
participating members. The City pays an annual premium to MMWCF for its workers' compensation
coverage. The MMWCF is self-sustaining through member premiums and provides statutory workers'
compensation coverage to its members by internally assuring certain risks and reinsuring risks through
commercial companies. Settled claims resulting from these risks have not exceeded insurance coverage in
any of the past three fiscal years.
The City is self-insured for employee health care benefits for those employees selecting the City plan over
other options. Under this plan, the General Insurance Fund provides coverage for up to a maximum of
$350,000 per covered individual’s lifetime. As of December 31, 2009, the claims liability including incurred
but not reported claims was $50,267. A liability was recorded in the accompanying financial statements for
the estimated claims liability. The claims liability was based on past experience, a review of pending claims
and other social and economic factors. The above estimate was not discounted and there were no outstanding
claims for which annuity contracts have been purchased in the claimant’s name. No significant reductions in
insurance coverage were made in the last fiscal year. Settled claims have not exceeded the commercial
coverage in any of the past three fiscal years. Changes in the fund’s claim liability amount in 2009 and 2008
were as follows:
Current year
Balance claims and Balance
Year ended at beginning changes in Claims at end
December 31, of year estimates payments of year
2009 $ 18,875 $ 1,165,505 $ 1,134,113 $ 50,267
2008 20,735 1,055,901 1,057,761 18,875
67
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE J—OTHER INFORMATION—Continued
Contingencies
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor
agencies, principally the federal government. Any disallowed claims, including amounts already
collected, may constitute a liability to the applicable funds. The amount, if any, of expenditures that may
be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if
any, to be immaterial.
The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently
determinable, in the opinion of the City's counsel the resolution of these matters will not have a material
adverse effect on the financial condition of the City.
Commitments
At December 31, 2009, the City had entered into various agreements for construction projects and capital
purchases. Below is a summary of those agreements:
Remaining
Fund Project Spent-to-date commitment
State Grant Fund Smith Ryerson improvements $ - $ 696,870
Leases
The City leases an office facility under a noncancelable operating lease that expires June 2012 with the
option by the tenant to renew the term of the lease for five successive periods of five years each. The City
received rental income of $44,166 for the year ended December 31, 2009. The future minimum rental
income for this lease is as follows:
Year ending
December 31, Amount
2010 $ 34,396
2011 34,058
2012 16,860
$ 85,314
68
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE K—PENSION PLANS
Defined Benefit Pension Plan
Plan Description. The City has an agent multiple-employer defined benefit pension plan with the
Municipal Employees Retirement System (MERS). The Plan provides retirement and disability benefits,
annual cost-of-living adjustments, and death benefits to Plan members and beneficiaries. Act No. 427 of
the Public Acts of 1984 of the State of Michigan assigns the authority to establish and amend the benefit
provisions of the plans that participate in MERS to the respective employer entities; that authority rests
with the City. A copy of the complete financial report and required supplemental information can be
obtained by writing to:
City of Muskegon
933 Terrace Street
Muskegon, MI 49443
Funding Policy. City employees are required to contribute 5 to 6 percent to the Plan depending on
employee contract. The City is required to contribute at an actuarially-determined rate depending upon
employee group from 3.36 to 14.67 percent of annual covered payroll depending on the plan. The
contributions requirements of plan members and the City are established and may be amended by MERS.
Annual Pension Cost. For the year ended December 31, 2009, the City’s annual pension cost was
approximately $888,000 was equal to the City’s required and actual contribution.
Trend Information
Approximate Percentage
Annual Pension of APC Net Pension
Year ended Cost (APC) Contributed Obligation
12/31/07 $ 819,000 100 % $ -
12/31/08 1,167,000 100 -
12/31/09 888,000 100 -
The required contribution was determined as part of the December 31, 2007 actuarial valuation using the
entry age actuarial cost method. The actuarial assumptions included (a) 8 percent investment rate of
return (net of administrative expenses), (b) projected salary increases ranging from 0 percent to 4.5
percent, and (c) 4.5 percent per year compounded annually attributable to inflation. The actuarial value of
plan assets was determined using techniques that smooth the effects of short-term volatility in the market
value of investments over a five-year period. The plan’s unfunded actuarial accrued liability is being
amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period
at December 31, 2008 was 9 years which will be reduced by two years in each of the next two valuations
until reaching 5 years after which the 5 year period will be reestablished with each annual actuarial
valuation.
69
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE K—PENSION PLANS—Continued
Defined Benefit Pension Plan—Continued
Funding Status and Funding Progress. As of December 31, 2008, the most recent actuarial valuation
date, the plan was 100 percent funded. The actuarial accrued liability for benefits was approximately
$86,794,000, and the actuarial value of assets was approximately $86,928,000, resulting in an unfunded
actuarial accrued liability (UAAL) of approximately a negative $134,000. The covered payroll (annual
payroll of active employees covered by the plan) was approximately $13,107,000, and the ratio of the
UAAL to the covered payroll was a negative 1 percent due to the plan being overfunded.
The schedule of funding progress, presented as RSI following the notes to the financial statements,
presents multiyear trend information about whether the actuarial value of the plan assets is increasing or
decreasing over time relative to the actuarial accrued liability for benefits.
Defined Contribution Pension Plan
The City also maintains a defined contribution plan offered by MERS and administered by the ICMA
Retirement Corporation, an independent third party. In a defined contribution plan, benefits depend solely on
amounts contributed to the plan plus investments. Depending on employee group, the Plan covers all City
employees hired after January 2005 to July 2006 and those hired earlier who elected to convert from the
defined benefit plan. The authority for establishing or amending the plan’s provisions and for establishing or
amending contribution requirements rests with the City Commission as determined by negotiated labor
contracts. The City is required to contribute 3 percent to 10 percent of a qualified employees’ annual
compensation each year depending on employee group. Qualified employees are required to contribute 0
percent to 6 percent of annual compensation depending on employee group. For the year ended December 31,
2009, City and employee contributions were approximately $122,000 and $68,000, respectively.
Deferred Compensation Plan
The City offers its employees a deferred compensation plan created in accordance with Internal Revenue
Code Section 457. The Plan, available to all full-time employees at their option, permits participants to defer
a portion of their salary until future years. The deferred compensation is not available to participants until
termination, retirement, death, or unforeseeable emergency.
The Plan has created a trust for the exclusive benefit of the Plan’s participants and beneficiaries under rules
provided by Internal Revenue Code Section 401(f).
70
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE L—OTHER POST-EMPLOYMENT BENEFITS
Plan Description. The City has a retiree healthcare funding vehicle administered Municipal Employees
Retirement System (MERS), an agent multiple-employer postemployment healthcare plan (OPEB). The
retiree healthcare funding vehicle is established under the authority of section 115 of the IRS code and is
exempt from taxation. The Plan provides health insurance to eligible retirees and their spouses. Act No.
149 of the Public Acts of 1999 of the State of Michigan assigns the authority to establish and amend the
benefit provisions of the plans that participate in MERS to the respective employer entities; that authority
rests with the City. A copy of the complete financial report and required supplemental information can be
obtained by writing to:
City of Muskegon
933 Terrace Street
Muskegon, MI 49443
Funding Policy. Plan members are not required to contribute to the Plan. The City is required to
contribute the annual required contribution of the employer (ARC) at an actuarially-determined rate
which varies upon employee group from 3.9 to 9.4 percent of covered wages. The ARC represents a
level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize
any unfunded liabilities (or funding excess) over a period not to exceed thirty years. The contribution
requirements of plan members and the City are established and may be amended by MERS.
Annual OPEB Cost. For the year ended December 31, 2009, the City’s OPEB cost (expense) of
approximately $1,698,000 was equal to the City’s ARC and actual contribution.
Trend Information
Approximate
Annual Required Percentage
Contribution of ARC Net ARC
Year ended (ARC) Contributed Obligation
12/31/07 $ 1,326,000 100 % $ -
12/31/08 1,476,000 100 -
12/31/09 1,698,000 100 -
71
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
NOTE L—OTHER POST-EMPLOYMENT BENEFITS—Continued
Actuarial Methods and Assumptions. Actuarial valuations of an ongoing plan involve estimates of the value
of reported amounts and assumptions about the probability of occurrence of events far into the future.
Examples include assumptions about future employment, mortality, and the healthcare cost trend. Actuarially
determined amounts are subject to continual revision as actual results are compared with past expectations
and new estimates are made about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and Plan members) and include the types of benefits provided at the time of each
valuation and the historical pattern of Plan members not contributing to the Plan. The actuarial methods and
assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial
accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the
calculations.
The required contribution was determined as part of the December 31, 2007 actuarial valuation using the
entry age actuarial cost method. The actuarial assumptions included (a) 8 percent investment rate of
return (net of administrative expenses), (b) an annual healthcare trend rate of 11 percent initially, reduced
by decrements to an ultimate rate of 4.5 percent after 10 years. Both rates assume include a 4.5 percent
inflation assumption. The Plan’s unfunded actuarial accrued liability is being amortized as a level
percentage of projected payroll on a closed basis. The remaining amortization period at December 31,
2007 is 30 years.
Funded Status and Progress. As of December 31, 2007, the most recent actuarial valuation date, the plan was
46.5 percent funded. The actuarial accrued liability for benefits was approximately $29,722,000, and the
actuarial value of assets was approximately $13,831,000, resulting in an unfunded actuarial liability (UAAL)
of approximately $15,891,000. The covered payroll (annual payroll of active employees covered by the plan)
was approximately $13,290,000, and the ratio of the UAAL to the covered payroll was 120 percent.
The schedule of funding progress, presented as required supplementary information following the notes to the
financial statements, presents multiyear trend information that shows whether the actuarial value of plan
assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
NOTE M—SUBSEQUENT EVENTS
Bond Refunding
On April 1, 2010, the City issued $6,185,000 million in Water System Revenue Bonds with interest rates
from 2.00 to 4.25 percent to refund $6,030,000 million of outstanding 1993 and 1999 Water System Revenue
Bonds with average interest rates of 4.60 percent.
The City refunded the 1993 and 1999 Water System Revenue Bonds to reduce its total debt service payments
over the next 10 years by $389,669 and to obtain an economic gain (difference between the present values of
the debt service payments on the old and new debt) of approximately $334,200.
Commitments
Subsequent to year-end, the City approved contracts to reconstruct the bridges over the southern branch of the
Muskegon River and make improvements to Heritage Landing for approximately $98,000 and $43,000,
respectively.
72
REQUIRED SUPPLEMENTARY INFORMATION
73
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the year ended December 31, 2009
(with comparative actual amounts for the year ended December 31, 2008)
2009 2008
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative) Actual
REVENUES
Taxes
City income tax $ 7,400,000 $ 6,200,000 $ 6,482,290 $ 282,290 $ 7,694,780
Property taxes 7,787,372 7,808,886 7,882,325 73,439 7,666,645
Industrial facilities taxes 242,887 242,887 216,962 (25,925) 276,203
Payments in lieu of taxes 90,000 91,435 91,435 - 91,225
Delinquent chargeback collected 5,000 5,000 - (5,000) 6
Total taxes 15,525,259 14,348,208 14,673,012 324,804 15,728,859
Licenses and permits
Business licenses 33,000 31,000 31,573 573 32,314
74
Liquor licenses 37,000 54,236 54,235 (1) 38,957
Cable TV fees 300,000 310,000 321,852 11,852 304,812
Rental property registration 100,000 110,000 112,110 2,110 61,600
Burial permits 120,000 110,000 105,616 (4,384) 86,515
Building permits 250,000 215,000 232,797 17,797 353,042
Electrical permits 95,000 73,000 73,940 940 98,914
Plumbing permits 40,000 30,000 28,966 (1,034) 41,711
Mechanical permits 52,500 45,000 45,452 452 68,002
Cat licenses 2,500 2,500 2,390 (110) 3,315
Vacant building fees - 22,000 23,750 1,750 -
Police gun registration - - - - 5
Total licenses and permits 1,030,000 1,002,736 1,032,681 29,945 1,089,187
Intergovernmental revenues
Federal grants 16,602 22,000 64,613 42,613 40,622
State
Grants 28,000 28,000 16,363 (11,637) 27,701
State shared revenue 4,552,462 3,893,161 3,841,922 (51,239) 4,487,698
Total intergovernmental revenues - State 4,580,462 3,921,161 3,858,285 (62,876) 4,515,399
Local - - 60,347 60,347 50,000
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the year ended December 31, 2009
(with comparative actual amounts for the year ended December 31, 2008)
2009 2008
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative) Actual
Charges for services
Tax administration fees $ 276,215 $ 305,000 $ 301,784 $ (3,216) $ 315,261
Utility administration fees 200,000 200,000 200,000 - 180,000
Reimbursement for elections - 14,403 14,409 6 12,006
Indirect cost reimbursements 1,140,717 1,140,717 1,140,720 3 1,021,500
Site plan review fee 4,000 4,000 3,400 (600) 4,245
Sale of cemetery lots 27,400 25,800 24,895 (905) 21,233
Police miscellaneous 119,000 94,000 82,882 (11,118) 97,255
Police impound fees 45,000 45,000 43,629 (1,371) 39,375
Landlord's alert fee 300 300 175 (125) 290
Fire protection-state property 80,000 109,000 110,079 1,079 127,589
Zoning fees 8,000 6,000 5,697 (303) 8,360
75
Clerk fees 3,500 1,000 1,098 98 5,550
Clerk fees - passport fees 8,000 4,000 3,827 (173) 7,830
Tax abatement application fees 10,000 10,000 2,211 (7,789) 11,711
Treasurer fees 90,000 60,000 61,033 1,033 43,279
False alarm fees 12,000 12,000 10,500 (1,500) 10,415
Miscellaneous cemetery income 22,000 22,000 18,108 (3,892) 19,282
Senior transit program fees 9,000 9,000 9,572 572 10,149
Fire miscellaneous 3,000 3,000 1,889 (1,111) 14,699
Sanitation stickers 75,000 80,000 83,254 3,254 81,702
Lot cleanup fees 70,000 70,000 42,244 (27,756) 63,733
Reimbursements - lot mowing and demolitions 70,000 70,000 59,447 (10,553) 85,905
Special events reimbursements 100,000 228,525 164,966 (63,559) 15,278
Recreation program fees 45,000 45,000 50,642 5,642 42,960
Total charges for services 2,418,132 2,558,745 2,436,461 (122,284) 2,239,607
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the year ended December 31, 2009
(with comparative actual amounts for the year ended December 31, 2008)
2009 2008
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative) Actual
Fines and forfeitures
Income tax - penalty and interest $ 225,000 $ 225,000 $ 219,490 $ (5,510) $ 284,629
Late fees on current taxes 40,000 40,000 36,585 (3,415) 28,158
Interest on late invoices 2,000 2,000 1,717 (283) 1,774
Parking fines 125,000 100,000 111,022 11,022 90,360
Court fines 185,000 170,000 154,801 (15,199) 154,765
Total fines and forfeitures 577,000 537,000 523,615 (13,385) 559,686
Interest and rental income
Investment earnings 250,000 75,000 47,181 (27,819) 374,527
Flea market 29,000 29,000 27,262 (1,738) 27,880
76
Farmers' market 32,000 41,000 41,629 629 39,519
City right of way rental 6,800 6,900 6,881 (19) 6,800
Advertising 500 500 - (500) 123
Fire station lease - Central Dispatch 42,000 42,000 44,166 2,166 45,450
Parking rentals 2,500 1,400 1,400 - 2,800
Great Lakes Naval Memorial lease - 7,500 4,958 (2,542) -
McGraft park rentals 45,000 45,000 61,585 16,585 39,043
Other park rentals 30,000 35,000 35,330 330 33,795
Total interest and rental income 437,800 283,300 270,392 (12,908) 569,937
Other
Sale of land and assets 1,000 1,000 - (1,000) 14,488
Police sale and auction proceeds - - 503 503 277
CDBG program reimbursements 354,119 350,000 386,164 36,164 329,756
Fisherman's Landing reimbursement 14,500 14,500 - (14,500) 15,066
Contributions 11,000 24,000 21,561 (2,439) 50,224
Contribution - Veteran's Park maintenance 18,500 18,500 15,757 (2,743) 15,400
Community Foundation for Muskegon County 1,500 7,920 7,920 - 37,543
Miscellaneous reimbursements 1,000 1,000 - (1,000) -
Miscellaneous and sundry 47,000 114,000 120,940 6,940 63,677
Total other 448,619 530,920 552,845 21,925 526,431
Total revenues 25,033,874 23,204,070 23,472,251 268,181 25,319,728
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the year ended December 31, 2009
(with comparative actual amounts for the year ended December 31, 2008)
2009 2008
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative) Actual
EXPENDITURES
Current
Public representation services
City commission $ 86,281 $ 85,208 $ 84,426 $ 782 $ 86,777
City promotions and public relations 11,350 12,500 11,107 1,393 8,183
City manager 338,912 264,962 266,023 (1,061) 225,563
Contributions to outside agencies 201,875 215,511 213,481 2,030 186,153
City attorney 442,508 392,508 348,886 43,622 480,553
Total public representation services 1,080,926 970,689 923,923 46,766 987,229
Administrative services
Administration - - - - 38,672
77
City clerk 315,574 297,952 275,738 22,214 319,548
Civil service 193,711 190,711 190,104 607 186,372
Julia Hackley internships 1,948 2,870 2,861 9 7,988
Affirmative action 85,690 84,390 81,130 3,260 79,933
Total administrative services 596,923 575,923 549,833 26,090 632,513
Financial services
Finance administration 466,415 455,500 451,766 3,734 445,660
Assessing 465,665 468,365 467,854 511 470,280
Arena administration 235,000 252,540 254,262 (1,722) 241,602
Income tax administration 409,888 409,888 405,182 4,706 404,309
Information systems 383,978 384,278 380,699 3,579 347,762
City treasurer 410,842 410,842 446,860 (36,018) 389,217
Total financial services 2,371,788 2,381,413 2,406,623 (25,210) 2,298,830
Public safety
Police department 8,803,476 8,525,726 8,835,302 (309,576) 8,805,620
Fire department 3,647,368 3,655,000 3,794,329 (139,329) 3,836,604
Fire safety inspections 1,083,007 960,058 932,967 27,091 1,041,507
Total public safety 13,533,851 13,140,784 13,562,598 (421,814) 13,683,731
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the year ended December 31, 2009
(with comparative actual amounts for the year ended December 31, 2008)
2009 2008
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative) Actual
Public works
Street lighting $ 635,000 $ 744,000 $ 735,479 $ 8,521 $ 643,477
Community event support 31,100 43,100 40,596 2,504 32,345
Senior citizen transit 66,391 66,391 62,903 3,488 59,621
General sanitation 1,702,900 1,677,960 1,624,899 53,061 1,628,953
Recycling 166,368 93,000 92,784 216 164,568
Storm water management 17,786 17,786 16,991 795 17,754
City hall maintenance 289,184 291,145 286,858 4,287 284,459
Total public works 2,908,729 2,933,382 2,860,510 72,872 2,831,177
Community and economic development
Planning, zoning and economic development 542,827 513,827 513,812 15 523,927
78
Environmental services 410,094 318,984 306,083 12,901 403,385
Edison Landing subsidy 150,000 130,000 120,000 10,000 150,000
Total community and economic development 1,102,921 962,811 939,895 22,916 1,077,312
Culture and recreation
Parks maintenance 1,397,719 1,295,892 1,264,433 31,459 1,455,040
McGraft park maintenance 53,943 53,943 65,522 (11,579) 58,134
General and inner city recreation programs 315,358 306,531 325,116 (18,585) 314,042
Cemeteries maintenance 532,441 507,379 482,352 25,027 498,350
Graffiti removal 4,861 2,000 535 1,465 3,940
Parking operations 4,979 4,400 5,116 (716) 5,431
Farmers' market and flea market 49,450 48,650 49,986 (1,336) 43,835
Total culture and recreation 2,358,751 2,218,795 2,193,060 25,735 2,378,772
Other governmental functions
Insurance premiums 403,737 295,000 311,636 (16,636) 386,191
Other 400,000 300,000 126,656 173,344 76,150
Total other governmental functions 803,737 595,000 438,292 156,708 462,341
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the year ended December 31, 2009
(with comparative actual amounts for the year ended December 31, 2008)
2009 2008
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative) Actual
Debt service
Principal $ 50,000 $ 50,000 $ 50,000 $ - $ 45,000
Interest and fees 217,345 220,000 220,063 (63) 230,833
Total debt service 267,345 270,000 270,063 (63) 275,833
Capital outlay 193,000 189,000 167,239 21,761 174,755
Total expenditures 25,217,971 24,237,797 24,312,036 (74,239) 24,802,493
Excess of revenues under expenditures (184,097) (1,033,727) (839,785) 193,942 517,235
OTHER FINANCING SOURCES (USES)
79
Transfers in 95,000 697,744 632,768 (64,976) 243,904
Transfers out (688,046) (538,046) (538,046) - (1,298,046)
Total other financing sources (uses) (593,046) 159,698 94,722 (64,976) (1,054,142)
Net change in fund balance $ (777,143) $ (874,029) (745,063) $ 128,966 (536,907)
Fund balance at beginning of year 2,383,725 2,920,632
Fund balance at end of year $ 1,638,662 $ 2,383,725
Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
Major Street and Trunkline Fund
For the year ended December 31, 2009
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative)
REVENUES
Intergovernmental revenues
Federal $ 1,095,000 $ 1,730,000 $ 1,593,425 $ (136,575)
State 2,827,811 2,700,000 2,558,600 (141,400)
Local - - 25,235 25,235
Charges for services 75,000 75,000 19,911 (55,089)
Investment earnings 50,000 55,000 50,177 (4,823)
Other 250,000 250,000 233,245 (16,755)
Total revenues 4,297,811 4,810,000 4,480,593 (329,407)
EXPENDITURES
Current
Highways, streets and bridges 4,341,401 5,055,892 4,692,659 363,233
Total expenditures 4,341,401 5,055,892 4,692,659 363,233
80
Excess of revenues under expenditures (43,590) (245,892) (212,066) 33,826
OTHER FINANCING SOURCES
Transfers in - 225,292 200,000 (25,292)
Net change in fund balance $ (43,590) $ (20,600) (12,066) $ 8,534
Fund balance at January 1, 2009 284,912
Fund balance at December 31, 2009 $ 272,846
Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.
City of Muskegon
Required Supplemental Information
SCHEDULE OF FUNDING PROGRESS
For the year ended December 31, 2009
MUNICIPAL EMPLOYEES RETIREMENT SYSTEM (MERS) PENSION PLAN
SCHEDULE OF FUNDING PROGRESS
(Dollar amounts in thousands)
Actuarial UAAL as a
Accrued percentage
Actuarial Actuarial Liability Unfunded of
valuation value of (AAL) AAL Funded Covered covered
date assets Entry Age (UAAL) ratio payroll payroll
12/31/07 $ 86,157 $ 83,118 $ (3,039) 104 % $ 12,684 (24) %
12/31/08 86,928 86,794 (134) 100 13,107 (1)
81
MUNICIPAL EMPLOYEES RETIREMENT SYSTEM (MERS) OTHER POSTEMPLOYMENT BENEFITS PLAN
SCHEDULE OF FUNDING PROGRESS
(Dollar amounts in thousands)
Actuarial UAAL as a
Accrued percentage
Actuarial Actuarial Liability Unfunded of
valuation value of (AAL) AAL Funded Covered covered
date assets Entry Age (UAAL) ratio payroll payroll
12/31/07 $ 13,831 $ 29,722 $ 15,891 46.5 % $ 13,290 120 %
Additional actuarial data is not available from MERS and will be provided in subsequent years.
82
OTHER SUPPLEMENTAL INFORMATION
83
DESCRIPTION OF
OTHER GOVERNMENTAL FUNDS
Special Revenue Funds
The special revenue funds are used to account for the proceeds of special revenue sources that are
legally restricted to expenditures for specific purposes.
Local Street – to account for gas and weight allocations to the City by the Michigan Department
of Transportation for construction and maintenance of local streets within the City.
Criminal Forfeitures – to account for receipts generated through the sale of assets seized through
criminal court proceedings.
Budget Stabilization – to account for funds appropriated from the City’s General Fund for the
purpose of mitigating adverse affects on the City's budget from downturns in the business cycle.
Farmers’ Market Improvement – to account for funds allocated for maintenance and
improvements to the City’s farmers’ market facility.
Tree Replacement – to account for contributions and other revenues earmarked for tree
replacement throughout the City.
Capital Projects Funds
Capital projects funds are used to account for financial resources to be used for the acquisition or
construction of major capital facilities other than those financed by proprietary funds and trust
funds.
Public Improvement – to account for grants, private contributions, sale of property and other
resources used to finance various capital projects.
Sidewalk Replacement – to account for resources allocated for a multi-year city-wide sidewalk
replacement program.
Michcon Remediation – to account for reimbursements received from Michcon Gas Company for
environmental remediation of their former downtown site.
EDC Revolving Loan – to account for funds received upon repayment of Urban Development
Action Grant loans and subsequently reloaned to small business enterprises.
Community Development Block Grant – to account for categorical grants received from the U. S.
Department of Housing and Urban Development for the construction of major city public
improvements and the rehabilitation of residential housing and other qualifying expenditures.
State Grants – to account for grant revenues received from the State of Michigan and earmarked
for the purpose of improvements and/or rehabilitation of City property, environmental
remediation at lakeshore sites or new infrastructure in the City’s downtown.
84
DESCRIPTION OF
OTHER GOVERNMENTAL FUNDS—CONTINUED
Capital Projects Funds—Continued
HOME Rehabilitation – to account for grant revenues received from the U. S. Department of
Housing and Urban Development for the purpose of providing housing assistance to low and
moderate income households in the City.
Arena Capital Improvements – to account for ticket revenue collections earmarked for large
capital improvements and repairs to the L.C. Walker Arena.
Lead Abatement – to account for grant revenues received from the U. S. Department of Housing
and Urban Development for the purpose of abatement of lead from homes in the City.
Neighborhood Stabilization Fund – to account for grant revenues received from the US
Department of Housing and Urban Development for the purpose of stabilizing neighborhoods that
have suffered from foreclosure and abandonment.
Permanent Funds
Permanent funds are used to report resources that are legally restricted to the extent that only
earnings, not principal, may be used for purposes that support the reporting government’s
programs.
Cemetery Perpetual Care – to account for charges for services collected and investment income
earned and to account for transfers to the General Fund to partially cover cemetery care expenses.
85
City of Muskegon
COMBINING BALANCE SHEET
Other Governmental Funds
December 31, 2009
Permanent
Total other Special Capital Fund -
governmental Revenue Projects Cemetery
funds Funds Funds Perpetual Care
ASSETS
Cash and investments $ 4,505,142 $ 302,023 $ 2,896,114 $ 1,307,005
Receivables
Accounts and loans (net of allowance for uncollectibles) 662,462 - 659,054 3,408
Special assessments 874,636 566,836 307,800 -
Due from other governmental units 1,334,089 311,907 1,022,182 -
Due from other funds 1,457,428 1,354,718 102,710 -
Due from component units 10,214 10,214 - -
Prepaid items 4,314 4,314 - -
Total assets $ 8,848,285 $ 2,550,012 $ 4,987,860 $ 1,310,413
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ 29,762 $ 5,691 $ 24,071 $ -
86
Accrued liabilities 9,906 6,958 2,948 -
Due to other funds 1,604,375 194,273 1,410,102 -
Deferred revenue 1,233,227 541,698 691,529 -
Total liabilities 2,877,270 748,620 2,128,650 -
Fund balances
Reserved for:
Prepaid items 4,314 4,314 - -
Long-term loans receivable 224,431 - 224,431 -
Capital projects 2,080,506 - 2,080,506 -
Perpetual care 1,294,800 - - 1,294,800
Unreserved
Designated, reported in capital projects funds 871,111 - 871,111 -
Undesignated, reported in
Special revenue funds 1,797,078 1,797,078 - -
Capital projects funds (316,838) - (316,838) -
Permanent funds 15,613 - - 15,613
Total fund balances 5,971,015 1,801,392 2,859,210 1,310,413
Total liabilities and fund balances $ 8,848,285 $ 2,550,012 $ 4,987,860 $ 1,310,413
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Other Governmental Funds
For the year ended December 31, 2009
Permanent
Total other Special Capital Fund -
governmental Revenue Projects Cemetery
funds Funds Funds Perpetual Care
REVENUES
Intergovernmental revenues
Federal $ 3,085,102 $ - $ 3,085,102 $ -
State 939,801 764,432 175,369 -
Local 215,000 215,000 - -
Charges for services 164,000 1,911 137,761 24,328
Fines and forfeitures 58,779 58,779 - -
Investment earnings 80,331 22,070 48,437 9,824
Other 375,457 98,641 276,816 -
Total revenues 4,918,470 1,160,833 3,723,485 34,152
EXPENDITURES
Current
Public safety 4,503 4,503 - -
Highways, streets and bridges 1,870,305 1,870,305 - -
87
Culture and recreation 3,126 3,126 - -
Debt service
Principal 613,371 - 613,371 -
Interest and fees 62,111 - 62,111 -
Capital outlay 3,820,270 - 3,820,270 -
Total expenditures 6,373,686 1,877,934 4,495,752 -
Excess of revenues over (under) expenditures (1,455,216) (717,101) (772,267) 34,152
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 68,452 - 68,452 -
Transfers in 526,840 512,624 14,216 -
Transfers out (771,864) (500,000) (216,840) (55,024)
Total other financing sources (uses) (176,572) 12,624 (134,172) (55,024)
Net change in fund balances (1,631,788) (704,477) (906,439) (20,872)
Fund balances at January 1, 2009 7,602,803 2,505,869 3,765,649 1,331,285
Fund balances at December 31, 2009 $ 5,971,015 $ 1,801,392 $ 2,859,210 $ 1,310,413
City of Muskegon
COMBINING BALANCE SHEET
Other Special Revenue Funds
December 31, 2009
Total other Farmers'
special revenue Local Criminal Budget Market Tree
funds Street Forfeitures Stabilization Improvement Replacement
ASSETS
Cash and investments $ 302,023 $ - $ 140,640 $ 135,068 $ 17,725 $ 8,590
Special assessments receivable 566,836 566,836 - - - -
Due from other governmental units 311,907 311,907 - - - -
Due from other funds 1,354,718 - - 1,354,718 - -
Due from component units 10,214 - - 10,214 - -
Prepaid items 4,314 4,314 - - - -
Total assets $ 2,550,012 $ 883,057 $ 140,640 $ 1,500,000 $ 17,725 $ 8,590
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ 5,691 $ 5,691 $ - $ - $ - $ -
Accrued liabilities 6,958 6,958 - - - -
88
Due to other funds 194,273 194,273 - - - -
Deferred revenue 541,698 541,698 - - - -
Total liabilities 748,620 748,620 - - - -
Fund balances
Reserved for prepaid items 4,314 4,314 - - - -
Unreserved 1,797,078 130,123 140,640 1,500,000 17,725 8,590
Total fund balances 1,801,392 134,437 140,640 1,500,000 17,725 8,590
Total liabilities and fund balances $ 2,550,012 $ 883,057 $ 140,640 $ 1,500,000 $ 17,725 $ 8,590
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Other Special Revenue Funds
For the year ended December 31, 2009
Total other Farmers'
special revenue Local Criminal Budget Market Tree
funds Street Forfeitures Stabilization Improvement Replacement
REVENUES
Intergovernmental revenues
State $ 764,432 $ 764,432 $ - $ - $ - $ -
Local 215,000 215,000 - - - -
Charges for services 1,911 311 - - - 1,600
Fines and forfeitures 58,779 - 58,779 - - -
Investment earnings 22,070 20,955 881 - 160 74
Other 98,641 95,014 3,627 - - -
Total revenues 1,160,833 1,095,712 63,287 - 160 1,674
EXPENDITURES
Current
Public safety 4,503 - 4,503 - - -
89
Highways, streets and bridges 1,870,305 1,870,305 - - - -
Culture and recreation 3,126 - - - - 3,126
Total expenditures 1,877,934 1,870,305 4,503 - - 3,126
Excess of revenues over (under) expenditures (717,101) (774,593) 58,784 - 160 (1,452)
OTHER FINANCING SOURCES (USES)
Transfers in 512,624 512,624 - - - -
Transfers out (500,000) - - (500,000) - -
Total other financing sources (uses) 12,624 512,624 - (500,000) - -
Net change in fund balances (704,477) (261,969) 58,784 (500,000) 160 (1,452)
Fund balances at January 1, 2009 2,505,869 396,406 81,856 2,000,000 17,565 10,042
Fund balances at December 31, 2009 $ 1,801,392 $ 134,437 $ 140,640 $ 1,500,000 $ 17,725 $ 8,590
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
Other Special Revenue Funds
For the year ended December 31, 2009
Local Street Criminal Forfeitures Budget Stabilization
Variance - Variance - Variance -
Final positive Final positive Final positive
budget Actual (negative) budget Actual (negative) budget Actual (negative)
REVENUES
Intergovernmental revenues
State $ 794,409 $ 764,432 $ (29,977) $ - $ - $ - $ - $ - $ -
Local - 215,000 215,000 - - - - - -
Charges for services 15,000 311 (14,689) - - - - - -
Fines and forfeitures - - - 65,000 58,779 (6,221) - - -
Investment earnings 25,000 20,955 (4,045) 1,000 881 (119) - - -
Other 120,000 95,014 (24,986) - 3,627 3,627 - - -
Total revenues 954,409 1,095,712 141,303 66,000 63,287 (2,713) - - -
EXPENDITURES
Current
Public safety - - - 45,000 4,503 40,497 - - -
Highways, streets and bridges 1,926,750 1,870,305 56,445 - - - - - -
Culture and recreation - - - - - - - - -
90
Total expenditures 1,926,750 1,870,305 56,445 45,000 4,503 40,497 - - -
Excess of revenues over (under) expenditures (972,341) (774,593) 197,748 21,000 58,784 37,784 - - -
OTHER FINANCING SOURCES (USES)
Transfers in 710,000 512,624 (197,376) - - - - - -
Transfers out - - - - - - (500,000) (500,000) -
Total other financing sources (uses) 710,000 512,624 (197,376) - - - (500,000) (500,000) -
Net change in fund balances $ (262,341) (261,969) $ 372 $ 21,000 58,784 $ 37,784 $ (500,000) (500,000) $ -
Fund balances at January 1, 2009 396,406 81,856 2,000,000
Fund balances at December 31, 2009 $ 134,437 $ 140,640 $ 1,500,000
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
Other Special Revenue Funds
For the year ended December 31, 2009
Farmers' Market Improvement Tree Replacement
Variance - Variance -
Final positive Final positive
budget Actual (negative) budget Actual (negative)
REVENUES
Intergovernmental revenues
State $ - $ - $ - $ - $ - $ -
Local - - - - - -
Charges for services - - - 2,000 1,600 (400)
Fines and forfeitures - - - - - -
Investment earnings 200 160 (40) 100 74 (26)
Other - - - - - -
Total revenues 200 160 (40) 2,100 1,674 (426)
EXPENDITURES
91
Current
Public safety - - - - - -
Highways, streets and bridges - - - - - -
Culture and recreation - - - 4,000 3,126 874
Total expenditures - - - 4,000 3,126 874
Excess of revenues over (under) expenditures 200 160 (40) (1,900) (1,452) 448
OTHER FINANCING SOURCES (USES)
Transfers in - - - - - -
Transfers out - - - - - -
Total other financing sources (uses) - - - - - -
Net change in fund balances $ 200 160 $ (40) $ (1,900) (1,452) $ 448
Fund balances at January 1, 2009 17,565 10,042
Fund balances at December 31, 2009 $ 17,725 $ 8,590
City of Muskegon
COMBINING BALANCE SHEET
Other Capital Projects Funds
December 31, 2009
Total other EDC Community Arena
capital projects Public Sidewalk Michcon Revolving Development State HOME Capital Lead Neighborhood
funds Improvement Replacement Remediation Loan Block Grant Grants Rehabilitation Improvements Abatement Stabilization
ASSETS
Cash and investments $ 2,896,114 $ 1,310,483 $ 723,056 $ 214,182 $ 106,614 $ - $ 470,755 $ - $ 71,024 $ - $ -
Receivables
Accounts and loans (net of
allowance for uncollectibles) 659,054 25,523 - - 46,244 377,837 178,187 - - 31,263 -
Special assessments 307,800 - 307,800 - - - - - - - -
Due from other governmental units 1,022,182 - - - - 484,867 139,213 201,522 - 938 195,642
Due from other funds 102,710 - - - - - - - - 102,710 -
Total assets $ 4,987,860 $ 1,336,006 $ 1,030,856 $ 214,182 $ 152,858 $ 862,704 $ 788,155 $ 201,522 $ 71,024 $ 134,911 $ 195,642
LIABILITIES AND FUND BALANCES (DEFICIT)
Liabilities
Accounts payable $ 24,071 $ 280 $ - $ - $ - $ 15,263 $ 7,700 $ 665 $ - $ - $ 163
Accrued liabilities 2,948 - - - - 2,173 - 579 - - 196
Due to other funds 1,410,102 - - - - 562,792 - 517,116 - 134,911 195,283
Deferred revenue 691,529 16,000 211,773 - - 282,476 181,280 - - - -
Total liabilities 2,128,650 16,280 211,773 - - 862,704 188,980 518,360 - 134,911 195,642
Fund balances (deficit)
Reserved for:
Long-term loans receivable 224,431 - - - 46,244 - 178,187 - - - -
Capital projects 2,080,506 547,688 819,083 214,182 106,614 - 321,915 - 71,024 - -
92
Unreserved
Designated for approved projects 871,111 772,038 - - - - 99,073 - - - -
Undesignated (316,838) - - - - - - (316,838) - - -
Total fund balances (deficit) 2,859,210 1,319,726 819,083 214,182 152,858 - 599,175 (316,838) 71,024 - -
Total liabilities and fund balances (deficit) $ 4,987,860 $ 1,336,006 $ 1,030,856 $ 214,182 $ 152,858 $ 862,704 $ 788,155 $ 201,522 $ 71,024 $ 134,911 $ 195,642
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICIT)
Other Capital Projects Funds
For the year ended December 31, 2009
Total other EDC Community Arena
capital projects Public Sidewalk Michcon Revolving Development State HOME Capital Lead Neighborhood
funds Improvement Replacement Remediation Loan Block Grant Grants Rehabilitation Improvements Abatement Stabilization
REVENUES
Intergovernmental revenues
Federal $ 3,085,102 $ - $ - $ - $ - $ 1,253,227 $ 320 $ 398,163 $ - $ 1,168,171 $ 265,221
State 175,369 - - - - - 175,369 - - - -
Charges for services 137,761 100,075 - - - - - - 37,686 - -
Investment earnings 48,437 16,140 27,514 1,747 1,678 624 - - 734 - -
Other 276,816 486 109,431 - 34,684 13,161 6,307 - - 96,532 16,215
Total revenues 3,723,485 116,701 136,945 1,747 36,362 1,267,012 181,996 398,163 38,420 1,264,703 281,436
EXPENDITURES
Debt service
Principal 613,371 353,371 260,000 - - - - - - - -
Interest and fees 62,111 16,152 45,959 - - - - - - - -
Capital outlay 3,820,270 239,995 1,398 3,702 22,407 1,295,306 215,528 425,120 70,675 1,264,703 281,436
Total expenditures 4,495,752 609,518 307,357 3,702 22,407 1,295,306 215,528 425,120 70,675 1,264,703 281,436
Excess of revenues over (under) expenditures (772,267) (492,817) (170,412) (1,955) 13,955 (28,294) (33,532) (26,957) (32,255) - -
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 68,452 13,201 - - - 28,294 - 26,957 - - -
93
Transfers in 14,216 14,216 - - - - - - - - -
Transfers out (216,840) (200,000) - - - - (16,840) - - - -
Total other financing sources (uses) (134,172) (172,583) - - - 28,294 (16,840) 26,957 - - -
Net change in fund balances (906,439) (665,400) (170,412) (1,955) 13,955 - (50,372) - (32,255) - -
Fund balances (deficit) at January 1, 2009 3,765,649 1,985,126 989,495 216,137 138,903 - 649,547 (316,838) 103,279 - -
Fund balances (deficit) at December 31, 2009 $ 2,859,210 $ 1,319,726 $ 819,083 $ 214,182 $ 152,858 $ - $ 599,175 $ (316,838) $ 71,024 $ - $ -
94
DESCRIPTION OF
INTERNAL SERVICE FUNDS
Internal service funds are used to account for the financing of goods or services provided by one
department to other departments of a governmental unit or to other governments on a cost-
reimbursement basis.
A list and description of internal service funds maintained by the City follows:
Engineering Services – to account for salary, benefit and other costs related to the provision of
internal engineering services for City projects; to account for charges to the user funds and
projects to cover those expenses.
Equipment – to account for the purchase, operation, maintenance and depreciation of all City-
owned vehicles and equipment; to account for charges to the user funds and departments to cover
those expenses.
General Insurance – to account for the payment of claims and benefits, excess liability premiums
and operating expenses; to account for charges to other funds and departments to cover the
expenses.
Public Service Building – to account for the operation, maintenance and depreciation of the City's
Public Service Building; to account for charges to the user funds and departments to cover these
expenses.
95
City of Muskegon
COMBINING STATEMENT OF NET ASSETS
Internal Service Funds
December 31, 2009
ASSETS
Total internal Engineering General Public Service
service funds Services Equipment Insurance Building
CURRENT ASSETS
Cash and investments $ 4,372,256 $ - $ 2,519,442 $ 1,339,236 $ 513,578
Accounts receivable 572,959 17,893 7,858 547,208 -
Inventories 23,750 - 23,750 - -
Prepaid items 197,355 864 15,474 179,867 1,150
Total current assets 5,166,320 18,757 2,566,524 2,066,311 514,728
NONCURRENT ASSETS
Capital assets
Land 65,000 - - - 65,000
Land improvements 121,648 - - - 121,648
Buildings and improvements 1,559,334 - - - 1,559,334
Machinery and equipment 7,439,725 26,355 7,378,681 - 34,689
Less accumulated depreciation (7,103,619) (26,355) (5,976,775) - (1,100,489)
Total noncurrent assets 2,082,088 - 1,401,906 - 680,182
96
Total assets 7,248,408 18,757 3,968,430 2,066,311 1,194,910
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable 309,261 2,856 54,169 236,833 15,403
Accrued liabilities 13,940 2,995 3,882 303 6,760
Due to other funds 48,336 48,336 - - -
Bonds and other obligations, due within one year 15,700 4,400 8,500 300 2,500
Total current liabilities 387,237 58,587 66,551 237,436 24,663
NONCURRENT LIABILITIES
Bonds and other obligations, less amounts due within one year 77,996 22,121 42,262 1,306 12,307
Total liabilities 465,233 80,708 108,813 238,742 36,970
NET ASSETS
Invested in capital assets 2,082,088 - 1,401,906 - 680,182
Unrestricted 4,701,087 (61,951) 2,457,711 1,827,569 477,758
Total net assets $ 6,783,175 $ (61,951) $ 3,859,617 $ 1,827,569 $ 1,157,940
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
Internal Service Funds
For the year ended December 31, 2009
Total internal Engineering General Public Service
service funds Services Equipment Insurance Building
OPERATING REVENUES
Charges for services $ 7,493,915 $ 451,132 $ 2,178,851 $ 4,260,731 $ 603,201
Other 93,086 23,918 56,633 4,863 7,672
Total operating revenues 7,587,001 475,050 2,235,484 4,265,594 610,873
OPERATING EXPENSES
Administration 314,952 71,604 114,780 80,916 47,652
Insurance premiums and claims 4,147,899 - - 4,147,899 -
Other operations 2,827,361 567,697 1,719,185 34,904 505,575
Depreciation 568,578 - 500,898 - 67,680
Total operating expenses 7,858,790 639,301 2,334,863 4,263,719 620,907
Operating income (loss) (271,789) (164,251) (99,379) 1,875 (10,034)
97
NONOPERATING REVENUES
Investment earnings 29,162 606 19,495 5,257 3,804
Gain on sale of capital assets 95,057 - 95,057 - -
Total nonoperating revenues 124,219 606 114,552 5,257 3,804
Income (loss) before transfers (147,570) (163,645) 15,173 7,132 (6,230)
Transfers in 28,046 - - 28,046 -
Transfers out (77,744) - - (77,744) -
Change in net assets (197,268) (163,645) 15,173 (42,566) (6,230)
Net assets at January 1, 2009 6,980,443 101,694 3,844,444 1,870,135 1,164,170
Net assets at December 31, 2009 $ 6,783,175 $ (61,951) $ 3,859,617 $ 1,827,569 $ 1,157,940
City of Muskegon
COMBINING STATEMENT OF CASH FLOWS
Internal Service Funds
For the year ended December 31, 2009
Total internal Engineering General Public Service
service funds Services Equipment Insurance Building
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 86,326 $ 9,315 $ 64,476 $ 4,863 $ 7,672
Receipts from interfund services provided 7,493,915 451,132 2,178,851 4,260,731 603,201
Payments to suppliers (4,364,023) (162,615) (1,085,870) (2,826,985) (288,553)
Payments to employees (1,178,248) (401,127) (512,236) (27,119) (237,766)
Payments for interfund services used (710,733) (29,385) (278,455) (353,482) (49,411)
Net cash provided by (used for) operating activities 1,327,237 (132,680) 366,766 1,058,008 35,143
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in 28,046 - - 28,046 -
Transfers out (77,744) - - (77,744) -
Net cash used for noncapital financing activities (49,698) - - (49,698) -
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Purchases of capital assets (446,534) - (446,534) - -
Proceeds from sale of capital assets 107,039 - 107,039 - -
98
Net cash used for capital and related financing activities (339,495) - (339,495) - -
CASH FLOW FROM INVESTING ACTIVITIES
Investment earnings 29,162 606 19,495 5,257 3,804
Net increase (decrease) in cash and investments 967,206 (132,074) 46,766 1,013,567 38,947
Cash and investments at January 1, 2009 3,405,050 132,074 2,472,676 325,669 474,631
Cash and investments at December 31, 2009 $ 4,372,256 $ - $ 2,519,442 $ 1,339,236 $ 513,578
Reconciliation of operating income (loss) to net cash provided by (used for)
operating activities
Operating income (loss) $ (271,789) $ (164,251) $ (99,379) $ 1,875 $ (10,034)
Adjustments to reconcile operating income (loss) to net cash provided by
(used for) operating activities
Depreciation expense 568,578 - 500,898 - 67,680
Change in assets and liabilities
Receivables, net 1,036,229 (14,603) 7,843 1,042,989 -
Inventories (12,198) - (12,198) - -
Prepaid items (18,593) 448 4,138 (23,585) 406
Accounts payable 8,639 409 (17,539) 37,145 (11,376)
Accrued liabilities (31,965) (3,019) (16,997) (416) (11,533)
Due to other funds 48,336 48,336 - - -
Net cash provided by (used for) operating activities $ 1,327,237 $ (132,680) $ 366,766 $ 1,058,008 $ 35,143
DESCRIPTION OF
FIDUCIARY FUNDS
Fiduciary funds are used to account for assets held by a government in a trustee capacity for
individuals, private organizations, other governments or other funds.
A list and description of the fiduciary funds maintained by the City follows:
AGENCY FUNDS are used to account for assets held as an agent for another organization or
individual.
Collector – to account for the collections and disbursement of funds to other entities and
individuals and to account for payroll withholdings and their remittance to the appropriate
governmental agencies.
Current Tax – to account for levy, collection and payment of taxes levied for the general and
other funds of the City, county and public school districts.
Rehab Loan Escrow – to account for deposits made by housing rehabilitation program
participants and their expenditures for the intended purposes.
99
City of Muskegon
COMBINING STATEMENT OF ASSETS AND LIABILITIES
Agency Funds
December 31, 2009
Total Current Rehab Loan
agency funds Collector tax Escrow
ASSETS
Cash and investments $ 5,413,000 $ 707,927 $ 4,705,073 $ -
Receivables
Accounts 1,868 1,868 - -
Property taxes 15,016,716 - 15,016,716 -
Total assets $ 20,431,584 $ 709,795 $ 19,721,789 $ -
LIABILITIES
Accounts payable $ 204,587 $ 204,587 $ - $ -
100
Due to other governmental units 19,997,247 314,374 19,682,873 -
Deposits held for others 229,750 190,834 38,916 -
Total liabilities $ 20,431,584 $ 709,795 $ 19,721,789 $ -
City of Muskegon
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
Agency Funds
For the year ended December 31, 2009
Balance Balance
January 1, December 31,
COLLECTOR FUND 2009 Additions Deductions 2009
ASSETS
Cash and investments $ 1,163,589 $ 17,516,068 $ 17,971,730 $ 707,927
Accounts receivable 2,767 230,680 231,579 1,868
Total assets $ 1,166,356 $ 17,746,748 $ 18,203,309 $ 709,795
LIABILITIES
Accounts payable $ 193,101 $ 12,493,763 $ 12,482,277 $ 204,587
Due to other governmental units 822,530 2,362,555 2,870,711 314,374
Deposits held for others 150,725 3,031,251 2,991,142 190,834
Total liabilities $ 1,166,356 $ 17,887,569 $ 18,344,130 $ 709,795
CURRENT TAX FUND
ASSETS
Cash and investments $ 9,957,243 $ 35,746,651 $ 40,998,821 $ 4,705,073
Property taxes receivable 14,393,066 27,387,664 26,764,014 15,016,716
Total assets $ 24,350,309 $ 63,134,315 $ 67,762,835 $ 19,721,789
LIABILITIES
Due to other governmental units $ 24,319,136 $ 27,387,664 $ 32,023,927 $ 19,682,873
Due to other funds - 8,224,359 8,224,359 -
Due to component units - 645,170 645,170 -
101
Deposits held for others 31,173 113,108 105,365 38,916
Total liabilities $ 24,350,309 $ 36,370,301 $ 40,998,821 $ 19,721,789
REHAB LOAN ESCROW FUND
ASSETS
Cash and investments $ - $ 2,571 $ 2,571 $ -
LIABILITIES
Accounts payable $ - $ 2,571 $ 2,571 $ -
ALL AGENCY FUNDS
ASSETS
Cash and investments $ 11,120,832 $ 53,265,290 $ 58,973,122 $ 5,413,000
Receivables
Accounts 2,767 230,680 231,579 1,868
Property taxes 14,393,066 27,387,664 26,764,014 15,016,716
Total assets $ 25,516,665 $ 80,883,634 $ 85,968,715 $ 20,431,584
LIABILITIES
Accounts payable $ 193,101 $ 12,496,334 $ 12,484,848 $ 204,587
Due to other governmental units 25,141,666 29,750,219 34,894,638 19,997,247
Due to other funds - 8,224,359 8,224,359 -
Due to component units - 645,170 645,170 -
Deposits held for others 181,898 3,144,359 3,096,507 229,750
Total liabilities $ 25,516,665 $ 54,260,441 $ 59,345,522 $ 20,431,584
102
DESCRIPTION OF
DISCRETELY PRESENTED COMPONENT UNITS
A list and description of the discretely presented component units maintained by the City are as
follows:
Downtown Development Authority – to account for the collection of tax increment revenues, the
issuance and repayment of debt and the construction of public facilities to promote and facilitate
economic growth in the downtown.
Local Development Finance Authority – to account for the collection of tax increment revenues
and the construction of public facilities. Three separate local development finance authority
districts have been created:
Local Development Finance Authority I – to promote and facilitate economic growth in
the Port City Industrial Park.
Local Development Finance Authority II – to promote and facilitate economic growth in
the Medendorp Industrial Park.
Local Development Finance Authority III – to promote and facilitate economic growth
in the SmartZone Hi-Tech Park.
Tax Increment Finance Authority – to account for the collection of tax increment revenues, the
issuance and repayment of debt to promote and facilitate economic growth in a sub section of the
downtown.
Brownfield Redevelopment Authority – to account for the collection of tax increment revenues
for environmental remediation in designated brownfield areas.
103
City of Muskegon
COMBINING BALANCE SHEET
Discretely Presented Component Units
December 31, 2009
Total discretely Local Local Local
presented Development Development Development Downtown Tax Increment Brownfield
component Finance Finance Finance Development Finance Redevelopment
units Authority I Authority II Authority III Authority Authority Authority
ASSETS
Cash and investments $ 325,080 $ - $ - $ 13,765 $ 289,526 $ 21,789 $ -
Property taxes receivable 518,573 - - 71,360 390,662 40,634 15,917
Total assets $ 843,653 $ - $ - $ 85,125 $ 680,188 $ 62,423 $ 15,917
LIABILITIES AND FUND BALANCES (DEFICITS)
Liabilities
Due to primary government $ 10,214 $ - $ - $ - $ - $ - $ 10,214
Deferred revenue 518,573 - - 71,360 390,662 40,634 15,917
Total liabilities 528,787 - - 71,360 390,662 40,634 26,131
Fund balances (deficits)
Unreserved 314,866 - - 13,765 289,526 21,789 (10,214)
Total liabilities and fund balances (deficits) $ 843,653 $ - $ - $ 85,125 $ 680,188 $ 62,423 $ 15,917
104
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET ASSETS (DEFICITS)
Discretely Presented Component Units
December 31, 2009
Total fund balance—governmental funds $ 314,866
Amounts reported for governmental activities in the Statement of Net Assets
are different because:
Capital assets used in governmental activities are not financial resources
and therefore are not reported as assets in the governmental funds.
Capital assets $ 4,198,258
Accumulated depreciation (1,050,276) 3,147,982
105
Bond issuance costs are not capitalized and amortized in the
governmental funds.
Bond issuance costs 141,966
Accumulated amortization (43,207) 98,759
Accrued interest in governmental activities is not reported in the
governmental funds. (42,400)
Long-term liabilities, including bonds and notes payable, are not due
and payable in the current period and therefore are not reported
as liabilities in the governmental funds. (7,954,848)
Net assets of governmental activities in the Statement of Net Assets (Deficits) $ (4,435,641)
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICIT)
Discretely Presented Component Units
For the year ended December 31, 2009
Total discretely Local Local Local
presented Development Development Development Downtown Tax Increment Brownfield
component Finance Finance Finance Development Finance Redevelopment
units Authority I Authority II Authority III Authority Authority Authority
REVENUES
Property taxes $ 783,528 $ - $ - $ 91,281 $ 614,632 $ 67,664 $ 9,951
Intergovernmental revenues - Local 120,000 - - 120,000 - - -
Investment earnings 1,462 - 143 179 998 142 -
Other 75,000 - - 75,000 - - -
Total revenues 979,990 - 143 286,460 615,630 67,806 9,951
EXPENDITURES
Current
Community and economic development 87,884 347 25,235 - - 60,000 2,302
Debt service
Principal 300,000 - - 80,000 220,000 - -
Interest and fees 322,171 - - 201,448 120,723 - -
Total expenditures 710,055 347 25,235 281,448 340,723 60,000 2,302
106
Net change in fund balances 269,935 (347) (25,092) 5,012 274,907 7,806 7,649
Fund balances (deficit) at January 1, 2009 44,931 347 25,092 8,753 14,619 13,983 (17,863)
Fund balances (deficit) at December 31, 2009 $ 314,866 $ - $ - $ 13,765 $ 289,526 $ 21,789 $ (10,214)
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
Discretely Presented Component Units
For the year ended December 31, 2009
Net change in fund balances—total governmental funds $ 269,935
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report outlays for capital assets and bond issuance costs as
expenditures; in the Statement of Activities, these costs are depreciated and
amortized over their estimated useful lives, respectively.
Depreciation and amortization expense (178,820)
107
Repayment of principal on long-term debt is an expenditure in the governmental funds,
but the repayment reduces long-term liabilities in the Statement of Net Assets. 299,440
Interest expense on long-term debt is recorded in the Statement of Activities when
incurred, but is not reported in the governmental funds until paid. 1,300
Change in net assets of governmental activities $ 391,855
108
SCHEDULE OF INDEBTEDNESS
109
City of Muskegon
SCHEDULE OF INDEBTEDNESS
December 31, 2009
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 2008 2009 Payable
Business-Type Activities Bonds and Loans Payable:
Water supply system bonds 10/1/1993 $ 5,465,000 0.00% 05/01/09 $ - $ - $ -
($6,093 unamortized discount) 0.00% 05/01/10 - - 40,500
0.00% 05/01/11 - - 40,500
4.50% 05/01/12 450,000 450,000 30,375
4.50% 05/01/13 450,000 450,000 10,121
900,000 900,000 121,496
Water supply system bonds 3/2/1999 $ 9,575,000 4.10% 05/01/09 510,000 - -
($34,372 unamortized discount) 4.20% 05/01/10 535,000 535,000 246,660
4.30% 05/01/11 555,000 555,000 223,493
4.35% 05/01/12 130,000 130,000 208,733
4.40% 05/01/13 155,000 155,000 202,495
4.50% 05/01/14 635,000 635,000 184,798
4.55% 05/01/15 665,000 665,000 155,381
4.60% 05/01/16 695,000 695,000 124,268
4.65% 05/01/17 730,000 730,000 91,310
4.75% 05/01/18 765,000 765,000 56,169
4.75% 05/01/19 800,000 800,000 19,000
6,175,000 5,665,000 1,512,307
Drinking Water State Revolving 3/2/2004 $ 13,900,000 2.13% 10/01/09 600,000 - -
Fund (DWSRF) 2.13% 10/01/10 615,000 615,000 245,863
2.13% 10/01/11 630,000 630,000 232,794
2.13% 10/01/12 640,000 640,000 219,406
2.13% 10/01/13 655,000 655,000 205,806
2.13% 10/01/14 670,000 670,000 191,888
2.13% 10/01/15 685,000 685,000 177,650
2.13% 10/01/16 695,000 695,000 163,094
2.13% 10/01/17 710,000 710,000 148,325
2.13% 10/01/18 725,000 725,000 133,238
2.13% 10/01/19 745,000 745,000 117,831
2.13% 10/01/20 760,000 760,000 102,000
2.13% 10/01/21 775,000 775,000 85,850
2.13% 10/01/22 790,000 790,000 69,382
2.13% 10/01/23 810,000 810,000 52,594
2.13% 10/01/24 825,000 825,000 35,381
2.13% 10/01/25 840,000 840,000 17,850
12,170,000 11,570,000 2,198,952
TOTAL BUSINESS-TYPE ACTIVITIES BONDS AND LOANS PAYABLE $ 19,245,000 $ 18,135,000 $ 3,832,755
110
City of Muskegon
SCHEDULE OF INDEBTEDNESS - CONTINUED
December 31, 2009
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 2008 2009 Payable
Governmental Activities Bonds and Loans Payable:
Installment purchase contract 7/26/2005 $ 605,824 3.83% 04/01/09 $ 56,471 $ - $ -
of 2005 (firetrucks) 3.83% 04/01/10 58,894 58,894 13,944
3.83% 04/01/11 61,420 61,420 11,639
3.83% 04/01/12 64,055 64,055 9,236
3.83% 04/01/13 66,803 66,803 6,731
3.83% 04/01/14 69,669 69,669 4,117
3.83% 04/01/15 72,658 72,658 1,391
449,970 393,499 47,058
Special assessment improvement 10/1/1998 $ 1,495,000 4.00% 04/01/09 60,000 - -
bonds of 1998 (sidewalks) 60,000 - -
Special assessment improvement 12/1/2000 $ 825,000 4.90% 04/01/09 85,000 - -
bonds of 2000 (sidewalks) 5.00% 04/01/10 70,000 70,000 1,746
155,000 70,000 1,746
Capital improvement bonds 3/1/2003 $ 1,575,000 3.13% 06/01/09 115,000 - -
of 2003 (sidewalks) 3.50% 06/01/10 120,000 120,000 33,005
3.50% 06/01/11 120,000 120,000 28,805
3.70% 06/01/12 125,000 125,000 24,393
3.80% 06/01/13 130,000 130,000 19,610
3.90% 06/01/14 135,000 135,000 14,508
4.00% 06/01/15 145,000 145,000 8,975
4.05% 06/01/16 150,000 150,000 3,038
1,040,000 925,000 132,333
Capital improvement bonds 10/24/2006 $ 5,400,000 4.00% 10/01/09 50,000 - -
of 2006 (fire station, recreation) 4.00% 10/01/10 70,000 70,000 215,345
($14,676 unamortized discount) 4.00% 10/01/11 70,000 70,000 212,545
4.00% 10/01/12 70,000 70,000 209,745
4.00% 10/01/13 70,000 70,000 206,945
4.00% 10/01/14 70,000 70,000 204,145
4.00% 10/01/15 70,000 70,000 201,345
4.00% 10/01/16 70,000 70,000 198,545
4.00% 10/01/17 70,000 70,000 195,745
4.00% 10/01/18 70,000 70,000 192,945
4.00% 10/01/19 295,000 295,000 190,145
4.00% 10/01/20 305,000 305,000 178,345
4.00% 10/01/21 315,000 315,000 166,145
4.00% 10/01/22 315,000 315,000 153,545
4.00% 10/01/23 320,000 320,000 140,945
4.00% 10/01/24 340,000 340,000 128,145
4.00% 10/01/25 345,000 345,000 114,545
4.00% 10/01/26 345,000 345,000 100,745
4.10% 10/01/27 345,000 345,000 86,945
4.10% 10/01/28 350,000 350,000 72,800
4.10% 10/01/29 350,000 350,000 58,450
4.20% 10/01/30 350,000 350,000 44,100
4.20% 10/01/31 350,000 350,000 29,400
4.20% 10/01/32 350,000 350,000 14,700
5,355,000 5,305,000 3,316,260
111
City of Muskegon
SCHEDULE OF INDEBTEDNESS - CONTINUED
December 31, 2009
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 2008 2009 Payable
Governmental Activities Bonds and Loans Payable:
State of Michigan urban land 12/15/1999 $ 1,276,900 0.00% 10/31/09 276,900 - -
assembly loan 276,900 - -
State of Michigan urban land 8/1/2005 $ 700,000 0.00% 09/01/09 20,000 - -
assembly loan 0.00% 09/01/10 20,000 20,000 -
0.00% 09/01/11 120,000 120,000 -
0.00% 09/01/12 120,000 120,000 -
0.00% 09/01/13 120,000 120,000 -
0.00% 09/01/14 120,000 120,000 -
0.00% 09/01/15 120,000 120,000 -
640,000 620,000 -
State of Michigan 8/1/2005 $ 500,000 0.00% 03/18/10 54,572 54,572 -
environmental assessment loan 2.00% 03/18/11 45,663 45,663 8,909
2.00% 03/18/12 46,577 46,577 7,995
2.00% 03/18/13 47,508 47,508 7,064
2.00% 03/18/14 48,458 48,458 6,114
2.00% 03/18/15 49,427 49,427 5,144
2.00% 03/18/16 50,416 50,416 4,156
2.00% 03/18/17 51,424 51,424 3,148
2.00% 03/18/18 52,453 52,453 2,119
2.00% 03/18/19 53,502 53,502 1,070
500,000 500,000 45,718
TOTAL GOVERNMENTAL ACTIVITIES BONDS AND LOANS PAYABLE $ 8,476,870 $ 7,813,499 $ 3,543,115
TOTAL PRIMARY GOVERNMENT BONDS AND LOANS PAYABLE $ 27,721,870 $ 25,948,499 $ 7,375,870
112
City of Muskegon
SCHEDULE OF INDEBTEDNESS - CONTINUED
December 31, 2009
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 2008 2009 Payable
Discretely Presented Component Unit Bonds and Loans Payable:
Downtown Development Authority 8/10/1989 $ 1,000,000 0.00% 08/30/19 $ 1,000,000 $ 1,000,000 $ -
promissory note to Muskegon County 1,000,000 1,000,000 -
Downtown Development Authority 9/1/2001 $ 4,005,000 4.20% 06/01/09 220,000 - -
refunding bonds 4.25% 06/01/10 230,000 230,000 110,964
4.35% 06/01/11 240,000 240,000 100,857
4.45% 06/01/12 245,000 245,000 90,187
4.55% 06/01/13 260,000 260,000 78,821
4.65% 06/01/14 270,000 270,000 66,628
4.75% 06/01/15 280,000 280,000 53,700
4.85% 06/01/16 300,000 300,000 39,775
5.00% 06/01/17 315,000 315,000 24,625
5.00% 06/01/18 335,000 335,000 8,375
2,695,000 2,475,000 573,932
Local Development Finance Authority 11/1/2002 $ 4,725,000 3.63% 11/01/09 80,000 - -
Smartzone Bonds 3.88% 11/01/10 80,000 80,000 196,847
($5,152 unamortized discount) 3.88% 11/01/11 80,000 80,000 193,747
4.00% 11/01/12 180,000 180,000 190,647
3.90% 11/01/13 240,000 240,000 183,447
4.05% 11/01/14 305,000 305,000 174,087
4.05% 11/01/15 325,000 325,000 161,736
4.15% 11/01/16 340,000 340,000 148,572
4.25% 11/01/17 355,000 355,000 134,462
4.35% 11/01/18 375,000 375,000 119,376
4.45% 11/01/19 395,000 395,000 103,062
4.60% 11/01/20 400,000 400,000 85,486
4.60% 11/01/21 255,000 255,000 67,086
4.60% 11/01/22 265,000 265,000 55,356
4.85% 11/01/23 280,000 280,000 43,166
4.85% 11/01/24 295,000 295,000 29,586
4.85% 11/01/25 315,000 315,000 15,278
4,565,000 4,485,000 1,901,941
TOTAL DISCRETELY PRESENTED COMPONENT UNIT BONDS AND LOANS PAYABLE $ 8,260,000 $ 7,960,000 $ 2,475,873
TOTAL REPORTING ENTITY BONDS AND LOANS PAYABLE $ 35,981,870 $ 33,908,499 $ 9,851,743
113
114
Statistical Section
This part of the City of Muskegon’s Comprehensive Annual Financial Report presents detailed
information as a context for understanding what the information in the financial statements,
note disclosures, and required supplementary information says about the City’s overall
financial health.
Contents Page
Financial Trends
These schedules contain trend information to help the reader understand how the
City’s financial performance and well-being have changed over time. 116
Revenue Capacity
These schedules contain information to help the reader assess the factors affecting
the City’s ability to generate its property and sales taxes. 120
Debt Capacity
These schedules present information to help the reader assess the affordability of
the City’s current levels of outstanding debt and the City’s ability to issue additional
debt in the future. 126
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the City’s financial activities take place
and to help make comparisons over time and with other governments. 130
Operating Information
These schedules contain information about the City’s operations and resources to help
the reader understand how the City’s financial information relates to the services the
City provides and the activities it performs. 132
Sources: Unless otherwise noted, the information in these schedules is derived form the Comprehensive Annual
Financial Reports for the relevant year. The City implemented Statement 34 in 2002; schedules presenting
government-wide information include information beginning in that year.
115
City of Muskegon
NET ASSETS BY COMPONENT
Last Seven Fiscal Years
2003 2004 2005 (a) 2006 2007 2008 2009
Governmental Activities
Invested in Capital Assets, net of related debt $ 32,120,134 $ 40,663,844 $ 67,119,658 $ 68,189,021 $ 68,059,626 $ 69,564,935 $ 69,064,800
Restricted 5,674,787 5,209,654 5,420,482 5,378,669 5,485,703 3,557,678 2,956,449
Unrestricted 9,286,551 7,407,355 7,811,489 8,778,786 10,162,425 10,708,529 8,920,621
Total Governmental Net Assets $ 47,081,472 $ 53,280,853 $ 80,351,629 $ 82,346,476 $ 83,707,754 $ 83,831,142 $ 80,941,870
Business-type Activities
Invested in Capital Assets, net of related debt $ 27,808,792 $ 31,609,016 $ 36,742,669 $ 39,441,912 $ 39,356,966 $ 40,876,621 $ 41,876,507
Restricted 822,559 822,559 822,559 822,559 822,559 822,559 672,000
Unrestricted 10,488,022 8,647,716 6,663,563 6,910,247 7,980,823 6,775,508 5,983,935
Total Business-type Activities Net Assets $ 39,119,373 $ 41,079,291 $ 44,228,791 $ 47,174,718 $ 48,160,348 $ 48,474,688 $ 48,532,442
116
Primary Government
Invested in Capital Assets, net of related debt $ 59,928,926 $ 72,272,860 $ 103,862,327 $ 107,630,933 $ 107,416,592 $ 110,441,556 $ 110,941,307
Restricted 6,497,346 6,032,213 6,243,041 6,201,228 6,308,262 4,380,237 3,628,449
Unrestricted 19,774,573 16,055,071 14,475,052 15,689,033 18,143,248 17,484,037 14,904,556
Total Primary Government Net Assets $ 86,200,845 $ 94,360,144 $ 124,580,420 $ 129,521,194 $ 131,868,102 $ 132,305,830 $ 129,474,312
(a) In 2005, the City began reporting historic infrastructure assets as required by GASB 34.
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial
reports for the relevant year. The City implemented GASB Statement 34 in 2002; schedules presenting government-wide
information include information start that year. Certain other information has not been presented previously. Reported numbers
begin with the year for which information believed to be accurate is available.
City of Muskegon
CHANGES IN NET ASSETS
Last Seven Fiscal Years
2003 2004 2005 2006 2007 2008 2009
EXPENSES
Governmental Activities
Public representation $ 887,496 $ 866,669 $ 885,365 $ 904,109 $ 925,124 $ 986,696 $ 923,911
Administrative services 1,227,407 1,132,229 803,783 732,715 783,713 782,362 698,022
Financial services 1,842,653 1,809,136 1,872,159 2,061,836 2,205,041 2,292,430 2,406,517
Public safety 11,583,282 12,164,389 12,481,826 13,059,358 12,802,488 13,955,811 13,614,112
Public works 2,947,194 2,847,755 2,853,497 3,089,522 2,989,433 3,019,411 2,986,747
Highways, streets and bridges 3,483,032 3,879,462 5,910,307 5,672,590 7,272,288 7,265,438 7,160,797
Community and economic development 3,371,472 2,652,497 3,693,187 3,383,157 3,054,087 3,174,508 4,139,765
Culture and recreation 3,042,315 2,468,059 2,504,692 2,464,567 2,433,020 2,623,501 2,463,375
General administration 1,601,112 1,725,225 1,608,108 1,143,963 358,225 574,955 451,651
Interest on long-term debt 223,717 193,021 170,814 206,768 343,106 324,076 288,073
Total Governmental Activities Expenses 30,209,680 29,738,442 32,783,738 32,718,585 33,166,525 34,999,188 35,132,970
Business-type Activities
Water 4,538,186 4,122,822 4,181,855 4,500,578 5,795,279 5,800,977 6,080,230
Sewer 3,416,372 3,745,156 3,953,838 5,006,594 5,066,693 5,503,144 5,426,321
Marina and launch ramp 325,401 351,705 343,599 332,826 392,994 347,642 310,773
Total Business-type Activities Expenses 8,279,959 8,219,683 8,479,292 9,839,998 11,254,966 11,651,763 11,817,324
Total Primary Government Expenses $ 38,489,639 $ 37,958,125 $ 41,263,030 $ 42,558,583 $ 44,421,491 $ 46,650,951 $ 46,950,294
PROGRAM REVENUES
Governmental Activities
Charges for Services
Public representation $ 204,435 $ 210,238 $ 195,316 $ 202,939 $ 199,759 $ 188,467 $ 213,885
Administrative services 292,665 314,028 311,529 306,964 287,011 257,850 271,117
Financial services 591,174 645,166 537,445 728,332 744,109 726,572 818,845
Public safety 1,162,175 1,098,793 1,116,755 1,134,686 1,224,062 1,217,616 1,117,476
Public works 266,045 452,606 467,849 588,566 407,569 382,072 383,733
Highways, streets and bridges 273,893 555,018 267,689 263,423 372,133 301,955 251,840
Community and economic development 977,448 414,543 815,980 762,220 356,051 297,854 249,241
Culture and recreation 1,026,822 1,151,687 1,141,865 809,228 454,154 405,520 445,891
General administration 122,447 200,434 314,658 170,240 64,366 99,494 123,426
Operating grants and contributions 5,613,628 6,008,978 6,017,421 5,093,355 5,229,279 5,367,152 6,443,223
Capital grants and contributions 10,494,617 5,785,604 5,894,358 5,360,014 3,347,680 3,444,957 2,105,557
Total Governmental Program Revenues 21,025,349 16,837,095 17,080,865 15,419,967 12,686,173 12,689,509 12,424,234
Business-type Activities
Water 4,131,126 4,977,320 6,912,719 6,342,110 6,569,228 6,240,060 5,883,830
Sewer 4,057,743 4,083,591 4,149,187 4,803,702 5,179,095 5,326,787 5,720,171
Marina and launch ramp 274,258 266,981 248,460 267,412 281,679 250,266 242,055
Operating grants and contributions - - - - - - -
Capital grants and contributions 256,612 657,521 100,373 710,641 - - 5,179
Total Business-type program revenues 8,719,739 9,985,413 11,410,739 12,123,865 12,030,002 11,817,113 11,851,235
Total Primary Government program revenues $ 29,745,088 $ 26,822,508 $ 28,491,604 $ 27,543,832 $ 24,716,175 $ 24,506,622 $ 24,275,469
NET (EXPENSE) REVENUE
Governmental Activities (9,184,331) (12,901,347) (15,702,873) (17,298,618) (20,480,352) (22,309,679) (22,708,736)
Business-type Activities 439,780 1,765,730 2,931,447 2,283,867 775,036 165,350 33,911
Total Primary Government net expense $ (8,744,551) $ (11,135,617) $ (12,771,426) $ (15,014,751) $ (19,705,316) $ (22,144,329) $ (22,674,825)
GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS
Governmental Activities
Property taxes $ 7,029,393 $ 6,962,453 $ 7,670,384 $ 7,846,707 $ 8,014,102 $ 8,349,341 $ 8,492,507
Income taxes 6,644,708 7,326,811 7,238,552 7,673,696 7,757,707 8,117,566 6,628,365
Franchise fees 265,532 - 286,265 285,124 297,200 304,812 321,852
Grants and contributions not restricted for specific programs 4,938,861 4,645,348 4,627,915 4,674,157 4,475,462 4,487,698 3,841,922
Unrestricted investment earnings 281,492 170,094 420,595 832,300 1,247,520 730,142 185,436
Miscellaneous 109,620 68,405 70,402 64,645 88,035 160,460 226,124
Gain on sale of capital asset 62,992 70,886 300,037 81,372 1,604 323,048 123,258
Transfers - (142,420) (80,000) (540,000) (40,000) (40,000) -
Total Governmental Program Revenues 19,332,598 19,101,577 20,534,150 20,918,001 21,841,630 22,433,067 19,819,464
Business-type Activities
Unrestricted investment earnings 71,628 51,768 138,053 122,060 170,594 108,990 23,843
Gain on sale of capital asset (88,767) - - - - - -
Transfers - 142,420 80,000 540,000 40,000 40,000 -
Total Business-type program revenues (17,139) 194,188 218,053 662,060 210,594 148,990 23,843
Total Primary Government program revenues $ 19,315,459 $ 19,295,765 $ 20,752,203 $ 21,580,061 $ 22,052,224 $ 22,582,057 $ 19,843,307
CHANGE IN NET ASSETS
Governmental Activities 10,148,267 6,200,230 4,831,277 3,619,383 1,361,278 123,388 (2,889,272)
Business-type Activities 422,641 1,959,918 3,149,500 2,945,927 985,630 314,340 57,754
Total Primary Government $ 10,570,908 $ 8,160,148 $ 7,980,777 $ 6,565,310 $ 2,346,908 $ 437,728 $ (2,831,518)
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year. The
City implemented GASB Statement 34 in 2002; schedules presenting government-wide information include information start that year. Certain other
information has not been presented previously. Reported numbers begin with the year for which information believed to be accurate is available.
117
City of Muskegon
FUND BALANCE OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
General fund
Reserved $ 78,998 $ 75,337 $ 173,696 $ 110,642 $ 74,349 $ 79,356 $ 177,076 $ 180,410 $ 214,819 $ 187,633
Unreserved 2,872,737 3,087,031 2,634,300 2,320,776 2,370,842 2,440,249 2,512,963 2,740,222 2,168,906 1,451,029
Total general fund $ 2,951,735 $ 3,162,368 $ 2,807,996 $ 2,431,418 $ 2,445,191 $ 2,519,605 $ 2,690,039 $ 2,920,632 $ 2,383,725 $ 1,638,662
All other governmental funds
Reserved $ 2,562,867 $ 2,533,419 $ 2,309,214 $ 1,159,364 $ 1,187,662 $ 2,915,106 $ 7,044,394 $ 4,130,995 $ 4,382,118 $ 3,613,858
Unreserved, reported in:
Special revenue funds 4,900,500 4,579,430 3,785,857 3,254,746 2,692,431 2,910,285 3,030,096 4,462,015 2,768,886 2,060,117
Debt service - - - 153,955 - - - - - -
Capital project funds 2,361,991 2,143,770 1,614,636 3,849,868 2,187,667 1,239,763 390,282 635,676 675,898 554,273
Permanent funds 60,779 91,707 102,837 63,798 22,896 22,890 77,300 84,413 60,813 15,613
Total all other governmental funds $ 9,886,137 $ 9,348,326 $ 7,812,544 $ 8,481,731 $ 6,090,656 $ 7,088,044 $ 10,542,072 $ 9,313,099 $ 7,887,715 $ 6,243,861
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant
118
year. The City implemented GASB Statement 34 in 2002; schedules presenting government-wide information include information start that year.
City of Muskegon
CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Revenues
Taxes $ 12,969,769 $ 12,996,607 $ 13,607,863 $ 13,306,798 $ 13,767,040 $ 14,521,769 $ 15,052,708 $ 15,420,032 $ 15,728,859 $ 14,673,012
Intergovernmental 16,045,805 15,847,954 15,473,320 18,879,071 15,448,865 15,445,949 14,703,371 12,752,363 13,012,035 12,400,408
Charges for services 3,149,195 2,847,201 3,010,798 3,307,607 3,437,220 3,147,066 2,938,246 2,722,894 2,463,975 2,620,372
Other 4,528,702 4,965,889 3,872,459 3,629,983 3,828,223 4,134,604 3,758,956 4,618,149 3,624,579 3,177,522
Total revenues 36,693,471 36,657,651 35,964,440 39,123,459 36,481,348 37,249,388 36,453,281 35,513,438 34,829,448 32,871,314
Expenditures
Public representation 807,496 903,378 985,107 889,188 869,342 886,717 903,895 927,320 987,229 923,923
Administrative services 759,653 717,680 816,581 785,966 704,667 748,588 669,789 644,913 632,513 549,833
Financial services 1,585,890 1,679,979 1,797,662 1,846,558 1,829,276 1,905,714 2,056,580 2,231,519 2,298,830 2,406,623
Public safety 11,110,085 11,136,752 11,514,151 11,439,487 12,277,677 12,624,532 13,002,233 12,902,815 13,754,394 13,567,101
Public works 2,668,788 2,678,089 2,680,695 2,731,241 2,543,512 2,661,073 2,730,415 2,768,906 2,831,177 2,860,510
Highways, streets and bridges 7,894,893 8,309,998 8,816,305 11,800,017 8,654,931 9,531,840 8,023,539 6,504,915 6,414,453 6,562,964
Community and economic development 931,336 948,756 971,335 987,097 797,072 784,396 763,211 894,879 1,077,312 939,895
Culture and recreation 2,345,712 2,637,586 2,610,935 2,624,275 2,259,699 2,197,276 2,190,835 2,254,117 2,394,031 2,196,186
Other governmental functions 1,252,351 1,441,234 1,798,345 1,589,572 1,708,868 1,603,292 1,139,148 350,385 562,341 438,292
119
Debt service
Principal 1,420,462 1,425,741 1,345,000 1,270,000 1,335,000 1,115,000 1,189,785 1,241,921 999,148 663,371
Interest and issuance costs 380,123 367,317 316,255 230,907 201,447 166,071 271,233 324,577 310,432 282,174
Capital outlay 6,212,205 5,338,105 4,721,155 4,496,631 6,139,597 3,734,082 6,066,783 5,683,657 5,473,828 3,987,509
Total expenditure 37,368,994 37,584,615 38,373,526 40,690,939 39,321,088 37,958,581 39,007,446 36,729,924 37,735,688 35,378,381
Excess of revenues over (under) expenditures (675,523) (926,964) (2,409,086) (1,567,480) (2,839,740) (709,193) (2,554,165) (1,216,486) (2,906,240) (2,507,067)
Other financing sources (uses)
Transfers in 2,367,561 2,713,591 2,059,336 2,740,742 3,342,612 1,839,631 2,358,509 1,926,538 1,477,717 1,359,608
Transfers out (2,336,039) (2,403,591) (2,047,491) (2,740,742) (3,233,369) (1,947,677) (2,926,554) (1,994,584) (1,409,491) (1,309,910)
Bonds issued 825,000 - 106,807 1,578,009 - 1,061,900 5,626,331 - 500,000 -
Sale of capital assets 356,299 289,786 400,280 282,080 483,544 827,141 1,120,341 286,152 375,723 68,452
Total other financing sources (uses) 1,212,821 599,786 518,932 1,860,089 592,787 1,780,995 6,178,627 218,106 943,949 118,150
Net change in fund balances $ 537,298 $ (327,178) $ (1,890,154) $ 292,609 $ (2,246,953) $ 1,071,802 $ 3,624,462 $ (998,380) $ (1,962,291) $ (2,388,917)
Debt service as a percentage of noncapital
expenditures 5.78% 5.56% 4.94% 4.15% 4.63% 3.74% 4.44% 5.05% 4.06% 3.01%
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant
year. The City implemented GASB Statement 34 in 2002; schedules presenting government-wide information include information start that year.
City of Muskegon
GOVERNMENTAL ACTIVITIES REVENUES BY SOURCE
Last Ten Fiscal Years
Property % of Income % of Intergo- % of Charges for % of Licenses % of Fines % of Interest % of % of %
Year Tax Total Tax Total vernmental Total Service Total and Permits Total and Fees Total and Rent Total Other Total Total Change
2000 $ 5,891,198 16.1% $ 7,078,571 19.3% $ 16,045,805 43.7% $ 3,149,195 8.6% $ 1,030,830 2.8% $ 338,677 0.9% $ 1,142,700 3.1% $ 2,016,495 5.5% $ 36,693,471 27.8%
2001 6,176,436 16.8% 6,820,171 18.6% 15,847,954 43.2% 2,847,201 7.8% 1,014,598 2.8% 350,557 1.0% 914,214 2.5% 2,686,520 7.3% 36,657,651 -0.1%
2002 6,915,254 19.2% 6,692,609 18.6% 15,473,320 43.0% 3,010,798 8.4% 947,428 2.6% 393,314 1.1% 662,513 1.8% 1,869,204 5.2% 35,964,440 -1.9%
2003 6,764,443 17.3% 6,542,355 16.7% 18,879,071 48.3% 3,307,607 8.5% 1,108,780 2.8% 471,682 1.2% 516,482 1.3% 1,533,039 3.9% 39,123,459 8.8%
2004 6,733,653 18.5% 7,033,387 19.3% 15,448,865 42.3% 3,437,220 9.4% 1,139,014 3.1% 622,165 1.7% 435,152 1.2% 1,631,892 4.5% 36,481,348 -6.8%
2005 7,438,382 20.0% 7,083,023 19.0% 15,445,949 41.5% 3,147,066 8.4% 1,047,981 2.8% 648,300 1.7% 684,165 1.8% 1,754,158 4.7% 37,249,024 2.1%
2006 7,627,535 20.9% 7,425,173 20.4% 14,703,371 40.3% 2,938,246 8.1% 1,009,023 2.8% 544,902 1.5% 1,139,466 3.1% 1,065,565 2.9% 36,453,281 -2.1%
2007 7,801,571 22.0% 7,618,461 21.5% 12,752,363 35.9% 2,722,894 7.7% 1,115,518 3.1% 606,545 1.7% 1,348,819 3.8% 1,547,267 4.4% 35,513,438 -2.6%
2008 8,034,079 23.1% 7,694,780 22.1% 13,012,035 37.4% 2,463,975 7.1% 1,089,187 3.1% 570,526 1.6% 861,515 2.5% 1,103,351 3.2% 34,829,448 -1.9%
2009 8,190,722 24.9% 6,482,290 19.7% 12,400,408 37.7% 2,620,372 8.0% 1,032,681 3.1% 582,394 1.8% 400,900 1.2% 1,161,547 3.5% 32,871,314 -5.6%
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in 2002; schedules
presenting government-wide information include information start that year.
120
City of Muskegon
Taxable, Assessed and Equalized and Estimated Actual Valuation of Property
Last Ten Fiscal Years
Taxable Valuation of Property
Ad Valorem Assessment Roll Industrial and Commercial Facilities Assessment Roll
Total Industrial Industrial Commercial Total Taxable Value
Real Personal Total Real Personal Real Total Taxable As a Percent
Year Residential Agriculture Commercial Industrial Property Property Ad Valorem Property Property Property IFT and CFT Valuation Actual
2000 $ 239,166,390 $ 86,218 $ 111,996,740 $ 105,150,150 $ 456,399,498 $ 125,766,500 $ 582,165,998 $ 20,340,926 $ 54,398,400 $ - $ 74,739,326 $ 656,905,324 90.85%
2001 259,245,700 160,831 117,380,175 104,812,046 481,598,752 150,081,900 631,680,652 15,928,671 61,421,700 - 77,350,371 709,031,023 87.40%
2002 277,504,213 163,166 129,199,142 103,473,256 510,339,777 125,589,450 635,929,227 10,786,400 61,521,500 - 72,307,900 708,237,127 86.36%
2003 295,311,699 163,844 124,679,713 101,987,394 522,142,650 124,833,198 646,975,848 9,114,034 51,183,000 - 60,297,034 707,272,882 85.80%
2004 309,291,380 167,357 123,303,933 103,175,554 535,938,224 115,456,493 651,394,717 7,564,826 51,056,856 - 58,621,682 710,016,399 87.00%
2005 322,359,014 164,935 126,046,550 104,163,650 552,734,149 109,273,769 662,007,918 7,235,276 47,458,411 - 54,693,687 716,701,605 87.62%
2006 341,365,730 - 132,415,743 105,982,619 579,764,092 103,282,670 683,046,762 6,062,774 44,389,891 - 50,452,665 733,499,427 87.46%
2007 364,789,125 - 143,991,195 109,089,684 617,870,004 111,824,925 729,694,929 5,433,443 31,408,300 - 36,841,743 766,536,672 87.21%
2008 376,414,856 160,219 140,833,691 109,931,336 627,340,102 114,100,484 741,440,586 5,747,358 24,617,400 - 30,364,758 771,805,344 86.71%
2009 376,545,791 157,682 147,276,887 114,185,691 638,166,051 111,493,852 749,659,903 5,259,649 25,616,400 - 30,876,049 780,535,952 91.48%
Assessed and Equalized Valuation of Property
Ad Valorem Assessment Roll Industrial and Commercial Facilities Assessment Roll
121
Total Industrial Industrial Commercial Total Estimated
Real Personal Total Real Personal Real Total Assessed Actual
Year Residential Agriculture Commercial Industrial Property Property Ad Valorem Property Property Property IFT and CFT Valuation Value
2000 $ 292,740,000 $ 110,700 $ 122,567,000 $ 106,499,200 $ 521,916,900 $ 125,766,500 $ 647,683,400 $ 20,988,600 $ 54,398,400 $ - $ 75,387,000 $ 723,070,400 $ 1,446,140,800
2001 336,150,700 173,600 136,833,700 109,888,900 583,046,900 150,081,900 733,128,800 16,676,500 61,421,700 - 78,098,200 811,227,000 1,622,454,000
2002 358,727,850 173,600 152,324,900 110,440,500 621,666,850 125,597,200 747,264,050 11,272,200 61,521,500 - 72,793,700 820,057,750 1,640,115,500
2003 383,845,613 181,300 144,310,700 110,600,499 638,938,112 124,840,700 763,778,812 9,333,500 51,183,000 - 60,516,500 824,295,312 1,648,590,624
2004 384,783,400 184,800 141,579,300 114,496,500 641,044,000 115,591,300 756,635,300 7,717,000 51,785,000 - 59,502,000 816,137,300 1,632,274,600
2005 397,915,080 200,800 142,436,699 112,694,600 653,247,179 109,280,200 762,527,379 7,481,500 47,924,200 - 55,405,700 817,933,079 1,635,866,158
2006 420,608,600 - 149,948,800 113,890,900 684,448,300 103,288,100 787,736,400 6,454,200 44,470,600 - 50,924,800 838,661,200 1,677,322,400
2007 448,120,317 - 160,361,200 121,432,880 729,914,397 111,829,191 841,743,588 5,850,600 31,408,300 - 37,258,900 879,002,488 1,758,004,976
2008 466,633,100 194,800 156,596,000 121,810,900 745,234,800 114,104,600 859,339,400 6,162,900 24,617,400 - 30,780,300 890,119,700 1,780,239,400
2009 426,002,850 191,100 161,996,600 122,301,800 710,492,350 111,497,300 821,989,650 5,606,100 25,616,400 - 31,222,500 853,212,150 1,706,424,300
Property is assessed at 50% of true cash value. The assessed and equalized valuation of taxable property is determined as of December 31st of each year and is the basis upon which taxes are levied during the succeeding fiscal year. The passage of
Proposal A in May, 1994 altered how tax values are determined. Beginning in the 1995-1996 fiscal year, property taxes are based on taxable value instead of state equalized value. Proposal A also capped taxable value of each parcel of property, adjusted for
additions and losses, at the previous year's rate of inflation or 5% whichever is less, until the property is sold or transferred. When ownership of a parcel of property is transferred, the taxable value becomes 50% of true cash value, or the state equalized
valuation. The industrial and Commercial Facilities Tax Acts permit certain property to be taxed at one-half the tax rate for a period up to twelve years.
City of Muskegon
Principal Property Taxpayers
December 31, 2009
2009 2000
Percent of Percent of
Taxable Total Taxable Taxable Total Taxable
Taxpayer Valuation Rank Valuation Valuation Rank Valuation
Consumers Energy $ 78,615,856 1 10.1% $ 67,248,351 1 10.2%
Sappi/S.D. Warren Company 31,205,687 2 4.0% 54,094,785 2 8.2%
Johnson Technology 7,679,263 3 1.0% 8,950,262 4 1.4%
ADAC Plastics Inc 7,379,563 4 0.9% 7,147,253 8 1.1%
ESCO Company 6,578,855 5 0.8% - 0.0%
DTE Energy (formerly MichCon) 5,852,200 6 0.7% 9,142,300 3 1.4%
Glen Oaks Apartments LLC 4,776,500 7 0.6% - 0.0%
122
Honeywell Inc 4,738,900 8 0.6% - 0.0%
Faram Muskegon LLC 4,570,300 9 0.6% - 0.0%
Lorin Industries 4,318,889 10 0.6% 8,564,530 6 1.3%
Brunswick Corp - 0.0% 8,634,000 5 1.3%
Neway Anchorlok International - 0.0% 8,370,668 7 1.3%
Anglo-American Clays Corporation - 0.0% 6,876,300 9 1.0%
Muskegon Properties Company - 0.0% 6,392,900 10 1.0%
Total - 10 Largest 155,716,013 19.9% 185,421,349 28.2%
Total - All Other 624,819,939 80.1% 472,356,912 71.8%
$ 780,535,952 100.0% $ 657,778,261 100.0%
Source: Muskegon County Equalization Department; City of Muskegon Treasurer's Office
City of Muskegon
Property Tax Rates - Direct and Overlapping Government Units
Property Tax Rates Per $1,000 Taxable Valuation
Last Ten Fiscal Years
City-Wide Rates
Total Library
Year Operating Promotion Sanitation City District
2000 7.0000 0.0859 3.0000 10.0859 0.9947
2001 7.0000 0.0792 3.0000 10.0792 2.4000
2002 7.0000 0.0786 3.0000 10.0786 2.4000
2003 7.5000 0.0774 2.5000 10.0774 2.4000
2004 8.5000 0.0768 2.5000 11.0768 2.4000
2005 8.5000 0.0755 2.5000 11.0755 2.4000
2006 8.5000 0.0732 2.5000 11.0732 2.4000
2007 8.5000 0.0685 2.5000 11.0685 2.4000
2008 8.5000 0.0682 2.5000 11.0682 2.4000
2009 8.9000 0.0680 2.1000 11.0680 2.4000
Overlapping - County-Wide Rates
Muskegon Intermediate Special Vocational Community
Year County School Education Education College
2000 6.6256 0.4675 2.3374 - 2.2417
2001 6.5799 0.4640 2.3202 - 2.2233
2002 6.6957 0.4599 2.2997 1.0000 2.2037
2003 6.7957 0.4597 2.2983 1.0000 2.2037
2004 6.7957 0.4597 2.2983 1.0000 2.2037
2005 6.7757 0.4597 2.2983 1.0000 2.2037
2006 6.7557 0.4597 2.2987 0.9996 2.2037
2007 6.7357 0.4597 2.2987 0.9996 2.2037
2008 6.6957 0.4597 2.2987 0.9996 2.2037
2009 6.6957 0.4597 2.2987 0.9996 2.2037
Overlapping - School District Grand Total
State Non-
Year Operating Debt Total Education Homestead Homestead
2000 18.0000 7.0000 25.0000 6.0000 35.7528 53.7528
2001 18.0000 7.0000 25.0000 6.0000 37.0666 55.0666
2002 18.0000 7.0000 25.0000 6.0000 38.1376 56.1376
2003 18.0000 7.0000 25.0000 5.0000 37.2348 55.2348
2004 18.0000 7.0000 25.0000 6.0000 39.2342 57.2342
2005 18.0000 7.0000 25.0000 6.0000 39.2129 57.2129
2006 18.0000 7.0000 25.0000 6.0000 39.1906 57.1906
2007 18.0000 7.0000 25.0000 6.0000 39.1659 57.1659
2008 18.0000 5.5000 23.5000 6.0000 37.6256 55.6256
2009 18.0000 5.6000 23.6000 6.0000 37.7254 55.7254
123
City of Muskegon
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Charge backs
Total Current Percent Delinquent Total Tax On Uncollected Outstanding Outstanding Percent of
Fiscal Tax Tax Of Levy Tax Total Tax Collections Delinquent Delinquent Delinquent Delinquent
Year Levy Collections Collected Collections Collections as % of Levy Taxes Personal Specific Taxes to Levy
2000 $ 7,378,653 $ 6,631,358 89.9% $ 382,839 $ 7,014,197 95.1% $ 47,117 $ 60,847 $ 7,845 1.57%
2001 7,449,191 6,625,670 88.9% 88,768 6,714,438 90.1% 24,866 184,894 5,496 2.89%
2002 7,922,898 7,036,846 88.8% 123,906 7,160,752 90.4% 30,056 168,666 15,700 2.71%
2003 8,095,194 7,201,599 89.0% 710,353 7,911,952 97.7% 27,338 154,843 20,856 2.51%
2004 8,292,451 7,230,231 87.2% 772,545 8,002,776 96.5% 36,179 82,305 22,655 1.70%
2005 8,121,734 6,920,960 85.2% 1,027,932 7,948,892 97.9% 28,156 78,641 21,100 1.57%
2006 8,207,019 7,231,508 88.1% 885,675 8,117,183 98.9% 13,461 65,297 24,539 1.26%
2007 8,542,477 7,509,102 87.9% 949,754 8,458,856 99.0% - 67,586 20,748 1.03%
2008 8,466,096 7,219,540 85.3% 1,135,738 8,355,278 98.7% 36,917 73,430 37,388 1.75%
2009 8,700,017 7,522,462 86.5% 1,102,891 8,625,353 99.1% 25,755 73,440 34,758 1.54%
124
SOURCE: City of Muskegon Treasurer' Office
City of Muskegon
SEGMENTED DATA ON INCOME TAX FILERS, RATES AND LIABILITY
Most recent Year and Nine Years Previous
Fiscal Year 2009 Fiscal Year 2000
Taxable Income per Return # of % of Total Total Taxable % of Total # of % of Total Total Taxable % of Total
Individual and Joint Returns Returns Returns Filed Income Tax Dollars Tax Dollars Returns Returns Filed Income Tax Dollars Tax Dollars
Resident Taxpayers:
(City resident income, after exemptions, exclusions and deductions is taxed at a flat rate of 1%.)
$2,500 or less 1,138 5% $ 864,100 $ 8,641 0% 1,179 5% $ 1,029,474 $ 10,295 0%
$2,501-$7,500 770 4% 5,078,700 50,787 1% 1,169 5% 6,827,297 68,273 1%
$7,501-$25,000 2,020 10% 41,502,900 415,029 6% 2,704 10% 52,426,935 524,269 7%
$25,001-$50,000 1,693 8% 79,903,500 799,035 12% 2,394 9% 101,907,814 1,019,078 14%
$50,001-$100,000 989 5% 85,195,400 851,954 13% 986 4% 88,566,998 885,670 13%
More than $100,000 178 1% 41,650,500 416,505 6% 142 1% 40,253,382 402,534 6%
Subtotal 6,788 32% $ 254,195,100 $ 2,541,951 39% 8,574 33% $ 291,011,900 $ 2,910,119 41%
Non-Residents Taxpayers:
125
(Non-residents are taxed at a rate of 0.5% on income earned within the City.)
$2,500 or less 1,893 9% $ 1,016,800 $ 6,726 0% 1,939 8% $ 1,428,558 $ 9,525 0%
$2,501-$7,500 1,143 5% 5,521,406 36,523 1% 1,665 6% 7,901,142 52,677 1%
$7,501-$25,000 2,914 14% 47,512,234 314,284 5% 4,208 16% 68,958,300 459,742 6%
$25,001-$50,000 3,316 16% 121,177,000 801,562 12% 4,917 19% 177,165,226 1,181,151 17%
$50,001-$100,000 2,539 12% 168,325,400 1,113,440 17% 2,102 8% 135,900,236 906,039 13%
More than $100,000 628 3% 126,125,200 834,294 13% 527 2% 118,501,368 790,042 11%
Subtotal 12,433 59% $ 469,678,040 $ 3,106,829 48% 15,358 60% $ 509,854,830 $ 3,399,176 48%
All Other Returns
(Mostly corporate returns which pay at a rate of 1% on income earned in City and partnerships which pay based on partners residence status.)
Subtotal 1,850 9% $ 833,510 13% 1,850 7% $ 769,276 11%
Total 21,071 100% $ 6,482,290 100% 25,782 100% $ 7,078,571 100%
NOTE: Due to confidentiality issues, the names of the ten largest income tax payers are not available. The categories presented are intended to provide alternative information regarding sources of the City's revenue.
SOURCE: City of Muskegon Income Tax Department. The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB
Statement 34 in 2002; schedules presenting government-wide information include information starting that year. Certain other information has not been presented previously. Reported numbers begin with the year for which
information believed to be accurate is available.
City of Muskegon
RATIO OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Governmental Activities Business-Type Activities
General
Obligation Special Total Percent of
Limited Tax Assessment Governmental Revenue Intergovernmental Total Business- Total Primary Personal Per
Year Bonds Bonds State Loans Activities Bonds Contactual Debt State Loans Type Activities Government Income Capita
2000 $ 5,335,741 $ 2,910,000 $ 1,276,900 $ 9,522,641 $ 10,510,000 $ 9,235,090 $ - $ 19,745,090 $ 29,267,731 5.0% $ 730
2001 4,425,000 2,395,000 1,276,900 8,096,900 10,140,000 8,262,203 - 18,402,203 26,499,103 4.4% 661
2002 3,735,000 1,835,000 1,276,900 6,846,900 9,750,000 7,038,014 - 16,788,014 23,634,914 3.8% 589
2003 4,565,000 1,460,000 1,126,900 7,151,900 9,345,000 5,886,923 - 15,231,923 22,383,823 3.6% 562
2004 3,700,000 1,140,000 976,900 5,816,900 8,925,000 4,779,656 8,483,766 22,188,422 28,005,322 4.4% 703
2005 3,615,824 865,000 1,282,976 5,763,800 8,490,000 3,606,017 13,900,000 25,996,017 31,759,817 4.8% 797
2006 8,246,039 615,000 1,356,900 10,217,939 8,035,000 2,454,101 13,335,000 23,824,101 34,042,040 5.0% 855
2007 7,444,118 395,000 1,136,900 8,976,018 7,565,000 1,221,207 12,760,000 21,546,207 30,522,225 4.5% 766
2008 6,844,970 215,000 1,416,900 8,476,870 7,075,000 - 12,170,000 19,245,000 27,721,870 4.1% 696
2009 6,623,499 70,000 1,120,000 7,813,499 6,565,000 - 11,570,000 18,135,000 25,948,499 3.8% 659
126
NOTE: None of the debt issued by the City is payable through the levy of property tax millages.
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB
Statement 34 in 2002; schedules presenting government-wide information include information start that year.
City of Muskegon
DIRECT AND OVERLAPPING DEBT
December 31, 2009
Total Debt City General
Name of Governmental Unit Outstanding Self Supporting Taxes
Direct Debt
City of Muskegon:
Revenue Bonds $ 18,135,000 $ 18,135,000 $ -
Special Assessment Bonds 70,000 70,000 -
Capital Improvement Bonds 6,230,000 - 6,230,000
Intergovernmental Bonds 1,120,000 - 1,120,000
Act 99 Installment Purchase 393,499 - 393,499
Component Unit Debt:
Downtown Development Authority 3,475,000 3,475,000 -
Local Development Finance Authority 4,485,000 4,485,000 -
Total City Direct Debt $ 33,908,499 $ 26,165,000 $ 7,743,499
City Share as
Gross Percent of Gross Net
Overlapping Debt
Muskegon School Distict $ 37,469,736 94.48% $ 35,401,407
Orchard View School Distict 46,682,934 25.95% 12,114,221
Reeths Puffer School Distict 63,090,640 10.65% 6,719,153
Muskegon Intermediate School District - 15.65% -
Muskegon County 19,040,000 15.66% 2,981,664
Muskegon Community College 15,720,000 15.66% 2,461,752
Total Overlapping Debt $ 182,003,310 59,678,197
Total City Direct and Overlapping Debt $ 67,421,696
Details regarding the City's outstanding debt can be found in the notes to the financial statements.
SOURCE: Municipal Advisory Council of Michigan and City of Muskegon Finance Department. The information
in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the
relevant year. The City implemented GASB Statement 34 in 2002; schedules presenting government-wide
information include information start that year.
127
City of Muskegon
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Debt Limit $ 64,768,340 $ 73,312,880 $ 74,726,405 $ 76,377,881 $ 75,663,530 $ 76,252,738 $ 78,773,640 $ 84,174,359 $ 85,933,940 $ 82,198,965
Total net debt applicable to limit 3,502,641 7,232,900 11,066,900 9,726,900 9,191,900 9,918,800 16,142,939 15,591,018 15,481,870 14,778,499
Legal debt margin $ 61,265,699 $ 66,079,980 $ 63,659,505 $ 66,650,981 $ 66,471,630 $ 66,333,938 $ 62,630,701 $ 68,583,341 $ 70,452,070 $ 67,420,466
Total net debt applicable to the limit as 5.41% 9.87% 14.81% 12.74% 12.15% 13.01% 20.49% 18.52% 18.02% 17.98%
a percentage of debt limit
Legal Debt Margin Calculation for 2009:
Assessed Valuation: $ 821,989,650
Legal Debt Limit (10% ) 82,198,965
Total Indebtedness: $ 33,908,499
Debt not Subject to Limitation:
128
Paid by Special Assessment (995,000)
Revenue Bonds (18,135,000)
Debt Subject to Limitation 14,778,499
Legal Debt Margin $ 67,420,466
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year. The City
implemented GASB Statement 34 in 2002; schedules presenting government-wide information include information start that year. Certain other information has not been
presented previously. Reported numbers begin with the year for which information believed to be accurate is available.
City of Muskegon
REVENUE BOND COVERAGE
Water Supply System
Last Ten Fiscal Years
Direct Net Revenue Debt Service Requirements
Fiscal Gross Operating Available For
Year Revenue (a) Expenses (b) Debt Service Principal Interest Total Coverage
2000 $ 3,936,337 $ 2,576,864 $ 1,359,473 $ 350,000 $ 494,206 $ 844,206 1.61
2001 4,263,107 3,203,080 1,060,027 370,000 471,301 841,301 1.26
2002 4,051,015 3,030,959 1,020,056 390,000 453,666 843,666 1.21
2003 4,183,015 3,539,690 643,325 405,000 417,559 822,559 0.78
2004 5,016,267 3,186,067 1,830,200 420,000 411,867 831,867 2.20
2005 7,017,844 3,197,232 3,820,612 435,000 418,549 853,549 4.48
2006 6,424,971 3,172,882 3,252,089 1,020,000 662,774 1,682,774 1.93
2007 6,705,739 3,404,649 3,301,090 1,045,000 632,036 1,677,036 1.97
2008 6,336,135 3,407,903 2,928,232 1,080,000 600,377 1,680,377 1.74
2009 5,906,313 3,498,263 2,408,050 1,110,000 567,462 1,677,462 1.44
Sewage Disposal System
Direct Net Revenue Debt Service Requirements
Fiscal Gross Operating Available For
Year Revenue (a) Expenses (b) Debt Service Principal Interest Total Coverage
2000 $ 4,089,381 $ 2,236,111 $ 1,853,270 $ 421,516 $ 216,776 $ 638,292 2.90
2001 3,991,295 2,656,382 1,334,913 399,933 197,169 597,102 2.24
2002 4,039,448 2,726,975 1,312,473 458,918 137,622 596,540 2.20
2003 4,077,482 2,649,454 1,428,028 473,329 132,214 605,543 2.36
2004 4,096,412 3,038,939 1,057,473 455,179 110,520 565,699 1.87
2005 4,182,115 3,128,119 1,053,996 522,956 114,388 637,344 1.65
2006 4,842,901 4,270,296 572,605 511,626 63,233 574,859 1.00
2007 5,213,140 4,435,211 777,929 506,822 25,221 532,043 1.46
2008 5,338,647 4,979,343 359,304 546,278 12,550 558,828 0.64
2009 No System Indebtedness
For years in which "revenue bond coverage" is less than 1.00, the shortfall was made up either by use of net assets or by transfer in.
(a) "Gross Revenue" equals total operating revenues plus interest income.
(b) "Direct Operating Expenses" equal total operating expenses net of depreciation expense.
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for
the relevant year. The City implemented GASB Statement 34 in 2002; schedules presenting government-wide information include
information start that year. Certain other information has not been presented previously. Reported numbers begin with the year for
which information believed to be accurate is available.
129
City of Muskegon
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Fiscal Years
Fiscal Pesonal Per Capita Median Public School Building Permits
Year Population Income Income Age Enrollment Number Value Unemployment
2000 40,105 $ 587,140,208 $ 14,640 32.3 6,788 859 $ 39,494,923 6.1%
2001 40,105 601,818,713 15,006 32.3 6,761 893 26,052,549 9.3%
2002 40,105 616,864,181 15,381 32.3 6,603 1,008 39,705,174 12.1%
2003 39,825 627,871,373 15,766 32.3 6,327 1,061 21,369,545 13.9%
2004 39,825 643,568,157 16,160 32.3 6,088 1,152 37,963,075 11.1%
2005 39,825 659,657,361 16,564 32.3 5,862 966 30,041,025 9.0%
2006 39,825 676,148,795 16,978 32.3 5,625 1,063 27,328,144 8.6%
2007 39,825 693,052,515 17,402 32.3 5,534 941 36,129,064 9.5%
2008 39,825 710,378,828 17,838 32.3 5,361 946 23,001,998 11.5%
2009 39,401 720,386,117 18,283 32.8 5,931 909 18,417,289 16.2%
130
SOURCE: US Census Bureau, Muskegon Area Intermediate School Distrct (MAISD), City of Muskegon Inspections Department
City of Muskegon
PRINCIPAL EMPLOYERS
Current Year and Nine Years Ago
2009 2000
Percentage Percentage
of total of total
City City
Employer Employees Rank employment Employees Rank employment
Mercy General Health Partners 3,227 1 17.9% 1,300 1 7.1%
County of Muskegon 980 2 5.4% 650 5 3.6%
State of Michigan 772 3 4.3% 901 3 4.9%
Muskegon Public Schools 697 4 3.9% 550 6 3.0%
Johnson Technology 474 5 2.6% 550 6 3.0%
Knoll Group 450 6 2.5% - - 0.0%
Baker College 430 7 2.4% - - 0.0%
131
ADAC Plastics 400 8 2.2% 480 7 2.6%
Verizon 325 9 1.8% 350 9 1.9%
City of Muskegon 281 10 1.6% - - 0.0%
Brunswick 180 - 0.0% 400 8 2.2%
Hackley Hospital - - 0.0% 1,000 2 5.5%
Sappi Fine Paper - - 0.0% 740 4 4.1%
SOURCE: City of Muskegon; Muskegon Area First; Michigan Department of Energy, Labor & Economic Growth
City of Muskegon
BUDGETED FULL-TIME CITY GOVERNMENT POSITIONS BY DEPARTMENT
Last Ten Fiscal Years
Department 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Administration 1.70 1.70 1.50 1.50 1.50 1.50 1.50 1.50 1.50 -
Affirmative Action 1.00 1.00 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50
Cemetaries 3.52 3.52 3.52 3.52 3.52 3.25 3.00 3.25 3.25 3.25
City Assessors Office - - - - - - - - - -
City Clerk & Elections 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
City Commission 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
City Hall Maintenance 1.20 1.20 1.25 1.20 1.00 1.00 1.00 1.00 1.00 1.00
City Manager's Office 2.05 3.05 2.75 1.75 1.75 1.75 1.75 1.75 1.75 3.25
City Treasurer's Office 6.00 6.00 6.00 6.00 5.00 5.00 5.00 4.00 5.00 5.00
Civil Service 2.00 2.00 3.00 3.00 2.00 2.00 2.00 2.00 2.00 2.00
Community Event Support - 0.60 0.20 0.20 - - - - - -
Environmental Services 5.00 4.00 4.00 4.00 3.50 2.00 2.00 2.00 2.00 2.00
Farmers Market 0.12 0.12 0.12 0.12 0.12 - - - - 0.05
Finance Administration 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Fire 44.00 44.00 44.00 43.00 41.00 40.00 38.00 38.00 38.00 38.00
Fire Safety Inspections 13.00 13.00 12.00 13.00 12.00 10.00 12.00 12.00 12.00 12.00
Forestry 2.68 2.68 2.18 1.93 0.93 - - - - -
General Recreation 0.78 0.78 0.78 2.24 1.24 1.00 1.17 1.33 1.66 1.66
132
Income Tax Administration 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Information Systems 3.00 3.00 4.00 4.00 4.00 3.00 3.00 3.00 3.00 3.00
Inner City Recreation 1.46 1.46 1.46 - - - - - - -
Parking 0.30 0.30 0.30 0.30 - - - - - -
Parks 10.03 11.53 11.53 10.53 9.68 8.48 8.25 8.15 8.15 7.99
Planning, Zoning & Economic Development 8.00 7.50 7.50 7.50 6.50 6.00 6.00 6.00 6.00 6.00
Police 102.00 102.00 102.00 96.00 94.00 94.00 94.00 94.00 94.00 94.00
Sanitation 2.10 1.10 1.25 1.25 1.10 1.10 1.00 1.00 1.00 1.00
MVH-Major Streets 13.35 13.75 14.70 15.30 15.45 15.25 16.00 17.75 15.75 13.75
MVH-Local Streets 7.20 7.40 7.20 7.20 7.00 7.00 7.00 7.00 6.00 8.00
MVH-State Trunklines 1.60 1.60 1.60 1.60 2.00 2.00 2.00 - - -
Highway Non-Chargeables 0.20 - - - - - - - - -
Street Lighting 0.10 0.10 0.10 - - - - - - -
Walker Arena 0.12 0.12 0.12 0.12 0.12 - - - - -
Community Development 6.00 5.00 5.00 5.00 5.00 4.00 4.00 4.00 4.00 4.00
Home Program 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Sewer Maintenance 14.40 14.40 14.40 15.15 14.55 15.05 16.00 16.20 15.20 13.20
Water Filtration 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
Water Maintenance 16.15 15.65 15.65 15.65 15.15 14.65 13.00 12.50 13.50 15.40
Hartshorn Marina Fund 0.79 0.79 0.79 0.79 0.79 0.67 0.73 0.67 0.34 0.05
Public Service Building 3.30 3.30 3.30 3.30 3.65 3.85 3.45 3.45 3.45 3.70
Engineering 8.90 9.40 9.35 9.40 7.70 7.70 7.45 7.45 7.45 7.45
Equipment 7.70 7.70 7.70 7.70 8.00 8.00 8.95 8.25 8.25 8.50
314.00 314.00 315.00 308.00 294.00 284.00 284.00 282.00 280.00 280.00
SOURCE: City of Muskegon Finance Department
City of Muskegon
OPERATING INDICATORS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Function/Program 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Administrative Services
Elections
Number of registered voters 23,100 23,457 23,931 23,904 25,261 25,918 26,028 26,345 27,678 26,136
Number of votes cast:
Last general election 12,054 12,054 8,916 8,916 14,169 14,169 10,410 10,410 15,271 15,271
Last city election 3,069 3,840 3,840 4,325 4,325 4,022 4,022 1,101 1,101 2,254
Percentage of registered voters voting:
Last general election 52% 51% 37% 37% 56% 55% 40% 40% 55% 58%
Last city election 13% 16% 16% 18% 17% 16% 15% 4% 4% 9%
Financial Services
Property Tax Bills 15,854 15,804 15,586 15,428 15,403 15,404 15,354 15,376 15,350 15,435
Income Tax Returns N/A N/A 25,135 25,043 24,378 23,884 23,493 23,141 22,598 21,071
Paper Check Issued to Vendors 3,850 3,922 4,012 3,784 3,405 3,205 3,248 3,347 3,346 3,113
Electronic Payments to Vendors 571 662 651 746 752 828 800 772 763 963
133
Public Safety
Fire Protection
Number of firefighter and officer positions 45 45 44 42 41 41 41 41 41 37
Number of emergency calls 3,693 3,818 3,878 3,656 4,116 4,206 4,092 4,171 4,298 4,220
Police Protection
Number of sworn officer positions 91 91 85 83 83 83 84 84 84 79
Part I (Major) Crimes 3,537 3,429 3,504 2,971 3,360 3,303 3,495 2,997 3,107 3,071
Public Works
Refuse Collected (Tons per Year) 12,211 11,718 11,420 11,780 11,925 11,074 11,192 10,375 10,401 10,526
Recyclables Collected (Tons per Year) 897 838 808 775 779 588 559 629 626 309
Water & Sewer
Number of consumers 14,917 14,917 14,917 14,917 14,917 14,455 14,412 14,364 13,131 12,987
Average daily water consumption (GPD) 8,498,000 9,877,000 9,453,000 9,453,000 8,870,000 9,582,000 8,998,000 9,314,000 8,879,000 7,976,000
Water main breaks repaired 13 12 12 19 10 5 13 21 34 17
Sewer flows (Millions Gallons per Year) 1,718 1,994 1,477 1,387 1,475 1,700 2,040 1,945 2,181 1,979
Sewer Service Calls 925 799 661 624 568 638 605 598 533 508
SOURCE: City of Muskegon Departments
City of Muskegon
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Function/Program 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Public Safety
Fire Protection
Number of stations 3 3 3 3 3 3 3 3 3 3
Police Protection
Number of stations 1 1 1 1 1 1 1 1 1 1
Highways, Streets and Bridges
Miles of Streets 197.51 197.52 197.39 197.96 196.95 196.95 197.48 197.79 197.79 196.95
Number of streetlights 3,115 3,111 3,114 3,123 3,111 3,159 3,159 3,134 3,134 3,192
Culture and Recreation
Number of parks (acres) 611 612 612 701 701 701 701 701 701 701
Lake Michigan beaches (acres) 119 119 119 119 119 119 119 119 119 119
Hockey/Entertainment Arena 1 1 1 1 1 1 1 1 1 1
Sewer
Sanitary sewers (miles) 174.97 175.01 175.33 175.33 178.02 179.41 175.74 177.04 177.04 177.04
134
Storm sewers (miles) 177.97 178.29 178.57 178.57 178.61 179.23 180.48 183.25 183.60 184.35
Water
Water mains (miles) 192.30 192.60 193.09 193.66 194.14 194.14 194.15 195.63 195.58 195.69
SOURCE: City of Muskegon Departments
SINGLE AUDIT OF FEDERAL FINANCIAL ASSISTANCE PROGRAMS
135
BRICKLEY DELONG
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
April 5, 2010
City Commission
City of Muskegon
Muskegon, Michigan
We have audited the financial statements of the City of Muskegon as of and for the year ended December 31,
2009 and have issued our report thereon dated April 5, 2010. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City of Muskegon’s internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the
financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of
Muskegon’s internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the City of Muskegon’s internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the
preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting
that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all
deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the
accompanying Schedule of Findings and Responses, we identified a certain deficiency in internal control over
financial reporting that we consider to be a material weakness.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal
control such that there is a reasonable possibility that a material misstatement of the entity's financial statements
will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in
Section II of the accompanying Schedule of Findings and Responses, as 2009 Finding No. 1, to be a material
weakness.
316 Morris Ave., Suite 500 • P.O. Box 999 • Muskegon, MI 49443 907 S. State St. • P.O. Box 331 • Hart, MI 49420
PHONE (231) 726-5800 • FAX (231) 722-0260 PHONE (231) 873-1040 • FAX (231) 873-0602
136
BRICKLEY DELONG
City Commission
April 5, 2010
Page 2
Compliance
As part of obtaining reasonable assurance about whether the City of Muskegon’s financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of
our tests disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.
The City of Muskegon’s response to the finding identified in our audit is described in the accompanying Schedule
of Findings and Responses. We did not audit the City of Muskegon’s response and, accordingly, we express no
opinion on it.
This report is intended solely for the information and use of the City Commission, management, and federal
awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other
than these specified parties.
137
BRICKLEY DELONG
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH REQUIREMENTS
APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
April 5, 2010
City Commission
City of Muskegon
Muskegon, Michigan
Compliance
We have audited the compliance of the City of Muskegon with the types of compliance requirements described in
the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to
each of its major federal programs for the year ended December 31, 2009. The City of Muskegon’s major federal
programs are identified in the Summary of Auditors’ Results section of the accompanying Schedule of Findings
and Responses. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each
of its major federal programs is the responsibility of the City of Muskegon’s management. Our responsibility is
to express an opinion on the City of Muskegon’s compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United
States of America; the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and
perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance
requirements referred to above that could have a direct and material effect on a major federal program occurred.
An audit includes examining, on a test basis, evidence about the City of Muskegon’s compliance with those
requirements and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on
City of Muskegon’s compliance with those requirements.
As described in 2009 Finding No. 2 in Section III of the accompanying Schedule of Findings and Responses, the
City of Muskegon, did not comply with requirements regarding allowable costs/cost principles that are applicable
to its Community Development Block Grant and Lead-Based Paint Hazard Control in Privately-Owned Housing
Grant. Compliance with such requirements is necessary, in our opinion, for the City of Muskegon, to comply
with the requirements applicable to that program.
In our opinion, except for the noncompliance described in the preceding paragraph, the City of Muskegon
complied, in all material respects, with the requirements referred to above that are applicable to each of its major
federal programs for the year ended December 31, 2009.
316 Morris Ave., Suite 500 • P.O. Box 999 • Muskegon, MI 49443 907 S. State St. • P.O. Box 331 • Hart, MI 49420
PHONE (231) 726-5800 • FAX (231) 722-0260 PHONE (231) 873-1040 • FAX (231) 873-0602
138
BRICKLEY DELONG
City Commission
April 5, 2010
Page 2
Internal Control Over Compliance
The management of the City of Muskegon is responsible for establishing and maintaining effective internal
control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal
programs. In planning and performing our audit, we considered the City of Muskegon’s internal control over
compliance with requirements that could have a direct and material effect on a major federal program in order to
determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report
on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of
expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express
an opinion on the effectiveness of the City of Muskegon’s internal control over compliance.
Our consideration of the internal control over compliance was for the limited purpose described in the preceding
paragraph and was not designed to identify all deficiencies in internal control over compliance that might be
significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies,
significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified
a certain deficiency in internal control over compliance that we consider to be a material weakness.
A deficiency in internal control over compliance exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent or detect and
correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material
weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control
over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. We consider
the deficiency in internal control over compliance described in Section III of the accompanying Schedule of
Findings and Responses, as 2009 Finding No. 2 to be a material weakness.
The City of Muskegon’s responses to the findings identified in our audit are described in the accompanying
Schedule of Findings and Responses. We did not audit the City of Muskegon’s responses and, accordingly, we
express no opinion on it.
Schedule of Expenditures of Federal Awards
We have audited the financial statements of the City of Muskegon as of and for the year ended December 31,
2009 and have issued our report thereon dated April 5, 2010. Our audit was performed for the purpose of forming
an opinion on the financial statements taken as a whole. The accompanying Schedule of Expenditures of Federal
Awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required
part of the financial statements. Such information has been subjected to the auditing procedures applied in the
audit of the financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the
financial statements taken as a whole.
This report is intended solely for the information and use of the City Commission, management, and federal
awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other
than these specified parties.
139
City of Muskegon
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended December 31, 2009
Accrued Accrued
Entitlement (deferred) Cash or (deferred)
Federal program or revenue payments in Amount of revenue
Federal grantor/pass-through CFDA award January 1, kind received grant December 31,
grantor/program title number amount 2009 (cash basis) expenditures 2009
U.S. Department of Housing and Urban Development
Direct programs
Community Development Block Grant 14.218
B-08-MC-26-0026 $ 984,207 $ 478,802 $ 840,655 $ 361,853 $ -
B-09-MC-26-0026 999,443 - 406,507 891,374 484,867
Program Income 42,079 - 42,079 42,079 -
Passed through Michigan Department of Housing Development Authority
Community Development Block Grant 14.218
Neighborhood Stabilization Program
NSP-2008-0280-ENT 570,460 - 69,579 265,221 195,642
140
Program Income 16,215 - 16,215 16,215 -
Total Community Development Block Grant 2,612,404 478,802 1,375,035 1,576,742 680,509
Direct programs
Home Investment Partnership Program 14.239
M-06-MC-26-0215 301,767 10,790 13,116 4,426 2,100
M-08-MC-26-0215 290,049 77,937 223,612 209,212 63,537
M-09-MC-26-0215 322,469 - 48,640 184,525 135,885
Program Income 26,957 - 26,957 26,957 -
Total Home Investment Partnership Program 941,242 88,727 312,325 425,120 201,522
Direct programs
Lead-Based Paint Hazard Control in Privately-Owned Housing 14.900
FR-5100-N-20A 2,079,492 217,669 1,384,902 1,168,171 938
Total U.S. Department of Housing and
Urban Development 5,633,138 785,198 3,072,262 3,170,033 882,969
City of Muskegon
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS—CONTINUED
For the year ended December 31, 2009
Accrued Accrued
Entitlement (deferred) Cash or (deferred)
Federal program or revenue payments in Amount of revenue
Federal grantor/pass-through CFDA award January 1, kind received grant December 31,
grantor/program title number amount 2009 (cash basis) expenditures 2009
U.S Department of Justice
Direct programs
Bulletproof Vest Partnership Grant 16.607
2007 Grant $ 7,788 $ - $ 6,088 $ 6,088 $ -
Justice Assistance Grant 16.738
2009-DJ-BX-0692 52,970 - - 36,088 36,088
Passed through the Ottawa County
WEMET Multi-Jurisdictional Drug 16.738
Enforcement CO-OP
70834-109B 15,594 9,907 15,594 5,687 -
141
Total U.S. Department of Justice 76,352 9,907 21,682 47,863 36,088
U.S Department of Energy
Direct programs
Energy Efficiency and Conservation Block Grant 81.128
041714125 181,600 - 181,600 320 (181,280)
U.S Department of Health and Human Services
Passed through the Michigan Department of State
Voting Access for Individuals with Disabilities Program 93.617 16,750 - - 16,750 16,750
TOTAL FEDERAL ASSISTANCE $ 5,907,840 $ 795,105 $ 3,275,544 $ 3,234,966 $ 754,527
City of Muskegon
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended December 31, 2009
1. See the notes to the financial statements for significant accounting policies used in preparing this schedule.
2. The following is a reconciliation of federal revenues as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances of the City of Muskegon
financial statements for the year ended December 31, 2009 and federal expenditures per the Schedule of Expenditures of Federal Awards.
Federal revenues per City of Muskegon financial statements
General Fund $ 64,613
Major Street and Trunkline Fund 1,593,425
Other governmental funds 3,085,102
4,743,140
Plus program income 85,251
Less MDOT contracted projects as shown below (1,593,425)
Federal expenditures per the Schedule of Expenditures of Federal Awards $ 3,234,966
3. The Michigan Department of Transportation (MDOT) requires that cities report all federal and state grants pertaining to their city. During the year ended December 31,
142
2009, the federal aid received and expended by the City was $1,593,425 for contracted projects as shown below. Contracted projects are defined as projects performed by
private contractors and paid for and administrated by MDOT (they are included in MDOT's single audit). Negotiated projects are projects where the City administers the
grant and either performs the work or contracts it out.
Federal
CFDA Revenue Federal
number Recognized Expenditures
U.S Department of Transportation, Federal Highway Administration (contracted projects)
Passed through the Michigan Department of Transportation
Highway Planning and Construction Program 20.205
Proj ARRA0961 (138) Fed Item JJ3350 Contract 09-5253 $ 800,000 $ 800,000
Proj CMG0961 (127) Fed Item JJ3202 Contract 09-5110 165,399 165,399
Proj STP0961 (137) Fed Item HH5922 Contract 09-5252 240,000 240,000
Proj HPSL0961 (122) Fed Item RR6702 Contract 09-5066 200,000 200,000
Proj HPSL0961 (123) Fed Item RR6722 Contract 09-5087 188,026 188,026
Total U.S. Department of Transportation,
Federal Highway Administration (contracted projects) $ 1,593,425 $ 1,593,425
City of Muskegon
SCHEDULE OF FINDINGS AND RESPONSES—CONTINUED
Year ended December 31, 2009
SECTION I—SUMMARY OF AUDITORS’ RESULTS
A. Financial Statements
1. Type of auditors' report issued: Unqualified
2. Internal control over financial reporting:
• Material weakness(es) identified? X yes no
• Significant deficiency(ies) identified that are not considered to
be material weaknesses? yes X none reported
3. Noncompliance material to financial statements noted? yes X no
B. Federal Awards
1. Internal control over major programs:
• Material weakness(es) identified? X yes no
• Significant deficiency(ies) identified that are not considered to
be material weaknesses? yes X none reported
2. Type of auditors' report issued on compliance for major programs: Qualified
3. Any audit findings disclosed that are required to be reported in
accordance with section 510(a) of OMB Circular A-133? X yes no
4. Identification of major programs:
CFDA Number(s) Name of Federal Program/Cluster
U.S. Department of Housing and Urban Development
14.218 Community Development Block Grant
14.900 Lead-Based Paint Hazard Control in Privately-Owned
Housing
5. Dollar threshold used to distinguish between type A and type B programs: $300,000
6. Auditee qualified as low-risk auditee? yes X no
143
City of Muskegon
SCHEDULE OF FINDINGS AND RESPONSES—CONTINUED
Year ended December 31, 2009
SECTION II – FINANCIAL STATEMENT FINDINGS
COMPLIANCE
NONE
SIGNIFICANT DEFICIENCIES
2009 Finding No. 1: MATERIAL WEAKNESS—Grant Revenue Recognition Procedures
Criteria: Reimbursements due for expenditure-driven grants should be accrued as revenue at the time the
expenditures are made, or when received in advance, deferred until expenditures are made.
Condition: Grant revenues were not properly recorded which caused grant revenues and receivables to be
misstated as of the year end.
Cause: The City did not record all adjustments necessary to properly recognize grant revenues in the
appropriate year.
Effect: City records required year end adjustments.
Recommendation: Year end procedures for reconciling grant receivables and associated revenues should be
improved.
City Response: The City recognizes the need for better interdepartment coordination and communication
between finance operations and the grant receiving department. Policies will be instituted to ensure grant
receivable amounts are reconciled between departments on a regular basis.
144
City of Muskegon
SCHEDULE OF FINDINGS AND RESPONSES—CONTINUED
Year ended December 31, 2009
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
COMPLIANCE
U.S. Department of Housing and Urban Development
2009 Finding No. 2: Community Development Block Grant
CFDA: 14.218
Award Number: B-08-MC-26-0026, B-09-MC-0026, NSP-2008-0280-ENT
Award Year End: December 31, 2009
Lead-Based Paint Hazard Control in Privately-Owned Housing Grant
CFDA: 14.900
Award Number: FR-5100-N-20A
Award Year End: December 31, 2009
Specific Requirement: Allowable Costs/Cost Principles
Criteria: The cost principle of OMB Circular A-87 requires, “…Where employees are expected to work
solely on a single federal award or cost objective, charges for their salaries and wages will be supported by
periodic certifications that the employees worked solely on that program for the period covered by the
certification. These certifications will be prepared at least semi-annually and will be signed by the employee
or supervisory official having first hand knowledge of the work performed by the employee. …Where
employees work on multiple activities or cost objectives, a distribution of their salaries or wages will be
supported by personnel activity reports or equivalent documentation. Personnel activity reports must be
prepared at least monthly and must coincide with one or more pay periods and they must be signed by the
employee.”
Condition: During our detailed testing, we noted that none of the employees whose wages and benefits were
charged to either grant had proper time and effort documentation.
Cause: The City became aware of time documentation requirements during the year but did not fully
implement the requirements.
Questioned Costs: $261,882 and $36,176 for Community Development Block Grant and Lead-Based Paint
Grant, respectively, which represents the portion of salaries and benefits charged to the grants for all
employees that did not have adequate documentation.
Context: None of the employees, for which personnel activity reports or semi-annual certifications were
required, had adequate documentation.
Effect: The salaries and benefits charged to the Community Development Block Grant and Lead-Based
Paint Grant could be disallowed.
Recommendation: The City should require all employees, who fall under OMB Circular A-87 requirements
for documenting time charged to federal award programs, to prepare the required documentation.
City Response: The City recognizes this federal requirement and will put in place procedures to better
document employee time allocations.
SIGNIFICANT DEFICIENCIES
See Fiscal 2009 Finding No. 2 in Section III above, which is a material weakness.
145
City of Muskegon
933 Terrace Street
Muskegon, MI 49440
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
April 5, 2010
U.S. Department of Housing and Urban Development
Washington, D.C.
The City of Muskegon respectfully submits the following summary of the current status of prior audit
findings contained in the single audit report for the year ended December 31, 2008 dated April 8, 2009.
SECTION II – FINANCIAL STATEMENT FINDINGS
COMPLIANCE
There were no findings reported in relation to the financial statements for the year ended December 31,
2008.
SIGNIFICANT DEFICIENCIES
2008 Finding No. 1: MATERIAL WEAKNESS—Capital Asset Recordkeeping Procedures
Condition: During our detailed testing of capital outlay expenditures, we noted items which qualified as
capital assets within the City’s capitalization policy, which were not recorded in the City’s detailed
capital asset records. We also noted that some street infrastructure managed by the Michigan Department
of Transportation (MDOT) was not recorded in the City’s detailed capital asset records.
Recommendation: Capital assets for governmental activities should be more carefully identified and
included in the government-wide (full accrual) financial statements.
Current Status: This recommendation was implemented during the year ended December 31, 2009. No
similar finding was reported in the 2009 audit.
2008 Finding No. 2: MATERIAL WEAKNESS—Investment Function Segregation of Duties
Condition: During our testing of investment procedures, we noted that the same individual is responsible
for oversight of investments, making day-to-day investment decisions, opening and reviewing investment
statements, transferring funds between accounts, and participating in recording of investment activity in
the City’s accounting records.
Recommendation: Responsibilities within the investment function should be further segregated.
Current Status: This recommendation was implemented during the year ended December 31, 2009. No
similar finding was reported in the 2009 audit.
146
U.S. Department of Housing and Urban Development
April 5, 2010
Page 2
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
COMPLIANCE
U.S. Department of Housing and Urban Development
2008 Finding No. 3: Lead-Based Paint Hazard Control in Privately-Owned Housing
CFDA: 14.900
Award Number: FR-5100-N-20A
Award Year End: December 31, 2008
Specific Requirement: Allowable Costs/Cost Principles
Condition: During our detailed testing, we noted one employee whose wages and benefits were charged
partially to the grant that did not have proper time and effort documentation.
Recommendation: The City should require all employees, who fall under OMB Circular A-87 requirements
for documenting time charged to federal award programs, to prepare the required documentation.
Current Status: See 2009 Finding No. 2 for similar finding reported during the single audit for the year
ended December 31, 2009.
SIGNIFICANT DEFICIENCIES
There were no significant deficiencies reported in relation to the major federal award programs during the
single audit for the year ended December 31, 2008.
Sincerely,
Timothy J. Paul
Finance Director
147
City of Muskegon
933 Terrace Street
Muskegon, MI 49440
CORRECTIVE ACTION PLAN
April 5, 2010
U.S. Department of Housing and Urban Development
Washington, D.C.
The City of Muskegon respectfully submits the following Corrective Action Plan for the year ended
December 31, 2009.
Name and address of independent public accounting firm:
Brickley DeLong, P.C.
P.O. Box 999
Muskegon, Michigan 49443
Audit period: December 31, 2009
The findings from the Schedule of Findings and Responses for the year ended December 31, 2009 are
discussed below. The findings are numbered consistently with the numbers assigned in the schedule.
SECTION II – FINANCIAL STATEMENT FINDINGS
COMPLIANCE
There were no compliance findings reported in relation to the financial statements for the year ended
December 31, 2009.
SIGNIFICANT DEFICIENCIES
2009 Finding No. 1: MATERIAL WEAKNESS—Grant Revenue Recognition Procedures
Recommendation: Year end procedures for reconciling grant receivables and associated revenues
should be improved.
Action Taken: The City recognizes the need for better interdepartment coordination and
communication between finance operations and the grant receiving department. Policies will be
instituted to ensure grant receivable amounts are reconciled between departments on a regular basis.
148
U.S. Department of Housing and Urban Development
April 5, 2010
Page 2
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
COMPLIANCE
U.S. Department of Housing and Urban Development
2009 Finding No. 2: Community Development Block Grant
CFDA: 14.218
Award Number: B-08-MC-26-0026, B-09-MC-0026, NSP-2008-0280-ENT
Award Year End: December 31, 2009
Lead-Based Paint Hazard Control in Privately-Owned Housing
CFDA: 14.900
Award Number: FR-5100-N-20A
Award Year End: December 31, 2009
Specific Requirement: Allowable Costs/Cost Principles
Recommendation: The City should require all employees, who fall under OMB Circular A-87 requirements
for documenting time charged to federal award programs, to prepare the required documentation.
Action Taken: The City recognizes this federal requirement and will put in place procedures to better
document employee time allocations.
SIGNIFICANT DEFICIENCIES
See 2009 Finding No. 2 in Section III above, which is a material weakness.
If the U.S. Department of Housing and Urban Development has questions regarding this plan, please call
Timothy J. Paul at (231)724-6709.
Sincerely,
Timothy J. Paul
Finance Director
149
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