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CITY OF MUSKEGON,
MICHIGAN
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
JUNE 30, 2017
Prepared By
FINANCIAL SERVICES DIVISION
Elizabeth Lewis James Maurer
Finance Director Information Systems Director
Kenneth Grant Mike VanderMolen
Assistant Finance Director Management Assistant
Sarah Petersen
City Treasurer
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City of Muskegon
TABLE OF CONTENTS
INTRODUCTORY SECTION
Letter of Transmittal .................................................................................................................................. 5
Certificate of Achievement for Excellence in Financial Reporting ......................................................... 11
Organization Chart ................................................................................................................................... 12
List of Principal Officials......................................................................................................................... 13
FINANCIAL SECTION
Independent Auditor’s Report.................................................................................................................. 17
Management’s Discussion and Analysis.................................................................................................. 21
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position .................................................................................................................. 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 Position ................................................................................................. 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 Position............................................................................................................... 40
Statement of Revenues, Expenses and Changes in Net Position ................................................... 41
Statement of Cash Flows ................................................................................................................ 42
Fiduciary Funds
Statement of Fiduciary Assets and Liabilities ................................................................................ 43
Discretely Presented Component Units
Statement of Net Position .................................................................................................................. 44
Statement of Activities ...................................................................................................................... 45
Notes to Financial Statements .............................................................................................................. 46
Required Supplementary Information
Budgetary Comparison Schedule—General Fund ................................................................................ 80
Budgetary Comparison Schedule—Major Street and Trunkline Fund ................................................. 85
Schedule of Changes in Net Pension Liability and Related Ratios ...................................................... 86
Pension System Schedule of Contributions .......................................................................................... 87
Schedule of Funding Progress – Retiree Healthcare Plan .................................................................... 88
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City of Muskegon
TABLE OF CONTENTS
Other Supplemental Information
Other Governmental Funds
Description of Other Governmental Funds ....................................................................................... 90
Combining Balance Sheet ................................................................................................................. 92
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances ................................................................................................................................ 93
Other Special Revenue Funds
Combining Balance Sheet .............................................................................................................. 94
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances ............................................................................................................................. 95
Budgetary Comparison Schedule—Other Special Revenue Funds ............................................... 96
Other Capital Projects Funds
Combining Balance Sheet .............................................................................................................. 99
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances ........................................................................................................................... 100
Internal Service Funds
Description of Internal Service Funds ............................................................................................. 101
Combining Statement of Net Position ............................................................................................. 102
Combining Statement of Revenues, Expenses and
Changes in Fund Net Position ...................................................................................................... 103
Combining Statement of Cash Flows .............................................................................................. 104
Fiduciary Funds
Description of Fiduciary Funds ....................................................................................................... 105
Agency Funds
Combining Statement of Assets and Liabilities ........................................................................... 106
Statement of Changes in Assets and Liabilities ........................................................................... 107
Discretely Presented Component Units
Description of Discretely Presented Component Units ................................................................... 109
Combining Balance Sheet ............................................................................................................... 110
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position ................................................................................................... 111
Combining Statement of Revenues, Expenditures and Changes
in Fund Balances (Deficits) .......................................................................................................... 112
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances (Deficits) to the Statement
of Activities .................................................................................................................................. 113
Schedule of Indebtedness ................................................................................................................... 115
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City of Muskegon
TABLE OF CONTENTS
STATISTICAL SECTION
Financial Trends
Net Assets/Net Position by Component.............................................................................................. 120
Changes in Net Assets/Net Position ................................................................................................... 121
Fund Balances of Governmental Funds .............................................................................................. 123
Changes in Fund Balances of Governmental Funds ........................................................................... 124
Revenue Capacity
Governmental Activities Revenues by Source ................................................................................... 125
Taxable, Assessed and Equalized and Estimated Actual Valuation of Property ................................ 126
Principal Property Taxpayers ............................................................................................................. 127
Property Tax Rates – Direct and Overlapping Government Units ..................................................... 128
Property Tax Levies and Collections .................................................................................................. 129
Segmented Data on Income Tax Filers, Rates and Liability .............................................................. 130
Debt Capacity
Ratio of Outstanding Debt by Type .................................................................................................... 131
Direct and Overlapping Debt .............................................................................................................. 132
Legal Debt Margin Information.......................................................................................................... 133
Revenue Bond Coverage .................................................................................................................... 134
Demographic and Economic Information
Demographic and Economic Statistics ............................................................................................... 135
Principal Employers............................................................................................................................ 136
Operation Information
Full-time Equivalent Government Employees ................................................................................... 137
Operating Indicators by Function/Program ........................................................................................ 138
Capital Asset Statistics by Function/Program .................................................................................... 139
SINGLE AUDIT OF FEDERAL FINANCIAL ASSISTANCE PROGRAMS
Independent Auditor’s 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 ..................................................................................................... 142
Independent Auditor’s Report on Compliance for Each Major
Program and on Internal Control over Compliance Required by
the Uniform Guidance ..................................................................................................................... 144
Schedule of Expenditures of Federal Awards ...................................................................................... 146
Notes to Schedule of Expenditures of Federal Awards ....................................................................... 148
Schedule of Findings and Responses ................................................................................................... 149
Client Documents
Summary Schedule of Prior Audit Findings ................................................................................... 152
Corrective Action Plan .................................................................................................................... 153
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Affirmative Action
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FAX (231)722-1214
Assessor/
Equalization Co.
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FAX (231)724-1129
Cemetery/Forestry
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City Manager
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FAX (231)722-1214 December 1, 2017
Clerk
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FAX (231)724-4178
To the Honorable Mayor, Members of the City Commission and Citizens of the City of
Comm. & Neigh.
Services
Muskegon:
(231)724-6717
FAX (231)726-2501
Computer Info. State law requires that every general purpose local government publish, within six
Technology
(231)724-4126 months of the close of each fiscal year, a complete set of audited financial
FAX (231)722-4301 statements. This report is published to fulfill that requirement for the fiscal year ended
Engineering June 30, 2017.
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Management assumes full responsibility for the completeness and reliability of the
Finance
(231)724-6713 information contained in this report, based upon a comprehensive framework of
FAX (231)726-2325 internal control that it has established for this purpose. Because the cost of internal
Fire Department control should not exceed anticipated benefits, the objective is to provide reasonable,
(231)724-6795
FAX (231)724-6985
rather than absolute, assurance that the financial statements are free of any material
misstatements.
Human Resources
Co. (Civil Service)
(231)724-6442 Brickley Delong, PC, Certified Public Accountants, have issued an unmodified
FAX (231)724-6840
(“clean”) opinion on the City of Muskegon’s financial statements for the year ended
Income Tax
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June 30, 2017. The independent auditor’s report is located at the front of the financial
FAX (231)724-6768 section of this report.
Mayor’s Office
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FAX (231)722-1214 Management’s discussion and analysis (MD&A) immediately follows the independent
Planning/Zoning
auditor’s report and provides a narrative introduction, overview, and analysis of the
(231)724-6702 basic financial statements. MD&A complements this letter of transmittal and should
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be read in conjunction with it.
Police Department
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FAX (231)722-5140
Public Works
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FAX (231)722-4188
Profile of the government
SafeBuilt The City of Muskegon operates under a commission-manager form of government
(Inspections) and provides a full range of traditional municipal services. Policy-making and
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FAX (231)728-4371 legislative authority are vested in the governing board (Commission) consisting of the
Treasurer
mayor and six commissioners. Two commissioners are elected at large and each of
(231)724-6720 the four ward commissioners is elected by the voters of their respective wards.
FAX (231)724-6768
Commission members serve four-year terms, with the two at large members elected
Water Billing every four years in odd years and the four ward commissioners elected every four
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FAX (231)724-6768 years in even years. The Mayor is also elected for a four-year term. The Mayor and
Commission appoint the City of Muskegon’s manager.
Water Filtration
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FAX (231)755-5290 5
The City of Muskegon provides a full range of services, including police and fire protection;
solid waste collection; parks and recreation activities; the construction and maintenance of
streets and roadways; street snowplowing; traffic control; building inspections; licenses and
permits; water distribution and sewer disposal services; community development; and general
administrative support services. The City also provides treated drinking water to several
surrounding communities.
The Commission is required to adopt an initial budget for the fiscal year no later than the last
regular meeting in June preceding the beginning of the fiscal year on July 1. This annual
budget serves as the foundation for the City of Muskegon’s financial planning and control. The
budget is prepared by fund, function (e.g., public safety), and department (e.g., police). The
City Manager and department heads may transfer resources within a department as they see
fit. Transfers between departments, however, need special approval from the Commission.
Local economy
The City of Muskegon is located in western Michigan on the shores of Lake Michigan. The
City covers eighteen square miles and, with a 2010 census population of 38,401, 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 Metropolitan Statistical Area (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.
• Muskegon is the eastern terminus for the high speed cross-lake ferry. Connecting Muskegon
with Milwaukee, Wisconsin, the Lake Express service ferries 100,000-plus passengers each
season between the two cities. 2017 marks the ferry service’s fourteenth 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 thousands of visitors to the
community. These include Bike Time and Rebel Road, which attract motorcycle enthusiasts to
the City in July, the Unity Christian Music Festival and the Burning Foot Beer Fest in August,
and the Irish Fest in September.
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• Muskegon is the cultural hub for west Michigan with numerous museums and live
performances. The Muskegon Museum of Art has one of the largest and premier 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 age. The Fire Barn Museum takes visitors back to an
1890’s 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. The
Heritage Museum provides historic perspective on the city’s industrial roots.
• Muskegon’s port welcomed 11 Great Lakes cruise ships in 2017 and expects nearly 20 ships
to visit in 2018.
• 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
• 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 has a diverse local economy. The manufacturing sector is strong in the areas of
aerospace, chemicals, plastics, defense, 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. Even though these institutions are exempt from
paying property taxes, local income tax withholdings remitted by these employers provide
stability to City finances.
The local economy has seen slight increase in the unemployment rate which stood at 5.1
percent at the end of the fourth quarter of 2016 compared with 5.3 percent at the end of the
first quarter of 2017. According to the Summer 2017 Business Outlook prepared by the W.E.
Upjohn Institute for Employment Research:
“The area’s unemployment rate increased during the first quarter of 2017 to 5.3 from 5.1 in the previous
quarter. Employment improved in nearly every industry in Muskegon over the first quarter of 2017
pushing total employment up by 1.4 percent”
The City fully recognizes the difficulties it faces as an older urban rust-belt community. Thus,
we have attempted to position ourselves as a leader in fiscal stability and sustainability.
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Long-term financial planning and major initiatives
Unrestricted fund balance (the total of the assigned and unassigned components of fund
balance) in the General Fund at year end was 29.0% of total General Fund revenues. This
amount was well above the policy guidelines set by the Commission for budgetary and
planning purposes (i.e., 13% of total actual General Fund revenue for the preceding year).
Adequate fund balances are maintained to allow the City to continue providing services to the
community in case of unexpected emergencies or requirements and/or economic downturns.
The City incorporates a five-year fiscal forecast into its yearly budget process. The forecast is
a macro-level projection of major revenue sources, expenses and fund balances, taking into
account identifiable factors, recent trends and management’s judgment as to future
developments. The City recently purchased a new web-based information source providing
financial information and forecasting for municipal governments and schools. This new system
should provide staff with enhanced information to improve forecasting.
Among the City's major initiatives and accomplishments in fiscal year 2016-17 were the
following:
• Downtown Muskegon experienced the commencement of a number of mixed use development
projects. Four adaptive reuse projects were undertaken in the LC Walker Arena, Terrace
Point, Terrace Plaza, and High Point Flats buildings, with a total investment of $18.5 million.
Three major new construction projects are also underway with the Berkshire Senior Living
Center, Heritage Commons Development, and the Lakeview Lofts all expected to be
completed in 2018 with a total investment of $25 million. Other downtown projects underway
include a $14 million investment from Muskegon Community College, a $10 million investment
in 72 single family homes on the Terrace Point Landing Development, and $7 million in
proposed investment to convert the vacant Ameribank office building into a mixed use
retail/residential center.
• After several years of perseverance, an agreement was reached between various parties and
deed restrictions were lifted by Sappi to allow for development on property formerly owned by
Sappi. Members of Pure Muskegon LLC, a Muskegon investor group, purchased the 120-acre
former Sappi site on Muskegon Lake and plan to redevelop it into residential, recreational and
commercial uses;
• The City renewed the Downtown Business Improvement District (BID) which aids downtown
businesses with marketing and promotions as well as beautification, lawn maintenance and
sidewalk snow plowing in the downtown;
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• Construction of Midtown Square, which consists of nine new market rate homes in the Nelson
neighborhood, was completed in 2016. It is anticipated that these new homes will help to
revitalize the area and increase surrounding property values. Eight houses have been sold
with the possibility of renting out the ninth house sometime in 2018.
• The City purchased the former Ameribank building in downtown Muskegon and issued a
request for proposals to developers to purchase and redevelop the property for mixed-use.
The City has accepted a proposal from a local developer who is finalizing plans for the project.
• KL Outdoor, the world’s largest manufacturer of kayaks, announced in 2017 that it would locate
its new corporate world headquarters in Downtown Muskegon. The move will create nearly 40
new corporate office positions in the downtown business district and result in the relocation of
the company’s manufacturing operations from Canada to Muskegon. Over the next five
years, the company will add as many as 200 new jobs.
• Mercy Health Partner, Muskegon’s largest employer is undertaking a $280 million expansion to
its existing hospital. The investment will result in new high-paying medical jobs over the next
three years.
Relevant financial policies
The City of Muskegon has adopted a comprehensive set of financial policies used to ensure
adequate protection of the City’s assets from loss, theft, or misuse, and provide adequate
accounting data to allow for preparation of financial statements in conformity with generally
accepted accounting principles.
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.
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Awards and Acknowledgements
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 (CAFR) for the fiscal year ended June
30, 2016. This was the 31st consecutive year that the City has received this award. In order
to be awarded a Certificate of Achievement, a government must publish an easily readable
and efficiently organized CAFR that satisfies both generally accepted accounting principles
and applicable program requirements.
A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one
year only. However, we believe our current CAFR continues to meet the Certificate of
Achievement for Excellence in Financial Reporting Program’s requirements, and we are
submitting it to the GFOA to determine its eligibility for another certificate.
The preparation of this report would not have been possible without the skill, effort, and
dedication of the Finance Division and the entire city staff. We express appreciation to those
staff members who assisted and contributed to the preparation of this report. Credit also must
be given to the Mayor and Commissioners for their support for maintaining the highest
standards of professionalism in the management of the City of Muskegon’s finances.
Respectfully submitted,
Frank Peterson Elizabeth Lewis
City Manager Finance Director
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COMPREHENSIVE ANNUAL FINANCIAL REPORT
CITY OF MUSKEGON, MICHIGAN
LIST OF PRINCIPAL OFFICIALS
June 30, 2017
ELECTED OFFICIALS
Mayor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stephen J. Gawron
At Large
Vice Mayor-Commissioner. . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . Eric Hood
Ward 1
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Willie German
Ward 2
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Debra Warren
Ward 3
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Byron Turnquist
Ward 4
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ken Johnson
At Large
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Dan Rinsema-Sybenga
At Large
APPOINTED OFFICIALS
City Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Frank Peterson
City Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John C. Schrier
Finance Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Elizabeth Lewis
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FINANCIAL SECTION
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INDEPENDENT AUDITOR’S REPORT
December 1, 2017
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, Michigan as of and for the year ended June 30, 2017, and the related notes
to the financial statements, which collectively comprise the City's basic financial statements as listed in the table
of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
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 from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Grand Haven | Grand Rapids | Hart | Muskegon
www.brickleydelong.com
17
BRICKLEY DELONG
City Commission
December 1, 2017
Page 2
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,
Michigan, as of June 30, 2017, and the respective changes in financial position and, where applicable, cash flows
thereof for the year then ended in accordance with accounting principles generally accepted in the United States
of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis budgetary comparison schedules, schedule of changes in net pension liability and related
ratios, pension system schedule of contributions, and schedule of funding progress – retiree healthcare plan on
pages 21 through 32 and 80 through 88 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.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City of Muskegon's basic financial statements. 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 basic financial statements. The schedule of expenditures of federal awards is presented for purposes of
additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a
required part of the basic 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
records used to prepare the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records used to
prepare the basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In our
opinion, 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 fairly stated in
all material respects in relation to the basic financial statements as a whole.
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BRICKLEY DELONG
City Commission
December 1, 2017
Page 3
Other Matters—Continued
Other Information—Continued
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.
Muskegon, Michigan
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2017 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 June 30,
2017. Please read it in conjunction with the City’s financial statements, which follow this
section.
FINANCIAL HIGHLIGHTS
• The assets/deferred outflows of resources of the City of Muskegon exceeded its
liabilities/deferred inflows of resources by $105,828,619 as of June 30, 2017. Of
the City’s total net position, $816,557 (.8%) was unrestricted and may be used to
meet the City’s ongoing obligations to citizens and creditors.
• The City’s total combined net position decreased by $3,871,796 during the year
ended June 30, 2017.
• The City’s governmental funds reported combined ending fund balance of
$16,011,971, an increase of $2,014,012 (14.4%) from the prior year.
• The City’s General Fund reported a total fund balance of $8,057,645, an increase
of $26,336 from the prior year balance of $8,031,309. The favorable increase is
primarily the result of conservative budgeting.
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.
• 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.
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° 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 financial statements and provide additional data. The statements are
followed by a section of required supplementary information that further explains and
supports the information in the financial statements. The figure above shows how the
required parts of this annual report are arranged and related to one another.
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 position includes all of the government’s assets/deferred outflows of resources
and liabilities/deferred inflows of resources. All of the current year’s revenues and
expenses are accounted for in the statement of activities regardless of when cash is
received or paid.
The two government-wide statements report the City’s net position and how they have
changed. Net position—the difference between the City’s assets/deferred outflows of
resources and liabilities/deferred inflow of resources—is one way to measure the City’s
overall financial health or position. Over time, increases or decreases in the City’s net
position 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 public
representation services, administrative services, financial services, public safety, public
22
works, highways, streets and bridges, community and economic development, culture
and recreation, general administration, 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.
The City has the following kinds of funds:
• Governmental funds—Most of the City’s basic services are included in
governmental funds, which focus on (1) how cash and other financial assets that
can readily be converted to cash flow in and out and (2) the balances left at year-
end that are available for spending. Consequently, the governmental fund
statements provide a detailed short-term view that helps the user determine
whether there are more or fewer financial resources that can be spent in the near
future to finance the City’s programs. Because this information does not
encompass the additional long-term focus of the government-wide statements, we
provide additional information on the subsequent page of the governmental funds
statements that explain the relationship (or differences) between them.
• Proprietary funds—Services for which the City charges customers a fee and are
intended to be self-supporting are generally reported in proprietary funds. The
City uses three proprietary funds: water, sewer, and marina and launch ramp.
Proprietary funds, like the government-wide statements, provide both long-term
and short-term financial information.
• The City uses 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 position
and a statement of changes in fiduciary net position. We exclude these activities
from the City’s government-wide financial statements because the City cannot use
these assets to finance its operations.
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• 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), the Local
Development Finance Authority (LDFA) and, the Brownfield Redevelopment
Authority (BRA 1, BRA 2 and BRA 3). 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 position. The Statement of Net Position provides an overview of the City’s
assets/deferred outflows of resources, liabilities/deferred inflow of resources and net
position. Over time this can provide a good indicator of the City’s fiscal health. The total
net position of the City was $105,828,619 as of June 30, 2017. This is a decrease of
$3,871,796 from reported net position for the prior year. An overview of the City’s net
position follows:
City's Net Position
(In Thousands of Dollars)
Governmental Business-Type
Activities Activities Total Percentage
6/30/2017 6/30/2016 6/30/2017 6/30/2016 6/30/2017 6/30/2016 Change
Current and other assets $22,448 $20,864 $10,007 $9,237 $32,455 $30,101 7.82%
Capital assets 68,519 70,647 46,618 48,935 115,137 119,582 -3.72%
Total Assets 90,967 91,511 56,625 58,172 147,592 149,683 -1.40%
Deferred outflow s of resources 4,046 9,758 281 678 4,327 10,436 -58.54%
Total Assets and Deferred Outflow s of Resources 95,013 101,269 56,906 58,850 151,919 160,119 -5.12%
Long-term liabilities 29,424 32,798 8,755 10,420 38,179 43,218 -11.66%
Other liabilities 4,064 3,844 2,999 3,034 7,063 6,878 2.69%
Total Liabilities 33,488 36,642 11,754 13,454 45,242 50,096 -9.69%
Deferred inflow s of resources 794 302 55 21 849 323 162.85%
Total Liabilities and Deferred Outflow s of Resources 34,282 36,944 11,809 13,475 46,091 50,419 -8.58%
Net Position
Net investment in capital assets 62,520 64,327 38,115 39,014 100,635 103,341 -2.62%
Restricted 3,777 4,140 599 599 4,376 4,739 -7.66%
Unrestricted -5,566 -4,142 6,383 5,762 817 1,620 -49.57%
Total Net Position $60,731 $64,325 $45,097 $45,375 $105,828 $109,700 -3.53%
The bulk of the City’s net position ($100,635,152 or 95%) represents investments in
capital assets net of accumulated depreciation, less the remaining balance of debt
issued to acquire those assets. These infrastructure assets are used to provide public
services to citizens and are not available for spending.
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Another 4.2% ($4,376,910) of the City’s net position are legally restricted as to use.
Unrestricted net position ($816,557 or .8%) represents assets that may be used to meet
the City’s operating needs and ongoing obligations. The City’s unrestricted net position
decreased ($803,596) during the year.
Changes in net position. The City’s total revenues were $52,414,426 for the year
ended June 30, 2017. This represents a 2.15% increase over total revenues collected
during the prior fiscal year. About 42% of the City’s revenue stream came from charges
to users of specific services such as water or sewer. Another 13% came from grants
from the state and federal governments and 33% 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 for the year ended June 30, 2017 was
$56,286,222. This represents a .7% decrease from reported expenses for the last fiscal
year ended June 30, 2016. 71% of the City’s expenses were for governmental activities
such as police and fire protection, streets, parks, and general administration. The
remaining 29% represents the costs of the City’s business-type activities, specifically,
water, sewer and marina operations.
The table on the following page (Changes in City’s Net Position) further breaks down
the change in total net position into period-to-period changes in individual revenue and
expense categories.
As can be seen, net position for governmental activities decreased $3,593,587 while net
position for business-type activities decreased by $278,209. For governmental
activities, most of these changes are related to the increased net pension liability. For
business-type activities, the changes similarly represent the impact of the increased net
pension liability.
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Changes in City’s Net Position
(In thousands of dollars)
Governmental Business-Type
Activities Activities Total Percentage
6/30/2017 6/30/2016 6/30/2017 6/30/2016 6/30/2017 6/30/2016 Change
Program revenues
Charges for services $6,633 $5,217 $15,329 $14,078 $21,962 $19,295 13.82%
Operating grants and contributions 5,209 5,331 3 - 5,212 5,331 -2.23%
Capital grants and contributions 862 3,805 785 765 1,647 4,570 -63.96%
General revenues
Property taxes 8,389 8,366 - - 8,389 8,366 0.27%
Income taxes 8,707 8,387 - - 8,707 8,387 3.82%
State shared revenues 4,630 4,051 - - 4,630 4,051 14.29%
All other 1,842 1,286 25 26 1,867 1,312 42.30%
Total revenues 36,272 36,443 16,142 14,869 52,414 51,312 2.15%
Governmental activities expenses
Public representation 1,114 1,108 - - 1,114 1,108 0.54%
Administrative services 679 663 - - 679 663 2.41%
Financial services 2,483 2,331 - - 2,483 2,331 6.52%
Public safety 16,910 17,119 - - 16,910 17,119 -1.22%
Public w orks 3,551 3,109 - - 3,551 3,109 14.22%
Highw ays, streets and bridges 6,997 7,252 - - 6,997 7,252 -3.52%
Community and economic development 3,739 5,223 - - 3,739 5,223 -28.41%
Culture and recreation 3,919 3,552 - - 3,919 3,552 10.33%
General administration 301 327 - - 301 327 -7.95%
Interest on long-term debt 173 248 - - 173 248 -30.24%
Business-type activities expenses
Sew er - - 8,877 8,669 8,877 8,669 2.40%
Water - - 7,206 6,751 7,206 6,751 6.74%
Marina and launch ramp - - 337 328 337 328 2.74%
Total expenses 39,866 40,932 16,420 15,748 56,286 56,680 -0.70%
Change in net position (3,594) (4,489) (278) (879) (3,872) (5,368) -27.87%
Net position at beginning of year 64,325 68,814 45,375 46,254 109,700 115,068 -4.67%
Net position at end of year $60,731 $64,325 $45,097 $45,375 $105,828 $109,700 -3.53%
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 the year ended June 30,
2017 was $39,866,056.
• The net cost that City taxpayers paid for these activities through local property
taxes and income taxes was $17,096,522, or about 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.
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Net Cost of Selected City Functions
(in thousands of dollars)
Total Cost of Services Net Cost of Services
6/30/2017 6/30/2016 % Change 6/30/2017 6/30/2016 % Change
Governmental activities
Public safety $16,910 $17,119 -1.22% $14,987 $15,706 -4.58%
Public w orks 3,551 3,109 14.22% 2,904 2,720 6.76%
Highw ays, streets and bridges 6,997 7,252 -3.52% 2,359 887 165.95%
Community and economic development 3,739 5,223 -28.41% 1,698 3,421 -50.37%
Culture and recreation 3,919 3,552 10.33% 2,233 911 145.12%
All other 4,750 4,677 1.56% 2,981 2,935 1.57%
Total governmental activities $39,866 $40,932 -2.60% $27,162 $26,580 2.19%
Business-Type Activities
The financial goal of the City’s business-type activities (i.e. water, sewer and marina
and launch ramp operations) is to operate on a self-supporting basis without making
significant profit or needing general tax subsidies. For the fiscal year ended June 30,
2017, the City’s total business-type activities realized an overall decrease in net position
of $278,209.
Sewer Fund net position decreased $471,424 primarily as result of increased County
wastewater treatment costs. The Water Fund saw a net position increase of $256,899.
This is primarily attributable to the managing costs and achieving economies of scale
with the addition of Fruitport Township and the City of Norton Shores as wholesale
customers. Marina and Launch Ramp Fund net position decreased $56,377 due to
lower revenues.
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 the fiscal year ended June 30, 2017
were the General Fund and the Major Street and Trunkline Fund.
General Fund Highlights
The General Fund receives 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
taking into account changing economic conditions and policy priorities. The following
table shows the General Fund year-end unassigned fund balance for the last five years.
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Unassigned Fund
Year-End
Year-to-Year % Prior Year’s Balance as a % of
Year Ended Unassigned
Fund Balance Change Revenues Prior Year Revenues
(Policy Target=13%)
6/30/2017 $6,148,292 0.81% $25,821,114 23.81%
6/30/2016 6,098,977 3.67% 24,890,399 24.50%
6/30/2015 5,883,318 7.06% 23,960,758 24.55%
6/30/2014 5,495,145 19.10% 23,407,409 23.48%
6/30/2013 4,613,722 17.95% 24,122,760 19.13%
For the year ended June 30, 2017, General Fund revenues were $1,080,141 higher
than the final amended budget estimate. This variance is primarily due to higher than
expected City income taxes and State shared revenue.
General Fund expenditures were $21,056 higher than projected in the final amended
budget. Most city departments came in about where they were projected to.
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. For the year ended June 30, 2017, the fund balance of the Major
Street and Trunkline Fund decreased $455,077 which is attributable to a transfer to the
Local Streets Fund.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of June 30, 2017, the City had invested $115,137,662 in a variety of capital assets,
including land, streets, equipment, buildings, water and sewer lines, and vehicles. This
is a decrease of $4,445,132 from capital assets reported as of June 30, 2016. The
decrease is due to normal depreciation of assets offset by current year additions. Note
F of the notes to the basic financial statements provides detailed information on the
City’s capital asset investment.
Long-Term Debt
Bond Ratings
At June 30, 2017, the City had $16,312,664 in bonds and
The City’s limited full faith and
other long-term obligations outstanding. This represents credit bonds (bonds guaranteed
an 8.1% decrease from the prior year. The City did not by the City’s taxing powers)
issue any new debt during the fiscal year. were upgraded by Standard &
Poor’s from a rating of “A+” to
“AA-“ in early 2016. The City’s
Additional information concerning the City’s long-term debt Water System revenue bonds
is presented in Note H to the basic financial statements. carry the “AA-“ S&P rating.
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City’s Long Term Debt – Bonds and Other Obligations
(In thousands of dollars)
Governmental Business-Type
Activities Activities Total Percentage
6/30/2017 6/30/2016 6/30/2017 6/30/2016 6/30/2017 6/30/2016 Change
Due w ithin one year $561 $511 $1,479 $1,429 $2,040 $1,940 5.15%
Due in more than one year 7,071 7,175 7,201 8,638 14,272 15,813 -9.75%
Total bonds & other obligations $7,632 $7,686 $8,680 $10,067 $16,312 $17,753 -8.12%
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 $4,278,275 at year-end as shown in the table below. This represents a
decrease of 13.9% from the prior year.
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.
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)
Dow ntow n Development Local Development
Total Percentage
Authority Finance Authority
6/30/2017 6/30/2016 6/30/2017 6/30/2016 6/30/2017 6/30/2016 Change
Due w ithin one year $330 $310 $355 $345 $685 $655 4.58%
Due in more than one year 1,005 1,340 2,588 2,971 3,593 4,311 -16.66%
Total bonds & other obligations $1,335 $1,650 $2,943 $3,316 $4,278 $4,966 -13.85%
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The City’s fiscal year 2017-18 capital budget anticipates spending $6,606,400 for capital
projects, consisting of street improvements, water and sewer system improvements,
scheduled equipment replacements, improvements to the L. C. Walker Arena, the
construction of additional market rate houses in a city neighborhood and the
replacement of fire department rescue equipment. These improvements will be funded
by anticipated grants ($1,952,700), revenues generated from operations, and fund
balance.
From an operating standpoint, the City’s 2017-18 budget will be relatively stable while
the City attempts to maintain a healthy fund balance and allow time to plan for and
address economic challenges with a long-term solution:
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• The full-time personnel complement will be increased from 232 positions to 233
positions for a net gain of 1.
• Some user fees will be increased and new fees recommended during the course
of the year.
• The City will continue to look for opportunities to partner with other entities to
deliver quality services in a cost effective manner (e.g. Farmers’ Market kitchen
management, Marsh Field, and recreation programs).
City operations depend 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
revenues.
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 not-for-profit hospitals,
churches, government agencies, colleges and other institutions that are traditionally
exempt from paying local property taxes. This is particularly important for Muskegon
since it is the regional center for many such institutions.
Income tax revenues increased 5.6% from $8,151,902 for the year ended June 30,
2016 to $8,610,812 for the year ended June 30, 2017. For 2017-18, the City has
estimated income tax revenue to be $8,100,000.
City Income Percent
Year
Tax Revenues Change
6/30/2017 $8,610,812 5.6%
6/30/2016 8,151,902 -1.5%
6/30/2015 8,274,666 5.7%
6/30/2014 7,831,423 4.3%
6/30/2013 7,506,472 12.3%
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Local Property Tax
City charter and state law authorize the City to levy a general operating millage up to 10
mills and 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 2017-18, the City tax levy will be at 10 mills for general operations and 3 mills for
sanitation service. We project that $6,790,145 in total property tax revenue will be
collected during fiscal year 2017-18.
It should be noted that several property tax appeals are currently pending. The impact
of these appeals on City finances is being monitored closely.
State Shared Revenues
State shared sales tax revenues represent about 15% 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 non-
constitutional component is determined by a complex formula and is subject to
adjustment through the State’s annual budget process. Both components depend, of
course, on overall state sales tax collections. The City’s recent state shared revenue
history is summarized as follows:
State Shared Percent
Revenues Change
Year
6/30/2017 $4,046,147 4.1%
6/30/2016 3,886,514 -0.1%
6/30/2015 3,889,178 2.0%
6/30/2014 3,813,221 3.0%
6/30/2013 3,700,971 -7.0%
For 2017-18, the City projects $3,973,538 in state shared revenues
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 been more stable than general state sales tax state-shared revenues
have been. The State is projecting a significant increase in the distributions for the
current fiscal year, the motor fuel tax collection is up slightly over 40% as compared to
last year.
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Street Revenues Percent
Year from State Change
6/30/2017 $4,020,630 1.0%
6/30/2016 3,981,345 10.8%
6/30/2015 3,592,756 1.0%
6/30/2014 3,556,507 10.8%
6/30/2013 3,208,769 -2.4%
Water and Sewer Fees
From a government-wide entity perspective, combined water and sewer fees represent
one of the City’s largest income streams, totaling $14,661,712 during the year ended
June 30, 2017. Charges to customers are based on the amount of metered services
used times rates periodically set by the City Commission. Water rates are currently
planned to remain unchanged. The City began providing treated water to the City of
Norton Shores and Fruitport Charter Township in May 2015. The addition of these two
new large municipal customers allows the spreading of water treatment costs over a
larger customer base while remaining well within the plant’s rated treatment capacity.
Due to the impact of continued increases in wastewater treatment charges from the
Muskegon County Wastewater Treatment System, the City Commission passed a
resolution effective July 1, 2016, which ties the sewer rate the City will charge to its
customers to a multiplier of the rate that the county bills the City for wastewater
treatment. This rate change is expected to help maintain the financial viability of the
City’s sewer system.
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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FINANCIAL STATEMENTS
33
City of Muskegon
STATEMENT OF NET POSITION
June 30, 2017
Governmental Business-type Component
Activities Activities Total Units
ASSETS
Current assets
Cash and investments $ 16,124,197 $ 5,413,140 $ 21,537,337 $ 187,391
Assets managed by others 1,145,199 - 1,145,199 -
Receivables 2,426,984 2,587,390 5,014,374 -
Due from other governmental units 2,025,190 130,350 2,155,540 -
Internal balances (1,063,535) 1,063,535 - -
Inventories 8,060 105,902 113,962 -
Prepaid items 519,319 106,777 626,096 -
Total current assets 21,185,414 9,407,094 30,592,508 187,391
Noncurrent assets
Restricted cash and investments - 599,500 599,500 -
Advances to component units 1,102,267 - 1,102,267 -
Notes receivable, less amounts due within one year 160,099 - 160,099 -
Capital assets, net
Nondepreciable 13,950,546 347,947 14,298,493 400,000
Depreciable 54,568,769 46,270,400 100,839,169 1,453,122
Total noncurrent assets 69,781,681 47,217,847 116,999,528 1,853,122
Total assets 90,967,095 56,624,941 147,592,036 2,040,513
DEFERRED OUTFLOWS OF RESOURCES
Related to pension 4,045,898 281,265 4,327,163 -
Total assets and deferred outflows of resources 95,012,993 56,906,206 151,919,199 2,040,513
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 3,354,453 474,730 3,829,183 16,500
Due to other governmental units 67,865 1,044,752 1,112,617 -
Unearned revenues - unused Farmers Market tokens 26,390 - 26,390 -
Unearned revenues - expenditure-driven grants 53,874 - 53,874 -
Bonds and other obligations, due within one year 561,134 1,479,400 2,040,534 685,000
Total current liabilities 4,063,716 2,998,882 7,062,598 701,500
Noncurrent liabilities
Advances from primary government - - - 1,102,267
Bonds and other obligations, less amounts due within one year 7,071,028 7,201,102 14,272,130 3,593,275
Net pension liability 22,353,002 1,553,952 23,906,954 -
Total noncurrent liabilities 29,424,030 8,755,054 38,179,084 4,695,542
Total liabilities 33,487,746 11,753,936 45,241,682 5,397,042
DEFERRED INFLOWS OF RESOURCES
Related to pension 793,720 55,178 848,898 -
Total liabilities and deferred inflows of resources 34,281,466 11,809,114 46,090,580 5,397,042
NET POSITION
Net investment in capital assets 62,520,466 38,114,686 100,635,152 (1,089,826)
Restricted
Highways, streets and bridges 1,676,958 - 1,676,958 -
Debt service - 599,500 599,500 -
L.C. Walker Arena 123,320 - 123,320 -
Law enforcement 121,873 - 121,873 -
Downtown BID 105,397 - 105,397 -
Perpetual care
Expendable 223,520 - 223,520 -
Non-expendable 1,508,768 - 1,508,768 -
Other purposes 17,574 - 17,574 -
Unrestricted (5,566,349) 6,382,906 816,557 (2,266,703)
Total net position $ 60,731,527 $ 45,097,092 $ 105,828,619 $ (3,356,529)
The accompanying notes are an integral part of this statement.
34
City of Muskegon
STATEMENT OF ACTIVITIES
For the year ended June 30, 2017
Net (Expense) Revenue and Changes in Net Position
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 $ 1,113,897 $ 228,767 $ - $ - $ (885,130) $ - $ (885,130) $ -
Administrative services 679,139 572,739 - - (106,400) - (106,400) -
Financial services 2,483,519 895,924 34,000 - (1,553,595) - (1,553,595) -
Public safety 16,910,473 1,824,114 99,653 - (14,986,706) - (14,986,706) -
Public works 3,551,230 646,876 350 - (2,904,004) - (2,904,004) -
Highways, streets and bridges 6,996,540 256,190 3,981,065 400,000 (2,359,285) - (2,359,285) -
Community and economic development 3,738,566 706,195 993,006 340,894 (1,698,471) - (1,698,471) -
Culture and recreation 3,918,814 1,463,839 100,744 121,180 (2,233,051) - (2,233,051) -
General administration 301,287 37,892 - - (263,395) - (263,395) -
Interest on long-term debt 172,591 - - - (172,591) - (172,591) -
Total governmental activities 39,866,056 6,632,536 5,208,818 862,074 (27,162,628) - (27,162,628) -
Business-type activities
Sewer 8,876,690 7,620,208 - 784,969 - (471,513) (471,513) -
Water 7,206,564 7,430,314 2,436 - - 226,186 226,186 -
Marina and launch ramp 336,912 278,753 - - - (58,159) (58,159) -
Total business-type activities 16,420,166 15,329,275 2,436 784,969 - (303,486) (303,486) -
35
Total primary government $ 56,286,222 $ 21,961,811 $ 5,211,254 $ 1,647,043 (27,162,628) (303,486) (27,466,114) -
Component units
Local Development Finance Authority - SmartZone $ 247,166 $ - $ - $ 350,000 - - - 102,834
Downtown Development Authority 17,751 - - 175,000 - - - 157,249
Tax Increment Finance Authority 34,000 - - - - - - (34,000)
Brownfield Redevelopment Authority I 38,729 - - - - - - (38,729)
Brownfield Redevelopment Authority II 182,650 - - - - - - (182,650)
Brownfield Redevelopment Authority III 26,148 - - - - - - (26,148)
Total component units $ 546,444 $ - $ - $ 525,000 - - - (21,444)
General revenues
Property taxes 8,389,243 - 8,389,243 616,945
Income taxes 8,707,279 - 8,707,279 -
Cable franchise agreement 378,955 - 378,955 -
Grants and contributions not restricted to specific programs 4,630,111 - 4,630,111 -
Unrestricted investment earnings 106,653 25,277 131,930 1,085
Miscellaneous 512,738 - 512,738 -
Gain on sale of capital asset 844,062 - 844,062 -
Total general revenues 23,569,041 25,277 23,594,318 618,030
Change in net position (3,593,587) (278,209) (3,871,796) 596,586
Net position at July 1, 2016 64,325,114 45,375,301 109,700,415 (3,953,115)
Net position at June 30, 2017 $ 60,731,527 $ 45,097,092 $ 105,828,619 $ (3,356,529)
The accompanying notes are an integral part of this statement.
City of Muskegon
BALANCE SHEET
Governmental Funds
June 30, 2017
Major Street Other Total
General and Trunkline Governmental Governmental
Fund Fund Funds Funds
ASSETS
Cash and investments $ 7,606,891 $ 1,418,950 $ 4,711,503 $ 13,737,344
Assets managed by others - - 1,145,199 1,145,199
Receivables
Accounts and loans (net of allowance for uncollectibles) 133,946 2,036 336,979 472,961
Property taxes 28,703 - - 28,703
Income taxes 1,556,255 - - 1,556,255
Special assessments - 14,971 15,224 30,195
Due from other governmental units 715,369 631,061 678,760 2,025,190
Due from other funds 356,207 - - 356,207
Advances to component units - - 367,423 367,423
Prepaid items 199,353 29,427 30,775 259,555
Total assets $ 10,596,724 $ 2,096,445 $ 7,285,863 $ 19,979,032
LIABILITIES
Accounts payable $ 1,647,215 $ 223,411 $ 678,862 $ 2,549,488
Accrued liabilities 345,611 9,504 20,682 375,797
Due to other governmental units 40,399 11,940 15,526 67,865
Due to other funds - - 356,207 356,207
Unearned revenues - unused Farmers Market tokens - - 26,390 26,390
Unearned revenues - expenditure-driven grants 854 - 53,020 53,874
Total liabilities 2,034,079 244,855 1,150,687 3,429,621
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - income taxes 505,000 - - 505,000
Unavailable revenues - special assessments - 14,971 15,225 30,196
Unavailable revenues - other long-term receivables - - 2,244 2,244
Total deferred inflows of resources 505,000 14,971 17,469 537,440
FUND BALANCES
Nonspendable
Prepaid items 199,353 29,427 30,775 259,555
Long-term loans receivable - - 157,855 157,855
Perpetual care 10,000 - 1,498,768 1,508,768
Restricted
Highways, streets and bridges - 1,807,192 353,714 2,160,906
L.C. Walker Arena - - 97,484 97,484
Law enforcement - - 121,873 121,873
Downtown BID - - 105,397 105,397
Perpetual care - - 223,520 223,520
Other purposes - - 17,574 17,574
Assigned for capital projects and public improvements 1,700,000 - 3,510,747 5,210,747
Unassigned 6,148,292 - - 6,148,292
Total fund balances 8,057,645 1,836,619 6,117,707 16,011,971
Total liabilities, deferred inflows of
resources and fund balances $ 10,596,724 $ 2,096,445 $ 7,285,863 $ 19,979,032
The accompanying notes are an integral part of this statement.
36
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
June 30, 2017
Total fund balance—governmental funds $ 16,011,971
Amounts reported for governmental activities in the Statement of Net Position
are different because:
Capital assets used in governmental activities are not current financial
resources and, therefore, are not reported in the governmental funds.
Cost of capital assets $ 127,375,807
Accumulated depreciation (61,369,072) 66,006,735
Other long-term assets are not available to pay for current period
expenditures and, therefore, are reported as unavailable revenues
in the governmental funds.
Income taxes 505,000
Special assessments 30,196
Other long-term receivables 2,244 537,440
Long-term liabilities in governmental activities are not due and payable in the
current period and, therefore, are not reported in the governmental funds.
Accrued interest payable (46,000)
Bonds and notes payable (5,998,849)
Compensated absences (1,523,208)
Net pension liability and related deferred outflows/inflows of resources (18,283,677) (25,851,734)
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 Position.
Net position of the internal service funds 5,090,650
Internal balances representing the cumulative difference between
actual costs and amounts charged to business-type activities (1,063,535) 4,027,115
Net position of governmental activities $ 60,731,527
The accompanying notes are an integral part of this statement.
37
City of Muskegon
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Governmental Funds
For the year ended June 30, 2017
Major Street Other Total
General and Trunkline Governmental Governmental
Fund Fund Funds Funds
REVENUES
Taxes $ 16,667,272 $ - $ - $ 16,667,272
Licenses and permits 1,884,341 - - 1,884,341
Intergovernmental revenues
Federal 51,628 400,000 1,276,349 1,727,977
State 4,653,136 3,197,829 1,108,003 8,958,968
Local 34,000 - 22,489 56,489
Charges for services 2,647,384 33,787 1,237,046 3,918,217
Fines and forfeitures 481,624 - 12,745 494,369
Interest and rental income 142,193 11,238 27,729 181,160
Income from assets managed by others - - 109,418 109,418
Other 490,188 90,296 755,354 1,335,838
Total revenues 27,051,766 3,733,150 4,549,133 35,334,049
EXPENDITURES
Current
Public representation services 1,080,032 - - 1,080,032
Administrative services 624,284 - - 624,284
Financial services 2,236,941 - - 2,236,941
Public safety 14,056,236 - 30,383 14,086,619
Public works 3,105,699 - 100,351 3,206,050
Highways, streets and bridges - 3,507,777 1,347,895 4,855,672
Community and economic development 2,006,599 - - 2,006,599
Culture and recreation 1,660,175 - 1,863,003 3,523,178
Other governmental functions 280,416 - - 280,416
Debt service
Principal 70,000 195,000 18,563 283,563
Interest and fees 174,262 35,450 1,530 211,242
Capital outlay 362,786 - 2,078,980 2,441,766
Total expenditures 25,657,430 3,738,227 5,440,705 34,836,362
Excess of revenues over (under) expenditures 1,394,336 (5,077) (891,572) 497,687
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets - - 1,529,325 1,529,325
Transfers in - - 1,805,000 1,805,000
Transfers out (1,368,000) (450,000) - (1,818,000)
Total other financing sources (uses) (1,368,000) (450,000) 3,334,325 1,516,325
Net change in fund balances 26,336 (455,077) 2,442,753 2,014,012
Fund balances at July 1, 2016 8,031,309 2,291,696 3,674,954 13,997,959
Fund balances at June 30, 2017 $ 8,057,645 $ 1,836,619 $ 6,117,707 $ 16,011,971
The accompanying notes are an integral part of this statement.
38
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 June 30, 2017
Net change in fund balances—total governmental funds $ 2,014,012
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report outlays for capital assets as expenditures. However,
in the Statement of Activities, the cost of these assets is allocated over their
estimated useful lives and reported as depreciation expense.
Depreciation expense $ (4,585,381)
Capital outlay 2,328,615 (2,256,766)
In the Statement of Activities, only the gain or loss on the sale of capital
assets is reported. However, in the governmental funds, the proceeds
from the sale increase financial resources. Thus, the change in net
position differs from the change in fund balance by the remaining
undepreciated cost of the capital assets sold. (250,179)
Revenues reported in the Statement of Activities that do not provide current
financial resources are not reported as revenues in the governmental funds. (214,023)
The issuance of long-term debt provides current financial resources to
governmental funds, but increases liabilities in the Statement of Net Position.
Repayment of debt is an expenditure in the governmental funds, but reduces
long-term liabilities in the Statement of Net Position.
Repayment of principal on long-term debt 283,563
Changes in accrual of interest and amortization of premiums and discounts
Change in accrued interest payable 651
Amortization of premiums and discounts 38,000 38,651
Some expenses reported in the Statement of Activities do not require the use
of current financial resources and, therefore, are not reported as expenditures
in the governmental funds.
Change in compensated absences (259,665)
Change in net pension liability and related deferred outflows/inflows of resources (2,808,159) (3,067,824)
The internal service funds are used by management to charge the costs of
certain activities used to individual funds. The net revenue of certain activities
of the internal service fund is reported with governmental activities.
Change in net position of the internal service funds (148,328)
Change in internal balances representing the current year difference
between actual costs and amounts charged to business-type activities 7,307 (141,021)
Change in net position of governmental activities $ (3,593,587)
The accompanying notes are an integral part of this statement.
39
City of Muskegon
STATEMENT OF NET POSITION
Proprietary Funds
June 30, 2017
Governmental
Activities -
Business-type Activities - Enterprise Funds Internal
Marina and Service
Sewer Water Launch Ramp Total Funds
ASSETS
Current assets
Cash and investments $ 1,368,662 $ 3,604,027 $ 440,451 $ 5,413,140 $ 2,386,853
Receivables 1,166,519 1,397,366 23,505 2,587,390 498,969
Due from other governmental units 81,065 49,285 - 130,350 -
Inventories 20,641 85,261 - 105,902 8,060
Prepaid items 41,249 63,103 2,425 106,777 259,764
Total current assets 2,678,136 5,199,042 466,381 8,343,559 3,153,646
Noncurrent assets
Restricted cash and investments - 599,500 - 599,500 -
Advances to component units - - - - 734,844
Capital assets
Land 16,188 103,500 22,562 142,250 65,000
Land improvements - - 1,888,965 1,888,965 301,715
Buildings, improvements and systems 21,524,875 68,982,943 2,322,488 92,830,306 1,559,334
Machinery and equipment 83,643 2,881,519 60,620 3,025,782 8,771,690
Construction in progress 41,716 163,981 - 205,697 -
Less accumulated depreciation (10,220,700) (38,226,831) (3,027,122) (51,474,653) (8,185,159)
Net capital assets 11,445,722 33,905,112 1,267,513 46,618,347 2,512,580
Total noncurrent assets 11,445,722 34,504,612 1,267,513 47,217,847 3,247,424
Total assets 14,123,858 39,703,654 1,733,894 55,561,406 6,401,070
DEFERRED OUFLOWS OF RESOURCES
Related to pension 64,907 216,358 - 281,265 173,087
Total assets and deferred outflows of resources 14,188,765 39,920,012 1,733,894 55,842,671 6,574,157
LIABILITIES
Current liabilities
Accounts payable 74,976 268,681 16,224 359,881 349,479
Accrued liabilities 16,073 97,825 951 114,849 33,689
Due to other governmental units 1,010,555 34,197 - 1,044,752 -
Bonds and other obligations, due within one year 7,300 1,472,100 - 1,479,400 18,400
Total current liabilities 1,108,904 1,872,803 17,175 2,998,882 401,568
Noncurrent liabilities
Bonds and other obligations, less amounts due within one year 36,659 7,164,443 - 7,201,102 91,705
Net pension liability 358,604 1,195,348 - 1,553,952 956,278
Total noncurrent liabilities 395,263 8,359,791 - 8,755,054 1,047,983
Total liabilities 1,504,167 10,232,594 17,175 11,753,936 1,449,551
DEFERRED INFLOWS OF RESOURCES
Related to pension 12,733 42,445 - 55,178 33,956
Total liabilities and deferred inflows of resources 1,516,900 10,275,039 17,175 11,809,114 1,483,507
NET POSITION
Net investment in capital assets 11,445,722 25,401,451 1,267,513 38,114,686 2,512,580
Restricted for debt service - 599,500 - 599,500 -
Unrestricted 1,226,143 3,644,022 449,206 5,319,371 2,578,070
Total net position $ 12,671,865 $ 29,644,973 $ 1,716,719 44,033,557 $ 5,090,650
Adjustment to report the cumulative internal balance for the net effect of the activity
between the internal service funds and the enterprise funds over time 1,063,535
Net position of business-type activities $ 45,097,092
The accompanying notes are an integral part of this statement.
40
City of Muskegon
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
Proprietary Funds
For the year ended June 30, 2017
Governmental
Activities -
Business-type Activities - Enterprise Funds Internal
Marina and Service
Sewer Water Launch Ramp Total Funds
OPERATING REVENUES
Charges for services $ 7,478,540 $ 7,183,172 $ 273,154 $ 14,934,866 $ 8,272,672
Other 141,668 249,578 5,599 396,845 153,855
Total operating revenues 7,620,208 7,432,750 278,753 15,331,711 8,426,527
OPERATING EXPENSES
Administration 438,932 934,419 5,549 1,378,900 325,613
Insurance premiums and claims - - - - 4,539,589
Wastewater treatment 5,836,328 - - 5,836,328 -
Wastewater maintenance 2,150,248 - - 2,150,248 -
Filtration plant operations - 2,028,490 - 2,028,490 -
Water distribution - 2,035,003 - 2,035,003 -
Other operations - - 216,359 216,359 3,377,697
Depreciation 457,440 1,970,096 115,256 2,542,792 385,387
Total operating expenses 8,882,948 6,968,008 337,164 16,188,120 8,628,286
Operating income (loss) (1,262,740) 464,742 (58,411) (856,409) (201,759)
NONOPERATING REVENUES (EXPENSES)
Investment earnings 6,347 16,896 2,034 25,277 40,431
Interest expense - (224,739) - (224,739) -
Total nonoperating revenue (expenses) 6,347 (207,843) 2,034 (199,462) 40,431
Income (loss) before contributions and transfers (1,256,393) 256,899 (56,377) (1,055,871) (161,328)
CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contributions 784,969 - - 784,969 -
Transfers in - - - - 13,000
Total capital contributions and transfers 784,969 - - 784,969 13,000
Change in net position (471,424) 256,899 (56,377) (270,902) (148,328)
Net position at July 1, 2016 13,143,289 29,388,074 1,773,096 5,238,978
Net position at June 30, 2017 $ 12,671,865 $ 29,644,973 $ 1,716,719 $ 5,090,650
Adjustment for the net effect of the current year activity between
the internal service funds and the enterprise funds (7,307)
Change in net position of business-type activities $ (278,209)
The accompanying notes are an integral part of this statement.
41
City of Muskegon
STATEMENT OF CASH FLOWS
Proprietary Funds
For the year ended June 30, 2017
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 $ 7,661,201 $ 7,238,350 $ 283,714 $ 15,183,265 $ 166,215
Receipts from interfund services provided 29,168 148,600 - 177,768 7,352,749
Other receipts - - - - 621,592
Payments to suppliers (7,336,121) (2,451,576) (183,851) (9,971,548) (6,108,795)
Payments to employees (595,818) (1,578,992) (24,054) (2,198,864) (1,281,433)
Payments for interfund services used (567,670) (735,617) (18,769) (1,322,056) (783,875)
Net cash provided by (used for) operating activities (809,240) 2,620,765 57,040 1,868,565 (33,547)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in - - - - 13,000
Advances to component units - - - - 79,234
Net cash provided by noncapital financing activities - - - - 92,234
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Capital contributions 784,969 - - 784,969 -
Purchases of capital assets (41,716) (162,392) (21,540) (225,648) (764,344)
Principal paid on capital debt - (1,405,000) - (1,405,000) -
Interest paid on capital debt - (246,434) - (246,434) -
Net cash provided by (used for) capital and related financing activities 743,253 (1,813,826) (21,540) (1,092,113) (764,344)
CASH FLOW FROM INVESTING ACTIVITIES
Investment earnings 6,347 16,896 2,034 25,277 40,431
Net increase (decrease) in cash and investments (59,640) 823,835 37,534 801,729 (665,226)
Cash and investments July 1, 2016 1,428,302 3,379,692 402,917 5,210,911 3,052,079
Cash and investments at June 30, 2017 $ 1,368,662 $ 4,203,527 $ 440,451 $ 6,012,640 $ 2,386,853
Reconciliation of cash and investments to the Statement of Net Position
Cash and investments $ 1,368,662 $ 3,604,027 $ 440,451 $ 5,413,140 $ 2,386,853
Restricted cash and investments - 599,500 - 599,500 -
$ 1,368,662 $ 4,203,527 $ 440,451 $ 6,012,640 $ 2,386,853
Reconciliation of operating income (loss) to net cash provided by (used for)
operating activities
Operating income (loss) $ (1,262,740) $ 464,742 $ (58,411) $ (856,409) $ (201,759)
Adjustments to reconcile operating income (loss) to net cash provided by
(used for) operating activities
Depreciation expense 457,440 1,970,096 115,256 2,542,792 385,387
Bad debt expense 6,034 3,698 - 9,732 -
Change in assets and liabilities
Receivables 64,127 (49,498) 4,961 19,590 (285,971)
Inventories (2,890) 985 - (1,905) 12,797
Prepaid items 1,317 (4,668) (94) (3,445) (48,946)
Accounts payable (120,764) 33,507 (3,050) (90,307) (33,532)
Accrued liabilities 48,236 201,903 (1,622) 248,517 138,477
Net cash provided by (used for) operating activities $ (809,240) $ 2,620,765 $ 57,040 $ 1,868,565 $ (33,547)
The accompanying notes are an integral part of this statement.
42
City of Muskegon
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES
Fiduciary Funds
June 30, 2017
Agency
Funds
ASSETS
Cash and investments $ 1,221,594
Accounts receivable 11,359
Total assets $ 1,232,953
LIABILITIES
Accounts payable $ 1,035,501
Due to other governmental units 70,676
Deposits held for others 126,776
Total liabilities $ 1,232,953
The accompanying notes are an integral part of this statement.
43
City of Muskegon
STATEMENT OF NET POSITION
Discretely Presented Component Units
June 30, 2017
Local
Development Tax
Finance Downtown Increment Brownfield Brownfield Brownfield
Authority - Development Finance Redevelopment Redevelopment Redevelopment
SmartZone Authority Authority Authority I Authority II Authority III Total
ASSETS
Current assets
Cash and investments $ 20,940 $ 106,919 $ 5,827 $ 50,858 $ 1,180 $ 1,667 $ 187,391
Noncurrent assets
Capital assets, net
Nondepreciable 400,000 - - - - - 400,000
Depreciable 1,453,122 - - - - - 1,453,122
Total noncurrent assets 1,853,122 - - - - - 1,853,122
Total assets 1,874,062 106,919 5,827 50,858 1,180 1,667 2,040,513
LIABILITIES
44
Current liabilities
Accrued liabilities 16,500 - - - - - 16,500
Bonds and other obligations, due within one year 355,000 330,000 - - - - 685,000
Total current liabilities 371,500 330,000 - - - - 701,500
Noncurrent liabilities
Advances from primary government - - - 1,102,267 - - 1,102,267
Bonds and other obligations, less amounts due
within one year 2,587,948 1,005,327 - - - - 3,593,275
Total noncurrent liabilities 2,587,948 1,005,327 - 1,102,267 - - 4,695,542
Total liabilities 2,959,448 1,335,327 - 1,102,267 - - 5,397,042
NET POSITION
Net investment in capital assets (1,089,826) - - - - - (1,089,826)
Unrestricted 4,440 (1,228,408) 5,827 (1,051,409) 1,180 1,667 (2,266,703)
Total net position $ (1,085,386) $ (1,228,408) $ 5,827 $ (1,051,409) $ 1,180 $ 1,667 $ (3,356,529)
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF ACTIVITIES
Discretely Presented Component Units
For the year ended June 30, 2017
Program
Revenue Net (Expense) Revenue and Changes in Net Position
Local
Development Tax
Capital Finance Downtown Increment Brownfield Brownfield Brownfield
Grants and Authority - Development Finance Redevelopment Redevelopment Redevelopment
Functions/Programs Expenses Contributions SmartZone Authority Authority Authority I Authority II Authority III Total
Local Development Finance Authority - SmartZone
Community and economic development $ 172,648 $ - $ (172,648) $ - $ - $ - $ - $ - $ (172,648)
Interest on long-term debt 74,518 350,000 275,482 - - - - - 275,482
Total Local Development Finance
Authority - SmartZone 247,166 350,000 102,834 - - - - - 102,834
Downtown Development Authority
Interest on long-term debt 17,751 175,000 - 157,249 - - - - 157,249
Tax Increment Finance Authority
Community and economic development 34,000 - - - (34,000) - - - (34,000)
Brownfield Redevelopment Authority I
45
Interest on long-term debt 38,729 - - - - (38,729) - - (38,729)
Brownfield Redevelopment Authority II
Community and economic development 182,650 - - - - - (182,650) (182,650)
Brownfield Redevelopment Authority III
Community and economic development 26,148 - - - - - - (26,148) (26,148)
Total discretely presented component units $ 546,444 $ 525,000 102,834 157,249 (34,000) (38,729) (182,650) (26,148) (21,444)
General revenues
Property taxes 99,280 147,081 39,373 137,659 165,737 27,815 616,945
Unrestricted investment income 55 823 - 81 126 - 1,085
Total general revenues 99,335 147,904 39,373 137,740 165,863 27,815 618,030
Change in net position 202,169 305,153 5,373 99,011 (16,787) 1,667 596,586
Net position at July 1, 2016 (1,287,555) (1,533,561) 454 (1,150,420) 17,967 - (3,953,115)
Net position at June 30, 2017 $ (1,085,386) $ (1,228,408) $ 5,827 $ (1,051,409) $ 1,180 $ 1,667 $ (3,356,529)
The accompanying notes are an integral part of this statement.
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
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 City and its component units, entities for which the government is considered
to be financially accountable. Blended component units, are, in substance, part of the primary government's
operations, even though they are legally separate entities. Thus, blended component units are appropriately
presented as funds of the primary government. 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 City.
Discretely Presented Component Units
Downtown Development Authority (DDA). The DDA’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 TIFA’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 (SmartZone).
Currently only the SmartZone is active. 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.
Brownfield Redevelopment Authority (BRA). There are three separate designated areas under the aegis of the
BRA – the Betten-Henry Street site, the former downtown mall site, and the Terrace Point site. 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 areas are presented as
governmental fund types.
46
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Reporting Entity—Continued
Discretely Presented Component Units—Continued
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 June 30, 2017, 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, 2015, the date
of its latest audited financial statements is as follows:
Total assets and deferred outflows of resources $ 4,490,802
Total liabilities and deferred inflows of resources (432,206)
Total net position $ 4,058,596
Total operating income $ 1,604,765
Total operating expenses (2,063,265)
Total nonoperating revenues 596
Capital contributions 174,638
Change in net assets $ (283,266)
47
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Basis of Presentation—Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities)
report information on all of the nonfiduciary activities of the primary government and its component units.
All fiduciary activities are reported only in the fund financial statements. Governmental activities, which
normally are supported by taxes, intergovernmental revenues, and other nonexchange transactions, are
reported separately from business-type activities, which rely to a significant extent on fees and charges to
external customers for support. Likewise, the primary government is reported separately from certain legally
separate component units for which the primary government is financially accountable.
While separate government-wide and fund financial statements are presented, they are interrelated. The
governmental activities column incorporates data from governmental funds and internal service funds, while
business-type activities incorporate data from the City’s enterprise funds. 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.
As discussed earlier, the City’s discretely presented component units are reported in a separate column in the
government-wide financial statements.
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 where the amounts are reasonably
equivalent in value to the interfund services provided and other charges between the City's water and sewer
functions 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.
The fund financial statements provide information about the City’s funds, including its fiduciary funds and
blended component units. Separate statements for each fund category – governmental, proprietary, and
fiduciary – are presented. The emphasis of fund financial statements is on major governmental and enterprise
funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated
and reported as nonmajor funds. Major individual governmental and enterprise funds are reported as separate
columns in the fund financial statements.
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.
48
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Basis of Presentation—Government-wide and Fund Financial Statements—Continued
The City reports the following three major proprietary funds:
The Sewer Fund accounts for user charges, operating expenses and debt service of the City’s sewer
system.
The Water Fund accounts for user charges, 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 employee payroll withholdings, property taxes collected by the
City on behalf of other governments, and deposits made by housing rehabilitation program participants.
During the course of operations the City has activity between funds for various purposes. Any residual
balances outstanding at year-end are reported as due from/to other funds and advances to/from other funds.
While these balances are reported in fund financial statements, certain eliminations are made in the
preparation of the government-wide financial statements. Balances between funds included in governmental
activities (i.e., the governmental and internal service funds) are eliminated so that only the net amount is
included as internal balances in the governmental activities column. Similarly, balances between the funds
included in business-type activities (i.e., enterprise funds) are eliminated so that only the net amount is
included as internal balances in the business-type activities column.
Further, certain activity occurs during the year involving transfers of resources between funds. In fund
financial statements these amounts are reported at gross amounts as transfers in/out. While reported in fund
financial statements, certain eliminations are made in the preparation of the government-wide financial
statements. Transfers between the funds included in governmental activities are eliminated so that only the
net amount is included as transfers in the governmental activities column. Similarly, balances between funds
included in business-type activities are eliminated so that only the net amount is included as transfers in the
business-type activities column.
Measurement Focus and Basis of Accounting
The accounting and financial reporting treatment is determined by the applicable measurement focus and
basis of accounting. Measurement focus indicates the type of resources being measured such as current
financial resources or economic resources. The basis of accounting indicates the timing of transactions or
events for recognition in the financial statements.
49
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Measurement Focus and Basis of Accounting—Continued
The government-wide financial statements are reported using the economic resources measurement focus and
the accrual basis of accounting. 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.
The 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 City
considers revenues to be available if they are collected within 60 days of the end of the current fiscal period.
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. General capital asset acquisitions are reported as expenditures in
governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other
financing sources.
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. Entitlements are recorded as revenues when all eligibility requirements are met, including any time
requirements, and the amount is received during the period or within the availability period for this revenue
source (within 60 days of year-end). Expenditure-driven grants are recognized as revenue when the
qualifying expenditures have been incurred and all other eligibility requirements have been met. Only the
portion of special assessments receivable 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.
The proprietary funds are reported using the economic resources measurement focus and the accrual basis of
accounting. The agency fund has no measurement focus but utilizes the accrual basis of accounting for
reporting its assets and liabilities.
Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance
Cash 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.
Investments for the City are reported at fair value (generally based on quoted market prices).
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.
50
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance—Continued
Cash and Investments—Continued
The component unit’s cash and investments are maintained within the City’s investment pool.
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.
Inventories and Prepaid Items
All inventories are valued at cost using the first-in/first-out (FIFO) method. The cost of such inventories is
recorded as expenses when consumed rather than when purchased in the business-type activities.
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. The cost of prepaid items is recorded as
expenditures/expenses when consumed rather than when purchased.
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 column
in the government-wide financial statements. Capital assets are defined by the City as assets with an initial,
individual cost of more than $10,000 and an estimated useful life in excess of two years.
In the case of 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.
As the City constructs or acquires additional capital assets each period, including infrastructure assets, they
are capitalized and reported at historical cost. The reported value excludes normal maintenance and repairs
which are essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency
of the item or increase its estimated useful life. Donated capital assets are recorded at their estimated fair
value at the date of donation.
Interest incurred during the construction phase of capital assets of enterprise funds is included as part of the
capitalized value of the assets constructed. The amount of interest capitalized depends on the specific
circumstances.
Land and construction in progress are not depreciated. The other property, plant, equipment, and
infrastructure of the City are depreciated using the straight-line method over the following estimated useful
lives:
51
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance—Continued
Capital Assets—Continued
Capital Asset Classes Years
Land improvements 5-25
Leasehold improvements 10-25
Buildings and improvements 25-50
Utility buildings, improvements and systems 40-100
Furniture, vehicles and equipment 5-20
Infrastructure 15-50
Shared improvements 20
Defined Benefit Plan
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of
resources related to pensions, and pension expense, information about the fiduciary net position of the Plan
and additions to/deductions from the Plan fiduciary net position have been determined on the same basis as
they are reported by the Municipal Employees Retirement System (MERS) of Michigan. For this purpose,
benefit payments (including refunds of employee contributions) are recognized when due and payable in
accordance with the benefit terms. Investments are reported at fair value.
Deferred Outflows/Inflows of Resources
In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred
outflows of resources. This separate financial statement element, deferred outflows of resources, represents a
consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of
resources (expense/expenditures) until then.
In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred
inflows of resources. This separate financial statement element, deferred inflows of resources, represents an
acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of
resources (revenue) until that time.
Net Position Flow Assumption
Sometimes the government will fund outlays for a particular purpose from both restricted (e.g., restricted
bond or grant proceeds) and unrestricted resources. In order to calculate the amounts of net position to report
as restricted and unrestricted in the government-wide and proprietary fund financial statements, a flow
assumption must be made about the order in which the resources are considered to be applied. It is the City’s
policy to consider restricted net position to have been depleted before unrestricted net position is applied.
Fund Balance Flow Assumptions
Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources
(the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as
restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a
flow assumption must be made about the order in which the resources are considered to be applied. It is the
City’s policy to consider restricted fund balance to have been depleted before using any of the components of
unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the
same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund
balance is applied last.
52
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance—Continued
Fund Balance Policies
Fund balance of governmental funds is reported in various categories based on the nature of any limitations
requiring the use of resources for specific purposes. The City itself can establish limitation on the use of
resources through either a commitment (committed fund balance) or an assignment (assigned fund balance).
The committed fund balance classification includes amounts that can be used only for the specific purposes
determined by a formal action of the City’s highest level of decision-making authority. The City Commission
is the highest level of decision-making authority for the City that can, by adoption of a resolution prior to the
end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the resolution remains
in place until a similar action is taken (the adoption of another resolution) to remove or revise the limitation.
Amounts in the assigned fund balance classification are intended to be used by the City for specific purposes
but do not meet the criteria to be classified as committed. The City Commission has by resolution authorized
the city manager to assign fund balance. The City Commission may also assign fund balance as it does when
appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent
year’s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other
words, an additional action does not normally have to be taken for the removal of an assignment. Conversely,
as discussed above, an additional action is essential to either remove or revise a commitment.
The City has a minimum fund balance policy requiring unassigned fund balance be at least 13 percent of prior
year actual revenues.
Revenues and Expenditures/Expenses
Program Revenues
Amounts reported as 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 (including special assessments) that are restricted to meeting the operational or capital
requirements of a particular function or segment. All taxes, including those dedicated for specific purposes,
and other internally dedicated resources are reported as general revenues rather than as program revenues.
Property Taxes
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 and liened on 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. Uncollected 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 of these delinquent real property taxes. The delinquent personal property taxes
remain the responsibility of the City. The City recognizes all available revenue from the current tax levy.
Available means collected within the current period or expected to be collected soon enough thereafter to be
used to pay liabilities of the current period (60 days).
The 2016 state taxable value for real/personal property of the City totaled approximately $550,802,000 of
which approximately $9,846,000 was captured by the component units. The ad valorem taxes levied
consisted of 10.0, 3.0 and .0905 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 SmartZone, DDA, BRA I, BRA II, and BRA III component units.
53
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Revenues and Expenditures/Expenses—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.
Proprietary Funds Operating and Nonoperating Revenues and Expenses
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 enterprise
funds and internal service 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.
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 2016 financial statements have been reclassified to conform to the
2017 presentation.
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 special revenue funds.
The appropriated budget is prepared by fund, function and department. The City Manager and department
heads may make transfers of appropriations within a department. 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.
Appropriations in all budgeted funds lapse at the end of the fiscal year.
54
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE B—STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY—Continued
Excess of Expenditures Over Appropriations
During the year ended June 30, 2017, actual expenditures exceeded appropriations for:
Final
Budget Actual
General Fund
Public safety
Fire department $ 4,078,142 $ 4,186,580
Fire safety inspections 575,000 854,019
Public works
Street lighting 515,000 592,830
Culture and recreation
Parks maintenance 1,396,467 1,512,556
Other financing uses
Transfers out 333,000 1,368,000
Major Streets Fund
Highways, streets and bridges 3,202,032 3,507,777
L.C. Walker Arena
Culture and recreation 1,132,000 1,537,210
These overexpenditures were funded with available fund balance.
NOTE C—DEPOSITS AND INVESTMENTS
As of June 30, 2017, the City had the following investments:
Weighted
Average
Maturity
Fair Value (Months) S&P Percent
Investment Type
Money market funds $ 294,544 1 AAA 4.1 %
Negotiable certificates of deposit 1,698,922 41 not rated 23.3
US agency obligations 3,873,862 236 AA+ 53.1
Local units of government obligations 518,895 34 AAA 7.1
Local units of government obligations 297,487 27 AA+ 4.1
Local units of government obligations 604,900 56 AA- 8.3
Total fair value $ 7,288,610 100.0 %
Portfolio weighted average maturity 143
55
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE C—DEPOSITS AND INVESTMENTS—Continued
Deposit and Investment Risks
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 percent of the City’s total
portfolio must be in instruments maturing in 30 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 percent each of the
total portfolio. More than 5 percent of the City’s investments are in various U.S. Agency obligations
including Financial Home Loan Mortgage Corporation which is 46 percent of the City’s investments.
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 June 30, 2017, $15,810,184 of the City’s bank balance of $16,310,184 was exposed to
custodial credit risk because it was uninsured and uncollateralized. 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 June 30, 2017, restricted
cash and investments in the Water Fund of $599,500 were restricted by bond ordinance.
56
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE D—ASSETS MANAGED BY OTHERS
As allowed by MCL 123.874 and MCL 128.4, the City is permitted to place monies in community foundations.
The Funds
The City has four funds with the Community Foundation of Muskegon County (Community Foundation).
Lakeshore Trails Improvement Fund
The Lakeshore Trails Improvement Fund was established by the City primarily to be used for the general
support of the bike trails which are located in the City of Muskegon. The agreement with the Community
Foundation allows the use of the Fund’s income in accordance with the Community Foundation’s spending
policy and principal in certain circumstances.
Cemetery Perpetual Care Fund
The City of Muskegon Cemetery Perpetual Care Fund was established by the City primarily to be used for the
care and maintenance of the cemeteries that are operated by the City. The agreement with the Community
Foundation allows the use of the Fund’s income in accordance with the Community Foundation’s spending
policy and principal in certain circumstances.
Pere Marquette and Margaret Drake Elliot Park Fund
The Pere Marquette and Margaret Drake Elliot Park Fund (Marquette and Elliot Park Fund) was established by
the City to be used for capital improvements at Pere Marquette and Margaret Drake Elliot Parks. The
agreement with the Community Foundation allows the use of the Fund’s income in accordance with the
Community Foundation’s spending policy and principal in certain circumstances.
Darl and Kathleen Staley Charity Fund
The Darl and Kathleen Staley Charity Fund (Staley Charity Fund) was established after the City received
monies from the Staley’s estate. The Fund is to be used for capital improvements needs at City parks. The
agreement with the Community Foundation allows the use of the Fund’s income in accordance with the
Community Foundation’s spending policy and principal in certain circumstances.
The Community Foundation invests the contributions to the funds in various types of marketable equity and debt
securities, U.S. Treasuries, commercial paper, and certificates of deposit. The majority of investments are
uninsured and uncollateralized.
Reporting of the Assets of the Funds
The investments held at the Community Foundation, which were contributed by the City to the funds along with
the earnings on these investments, are reported at fair value as assets of the City. The contributions to these funds
made by third party donors directly to the Community Foundation have been excluded from the assets of the City.
57
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE D—ASSETS MANAGED BY OTHERS—Continued
Summary of the Community Foundation Funds
A summary of revenues, expenses, and changes in the assets at fair value of the funds for the year ended June 30,
2017 follows:
Lakeshore
Trails Cemetery Marquette Staley
Improvement Perpetual and Elliot Charity
Fund Care Fund Park Fund Fund Totals
Revenues
Contributions $ 600 $ - $ - $ - $ 600
Dividends and interest 1,147 27,876 2,531 8,660 40,214
Realized and unrealized loss on investments 3,387 82,455 7,495 25,664 119,001
5,134 110,331 10,026 34,324 159,815
Expenses
Administration fees 217 5,230 1,439 3,284 10,170
Revenues over expenses 4,917 105,101 8,587 31,040 149,645
Total assets at beginning of year 41,693 1,024,013 93,254 318,557 1,477,517
Total assets at end of year 46,610 1,129,114 101,841 349,597 1,627,162
Less assets recorded as those of the Foundation (30,525) - (101,841) (349,597) (481,963)
Assets reported on the Balance Sheet/
Statement of Net Position $ 16,085 $ 1,129,114 $ - $ - $ 1,145,199
The Board of Trustees of the Community Foundation has the power to modify any restriction or condition on the
distribution of funds for any specified charitable purpose or to a specified organization if, in the sole judgment of
the Board, such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent
with the charitable needs of the community served. The authority to modify restrictions is sometimes referred to
as “variance power” and is a legal standard imposed on all community foundations.
58
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE E—FAIR VALUE MEASUREMENTS
The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level
3). The three levels of the fair value hierarchy are described below:
Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical
assets or liabilities in active markets that the City the ability to access.
Level 2 Inputs to the valuation methodology include the following:
- Quoted prices for similar assets or liabilities in active markets;
- Quoted prices for identical or similar assets or liabilities in inactive markets;
- Inputs other than quoted prices that are observable for the asset or liability;
- Inputs that are derived principally from or corroborated by observable
market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the level 2 input must be
observable for substantially the full term of the asset or liability.
Level 3 Inputs to the valuation methodology are unobservable and significant to the fair
value measurement.
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest
level of any input that is significant to the fair value measurement. Valuation techniques used need to
maximize the use of observable inputs and minimize the use of unobservable inputs.
Following is a description of the valuation methodologies used for assets measured at fair value. There have
been no changes in the methodologies used at June 30, 2017.
Money market funds: Valued at amortized cost which approximates fair value.
Negotiable certificates of deposit, US agency obligations, local units of government obligations:
Valued at the closing price reported on the active market on which the individual securities are traded.
59
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE E—FAIR VALUE MEASUREMENTS—Continued
Assets managed by others: The assets are valued based upon the City’s allocable share of the
Community Foundation of Muskegon County (Community Foundation) pooled investment portfolio. The
allocable share is based on the value of the underlying assets owned by the fund, minus its liabilities.
The assets managed by others are valued monthly by the Community Foundation and are allocated based
upon each organization’s calculated share of the Community Foundation’s pooled investment portfolio.
Each entity with an interest within the pooled investments receives a statement from the Community
Foundation indicating the additions to the investment (via contributions), withdrawals from the
investment (via grants), and the investment returns allocated via a unitization process. The City
calculates the fair value of its beneficial interest in the pooled investment assets held by the Community
Foundation based on the estimated fair value of the underlying assets. The Community Foundation
controls the investments and makes all management and investment decisions.
The preceding methods described may produce a fair value calculation that may not be indicative of net
realizable value or reflective of future fair values. Furthermore, while the City believes its valuation methods
are appropriate and consistent with other market participants, the use of different methodologies or
assumptions to determine the fair value of certain financial instruments could result in a different fair value
measurement at the reporting date.
The following table sets forth by level, within the fair value hierarchy, the City’s assets at fair value on a
recurring basis as of June 30, 2017:
Assets at Fair Value as of June 30, 2017
Level 1 Level 2 Level 3 Total
Money market funds $ - $ 294,544 $ - $ 294,544
Negotiable certificates of deposit 1,698,922 - - 1,698,922
US agency obligations 3,873,862 - - 3,873,862
Local units of government
obligations 1,421,282 - - 1,421,282
Assets managed by others - 1,145,199 - 1,145,199
Total assets at fair value $ 6,994,066 $ 1,439,743 $ - $ 8,433,809
60
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE F—CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2017 was as follows:
Balance Balance
July 1, 2016 Additions Deductions June 30, 2017
Governmental activities:
Capital assets, not being depreciated:
Land $ 12,253,560 $ - $ 250,179 $ 12,003,381
Construction in progress 4,862,963 1,758,796 4,674,594 1,947,165
Total capital assets, not being depreciated 17,116,523 1,758,796 4,924,773 13,950,546
Capital assets, being depreciated:
Land improvements 4,685,117 - - 4,685,117
Leasehold improvements 534,821 - - 534,821
Buildings and improvements 23,431,557 430,692 - 23,862,249
Furniture, vehicle and equipment 14,158,970 903,471 393,471 14,668,970
Infrastructure 71,913,465 4,674,594 3,121,508 73,466,551
Shared improvements 6,905,293 - - 6,905,293
Total capital assets, being depreciated 121,629,223 6,008,757 3,514,979 124,123,001
Less accumulated depreciation:
Land improvements 1,613,171 161,054 - 1,774,225
Leasehold improvements 432,357 30,404 - 462,761
Buildings and improvements 16,439,691 456,836 - 16,896,527
Furniture, vehicle and equipment 11,204,748 590,374 393,471 11,401,651
Infrastructure 34,642,220 3,386,835 3,121,508 34,907,547
Shared improvements 3,766,256 345,265 - 4,111,521
Total accumulated depreciation 68,098,443 4,970,768 3,514,979 69,554,232
Total capital assets, being
depreciated, net 53,530,780 1,037,989 - 54,568,769
Capital assets, net $ 70,647,303 $ 2,796,785 $ 4,924,773 $ 68,519,315
Business-type activities:
Capital assets, not being depreciated:
Land $ 142,250 $ - $ - $ 142,250
Construction in progress 1,188,637 204,108 1,187,048 205,697
Total capital assets, not being depreciated 1,330,887 204,108 1,187,048 347,947
Capital assets, being depreciated:
Land improvements 1,888,965 - - 1,888,965
Buildings, improvements and systems 91,643,258 1,187,048 - 92,830,306
Machinery and equipment 3,004,242 21,540 - 3,025,782
Total capital assets, being depreciated 96,536,465 1,208,588 - 97,745,053
Less accumulated depreciation:
Land improvements 1,797,373 18,196 - 1,815,569
Buildings, improvements and systems 44,543,381 2,442,625 - 46,986,006
Machinery and equipment 2,591,107 81,971 - 2,673,078
Total accumulated depreciation 48,931,861 2,542,792 - 51,474,653
Total capital assets, being
depreciated, net 47,604,604 (1,334,204) - 46,270,400
Capital assets, net $ 48,935,491 $ (1,130,096) $ 1,187,048 $ 46,618,347
61
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE F—CAPITAL ASSETS—Continued
Depreciation
Depreciation expense was charged to functions as follows:
Governmental activities:
Adminstrative services $ 18,438
Financial services 33,106
Public safety 209,177
Public works 2,126
Highways, streets and bridges 3,855,882
Community and economic development 75,717
Culture and recreation 370,064
General administration 20,871
Internal Service Fund depreciation 385,387
$ 4,970,768
Business-type activities:
Sewer $ 457,440
Water 1,970,096
Marina and Launch Ramp 115,256
$ 2,542,792
Balance Balance
July 1, 2016 Additions Deductions June 30, 2017
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:
Building and improvements 2,172,488 172,648 - 2,345,136
Total capital assets, being
depreciated, net 1,625,770 (172,648) - 1,453,122
Capital assets, net $ 2,025,770 $ (172,648) $ - $ 1,853,122
Depreciation
Depreciation expense was charged to economic development.
62
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE G—INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
The composition of interfund balances as of June 30, 2017 is as follows:
Due To/From Other Funds:
Receivable Fund Payable Fund Amount
General Fund Community Development Block Grant Fund $ 356,207
The outstanding balances between funds result from the payable funds having negative positions in the City’s
cash and investment pool.
Component Unit Advance:
The Cemetery Perpetual Care Fund, Equipment Fund, and General Insurance Fund advanced the BRA I
$1,102,267 to enable the BRA I to retire a redevelopment commitment early. The advance will be repaid with
future tax captures.
Interfund Transfers:
Transfers In Amount Transfers Out Amount
Nonmajor Governmental Funds
L.C. Walker Arena Fund $ 305,000 General Fund $ 1,355,000
Farmers Market and
Kitchen 242 Fund 50,000
Public Improvement Fund 1,000,000
1,355,000 1,355,000
Nonmajor Governmental Funds
Local Street Fund 450,000 Major Streets Fund 450,000
Internal Service Funds
Engineering Services Fund 13,000 General Fund 13,000
$ 1,818,000 $ 1,818,000
The General Fund transferred funds to the Public Improvement Fund for future capital improvements and to
the L.C. Walker Arena Fund and other funds for operation subsidies. Other transfers between funds were
made to meet grant matching requirements or other operational needs.
63
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
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 June 30, 2017.
Balance Balance Due Within
July 1, 2016 Additions Deductions June 30, 2017 One Year
Governmental activities:
General obligation debt $ 5,875,000 $ - $ 265,000 $ 5,610,000 $ 270,000
Premium 368,903 - 38,000 330,903 -
Intergovernmental obligations 76,509 - 18,563 57,946 18,934
Compensated absences 1,365,471 1,596,619 1,328,777 1,633,313 272,200
Governmental activities
long-term liabilities $ 7,685,883 $ 1,596,619 $ 1,650,340 $ 7,632,162 $ 561,134
Business-type activities:
Revenue obligations $ 9,895,000 $ - $ 1,405,000 $ 8,490,000 $ 1,450,000
Premium 26,962 - 13,301 13,661 -
Compensated absences 145,616 183,512 152,287 176,841 29,400
Business-type activities
long-term liabilities $ 10,067,578 $ 183,512 $ 1,570,588 $ 8,680,502 $ 1,479,400
Component units:
General obligation debt $ 3,825,000 $ - $ 655,000 $ 3,170,000 $ 685,000
Premium 141,420 - 33,145 108,275 -
Intergovernmental obligations 1,000,000 - - 1,000,000 -
Component unit long-
term liabilities $ 4,966,420 $ - $ 688,145 $ 4,278,275 $ 685,000
General Obligation Debt
The City has issued general obligation debt to provide funds for the acquisition and construction of major
capital facilities. General obligation debt is a direct obligation and pledges the full faith and credit of the City.
This debt is generally issued as serial bonds with varying amounts of principal maturing each year. Certain
debt issued by the City’s component units is also backed by the full faith and credit of the City if there is a
shortfall in tax increment revenues. General obligation debt outstanding as of June 30, 2017 is as follows:
Original Date of
Borrowing Interest Rate Maturity Balance
General obligation debt:
Governmental activities:
2011 Capital Improvement Bonds $ 2,000,000 2.98% September 2021 $ 1,075,000
2016 Limited Tax General Obligation
Refunding Bonds 4,535,000 2% - 4% October 2032 4,535,000
$ 5,610,000
Component units:
2011 DDA Tax Increment Refunding Bonds $ 2,045,000 3.75% - 4% June 2018 $ 330,000
2012 LDFA Tax Increment Refunding Bonds 4,100,000 4% November 2025 2,840,000
$ 3,170,000
64
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE H—LONG-TERM DEBT—Continued
Intergovernmental Obligations
The City has long-term contractual obligations with other governmental entities for program purposes.
Intergovernmental contractual obligations outstanding as of June 30, 2017 are as follows:
Original Date of
Borrowing Interest Rate Maturity Balance
Intergovernmental Contractual Obligations:
Governmental activities:
2008 State of Michigan Brownfield
Redevelopment Loan $ 500,000 2% March 2020 $ 57,946
Component units:
1989 DDA Promissory Note to
Muskegon County $ 1,000,000 0% August 2019 $ 1,000,000
Revenue Obligations
The City has issued bonds where the income derived from the acquired or constructed assets is pledged to pay
debt service. Revenue obligations outstanding as of June 30, 2017 are as follows:
Original Date of
Borrowing Interest Rate Maturity Balance
Business-type activities:
Revenue obligations:
2004 Drinking Water State Revolving Fund $ 13,900,000 2.13% October 2025 $ 6,980,000
2010 Water Supply System Refunding Bonds 5,995,000 4% - 4.25% May 2019 1,510,000
$ 8,490,000
The City has pledged future water customer revenues, net of specified operating expenses, to repay the 2004
Drinking Water State Revolving Fund Loan and 2010 Water Supply System Refunding Bonds. Proceeds
from both issuances were used to make improvements to the City’s water supply system. The bonds are
payable solely from water customer net revenues and are payable through 2025 and 2019, respectively.
Annual principal and interest payments on the bonds are expected to require less than 67 percent of net
revenues through 2019 and less than 35 percent after 2019 through 2025. The total principal and interest
remaining to be paid on the bonds is $9,273,339. Principal and interest paid for the year ended June 30, 2017
and total customer net revenues were $1,651,434 and $2,451,734, respectively.
The City was in compliance in all material respects with all the revenue bond ordinances at June 30, 2017.
For governmental activities, claims and judgments and compensated absences are generally liquidated by the
General Fund.
65
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE H—LONG-TERM DEBT—Continued
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 June 30, 2017 was approximately $3,561,000. The City is unaware of any
circumstances that would cause a shortfall in the near future.
Annual debt service requirements to maturity for debt outstanding as of June 30, 2017 follow:
Year Ending Governmental Activites Business-type Activities Component Units
June 30, Principal Interest Principal Interest Principal Interest
2018 $ 288,934 $ 196,314 $ 1,450,000 $ 203,106 $ 685,000 $ 107,125
2019 294,313 188,476 1,495,000 158,259 375,000 81,100
2020 524,699 176,758 745,000 109,916 1,390,000 65,800
2021 515,000 161,107 760,000 93,925 395,000 50,100
2022 535,000 145,402 775,000 77,616 245,000 37,300
2023-2027 1,570,000 546,500 3,265,000 140,517 1,080,000 66,300
2028-2032 1,620,000 225,600 - - - -
2033 320,000 6,400 - - - -
$ 5,667,946 $ 1,646,557 $ 8,490,000 $ 783,339 $ 4,170,000 $ 407,725
Annual debt service requirements to maturity by type of debt as of June 30, 2017 follow:
Revenue
General Obligation Debt Obligations Intergovernmental
Year Ending Governmental Component Business-type Governmental Component
June 30, Activities Units Activities Activities Units
2018 $ 465,155 $ 792,125 $ 1,653,106 $ 20,093 $ -
2019 462,696 456,100 1,653,259 20,093 -
2020 681,364 455,800 854,916 20,093 1,000,000
2021 676,107 445,100 853,925 - -
2022 680,402 282,300 852,616 - -
2023-2027 2,116,500 1,146,300 3,405,517 - -
2028-2032 1,845,600 - - - -
2033 326,400 - - - -
$ 7,254,224 $ 3,577,725 $ 9,273,339 $ 60,279 $ 1,000,000
66
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE I—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 $150,000 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 2017 and 2016 were as
follows:
Current Year
Balance Claims and Balance
at Beginning Changes in Claims at End
Year Ended of Year Estimates Payments of Year
June 30, 2017 $ 29,700 $ 151,867 $ 71,435 $ 110,132
June 30, 2016 137,902 (6,455) 101,747 29,700
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 up to
$500,000 per covered individual’s lifetime. As of June 30, 2017, the claims liability including incurred but
not reported claims was $53,504. 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 2017 and 2016
were as follows:
Current Year
Balance Claims and Balance
at Beginning Changes in Claims at End
Year Ended of Year Estimates Payments of Year
June 30, 2017 $ 34,064 $ 1,105,988 $ 1,086,548 $ 53,504
June 30, 2016 49,144 1,267,781 1,282,861 34,064
67
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE I—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.
Leases
The City leases an office facility under a noncancelable operating lease that expires June 2022 with the option
by the tenant to renew the term of the lease for two successive periods of five years each. The City received
rental income (including pro-rata utility usage) of $43,273 for the year ended June 30, 2017. The future
minimum rental income for this lease is as follows:
Year Ending
June 30, Amount
2018 $ 30,135
2019 29,369
2020 55,919
2021 55,463
2022 55,584
$ 226,470
NOTE J—TAX ABATEMENTS
Industrial Facilities Exemption
The City entered into property tax abatement agreements with local businesses under the Plant Rehabilitation
and Industrial Developments Act, (known as the Industrial Facilities Exemptions or IFTs) PA 198 of 1974, as
amended. The IFTs provides a tax incentive to manufacturers to enable renovation and expansion of aging
facilities, assist in the building of new facilities, and to promote the establishment of high tech facilities.
Properties qualifying for IFT status are taxed at half the local property tax millage rate applicable to other real
and personal property in the City for a term of one to twelve years as determined by the City.
For the year ended June 30, 2017, the City abated property taxes revenues totaling $58,828 under this
program.
68
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE J—TAX ABATEMENTS—Continued
Brownfield Redevelopment Authority
The City entered into property tax abatement agreements with local businesses under the Brownfield
Redevelopment Act, PA 381 of 1996, as amended. Brownfield properties are those in which the
redevelopment or reuse of property may be complicated by the presence or perception of contamination.
Brownfields use tax increment financing where growth in taxable value above the initial value of the
Brownfield is captured and used to repay the developer for remediation costs.
For the year ended June 30, 2017, the City abated property taxes revenues totaling $83,346 under this
program.
Payment in Lieu of Taxes (PILOT)
The City uses the State Housing Development Authority Act, PA 346 of 1966, as amended, to enter into
agreements that provide for a service charge in lieu of taxes to encourage the development of housing of its
elderly citizens of low and moderate income.
For the year ended June 30, 2017, the City abated property taxes revenues totaling $122,137 under this
program.
NOTE K—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN
Defined Benefit Pension Plan
Plan Description
The City participates in the Municipal Employees Retirement System (MERS) of Michigan. MERS is an
agent multiple-employer, statewide public employee pension plan established by the Michigan Legislature
under Public Act 135 of 1945 and administered by a nine member Retirement Board. MERS issues a publicly
available financial report that includes financial statements and required supplementary information. This
report may be obtained accessing the MERS website at www.mersofmich.com.
Benefits Provided
The City’s defined benefit pension plan provides certain retirement, disability and death benefits to plan
members and beneficiaries. Public Act 427 of 1984, as amended, established and amends the benefit
provisions of the participants in MERS. The Plan covers all full-time employees hired prior to January 2005.
Beginning in January 2005, the various employee divisions began to be closed. By July 2006, all employee
divisions were closed.
69
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE K—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued
Defined Benefit Pension Plan—Continued
Benefits Provided—Continued
Benefits provided are based on the following by employee division:
Normal Reduced
Vesting Retirement Early Early
Mulitplier Period Age Retirement Retirement
Non-Union General 2.25%* 5 years 60 55/25 50/25 or 55/15
Non-Union Police 3.00% 10 years 55 53/25 50/25
Clerical 2.25% 5 years 60 55/30 50/25 or 55/15
Department of Public Works 2.25%* 10 years 60 55/30 50/25 or 55/15
Police Patrol 3.00%* 10 years 55 50/25 Not applicable
Police Command 3.00% 10 years 55 50/25 Not applicable
Fire 2.75% 10 years 55 53/25 50/25
Effective January 1, 2017, the multiplier for Non-Union General and Department of Public Works was
changed to 2.00% and the multiplier for Police Patrol was changed to 2.675%.
Final average compensation is calculated based on 3 years.
Employees Covered by Benefit Terms
At December 31, 2016 valuation date, the following employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 306
Inactive employees entitled to but not yet receiving benefits 30
Active employees 134
Total employees covered by MERS 470
Contributions
The City is required to contribute amounts at least equal to the actuarially determined rate, as established by
the MERS Retirement Board. The actuarially determined rate is the estimated amount necessary to finance
the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded
accrued liability. The City may establish contribution rates to be paid by its covered employees.
For the year ended June 30, 2017, the City had a flat-dollar employer contribution to the Plan of $1,897,158
in lieu of a percentage of covered employee payroll, as the Plan is closed to new employees. Member
contributions range from 5 percent to 6.5 percent.
Net Pension Liability
The City’s net pension liability was measured as of December 31, 2016, and the total pension liability used to
calculate the net pension liability was determined by an annual actuarial valuation as of that date.
70
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE K—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued
Defined Benefit Pension Plan—Continued
Actuarial Assumptions
The total pension liability in the December 31, 2016 actuarial valuation was determined using the following
actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.5 percent
Salary increases 3.75 percent, in the long-term
Investment rate of return 7.75 percent, net of administrative and investment expenses
including inflation
Although no specific price inflation assumptions are needed for the valuation, the 2.5 percent long-term wage
inflation assumption would be consistent with a price inflation of 3-4 percent. Mortality rates used were
based on the RP-2014 Group Annuity Mortality Table of a 50 percent Male and 50 percent Female blend.
The actuarial assumptions used in valuation were based on the results of the most recent actuarial experience
study of 2009 through 2013.
The long-term expected rate of return on pension plan investments was determined using a model method in
which the best-estimate ranges of expected future real rates of return (expected returns, net of investment and
administrative expenses and inflation) are developed for each major asset class. These ranges are combined
to produce the long-term expected rate of return by weighting the expected future real rates of return by the
target asset allocation percentage and by adding expected inflation. The target allocation and best estimates
of arithmetic real rates of return for each major asset class are summarized in the following table:
Long-Term
Target Expected Real
Asset Class Allocation Rate of Return
Global equity 57.5% 5.02%
Global fixed income 20.0% 2.18%
Real assets 12.5% 4.23%
Diversifying strategies 10.0% 6.56%
Discount Rate
The discount rate used to measure the total pension liability was 8.00 percent for 2016. The projection of
cash flows used to determine the discount rate assumed that employee contributions will be made at the
current contribution rate and that City contributions will be made at rates equal to the difference between
actuarially determined contribution rates and the employee rate. Based on those assumptions, the pension
plan's fiduciary net position was projected to be available to pay all projected future benefit payments of
current active and inactive employees. Therefore, the long-term expected rate of return on pension plan
investments was applied to all periods of projected benefit payments to determine the total pension liability.
71
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE K—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued
Defined Benefit Pension Plan—Continued
Changes in the Net Pension Liability
Increase (Decrease)
Plan Net Pension
Total Pension Fiduciary Liability
Liability (a) Position (b) (a)-(b)
Balance at December 31, 2015 $ 106,964,467 $ 79,560,142 $ 27,404,325
Changes for the year
Service cost 1,130,408 - 1,130,408
Interest 8,345,661 - 8,345,661
Difference between expected and
actual experience (1,697,797) - (1,697,797)
Contributions - employer - 1,996,512 (1,996,512)
Contributions - employee - 563,898 (563,898)
Net investment income - 8,890,951 (8,890,951)
Administrative expenses - (175,718) 175,718
Benefit payments including refund of
employee contributions (6,417,825) (6,417,825) -
Net changes 1,360,447 4,857,818 (3,497,371)
Balance at December 31, 2016 $ 108,324,914 $ 84,417,960 $ 23,906,954
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the City, calculated using the discount rate of 8.00 percent,
as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1-
percentage-point lower (7.00 percent) or 1-percentage-point higher (9.00 percent) than the current rate:
Current
1% Decrease Discount Rate 1% Increase
(7%) (8%) (9%)
City's net pension liability $35,652,249 $ 23,906,954 $13,933,417
Note: The current discount rate shown for GASB 68 purposes is higher than the MERS assumed rate of
return. This is because for GASB 68 purposes, the discount rate must be gross of administrative expenses,
whereas for funding purposes, it is net of administrative expense.
72
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE K—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued
Defined Benefit Pension Plan—Continued
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
For the year ended June 30, 2017, the City recognized pension expense of $5,413,807. At June 30, 2017, the
City reported deferred outflows of resources and deferred inflows of resources related to pensions from the
following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences in experience $ - $ 848,898
Net differences between projected
and actual net investment income 3,067,423 -
Contributions subsequent to the
measurement date* 1,259,740 -
Total $ 4,327,163 $ 848,898
*The amount reported as deferred outflows of resources resulting from contributions subsequent to the
measurement date will be recognized as a reduction in the net pension liability for the year ending June 30,
2017.
Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will
be recognized in pension expense as follows:
Year Ending
June 30, Amount
2018 $ 440,666
2019 1,289,564
2020 1,030,300
2021 (542,005)
Payables to the Pension Plan
At June 30, 2017, the City reported a payable of $561,253 for the outstanding amount of contributions to the
pension plan required for the year ended June 30, 2017 and an additional contribution approved by the City
Commission.
73
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE K—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued
Defined Contribution Pension Plan
The City also maintains a defined contribution plan offered by MERS for its full-time employees hired after
the defined benefit plan was closed to new participants.
Benefit terms, including contribution requirements, for the MERS defined contribution plan are established
and may be amended by the City Commission as determined by negotiated labor contracts. The City is
required to contribute 3 percent to 10.5 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 June 30, 2017, City and employee
contributions were $344,885 and $182,607, respectively.
Employees are immediately vested in their own contributions and earnings on those contributions and become
vested in City contributions and earnings on City contributions by 20 percent for each full year of service,
leaving employees fully vested after five years of service. Nonvested City contributions are forfeited upon
termination of employment. Such forfeitures are used to cover a portion of the pension plan’s administrative
expenses. For the year ended June 30, 2017, forfeitures reduced the City’s pension expense by $4,916.
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. Payments from the deferred compensation plan are not available to
participants until termination, retirement, death, or unforeseeable emergency. Active participants are allowed
to borrow from their accumulated assets for limited purposes such as family education costs, medical costs, or
down payment for a new home. The City must approve program loans.
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).
74
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE L—OTHER POST-EMPLOYMENT BENEFITS
Retiree Healthcare Plan
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 3.28 to 7.44 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 depending on the benefits program adopted by the City.
Annual OPEB Cost
For the year ended June 30, 2017, the City’s OPEB cost (expense) of $606,506 was equal to the City’s ARC
and actual contribution.
Trend Information
Percentage of
Annual
Annual OPEB OPEB Cost Net OPEB
Year Ended Cost Contributed Obligation
June 30, 2015 $ 659,451 100 % $ -
June 30, 2016 639,428 100 -
June 30, 2017 606,506 100 -
75
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE L—OTHER POST-EMPLOYMENT BENEFITS—Continued
Retiree Healthcare Plan—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, 2015 actuarial valuation using the
entry age actuarial cost method. The actuarial assumptions included (a) 7.5 percent investment rate of return
(net of administrative expenses), (b) an annual healthcare trend rate of 9 percent initially, reduced by
decrements to an ultimate rate of 4 percent after 10 years. Both rates include a 4 percent inflation assumption.
The Plan’s unfunded actuarial accrued liability is being amortized as a level dollar amount of projected
payroll on a closed basis. The remaining amortization period at December 31, 2015 is 22 years.
Funded Status and Progress
As of December 31, 2015, the most recent actuarial valuation date, the plan was 81 percent funded. The
actuarial accrued liability for benefits was approximately $22,029,000, and the actuarial value of assets was
approximately $17,921,000, resulting in an unfunded actuarial liability (UAAL) of approximately $4,108,000.
The covered payroll (annual payroll of active employees covered by the plan) was approximately
$10,830,000, and the ratio of the UAAL to the covered payroll was 38 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.
Healthcare Savings Plan
The City also maintains a defined contribution Health Care Savings Plan (HCSP) offered by MERS. In this
plan, post-employment healthcare benefits depend solely on amounts contributed to the plan plus investment
earnings. Depending on employee group, the Plan covers all City employees hired after January 2009 to
December 2012 in lieu of the traditional retiree healthcare 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 1 or 2 percent of
a qualified employees’ annual compensation each year depending on employee group. Qualified employees
are also required to contribute 1 or 2 percent of annual compensation. Additionally, some employees,
regardless of hire date, may make voluntary contributions to the HCSP. For the year ended June 30, 2017,
City and employee contributions were $64,622 and $207,067, respectively.
76
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
NOTE M—UPCOMING ACCOUNTING PRONOUNCEMENTS
GASB Statement 75—Accounting and Financial Reporting for Postemployment Benefits other than Pensions
was issued by the GASB in June 2015 and will be effective for the City’s 2018 fiscal year. The statement
requires governments that participate in postemployment benefits other than pensions (OPEB) to report in
their Statement of Net Position a net OPEB liability. The net OPEB liability is the difference between the
total OPEB liability (the present value of projected benefit payments to employees based on their past service)
and the assets (mostly investments reported at fair value) set aside in a trust and restricted to paying benefits
to current employees, retirees, and their beneficiaries. The net OPEB liability recorded in the Statement of
Net Position on July 1, 2017 will be significant.
GASB Statement 84—Fiduciary Activities was issued by the GASB in January 2017 and will be effective for
the City’s 2020 fiscal year. The objective of this Statement is to improve guidance regarding the
identification of fiduciary activities for accounting and financial reporting purposes and how those activities
should be reported. This Statement establishes criteria for identifying fiduciary activities for all state and
local governments. The focus on the criteria generally is on (1) whether a government is controlling the
assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. An activity
meeting the criteria should be reported in a fiduciary fund in the basic financial statements.
77
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78
REQUIRED SUPPLEMENTARY INFORMATION
79
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the year ended June 30, 2017
(with comparative actual amounts for the year ended June 30, 2016)
2017 2016
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
REVENUES
Taxes
City income taxes $ 8,850,000 $ 7,920,000 $ 8,610,812 $ 690,812 $ 8,151,902
Property taxes 7,362,000 7,463,000 7,415,596 (47,404) 7,381,555
Industrial facilities taxes 95,000 87,000 87,752 752 99,363
Payments in lieu of taxes 543,290 543,290 553,112 9,822 545,941
Total taxes 16,850,290 16,013,290 16,667,272 653,982 16,178,761
Licenses and permits
Business licenses 70,000 70,000 77,085 7,085 63,182
Liquor licenses 55,000 48,000 50,988 2,988 48,790
Cable TV fees 350,000 370,000 378,955 8,955 372,117
Rental property registration 160,000 160,000 221,901 61,901 152,380
Burial permits 82,000 82,000 85,137 3,137 81,095
Building permits 351,000 650,000 721,500 71,500 371,692
Electrical permits 78,000 98,000 140,373 42,373 84,912
Plumbing permits 36,000 36,000 54,821 18,821 34,316
Mechanical permits 66,000 76,000 94,023 18,023 69,070
Vacant building fees 150,000 150,000 59,558 (90,442) 165,590
Total licenses and permits 1,398,000 1,740,000 1,884,341 144,341 1,443,144
Intergovernmental revenues
Federal grants 124,580 59,580 51,628 (7,952) 72,521
State
Grants 235,000 573,900 606,989 33,089 155,951
State shared revenue 4,002,925 3,909,856 4,046,147 136,291 3,886,514
Total intergovernmental revenues - State 4,237,925 4,483,756 4,653,136 169,380 4,042,465
Local 34,000 34,000 34,000 - 36,000
80
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
General Fund
For the year ended June 30, 2017
(with comparative actual amounts for the year ended June 30, 2016)
2017 2016
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
Charges for services
Tax administration fees $ 290,000 $ 328,800 $ 332,784 $ 3,984 $ 339,353
Utility administration fees 310,000 310,000 310,000 - 310,000
Reimbursement for elections - 30,000 18,151 (11,849) 26,702
Brownfield authority admin fee 120,000 182,650 182,650 - 153,000
Indirect cost reimbursements 1,010,456 1,010,456 1,010,456 - 1,025,618
Site plan review fee 5,000 6,000 5,800 (200) 8,300
Sale of cemetery lots 20,000 20,000 21,425 1,425 25,987
Police miscellaneous 140,493 145,493 148,476 2,983 142,854
Police impound fees 34,000 34,000 35,455 1,455 34,005
Landlord's alert fee - 2,000 3,550 1,550 -
Fire protection - state property 81,000 116,000 115,820 (180) 81,249
Zoning fees 12,000 15,300 18,525 3,225 12,962
Muskegon Heights zoning 6,000 6,000 8,750 2,750 11,095
Clerk fees 3,000 1,500 13,983 12,483 16,789
Clerk fees - passport fees 40,000 60,000 63,157 3,157 27,199
Tax abatement application fees 1,000 7,500 13,241 5,741 600
Treasurer fees 72,000 72,000 69,581 (2,419) 69,743
False alarm fees 10,000 3,000 3,435 435 6,435
Miscellaneous cemetery income 15,000 15,000 17,741 2,741 17,128
Fire miscellaneous 9,500 9,500 13,520 4,020 11,413
Sanitation stickers 73,100 73,100 83,325 10,225 82,840
Lot cleanup fees 68,000 68,000 89,757 21,757 84,143
Reimbursements - lot mowing and demolitions 7,000 7,000 9,379 2,379 9,728
Special events reimbursements 37,000 55,000 52,657 (2,343) 30,877
Recreation program fees 4,700 4,700 5,766 1,066 5,201
Other charges for services - - - - 227
Total charges for services 2,369,249 2,582,999 2,647,384 64,385 2,533,448
Fines and forfeitures
Income tax - penalty and interest 170,000 200,000 213,634 13,634 204,792
Late fees on current taxes 25,000 25,000 42,833 17,833 35,081
Interest on late invoices 3,500 3,500 7,278 3,778 4,252
Parking fines 75,000 65,000 69,609 4,609 73,390
Court fines 105,000 105,000 122,757 17,757 129,764
Civil infractions 8,500 13,000 25,513 12,513 11,902
Total fines and forfeitures 387,000 411,500 481,624 70,124 459,181
Interest and rental income
Interest income 12,000 95,000 111,851 16,851 92,890
Net increase (decrease) in the fair value of investments - (150,000) (184,946) (34,946) (7,428)
Flea market 26,000 - - - 25,580
Farmers market 61,500 - 2,095 2,095 74,754
City right of way rental 6,800 6,800 6,800 - 6,800
Fire station lease - Central Dispatch 28,500 28,500 43,273 14,773 44,695
Parking rentals - 38,000 45,000 7,000 -
Great Lakes Naval Memorial lease 15,000 15,000 - (15,000) 7,500
McGraft Park rentals 45,000 70,000 62,791 (7,209) 76,761
Other park rentals 60,000 60,000 55,329 (4,671) 62,373
Total interest and rental income 254,800 163,300 142,193 (21,107) 383,925
81
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
General Fund
For the year ended June 30, 2017
(with comparative actual amounts for the year ended June 30, 2016)
2017 2016
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
Other
Sale of land and assets $ - $ - $ 4,950 $ 4,950 $ 100
Police sale and auction proceeds 1,500 1,500 894 (606) 832
CDBG program reimbursements 350,000 350,000 332,239 (17,761) 422,840
Fisherman's Landing reimbursement - - - - 11,320
Contributions 68,000 43,000 56,619 13,619 111,650
Contributions - Veteran's Park maintenance 18,500 18,500 21,710 3,210 18,504
Community Foundation for Muskegon County 10,000 10,000 5,734 (4,266) 32,096
Miscellaneous and sundry 49,000 60,200 68,042 7,842 74,327
Total other 497,000 483,200 490,188 6,988 671,669
Total revenues 26,152,844 25,971,625 27,051,766 1,080,141 25,821,114
EXPENDITURES
Current
Public representation services
City commission 81,698 91,898 94,940 (3,042) 95,107
City promotions and public relations 50,000 50,000 48,223 1,777 63,880
City manager 280,695 324,697 331,949 (7,252) 279,956
Contributions to outside agencies 254,560 254,560 278,143 (23,583) 273,572
City attorney 350,000 350,000 326,777 23,223 351,988
Total public representation services 1,016,953 1,071,155 1,080,032 (8,877) 1,064,503
Administrative services
City clerk 391,971 433,971 441,465 (7,494) 365,993
Civil service 101,300 101,300 107,591 (6,291) 117,219
Affirmative action 103,469 90,969 75,228 15,741 94,242
Total administrative services 596,740 626,240 624,284 1,956 577,454
Financial services
Finance administration 461,811 523,378 574,023 (50,645) 445,076
Assessing 327,000 327,000 321,343 5,657 294,656
Arena administration 239,600 - - - 944
Income tax administration 343,051 343,051 340,656 2,395 309,817
Information systems 473,117 473,117 437,911 35,206 459,375
City treasurer 612,755 612,755 563,008 49,747 558,340
Total financial services 2,457,334 2,279,301 2,236,941 42,360 2,068,208
Public safety
Police department 9,779,824 9,344,445 9,015,637 328,808 8,980,698
Fire department 4,012,172 4,078,142 4,186,580 (108,438) 3,996,694
Fire safety inspections 485,000 575,000 854,019 (279,019) 478,907
Total public safety 14,276,996 13,997,587 14,056,236 (58,649) 13,456,299
82
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
General Fund
For the year ended June 30, 2017
(with comparative actual amounts for the year ended June 30, 2016)
2017 2016
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
Public works
Street lighting $ 575,000 $ 515,000 $ 592,830 $ (77,830) $ 566,743
Community event support 27,736 34,500 33,728 772 19,424
Senior citizen transit - - 227 (227) -
General sanitation 1,820,704 1,820,704 1,839,943 (19,239) 1,605,393
Storm water management 10,000 10,000 4,000 6,000 13,755
City hall maintenance 280,000 274,725 247,136 27,589 221,270
Cemeteries maintenance 425,501 425,501 387,835 37,666 406,444
Total public works 3,138,941 3,080,430 3,105,699 (25,269) 2,833,029
Community and economic development
Planning, zoning and economic development 417,095 465,541 466,448 (907) 422,267
Environmental services 1,152,582 1,088,424 1,090,151 (1,727) 1,016,061
Edison Landing subsidy 275,000 275,000 275,000 - 265,000
Downtown Development Authority subsidy 175,000 175,000 175,000 - 175,000
Total community and economic development 2,019,677 2,003,965 2,006,599 (2,634) 1,878,328
Culture and recreation
Parks maintenance 1,319,302 1,396,467 1,512,556 (116,089) 1,284,097
McGraft Park maintenance 68,760 63,340 53,945 9,395 56,969
General and inner city recreation programs 100,500 125,200 90,305 34,895 126,580
Graffiti removal 7,457 7,457 647 6,810 1,101
Parking operations 6,555 6,555 2,722 3,833 5,609
Farmers market and flea market 217,000 - - - 188,214
Total culture and recreation 1,719,574 1,599,019 1,660,175 (61,156) 1,662,570
Other governmental functions
Insurance premiums 270,640 270,640 274,472 (3,832) 261,419
Other 100,000 60,000 5,944 54,056 44,388
Total other governmental functions 370,640 330,640 280,416 50,224 305,807
Debt service
Principal 70,000 70,000 70,000 - 70,000
Interest and fees 97,000 175,000 174,262 738 208,176
Bond issuance costs - - - - 97,578
Total debt service 167,000 245,000 244,262 738 375,754
Capital outlay 325,000 403,037 362,786 40,251 185,895
Total expenditures 26,088,855 25,636,374 25,657,430 (21,056) 24,407,847
Excess of revenues over (under) expenditures 63,989 335,251 1,394,336 1,059,085 1,413,267
83
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
General Fund
For the year ended June 30, 2017
(with comparative actual amounts for the year ended June 30, 2016)
2017 2016
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
OTHER FINANCING SOURCES (USES)
Refunding bonds issued $ - $ - $ - $ - $ 4,535,000
Premium on refunding bonds issued - - - - 368,903
Payment to refunded bond escrow agent - - - - (4,806,325)
Transfers in - - - - 35,132
Transfers out (63,000) (333,000) (1,368,000) (1,035,000) (1,318,164)
Total other financing sources (uses) (63,000) (333,000) (1,368,000) (1,035,000) (1,185,454)
Net change in fund balance $ 989 $ 2,251 26,336 $ 24,085 227,813
Fund balance at beginning of year 8,031,309 7,803,496
Fund balance at end of year $ 8,057,645 $ 8,031,309
Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.
84
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
Major Street and Trunkline Fund
For the year ended June 30, 2017
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative)
REVENUES
Intergovernmental revenues
Federal $ 1,385,000 $ 30,000 $ 400,000 $ 370,000
State 2,800,000 3,000,000 3,197,829 197,829
Charges for services - - 33,787 33,787
Investment earnings 9,100 9,100 11,238 2,138
Other 79,777 79,777 90,296 10,519
Total revenues 4,273,877 3,118,877 3,733,150 614,273
EXPENDITURES
Current
Highways, streets and bridges 5,248,032 3,202,032 3,507,777 (305,745)
Debt service
Principal 195,000 195,000 195,000 -
Interest and fees 35,500 35,500 35,450 50
Total expenditures 5,478,532 3,432,532 3,738,227 (305,695)
Excess of revenues over (under) expenditures (1,204,655) (313,655) (5,077) 308,578
OTHER FINANCING SOURCES (USES)
Long-term debt issued 1,650,000 - - -
Transfers out (681,000) (681,000) (450,000) 231,000
Total other financing sources (uses) 969,000 (681,000) (450,000) 231,000
Net change in fund balance $ (235,655) $ (994,655) (455,077) $ 539,578
Fund balance at July 1, 2016 2,291,696
Fund balance at June 30, 2017 $ 1,836,619
Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.
85
City of Muskegon
Required Supplemental Information
SCHEDULE OF CHANGES IN NET PENSION LIAIBILITY AND RELATED RATIOS
Last Ten Fiscal Years (Amounts were determined as of December 31 of each fiscal year)
2016 2015 2014
TOTAL PENSION LIABILITY
Service cost $ 1,130,408 $ 1,194,909 $ 1,190,507
Interest 8,345,661 8,034,035 7,817,503
Differences between expected and actual experience (1,697,797) (647,017) -
Changes in assumptions - 4,779,382 -
Benefit payments, including refunds of employee contributions (6,417,825) (6,363,249) (6,407,932)
Net change in total pension liability 1,360,447 6,998,060 2,600,078
Total pension liability at beginning of year 106,964,467 99,966,407 97,366,329
Total pension liability at end of year (a) $ 108,324,914 $ 106,964,467 $ 99,966,407
PLAN FIDUCIARY NET POSITION
Contributions-employer $ 1,996,512 $ 1,420,218 $ 1,166,652
Contributions-employee 563,898 566,045 564,409
Net investment income 8,890,951 (1,237,895) 5,282,031
86
Benefit payments, including refunds or employee contributions (6,417,825) (6,363,249) (6,407,932)
Administrative expense (175,718) (183,599) (193,139)
Net change in plan fiduciary net position 4,857,818 (5,798,480) 412,021
Plan fiduciary net position at beginning of year 79,560,142 85,358,622 84,946,601
Plan fiduciary net position at end of year (b) $ 84,417,960 $ 79,560,142 $ 85,358,622
City's net pension liability at end of year (a)-(b) $ 23,906,954 $ 27,404,325 $ 14,607,785
Plan fiduciary net position as a percentage of the total pension liability 77.93% 74.38% 85.39%
Covered employee payroll $ 8,460,078 $ 9,108,948 $ 9,171,511
City's net pension liability as a percentage of covered employee payroll 282.59% 300.85% 159.27%
Notes to Schedule
Additional actuarial data is not available and will be provided in subsequent years.
City of Muskegon
Required Supplemental Information
PENSION SYSTEM SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years
Period Ended
Year Ended June 30 June 30* Year Ended December 31
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
Actuarially determined contribution $ 1,897,158 $ 1,546,440 $ 1,293,996 $ 1,043,040 $ 1,035,772 $ 1,160,870 $ 1,211,612 $ 688,832 $ 801,898 $ 1,067,853
Contributions in relation to the actuarially
determined contribution 2,276,200 1,753,272 1,293,996 1,543,040 1,035,772 1,160,870 2,211,612 688,832 801,898 1,067,853
Contribution deficiency (excess) $ (379,042) $ (206,832) $ - $ (500,000) $ - $ - $ (1,000,000) $ - $ - $ -
Covered employee payroll $ 8,460,078 $ 9,108,948 $ 9,171,511 $ 9,198,938 $10,185,425 $ 10,650,990 $ 11,533,186 $12,613,654 $13,107,179 $12,684,083
Contributions as percentage of covered
employee payroll 26.9% 19.2% 14.1% 16.8% 10.2% 10.9% 19.2% 5.5% 6.1% 8.4%
Notes to Schedule
Valuation Date:
Actuarially determined contribution rates are calculated as of December 31, two years prior to the end of the fiscal year in which contributions are reported.
Methods and assumptions used to determine contribution rates:
87
Actuarial cost method Entry age
Amortization method Level percentage of payroll, Closed
Remaining amortization period 22 years
Asset valuation method 5-year smoothed market
Inflation 2.5 percent
Salary increases 3.75 percent
Investment rate of return 7.75 percent, net of investment and administrative expenses
Retirement age Varies depending on plan adoption
Mortality 50 percent Female/50 percent Male RP-2014 Group Annuity Mortality Table
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
City of Muskegon
Required Supplemental Information
SCHEDULE OF FUNDING PROGRESS – RETIREE HEALTHCARE PLAN
For the year ended June 30, 2017
(Dollar amounts in thousands)
Actuarial
Actuarial Actuarial Accrued Unfunded UAAL as a
Valuation Value of Liability (AAL) AAL Funded Covered Percentage of
Date Assets Entry Age (UAAL) Ratio Payroll Covered Payroll
12/31/11 $ 15,331 $ 20,168 $ 4,837 76 % $ 12,365 39 %
12/31/13 18,261 21,102 2,841 87 10,005 28
12/31/15 17,921 22,029 4,108 81 10,830 38
88
OTHER SUPPLEMENTAL INFORMATION
89
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.
L.C. Walker Arena – to account for revenues received for the operation and maintenance of L.C.Walker
Arena.
Criminal Forfeitures – to account for receipts generated through the sale of assets seized through criminal
court proceedings.
Downtown BID – to account for the collection of special assessment revenue in the downtown to be used
for improvement and maintenance of downtown public infrastructure.
Tree Replacement – to account for contributions and other revenues earmarked for tree replacement
throughout the City.
Farmers Market and Kitchen 242 – to account for revenues received for the City’s Farmers Market and
Kitchen 242.
Capital Projects Funds
Capital projects funds are used to account for financial resources to be used for the acquisition or
construction of major capital assets 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.
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.
90
DESCRIPTION OF
OTHER GOVERNMENTAL FUNDS—CONTINUED
Capital Projects Funds—Continued
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.
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.
Economic Development - Sappi – to account for funds contributed to the City for economic
redevelopment of vacated industrial property sites.
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.
91
City of Muskegon
COMBINING BALANCE SHEET
Other Governmental Funds
June 30, 2017
Other Other Permanent
Total Other Special Capital Fund -
Governmental Revenue Projects Cemetery
Funds Funds Funds Perpetual Care
ASSETS
Cash and investments $ 4,711,503 $ 956,351 $ 3,532,867 $ 222,285
Assets managed by others 1,145,199 - 16,085 1,129,114
Receivables
Accounts and loans (net of allowance for uncollectibles) 336,979 74,053 259,460 3,466
Special assessments 15,224 15,224 - -
Due from other governmental units 678,760 192,031 486,729 -
Advances to component units 367,423 - - 367,423
Prepaid items 30,775 30,775 - -
Total assets $ 7,285,863 $ 1,268,434 $ 4,295,141 $ 1,722,288
LIABILITIES
Accounts payable $ 678,862 $ 473,765 $ 205,097 $ -
Accrued liabilities 20,682 14,461 6,221 -
Due to other governmental units 15,526 11,776 3,750 -
Due to other funds 356,207 - 356,207 -
Unearned revenues - unused Farmers Market tokens 26,390 26,390 - -
Unearned revenues - expenditure-driven grants 53,020 - 53,020 -
Total liabilities 1,150,687 526,392 624,295 -
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - special assessments 15,225 15,225 - -
Unavailable revenues - other long-term receivables 2,244 - 2,244 -
Total deferred inflows of resources 17,469 15,225 2,244 -
FUND BALANCES
Nonspendable
Prepaid items 30,775 30,775 - -
Long-term loans receivable 157,855 - 157,855 -
Perpetual care 1,498,768 - - 1,498,768
Restricted
Highways, streets and bridges 353,714 353,714 - -
L.C. Walker Arena 97,484 97,484 - -
Law enforcement 121,873 121,873 - -
Downtown BID 105,397 105,397 - -
Perpetual care 223,520 - - 223,520
Other purposes 17,574 17,574 - -
Assigned for capital projects and public improvements 3,510,747 - 3,510,747 -
Total fund balances 6,117,707 726,817 3,668,602 1,722,288
Total liabilities, deferred inflows of
resources and fund balances $ 7,285,863 $ 1,268,434 $ 4,295,141 $ 1,722,288
92
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Other Governmental Funds
For the year ended June 30, 2017
Other Other Permanent
Total Other Special Capital Fund -
Governmental Revenue Projects Cemetery
Funds Funds Funds Perpetual Care
REVENUES
Intergovernmental revenues
Federal $ 1,276,349 $ 26,268 $ 1,250,081 $ -
State 1,108,003 1,104,778 3,225 -
Local 22,489 - 22,489 -
Charges for services 1,237,046 1,181,183 33,688 22,175
Fines and forfeitures 12,745 12,745 - -
Investment earnings 27,729 4,612 9,301 13,816
Income from assets managed by others 109,418 - 4,317 105,101
Other 755,354 309,702 445,652 -
Total revenues 4,549,133 2,639,288 1,768,753 141,092
EXPENDITURES
Current
Public safety 30,383 30,383 - -
Public works 100,351 100,351 - -
Highways, streets and bridges 1,347,895 1,347,895 - -
Culture and recreation 1,863,003 1,863,003 - -
Debt service
Principal 18,563 - 18,563 -
Interest and fees 1,530 - 1,530 -
Capital outlay 2,078,980 15,750 2,063,230 -
Total expenditures 5,440,705 3,357,382 2,083,323 -
Excess of revenues over (under) expenditures (891,572) (718,094) (314,570) 141,092
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 1,529,325 - 1,529,325 -
Transfers in 1,805,000 805,000 1,000,000 -
Transfers out - - - -
Total other financing sources (uses) 3,334,325 805,000 2,529,325 -
Net change in fund balances 2,442,753 86,906 2,214,755 141,092
Fund balances at July 1, 2016 3,674,954 639,911 1,453,847 1,581,196
Fund balances at June 30, 2017 $ 6,117,707 $ 726,817 $ 3,668,602 $ 1,722,288
93
City of Muskegon
COMBINING BALANCE SHEET
Other Special Revenue Funds
June 30, 2017
Total Other Farmers
Special Revenue Local L.C. Walker Criminal Downtown Tree Market and
Funds Street Arena Forfeitures BID Replacement Kitchen 242
ASSETS
Cash and investments $ 956,351 $ 635,644 $ 61,520 $ 121,873 $ 106,322 $ 1,569 $ 29,423
Receivables
Accounts 74,053 10,423 62,078 - - - 1,552
Special assessments 15,224 15,224 - - - - -
Due from other governmental units 192,031 159,163 - - - - 32,868
Prepaid items 30,775 4,939 25,836 - - - -
Total assets $ 1,268,434 $ 825,393 $ 149,434 $ 121,873 $ 106,322 $ 1,569 $ 63,843
LIABILITIES
Accounts payable $ 473,765 $ 425,596 $ 26,114 $ - $ 925 $ 219 $ 20,911
Accrued liabilities 14,461 14,143 - - - - 318
Due to other governmental units 11,776 11,776 - - - - -
94
Unearned revenues - unused Farmers Market tokens 26,390 - - - - - 26,390
Total liabilities 526,392 451,515 26,114 - 925 219 47,619
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - special assessments 15,225 15,225 - - - - -
FUND BALANCES
Nonspendable - prepaid items 30,775 4,939 25,836 - - - -
Restricted
Highways, streets and bridges 353,714 353,714 - - - - -
L.C. Walker Arena 97,484 - 97,484 - - - -
Law enforcement 121,873 - - 121,873 - - -
Downtown BID 105,397 - - - 105,397 - -
Other purposes 17,574 - - - - 1,350 16,224
Total fund balances 726,817 358,653 123,320 121,873 105,397 1,350 16,224
Total liabilities, deferred inflows of
resources and fund balances $ 1,268,434 $ 825,393 $ 149,434 $ 121,873 $ 106,322 $ 1,569 $ 63,843
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Other Special Revenue Funds
For the year ended June 30, 2017
Total Other Farmers
Special Revenue Local L.C. Walker Criminal Downtown Tree Market and
Funds Street Arena Forfeitures BID Replacement Kitchen 242
REVENUES
Intergovernmental revenues
Federal $ 26,268 $ - $ - $ - $ - $ - $ 26,268
State 1,104,778 982,295 - - - 1,303 121,180
Charges for services 1,181,183 14,276 1,059,188 - - - 107,719
Fines and forfeitures 12,745 - - 12,745 - - -
Investment earnings 4,612 2,986 738 684 198 5 1
Other 309,702 19,457 64,326 - 190,099 2,500 33,320
Total revenues 2,639,288 1,019,014 1,124,252 13,429 190,297 3,808 288,488
EXPENDITURES
Current
95
Public safety 30,383 - - 30,383 - - -
Public works 100,351 - - - 100,351 - -
Highways, streets and bridges 1,347,895 1,347,895 - - - - -
Culture and recreation 1,863,003 - 1,537,210 - - 3,529 322,264
Capital outlay 15,750 - 15,750 - - - -
Total expenditures 3,357,382 1,347,895 1,552,960 30,383 100,351 3,529 322,264
Excess of revenues over (under) expenditures (718,094) (328,881) (428,708) (16,954) 89,946 279 (33,776)
OTHER FINANCING SOURCES
Transfers in 805,000 450,000 305,000 - - - 50,000
Net change in fund balances 86,906 121,119 (123,708) (16,954) 89,946 279 16,224
Fund balances at July 1, 2016 639,911 237,534 247,028 138,827 15,451 1,071 -
Fund balances at June 30, 2017 $ 726,817 $ 358,653 $ 123,320 $ 121,873 $ 105,397 $ 1,350 $ 16,224
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
Other Special Revenue Funds
For the year ended June 30, 2017
Local Street L.C. Walker Arena
Variance - Variance -
Final Positive Final Positive
Budget Actual (Negative) Budget Actual (Negative)
REVENUES
Intergovernmental revenues - State $ 920,000 $ 982,295 $ 62,295 $ - $ - $ -
Charges for services - 14,276 14,276 942,500 1,059,188 116,688
Investment earnings 2,900 2,986 86 - 738 738
Other 40,000 19,457 (20,543) - 64,326 64,326
Total revenues 962,900 1,019,014 56,114 942,500 1,124,252 181,752
EXPENDITURES
Current
Highways, streets and bridges 1,439,000 1,347,895 91,105 - - -
96
Culture and recreation - - - 1,132,000 1,537,210 (405,210)
Capital outlay - - - 120,000 15,750 104,250
Total expenditures 1,439,000 1,347,895 91,105 1,252,000 1,552,960 (300,960)
Excess of revenues over (under) expenditures (476,100) (328,881) 147,219 (309,500) (428,708) (119,208)
OTHER FINANCING SOURCES
Transfers in 500,000 450,000 (50,000) 305,000 305,000 -
Net change in fund balances $ 23,900 121,119 $ 97,219 $ (4,500) (123,708) $ (119,208)
Fund balances at July 1, 2016 237,534 247,028
Fund balances at June 30, 2017 $ 358,653 $ 123,320
City of Muskegon
BUDGETARY COMPARISON SCHEDULE─CONTINUED
Other Special Revenue Funds
For the year ended June 30, 2017
Criminal Forfeitures Downtown BID
Variance - Variance -
Final Positive Final Positive
budget Actual (Negative) Budget Actual (Negative)
REVENUES
Fines and forfeitures $ 16,000 $ 12,745 $ (3,255) $ - $ - $ -
Investment earnings 700 684 (16) - 198 198
Other - - - 115,223 190,099 74,876
Total revenues 16,700 13,429 (3,271) 115,223 190,297 75,074
EXPENDITURES
Current
Public safety 33,500 30,383 3,117 - - -
Public works - - - 150,000 100,351 49,649
97
Total expenditures 33,500 30,383 3,117 150,000 100,351 49,649
Net change in fund balances $ (16,800) (16,954) $ (154) $ (34,777) 89,946 $ 124,723
Fund balance at July 1, 2016 138,827 15,451
Fund balance at June 30, 2017 $ 121,873 $ 105,397
City of Muskegon
BUDGETARY COMPARISON SCHEDULE─CONTINUED
Other Special Revenue Funds
For the year ended June 30, 2017
Tree Replacement Farmers Market and Kitchen 242
Variance - Variance -
Final Positive Final Positive
Budget Actual (Negative) Budget Actual (Negative)
REVENUES
Intergovernmental revenues
Federal $ - $ - $ - $ 65,000 $ 26,268 $ (38,732)
State - 1,303 1,303 200,000 121,180 (78,820)
Charges for services - - - 93,500 107,719 14,219
Investment earnings - 5 5 - 1 1
Other 2,500 2,500 - 21,000 33,320 12,320
Total revenues 2,500 3,808 1,308 379,500 288,488 (91,012)
EXPENDITURES
98
Current
Culture and recreation 3,571 3,529 42 417,000 322,264 94,736
Excess of revenues over (under) expenditures (1,071) 279 1,350 (37,500) (33,776) 3,724
OTHER FINANCING SOURCES
Transfers in - - - 50,000 50,000 -
Net change in fund balances $ (1,071) 279 $ 1,350 $ 12,500 16,224 $ 3,724
Fund balance at July 1, 2016 1,071 -
Fund balance at June 30, 2017 $ 1,350 $ 16,224
City of Muskegon
COMBINING BALANCE SHEET
Other Capital Projects Funds
June 30, 2017
Total Other EDC Community Economic
Capital Projects Public Michcon Revolving Development State HOME Development -
Funds Improvement Remediation Loan Block Grant Grants Rehabilitation Sappi
ASSETS
Cash and investments $ 3,532,867 $ 2,088,302 $ 223,042 $ 664,945 $ - $ 6,997 $ 32,320 $ 517,261
Assets managed by others 16,085 16,085 - - - - - -
Receivables
Accounts and loans (net of
allowance for uncollectibles) 259,460 3,144 - 123,912 79,906 52,498 - -
Due from other governmental units 486,729 - - - 295,615 74,019 117,095 -
Total assets $ 4,295,141 $ 2,107,531 $ 223,042 $ 788,857 $ 375,521 $ 133,514 $ 149,415 $ 517,261
LIABILITIES
Accounts payable $ 205,097 $ 6,663 $ - $ 97,000 $ 14,609 $ 29,039 $ 57,786 $ -
Accrued liabilities 6,221 - - - 4,705 - 1,516 -
Due to other governmental units 3,750 3,750 - - - - - -
Due to other funds 356,207 - - - 356,207 - - -
Unearned revenues - expenditure-driven grants 53,020 - - - - 53,020 - -
99
Total liabilities 624,295 10,413 - 97,000 375,521 82,059 59,302 -
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - other long-term receivables 2,244 2,244 - - - - - -
FUND BALANCES
Nonspendable - long-term loans receivable 157,855 - - 123,912 - 33,943 - -
Assigned for capital projects and public improvements 3,510,747 2,094,874 223,042 567,945 - 17,512 90,113 517,261
Total fund balances 3,668,602 2,094,874 223,042 691,857 - 51,455 90,113 517,261
Total liabilities, deferred inflows of
resources and fund balances $ 4,295,141 $ 2,107,531 $ 223,042 $ 788,857 $ 375,521 $ 133,514 $ 149,415 $ 517,261
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Other Capital Projects Funds
For the year ended June 30, 2017
Total Other EDC Community Economic
Capital Projects Public Michcon Revolving Development State HOME Development -
Funds Improvement Remediation Loan Block Grant Grants Rehabilitation Sappi
REVENUES
Intergovernmental revenues
Federal $ 1,250,081 $ - $ - $ - $ 729,942 $ 260,076 $ 260,063 $ -
State 3,225 - - - - 3,225 - -
Local 22,489 22,489 - - - - - -
Charges for services 33,688 27,688 - 6,000 - - - -
Investment earnings 9,301 1,806 1,111 2,726 25 1,055 - 2,578
Income from assets managed by others 4,317 4,317 - - - - - -
Other 445,652 379,270 - 57,935 8,447 - - -
Total revenues 1,768,753 435,570 1,111 66,661 738,414 264,356 260,063 2,578
EXPENDITURES
Debt service
Principal 18,563 - - - - 18,563 - -
100
Interest and fees 1,530 - - - - 1,530 - -
Capital outlay 2,063,230 428,500 - 25,383 758,014 263,301 588,032 -
Total expenditures 2,083,323 428,500 - 25,383 758,014 283,394 588,032 -
Excess of revenues over (under) expenditures (314,570) 7,070 1,111 41,278 (19,600) (19,038) (327,969) 2,578
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 1,529,325 793,405 - 298,301 19,600 - 418,019 -
Transfers in 1,000,000 1,000,000 - - - - - -
Total other financing sources (uses) 2,529,325 1,793,405 - 298,301 19,600 - 418,019 -
Net change in fund balances 2,214,755 1,800,475 1,111 339,579 - (19,038) 90,050 2,578
Fund balances at July 1, 2016 1,453,847 294,399 221,931 352,278 - 70,493 63 514,683
Fund balances at June 30, 2017 $ 3,668,602 $ 2,094,874 $ 223,042 $ 691,857 $ - $ 51,455 $ 90,113 $ 517,261
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.
101
City of Muskegon
COMBINING STATEMENT OF NET POSITION
Internal Service Funds
June 30, 2017
Total Internal Engineering General Public Service
Service Funds Services Equipment Insurance Building
ASSETS
Current assets
Cash and investments $ 2,386,853 $ 43,346 $ 750,577 $ 960,294 $ 632,636
Accounts receivable 498,969 - 6,102 492,867 -
Inventories 8,060 - 8,060 - -
Prepaid items 259,764 1,255 53,042 199,922 5,545
Total current assets 3,153,646 44,601 817,781 1,653,083 638,181
Noncurrent assets
Advances to component units 734,844 - 367,422 367,422 -
Capital assets
Land 65,000 - - - 65,000
Land improvements 301,715 - - - 301,715
Buildings and improvements 1,559,334 - - - 1,559,334
Machinery and equipment 8,771,690 26,355 8,650,971 - 94,364
Less accumulated depreciation (8,185,159) (26,355) (6,538,629) - (1,620,175)
Net capital assets 2,512,580 - 2,112,342 - 400,238
Total noncurrent assets 3,247,424 - 2,479,764 367,422 400,238
Total assets 6,401,070 44,601 3,297,545 2,020,505 1,038,419
DEFERRED OUFLOWS OF RESOURCES
Related to pension 173,087 - 64,908 - 108,179
Total assets and deferred outflows of resources 6,574,157 44,601 3,362,453 2,020,505 1,146,598
LIABILITIES
Current liabilities
Accounts payable 349,479 772 159,761 169,676 19,270
Accrued liabilities 33,689 4,673 11,320 1,077 16,619
Bonds and other obligations, due within one year 18,400 1,200 6,600 900 9,700
Total current liabilities 401,568 6,645 177,681 171,653 45,589
Noncurrent liabilities
Bonds and other obligations, less amounts due within one year 91,705 5,876 32,829 4,797 48,203
Net pension liability 956,278 - 358,604 - 597,674
Total noncurrent liabilities 1,047,983 5,876 391,433 4,797 645,877
Total liabilities 1,449,551 12,521 569,114 176,450 691,466
DEFERRED INFLOWS OF RESOURCES
Related to pension 33,956 - 12,734 - 21,222
Total liabilities and deferred inflows of resources 1,483,507 12,521 581,848 176,450 712,688
NET POSITION
Net investment in capital assets 2,512,580 - 2,112,342 - 400,238
Unrestricted 2,578,070 32,080 668,263 1,844,055 33,672
Total net position $ 5,090,650 $ 32,080 $ 2,780,605 $ 1,844,055 $ 433,910
102
City of Muskegon
COMBINING STATEMENT OF REVENUE, EXPENSES AND CHANGES IN NET POSITION
Internal Service Funds
For the year ended June 30, 2017
Total Internal Engineering General Public Service
Service Funds Services Equipment Insurance Building
OPERATING REVENUES
Charges for services $ 8,272,672 $ 249,950 $ 2,636,813 $ 4,336,775 $ 1,049,134
Other 153,855 60,338 90,433 3,084 -
Total operating revenues 8,426,527 310,288 2,727,246 4,339,859 1,049,134
OPERATING EXPENSES
Administration 325,613 34,673 93,615 59,082 138,243
Insurance premiums and claims 4,539,589 - - 4,539,589 -
Other operations 3,377,697 264,073 2,070,689 60,249 982,686
Depreciation 385,387 - 331,855 - 53,532
Total operating expenses 8,628,286 298,746 2,496,159 4,658,920 1,174,461
Operating income (loss) (201,759) 11,542 231,087 (319,061) (125,327)
NONOPERATING REVENUES
Investment earnings 40,431 38 16,581 20,735 3,077
Income (loss) before transfers (161,328) 11,580 247,668 (298,326) (122,250)
TRANSFERS
Transfers in 13,000 13,000 - - -
Change in net position (148,328) 24,580 247,668 (298,326) (122,250)
Net position at July 1, 2016 5,238,978 7,500 2,532,937 2,142,381 556,160
Net position at June 30, 2017 $ 5,090,650 $ 32,080 $ 2,780,605 $ 1,844,055 $ 433,910
103
City of Muskegon
COMBINING STATEMENT OF CASH FLOWS
Internal Service Funds
For the year ended June 30, 2017
Total Internal Engineering General Public Service
Service Funds Services Equipment Insurance Building
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 166,215 $ 60,338 $ 102,793 $ 3,084 $ -
Receipts from interfund services provided 7,352,749 249,950 2,636,813 3,416,852 1,049,134
Other receipts 621,592 - - 621,592 -
Payments to suppliers (6,108,795) (120,721) (1,017,444) (4,644,811) (325,819)
Payments to employees (1,281,433) (125,280) (369,219) (194,919) (592,015)
Payments for interfund services used (783,875) (70,060) (593,309) (3,965) (116,541)
Net cash provided by (used for) operating activities (33,547) (5,773) 759,634 (802,167) 14,759
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in 13,000 13,000 - - -
Collections on advances to component units 79,234 - 39,617 39,617 -
Net cash provided by noncapital financing activities 92,234 13,000 39,617 39,617 -
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Purchases of capital assets (764,344) - (764,344) - -
CASH FLOW FROM INVESTING ACTIVITIES
104
Investment earnings 40,431 38 16,581 20,735 3,077
Net increase (decrease) in cash and investments (665,226) 7,265 51,488 (741,815) 17,836
Cash and investments at July 1, 2016 3,052,079 36,081 699,089 1,702,109 614,800
Cash and investments at June 30, 2017 $ 2,386,853 $ 43,346 $ 750,577 $ 960,294 $ 632,636
Reconciliation of operating income (loss) to net cash provided by (used for)
operating activities
Operating income (loss) $ (201,759) $ 11,542 $ 231,087 $ (319,061) $ (125,327)
Adjustments to reconcile operating income (loss) to net cash provided by
(used for) operating activities
Depreciation expense 385,387 - 331,855 - 53,532
Change in assets and liabilities
Receivables (285,971) - 12,360 (298,331) -
Inventories 12,797 - 12,797 - -
Prepaid items (48,946) 50 10,247 (60,694) 1,451
Accounts payable (33,532) (12,785) 101,724 (126,448) 3,977
Accrued liabilities 138,477 (4,580) 59,564 2,367 81,126
Net cash provided by (used for) operating activities $ (33,547) $ (5,773) $ 759,634 $ (802,167) $ 14,759
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, public school districts, and other governmental entities.
Rehab Loan Escrow – to account for deposits made by housing rehabilitation program participants and
their expenditures for the intended purposes.
105
City of Muskegon
COMBINING STATEMENT OF ASSETS AND LIABILITIES
Agency Funds
June 30, 2017
Total Current Rehab Loan
Agency Funds Collector Tax Escrow
ASSETS
Cash and investments $ 1,221,594 $ 1,221,213 $ - $ 381
Accounts receivable 11,359 11,359 - -
Total assets $ 1,232,953 $ 1,232,572 $ - $ 381
LIABILITIES
Accounts payable $ 1,035,501 $ 1,035,120 $ - $ 381
Due to other governmental units 70,676 70,676 - -
Deposits held for others 126,776 126,776 - -
Total liabilities $ 1,232,953 $ 1,232,572 $ - $ 381
106
City of Muskegon
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
Agency Funds
For the year ended June 30, 2017
Balance Balance
July 1, June 30,
COLLECTOR FUND 2016 Additions Deductions 2017
ASSETS
Cash and investments $ 912,727 $ 9,137,584 $ 8,829,098 $ 1,221,213
Accounts receivable 10,675 195,728 195,044 11,359
Total assets $ 923,402 $ 9,333,312 $ 9,024,142 $ 1,232,572
LIABILITIES
Accounts payable $ 755,706 $ 1,013,702 $ 734,288 $ 1,035,120
Due to other governmental units 87,995 1,044,424 1,061,743 70,676
Deposits held for others 79,701 2,764,327 2,717,252 126,776
Total liabilities $ 923,402 $ 4,822,453 $ 4,513,283 $ 1,232,572
CURRENT TAX FUND
ASSETS
Cash and investments $ - $ 28,487,084 $ 28,487,084 $ -
LIABILITIES
Due to other governmental units $ - $ 18,173,686 $ 18,173,686 $ -
Due to component units - 553,642 553,642 -
Deposits held for others - 63,572 63,572 -
Total liabilities $ - $ 18,790,900 $ 18,790,900 $ -
REHAB LOAN ESCROW FUND
ASSETS
Cash and investments $ 381 $ - $ - $ 381
LIABILITIES
Accounts payable $ 381 $ - $ - $ 381
ALL AGENCY FUNDS
ASSETS
Cash and investments $ 913,108 $ 37,624,668 $ 37,316,182 $ 1,221,594
Accounts receivable 10,675 195,728 195,044 11,359
Total assets $ 923,783 $ 37,820,396 $ 37,511,226 $ 1,232,953
LIABILITIES
Accounts payable $ 756,087 $ 1,013,702 $ 734,288 $ 1,035,501
Due to other governmental units 87,995 19,218,110 19,235,429 70,676
Due to component units - 553,642 553,642 -
Deposits held for others 79,701 2,827,899 2,780,824 126,776
Total liabilities $ 923,783 $ 23,613,353 $ 23,304,183 $ 1,232,953
107
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108
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 - SmartZone – to account for the collection of tax increment
revenues and the construction of public facilities 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. Currently there are two designated brownfield
areas capturing tax increments.
Area I – Betten-Henry Street brownfield site.
Area II – Former downtown mall brownfield site.
Area III – Terrace Point brownfield site.
109
City of Muskegon
COMBINING BALANCE SHEET
Discretely Presented Component Units
June 30, 2017
Local
Total Discretely Development
Presented Finance Downtown Tax Increment Brownfield Brownfield Brownfield
Component Authority - Development Finance Redevelopment Redevelopment Redevelopment
Units SmartZone Authority Authority Authority I Authority II Authority III
ASSETS
Cash and investments $ 187,391 $ 20,940 $ 106,919 $ 5,827 $ 50,858 $ 1,180 $ 1,667
LIABILITIES
Advances from primary government $ 1,102,267 $ - $ - $ - $ 1,102,267 $ - $ -
FUND BALANCES (DEFICITS)
Unassigned (914,876) 20,940 106,919 5,827 (1,051,409) 1,180 1,667
Total liabilities and fund
balances (deficits) $ 187,391 $ 20,940 $ 106,919 $ 5,827 $ 50,858 $ 1,180 $ 1,667
110
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
Discretely Presented Component Units
June 30, 2017
Total fund balances (deficits)—governmental funds $ (914,876)
Amounts reported for governmental activities in the Statement of Net Position
are different because:
Capital assets used in governmental activities are not current financial
resources and, therefore, are not reported in the governmental funds.
Cost of capital assets $ 4,198,258
Accumulated depreciation (2,345,136) 1,853,122
Long-term liabilities in governmental activities are not due and payable in the
current period and, therefore, are not reported in the governmental funds.
Accrued interest payable (16,500)
Bonds and notes payable (4,278,275) (4,294,775)
Net position of governmental activities $ (3,356,529)
111
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS)
Discretely Presented Component Units
For the year ended June 30, 2017
Local
Total Discretely Development
Presented Finance Downtown Tax Increment Brownfield Brownfield Brownfield
Component Authority - Development Finance Redevelopment Redevelopment Redevelopment
Units SmartZone Authority Authority Authority I Authority II Authority III
REVENUES
Property taxes $ 616,945 $ 99,280 $ 147,081 $ 39,373 $ 137,659 $ 165,737 $ 27,815
Intergovernmental revenues - Local 450,000 275,000 175,000 - - - -
Investment earnings 1,085 55 823 - 81 126 -
Other 75,000 75,000 - - - - -
Total revenues 1,143,030 449,335 322,904 39,373 137,740 165,863 27,815
EXPENDITURES
Current
Community and economic development 242,798 - - 34,000 - 182,650 26,148
112
Debt service
Principal 655,000 345,000 310,000 - - - -
Interest and fees 167,979 104,425 24,825 - 38,729 - -
Total expenditures 1,065,777 449,425 334,825 34,000 38,729 182,650 26,148
Net change in fund balances (deficits) 77,253 (90) (11,921) 5,373 99,011 (16,787) 1,667
Fund balances (deficits) at July 1, 2016 (992,129) 21,030 118,840 454 (1,150,420) 17,967 -
Fund balances (deficits) at June 30, 2017 $ (914,876) $ 20,940 $ 106,919 $ 5,827 $ (1,051,409) $ 1,180 $ 1,667
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES (DEFICITS)
TO THE STATEMENT OF ACTIVITIES
Discretely Presented Component Units
For the year ended June 30, 2017
Net change in fund balances—total governmental funds $ 77,253
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report outlays for capital assets as expenditures. However,
in the Statement of Activities, the cost of these assets is allocated over their
estimated useful lives and reported as depreciation expense.
Depreciation expense (172,648)
The issuance of long-term debt provides current financial resources to
governmental funds, but increases liabilities in the Statement of Net Position.
Repayment of debt is an expenditure in the governmental funds, but reduces
long-term liabilities in the Statement of Net Position.
Repayment of principal on long-term debt 655,000
Changes in accrual of interest and amortization of premiums and discounts
Change in accrued interest payable $ 3,836
Amortization of premiums 33,145 36,981
Change in net position of governmental activities $ 596,586
113
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114
SCHEDULE OF INDEBTEDNESS
115
City of Muskegon
SCHEDULE OF INDEBTEDNESS
June 30, 2017
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 6/30/2016 6/30/2017 Payable
Business-Type Activities Bonds and Loans Payable:
Water supply system bonds 4/1/2010 $ 5,995,000 4.00% 05/01/17 $ 710,000 $ - $ -
($13,661 unamortized premium) 4.00% 05/01/18 740,000 740,000 62,325
4.25% 05/01/19 770,000 770,000 32,725
Type of debt: revenue bond 2,220,000 1,510,000 95,050
Revenue pledged: water system net revenues
Drinking Water State Revolving 3/2/2004 $ 13,900,000 2.13% 10/01/16 695,000 - -
Fund 2.13% 10/01/17 710,000 710,000 140,781
2.13% 10/01/18 725,000 725,000 125,534
Type of debt: state loan 2.13% 10/01/19 745,000 745,000 109,916
Revenue pledged: water system net revenues 2.13% 10/01/20 760,000 760,000 93,925
2.13% 10/01/21 775,000 775,000 77,616
2.13% 10/01/22 790,000 790,000 60,988
2.13% 10/01/23 810,000 810,000 43,988
2.13% 10/01/24 825,000 825,000 26,616
2.13% 10/01/25 840,000 840,000 8,925
7,675,000 6,980,000 688,289
TOTAL BUSINESS-TYPE ACTIVITIES BONDS AND LOANS PAYABLE $ 9,895,000 $ 8,490,000 $ 783,339
116
City of Muskegon
SCHEDULE OF INDEBTEDNESS - CONTINUED
June 30, 2017
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 6/30/2016 6/30/2017 Payable
Governmental Activities Bonds and Loans Payable:
Capital improvement bonds 10/24/2006 $ 5,400,000 4.00% 10/01/16 $ 70,000 $ - $ -
of 2006 (fire station, recreation) 70,000 - -
Type of debt: limited G.O. bond
Revenue pledged: general revenues
Capital Improvement refunding bonds 3/8/2016 $ 4,535,000 2.00% 10/01/17 70,000 70,000 166,100
of 2016 2.00% 10/01/18 65,000 65,000 164,750
($330,903 unamortized premium) 3.00% 10/01/19 290,000 290,000 159,750
3.00% 10/01/20 295,000 295,000 150,975
Type of debt: limited G.O. bonds 3.00% 10/01/21 305,000 305,000 141,975
Revenue pledged: general revenue 3.00% 10/01/22 300,000 300,000 132,900
4.00% 10/01/23 300,000 300,000 122,400
4.00% 10/01/24 320,000 320,000 110,000
4.00% 10/01/25 325,000 325,000 97,100
4.00% 10/01/26 325,000 325,000 84,100
4.00% 10/01/27 325,000 325,000 71,100
4.00% 10/01/28 325,000 325,000 58,100
4.00% 10/01/29 325,000 325,000 45,100
4.00% 10/01/30 325,000 325,000 32,100
4.00% 10/01/31 320,000 320,000 19,200
4.00% 10/01/32 320,000 320,000 6,400
4,535,000 4,535,000 1,562,050
Capital improvement bonds 9/30/2011 $ 2,000,000 2.98% 09/01/16 195,000 - -
of 2011 (streets) 2.98% 09/01/17 200,000 200,000 29,055
2.98% 09/01/18 210,000 210,000 22,946
Type of debt: limited G.O. bond 2.98% 09/01/19 215,000 215,000 16,614
Revenue pledged: gas tax, general revenues 2.98% 09/01/20 220,000 220,000 10,132
2.98% 09/01/21 230,000 230,000 3,427
1,270,000 1,075,000 82,174
State of Michigan 6/18/2010 $ 500,000 2.00% 03/18/17 18,563 - -
environmental assessment loan 2.00% 03/18/18 18,934 18,934 1,159
2.00% 03/18/19 19,313 19,313 780
Type of debt: state loan 2.00% 03/18/20 19,699 19,699 394
Revenue pledged: general revenues 76,509 57,946 2,333
TOTAL GOVERNMENTAL ACTIVITIES BONDS AND LOANS PAYABLE $ 5,951,509 $ 5,667,946 $ 1,646,557
TOTAL PRIMARY GOVERNMENT BONDS AND LOANS PAYABLE $ 15,846,509 $ 14,157,946 $ 2,429,896
117
City of Muskegon
SCHEDULE OF INDEBTEDNESS - CONTINUED
June 30, 2017
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 6/30/2016 6/30/2017 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 -
Type of debt: intergovernmental note
Revenue pledged: DDA tax increments
Downtown Development Authority 3/22/2011 $ 2,045,000 3.75% 06/01/17 310,000 - -
refunding bonds 4.00% 06/01/18 330,000 330,000 13,200
($5,327 unamortized premium) 640,000 330,000 13,200
Type of debt: limited G.O. bond
Revenue pledged: DDA tax increments, general revenues
Local Development Finance Authority 3/20/2012 $ 4,100,000 3.00% 11/01/16 345,000 - -
Smartzone Refunding Bonds 3.00% 11/01/17 355,000 355,000 93,925
($102,948 unamortized premium) 4.00% 11/01/18 375,000 375,000 81,100
4.00% 11/01/19 390,000 390,000 65,800
Type of debt: limited G.O. bond 4.00% 11/01/20 395,000 395,000 50,100
Revenue pledged: LDFA tax increments, general revenues 4.00% 11/01/21 245,000 245,000 37,300
3.00% 11/01/22 255,000 255,000 28,575
3.00% 11/01/23 265,000 265,000 20,775
3.00% 11/01/24 275,000 275,000 12,675
3.00% 11/01/25 285,000 285,000 4,275
TOTAL DISCRETELY PRESENTED COMPONENT UNIT BONDS AND LOANS PAYABLE 3,185,000 2,840,000 394,525
$ 4,825,000 $ 4,170,000 $ 407,725
TOTAL REPORTING ENTITY BONDS AND LOANS PAYABLE $ 20,671,509 $ 18,327,946 $ 2,837,621
118
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. 120
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. 125
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. 131
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. 135
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. 137
Sources: Unless otherwise noted, the information in these schedules is derived form the Comprehensive Annual
Financial Reports for the relevant year.
119
City of Muskegon
NET ASSETS/NET POSITION BY COMPONENT
Last Ten Fiscal Years
December 31 June 30
2008 2009 2010 2011 2012 2013 (a) 2014 2015 (b) 2016 2017
Governmental Activities
Net Investment in Capital Assets $ 69,564,935 $ 69,064,800 $ 67,809,630 $ 67,944,957 $ 66,862,806 $ 63,842,092 $ 63,731,255 $ 63,514,691 $ 64,326,891 $ 62,520,466
Restricted 3,557,678 2,956,449 3,059,208 3,656,410 3,526,343 4,572,848 4,023,895 4,807,531 4,140,342 3,777,410
Unrestricted 10,708,529 8,920,621 13,828,231 12,598,197 12,836,573 13,299,523 12,811,852 491,914 (4,142,119) (5,566,349)
Total Governmental Net Assets/Net Position $ 83,831,142 $ 80,941,870 $ 84,697,069 $ 84,199,564 $ 83,225,722 $ 81,714,463 $ 80,567,002 $ 68,814,136 $ 64,325,114 $ 60,731,527
Business-type Activities
Net Investment in Capital Assets $ 40,876,621 $ 41,876,507 $ 41,105,739 $ 40,419,728 $ 40,147,600 $ 40,032,858 $ 39,365,043 $ 39,231,223 $ 39,013,529 $ 38,114,686
Restricted 822,559 672,000 672,000 672,000 672,000 599,500 599,500 599,500 599,500 599,500
Unrestricted 6,775,508 5,983,935 7,630,396 9,211,610 8,961,713 8,491,848 8,377,093 6,423,540 5,762,272 6,382,906
Total Business-type Activities Net Assets/Net Position $ 48,474,688 $ 48,532,442 $ 49,408,135 $ 50,303,338 $ 49,781,313 $ 49,124,206 $ 48,341,636 $ 46,254,263 $ 45,375,301 $ 45,097,092
Primary Government
Net Investment in Capital Assets $ 110,441,556 $ 110,941,307 $ 108,915,369 $ 108,364,685 $ 107,010,406 $ 103,874,950 $ 103,096,298 $ 102,745,914 $ 103,340,420 $ 100,635,152
Restricted 4,380,237 3,628,449 3,731,208 4,328,410 4,198,343 5,172,348 4,623,395 5,407,031 4,739,842 4,376,910
Unrestricted 17,484,037 14,904,556 21,458,627 21,809,807 21,798,286 21,791,371 21,188,945 6,915,454 1,620,153 816,557
Total Primary Government Net Assets/Net Position $ 132,305,830 $ 129,474,312 $ 134,105,204 $ 134,502,902 $ 133,007,035 $ 130,838,669 $ 128,908,638 $ 115,068,399 $ 109,700,415 $ 105,828,619
120
(a) In 2013, the City implemented GASB 63 and 65 which changed the elements of the financial statements.
(b) In 2015, the City implemented GASB 68 and 71 which changed how governments measure and report pension liabilities.
SOURCE: The information in these schedules (unless otherwise noted) is
derived from the comprehensive annual financial reports for the relevant year.
City of Muskegon
CHANGES IN NET ASSETS/NET POSITION
Last Ten Fiscal Years
Period Ended
Year Ended December 31 June 30 Year Ended June 30
2008 2009 2010 2011 2012 2013 (a) 2014 2015 (b) 2016 2017
EXPENSES
Governmental Activities
Public representation $ 986,696 $ 923,911 $ 445,251 $ 854,249 $ 866,809 $ 893,981 $ 1,030,006 $ 939,907 $ 1,107,551 $ 1,113,897
Administrative services 782,362 698,022 317,873 645,585 566,161 565,307 543,425 614,757 663,077 679,139
Financial services 2,292,430 2,406,517 1,209,694 2,373,141 2,399,147 2,241,061 2,171,958 2,547,766 2,331,236 2,483,519
Public safety 13,955,811 13,614,112 6,332,728 13,390,888 13,213,251 12,987,842 12,946,466 14,243,233 17,118,742 16,910,473
Public works 3,019,411 2,986,747 1,640,946 3,471,051 2,958,367 3,201,806 3,361,422 3,183,627 3,109,454 3,551,230
Highways, streets and bridges 7,265,438 7,160,797 3,680,196 7,013,216 6,568,448 6,672,374 7,053,326 7,165,703 7,251,882 6,996,540
Community and economic development 3,174,508 4,139,765 1,275,026 2,830,867 2,447,373 2,499,404 2,417,518 2,712,131 5,223,431 3,738,566
Culture and recreation 2,623,501 2,463,375 759,392 1,524,331 1,601,316 1,592,358 1,671,185 1,806,790 3,551,692 3,918,814
General administration 574,955 451,651 210,117 794,115 791,197 322,348 366,634 389,248 326,452 301,287
Interest on long-term debt 324,076 288,073 139,006 272,940 283,186 291,535 277,345 271,607 248,223 172,591
Total Governmental Activities Expenses 34,999,188 35,132,970 16,010,229 33,170,383 31,695,255 31,268,016 31,839,285 33,874,769 40,931,740 39,866,056
Business-type Activities
Water 5,800,977 6,080,230 2,958,795 5,869,241 5,974,173 6,228,788 6,016,192 6,047,244 6,750,826 7,206,564
Sewer 5,503,144 5,426,321 2,525,067 5,288,622 6,202,359 7,226,839 7,582,602 8,460,509 8,669,469 8,876,690
Marina and launch ramp 347,642 310,773 150,055 292,889 310,174 426,553 503,997 305,990 327,832 336,912
Total Business-type Activities Expenses 11,651,763 11,817,324 5,633,917 11,450,752 12,486,706 13,882,180 14,102,791 14,813,743 15,748,127 16,420,166
Total Primary Government Expenses $ 46,650,951 $ 46,950,294 $ 21,644,146 $ 44,621,135 $ 44,181,961 $ 45,150,196 $ 45,942,076 $ 48,688,512 $ 56,679,867 $ 56,286,222
121
PROGRAM REVENUES
Governmental Activities
Charges for Services
Public representation $ 188,467 $ 213,885 $ 100,177 $ 196,886 $ 196,886 $ 173,739 $ 189,444 $ 188,638 $ 226,559 $ 228,767
Administrative services 257,850 271,117 129,630 263,473 270,886 268,535 325,937 415,308 474,737 572,739
Financial services 726,572 818,845 475,031 879,905 881,229 830,919 871,632 823,547 925,474 895,924
Public safety 1,217,616 1,117,476 536,419 1,109,659 1,136,942 1,133,666 1,407,722 1,218,644 1,248,911 1,824,114
Public works 382,072 383,733 209,203 642,082 480,487 671,494 796,739 571,426 379,877 646,876
Highways, streets and bridges 301,955 251,840 139,009 451,473 230,241 245,609 351,962 258,475 234,861 256,190
Community and economic development 297,854 249,241 186,572 457,952 617,379 432,240 477,486 576,863 444,632 706,195
Culture and recreation 405,520 445,891 129,025 300,367 315,010 606,818 535,211 368,168 1,229,067 1,463,839
General administration 99,494 123,426 59,373 116,690 116,690 287,729 50,728 48,764 52,512 37,892
Operating grants and contributions 5,367,152 6,443,223 3,131,811 5,425,165 4,651,576 4,681,345 4,664,098 5,071,239 5,330,825 5,208,818
Capital grants and contributions 3,444,957 2,105,557 255,234 2,257,163 1,568,005 886,108 1,408,424 3,496,623 3,804,656 862,074
Total Governmental Program Revenues 12,689,509 12,424,234 5,351,484 12,100,815 10,465,331 10,218,202 11,079,383 13,037,695 14,352,111 12,703,428
Business-type Activities
Water 6,240,060 5,883,830 2,891,169 5,454,760 5,254,095 5,890,614 6,099,480 6,375,869 7,485,013 7,430,314
Sewer 5,326,787 5,720,171 3,441,924 6,652,851 6,455,634 7,058,315 6,633,911 6,363,808 6,305,554 7,620,208
Marina and launch ramp 250,266 242,055 156,767 194,311 208,370 234,229 228,339 255,638 287,547 278,753
Operating grants and contributions - - - - - 6,188 - - - 2,436
Capital grants and contributions - 5,179 - 20,074 - 88,046 327,240 474,681 765,363 784,969
Total Business-type program revenues 11,817,113 11,851,235 6,489,860 12,321,996 11,918,099 13,277,392 13,288,970 13,469,996 14,843,477 16,116,680
Total Primary Government program revenues $ 24,506,622 $ 24,275,469 $ 11,841,344 $ 24,422,811 $ 22,383,430 $ 23,495,594 $ 24,368,353 $ 26,507,691 $ 29,195,588 $ 28,820,108
NET (EXPENSE) REVENUE
Governmental Activities $ (22,309,679) $ (22,708,736) $ (10,658,745) $ (21,069,568) $ (21,229,924) $ (21,049,814) $ (20,759,902) $ (20,837,074) $ (26,579,629) $ (27,162,628)
Business-type Activities 165,350 33,911 855,943 871,244 (568,607) (604,788) (813,821) (1,343,747) (904,650) (303,486)
Total Primary Government net expense $ (22,144,329) $ (22,674,825) $ (9,802,802) $ (20,198,324) $ (21,798,531) $ (21,654,602) $ (21,573,723) $ (22,180,821) $ (27,484,279) $ (27,466,114)
City of Muskegon
CHANGES IN NET ASSETS/NET POSITION
Last Ten Fiscal Years
Period Ended
Year Ended December 31 June 30 Year Ended June 30
2008 2009 2010 2011 2012 2013 (a) 2014 2015 (b) 2016 2017
GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS/NET POSITION
Governmental Activities
Property taxes $ 8,349,341 $ 8,492,507 $ 8,681,256 $ 8,844,004 $ 8,383,224 $ 7,592,847 $ 7,383,236 $ 7,894,189 $ 8,366,212 $ 8,389,243
Income taxes 8,117,566 6,628,365 3,505,264 6,866,967 7,663,534 8,057,145 7,762,719 8,478,231 8,386,775 8,707,279
Franchise fees 304,812 321,852 178,239 362,103 342,376 358,785 358,754 369,965 372,117 378,955
Grants and contributions not restricted for specific programs 4,487,698 3,841,922 1,832,066 3,846,859 3,577,848 3,700,871 3,813,221 3,989,178 4,051,050 4,630,111
Unrestricted investment earnings 730,142 185,436 104,086 193,435 100,073 73,157 146,590 99,733 189,408 106,653
Miscellaneous 160,460 226,124 51,638 432,880 154,531 102,388 124,085 805,432 626,014 512,738
Gain on sale of capital asset 323,048 123,258 65,155 25,815 34,496 44,899 23,836 20,302 99,031 844,062
Transfers (40,000) - (3,760) - - - - - - -
Total Governmental Program Revenues 22,433,067 19,819,464 14,413,944 20,572,063 20,256,082 19,930,092 19,612,441 21,657,030 22,090,607 23,569,041
Business-type Activities
Unrestricted investment earnings 108,990 23,843 15,990 23,959 46,582 33,148 31,251 29,879 25,688 25,277
Gain on sale of capital asset - - - - - - - - - -
Transfers 40,000 - 3,760 - - - - - - -
Total Business-type program revenues 148,990 23,843 19,750 23,959 46,582 33,148 31,251 29,879 25,688 25,277
Total Primary Government program revenues $ 22,582,057 $ 19,843,307 $ 14,433,694 $ 20,596,022 $ 20,302,664 $ 19,963,240 $ 19,643,692 $ 21,686,909 $ 22,116,295 $ 23,594,318
CHANGE IN NET ASSETS/NET POSITION
Governmental Activities $ 123,388 $ (2,889,272) $ 3,755,199 $ (497,505) $ (973,842) $ (1,119,722) $ (1,147,461) $ 819,956 $ (4,489,022) $ (3,593,587)
122
Business-type Activities 314,340 57,754 875,693 895,203 (522,025) (571,640) (782,570) (1,313,868) (878,962) (278,209)
Total Primary Government $ 437,728 $ (2,831,518) $ 4,630,892 $ 397,698 $ (1,495,867) $ (1,691,362) $ (1,930,031) $ (493,912) $ (5,367,984) $ (3,871,796)
(a) In 2013, the City implemented GASB 63 and 65 which changed the elements of the financial statements.
(b) In 2015, the City implemented GASB 68 and 71 which changed how governments measure and report pension liabilities.
SOURCE: The information in these schedules (unless otherwise noted) is
derived from the comprehensive annual financial reports for the relevant year.
City of Muskegon
FUND BALANCE OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
December 31 June 30
2008 2009 2010 2011 (a) 2012 2013 2014 2015 2016 2017
General fund
Reserved $ 214,819 $ 187,633 $ 300,969 $ - $ - $ - $ - $ - $ - $ -
Nonspendable - - - 251,173 178,468 447,341 300,952 220,178 232,332 209,353
Restricted - - - - - - - - - -
Assigned - - - 2,385,728 2,075,738 2,292,495 1,700,000 1,700,000 1,700,000 1,700,000
Unassigned - - - 3,374,481 4,265,839 4,613,722 5,495,145 5,883,318 6,098,977 6,148,292
Unreserved 2,168,906 1,451,029 5,737,485 - - - - - - -
Total general fund $ 2,383,725 $ 1,638,662 $ 6,038,454 $ 6,011,382 $ 6,520,045 $ 7,353,558 $ 7,496,097 $ 7,803,496 $ 8,031,309 $ 8,057,645
All other governmental funds
Reserved $ 4,382,118 $ 3,613,858 $ 3,887,289 $ - $ - $ - $ - $ - $ - $ -
Nonspendable - - - 1,704,256 1,568,318 1,547,793 1,556,347 2,073,747 1,597,371 1,716,825
Restricted - - - 1,375,779 3,485,073 2,749,396 2,305,385 3,159,130 2,995,610 2,726,754
Assigned - - - 2,073,027 2,055,904 2,087,359 1,729,457 2,146,050 1,373,669 3,510,747
Unassigned - - - (238,104) (191,282) (82,048) (100,054) - - -
Unreserved, reported in:
123
Special revenue funds 2,768,886 2,060,117 2,163,041 - - - - - - -
Capital project funds 675,898 554,273 6,035 - - - - - - -
Permanent funds 60,813 15,613 16,979 - - - - - - -
Total all other governmental funds $ 7,887,715 $ 6,243,861 $ 6,073,344 $ 4,914,958 $ 6,918,013 $ 6,302,500 $ 5,491,135 $ 7,378,927 $ 5,966,650 $ 7,954,326
(a) In fiscal 2011, the City adopted GASB 54 which changed fund balance classifications.
SOURCE: The information in these schedules
(unless otherwise noted) is derived from the
comprehensive annual financial reports for the
relevant year.
City of Muskegon
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
Period Ended
Year Ended December 31 June 30 Year Ended June 30
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Revenues
Taxes $ 15,728,859 $ 14,673,012 $ 11,855,182 $ 15,146,430 $ 15,506,668 $ 14,832,027 $ 14,954,904 $ 15,830,137 $ 16,178,761 $ 16,667,272
Intergovernmental 13,012,035 12,400,408 4,785,494 11,525,749 9,899,379 9,403,554 9,945,065 12,301,594 11,711,788 10,743,434
Charges for services 2,463,975 2,620,372 1,338,194 2,769,204 2,596,328 2,769,227 2,569,335 2,468,889 3,468,938 3,918,217
Other 3,624,579 3,177,522 1,768,895 3,461,292 3,237,189 2,795,952 3,256,324 4,003,105 3,868,958 4,005,126
Total revenues 34,829,448 32,871,314 19,747,765 32,902,675 31,239,564 29,800,760 30,725,628 34,603,725 35,228,445 35,334,049
Expenditures
Public representation 987,229 923,923 448,703 851,918 867,762 892,113 1,031,984 930,788 1,064,503 1,080,032
Administrative services 632,513 645,704 303,555 586,328 515,988 508,130 497,025 554,330 577,454 624,284
Financial services 2,298,830 2,406,623 1,241,430 2,352,709 2,407,131 2,196,917 2,197,651 2,476,740 2,068,208 2,236,941
Public safety 13,754,394 13,567,101 6,578,735 13,087,976 12,963,122 12,724,094 12,987,898 13,285,004 13,476,557 14,086,619
Public works 2,831,177 2,860,510 1,589,090 3,079,342 2,835,000 2,878,328 2,918,305 2,876,576 2,864,878 3,206,050
Highways, streets and bridges 6,414,453 3,436,069 1,823,089 3,226,377 2,756,010 2,815,337 3,011,611 2,986,909 3,102,391 3,096,875
Community and economic development 1,077,312 4,440,687 1,330,794 3,109,693 2,850,593 2,578,073 2,687,933 2,957,071 5,415,436 3,878,547
Culture and recreation 2,394,031 2,196,186 639,852 1,197,020 1,265,743 1,248,174 1,308,481 1,444,471 3,100,338 3,523,178
Other governmental functions 562,341 438,292 200,623 1,775,128 770,910 299,812 643,666 369,408 305,807 280,416
124
Debt service
Principal 999,148 663,371 303,466 1,345,183 289,597 395,211 402,492 417,842 428,199 283,563
Interest 310,432 282,174 136,013 267,258 268,315 292,554 278,412 272,946 257,516 211,242
Issuance costs - - - - - - - - 97,578 -
Capital outlay 5,473,828 3,517,741 980,822 3,301,273 2,948,610 3,230,586 3,577,837 3,992,111 3,867,579 2,328,615
Total expenditure 37,735,688 35,378,381 15,576,172 34,180,205 30,738,781 30,059,329 31,543,295 32,564,196 36,626,444 34,836,362
Excess of revenues over (under) expenditures (2,906,240) (2,507,067) 4,171,593 (1,277,530) 500,783 (258,569) (817,667) 2,039,529 (1,397,999) 497,687
Other financing sources (uses)
Transfers in 1,477,717 1,359,608 342,188 1,348,694 510,907 1,356,229 743,035 853,910 1,563,094 1,805,000
Transfers out (1,409,491) (1,309,910) (359,971) (1,376,740) (613,953) (784,275) (771,081) (942,933) (1,638,094) (1,818,000)
Bonds issued 500,000 - - - 2,000,000 - - - 97,578 -
Sale of capital assets 375,723 68,452 75,465 120,118 113,981 190,263 176,887 244,685 190,957 1,529,325
Total other financing sources (uses) 943,949 118,150 57,682 92,072 2,010,935 762,217 148,841 155,662 213,535 1,516,325
Net change in fund balances $ (1,962,291) $ (2,388,917) $ 4,229,275 $ (1,185,458) $ 2,511,718 $ 503,648 $ (668,826) $ 2,195,191 $ (1,184,464) $ 2,014,012
Debt service as a percentage of noncapital
expenditures 4.06% 2.97% 3.01% 5.22% 2.01% 2.56% 2.43% 2.42% 2.09% 1.52%
SOURCE: The information in these schedules
(unless otherwise noted) is derived from the
comprehensive annual financial reports for the
relevant year.
City of Muskegon
GOVERNMENTAL ACTIVITIES REVENUES BY SOURCE
Last Ten Fiscal Years
Fiscal 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
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%
2010* 8,487,125 43.0% 3,368,057 17.1% 4,785,494 24.2% 1,338,194 6.8% 584,162 3.0% 297,043 1.5% 193,873 1.0% 693,817 3.5% 19,747,765 -39.9%
2011 8,546,677 26.0% 6,599,753 20.1% 11,525,749 35.0% 2,769,204 8.4% 1,179,639 3.6% 447,254 1.4% 412,498 1.3% 1,421,901 4.3% 32,902,675 66.6%
2012 8,093,864 25.9% 7,412,804 23.7% 9,899,379 31.7% 2,596,328 8.3% 1,223,034 3.9% 459,401 1.5% 307,891 1.0% 1,246,863 4.0% 31,239,564 -5.1%
2013 7,325,555 24.6% 7,506,472 25.2% 9,403,554 31.6% 2,769,227 9.3% 1,238,285 4.2% 435,893 1.5% 267,397 0.9% 854,377 2.9% 29,800,760 -4.6%
2014 7,123,481 23.2% 7,831,423 25.5% 9,945,065 32.4% 2,569,335 8.4% 1,570,137 5.1% 418,691 1.4% 352,153 1.1% 915,343 3.0% 30,725,628 3.1%
2015 7,555,471 21.8% 8,274,666 23.9% 12,301,594 35.5% 2,468,889 7.1% 1,361,721 3.9% 452,004 1.3% 343,105 1.0% 1,846,275 5.3% 34,603,725 12.6%
2016 8,026,859 22.8% 8,151,902 23.1% 11,711,788 33.2% 3,468,938 9.8% 1,443,144 4.1% 459,181 1.3% 455,671 1.3% 1,510,962 4.3% 35,228,445 1.8%
2017 8,056,460 22.8% 8,610,812 24.4% 10,743,434 30.4% 3,918,217 11.1% 1,884,341 5.3% 494,369 1.4% 290,578 0.8% 1,335,838 3.8% 35,334,049 0.3%
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year.
125
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 Total As a Percent
Year Residential Agriculture Commercial Industrial Property Property Ad Valorem Property Property Property IFT and CFT Valuation City Actual
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 11.0685 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 11.0682 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 11.0680 91.48%
2010 332,105,030 - 144,721,736 109,507,141 586,333,907 104,029,037 690,362,944 4,111,154 9,129,000 - 13,240,154 703,603,098 12.0680 94.04%
2011 331,901,631 - 144,675,509 87,261,346 563,838,486 93,465,537 657,304,023 3,071,654 9,129,000 - 12,200,654 669,504,677 12.0749 94.95%
2012 312,930,252 - 134,635,427 81,575,476 529,141,155 91,750,891 620,892,046 3,587,223 6,161,900 - 9,749,123 630,641,169 12.0789 96.40%
2013 310,252,865 - 118,856,014 76,331,458 505,440,337 91,730,093 597,170,430 6,677,737 7,472,900 - 14,150,637 611,321,067 12.0865 96.97%
2014 312,031,296 - 115,070,943 61,196,955 488,299,194 91,020,452 579,319,646 3,874,303 6,512,600 - 10,386,903 589,706,549 13.0875 96.26%
2015 314,055,244 - 116,448,947 54,898,389 485,402,580 95,098,912 580,501,492 3,149,352 7,772,000 - 10,921,352 591,422,844 13.0869 95.28%
2016 314,299,363 - 114,855,236 50,232,295 479,386,894 74,155,243 553,542,137 3,628,098 5,690,600 - 9,318,698 562,860,835 13.0905 93.60%
Assessed and Equalized Valuation of Property
Ad Valorem Assessment Roll Industrial and Commercial Facilities Assessment Roll
Total Industrial Industrial Commercial Total Estimated
Real Personal Total Real Personal Real Total Assessed Actual
126
Year Residential Agriculture Commercial Industrial Property Property Ad Valorem Property Property Property IFT and CFT Valuation Value
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
2010 354,044,700 - 154,185,000 122,703,400 630,933,100 104,020,200 734,953,300 4,120,400 9,129,000 - 13,249,400 748,202,700 1,496,405,400
2011 354,307,945 - 154,700,200 90,467,700 599,475,845 93,456,700 692,932,545 3,080,900 9,129,000 - 12,209,900 705,142,445 1,410,284,890
2012 327,226,000 - 141,238,834 84,084,000 552,548,834 91,740,800 644,289,634 3,719,300 6,161,900 - 9,881,200 654,170,834 1,308,341,668
2013 321,604,220 - 123,831,400 79,037,400 524,473,020 91,720,300 616,193,320 6,766,000 7,472,900 - 14,238,900 630,432,220 1,260,864,440
2014 326,690,900 - 120,803,800 63,704,200 511,198,900 91,004,400 602,203,300 3,877,300 6,512,600 - 10,389,900 612,593,200 1,225,186,400
2015 335,445,400 - 122,235,800 57,024,100 514,705,300 95,084,900 609,790,200 3,149,800 7,772,000 - 10,921,800 620,712,000 1,241,424,000
2016 342,767,600 - 122,574,300 52,323,600 517,665,500 74,140,100 591,805,600 3,851,200 5,690,600 - 9,541,800 601,347,400 1,202,694,800
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
June 30, 2017
6/30/2017 12/31/2007
Percent of Percent of
Taxable Total Taxable Taxable Total Taxable
Taxpayer Valuation Rank Valuation Valuation Rank Valuation
Consumers Energy $ 30,979,616 1 5.6% $ 73,329,972 1 9.6%
DTE Gas Company 7,759,800 2 1.4% 7,960,600 3 1.0%
Mercy General Health Partners 6,989,506 3 1.3% - 0.0%
Michigan Electric Transmission 4,249,600 4 0.8% - 0.0%
Muskegon Holdings LLC 4,129,459 5 0.7% - 0.0%
Glen Oaks Apartments, LLC 3,335,913 6 0.6% - 0.0%
GE Aviation (Johnson Technology) 2,909,695 7 0.5% 7,797,731 4 1.0%
127
RCG Muskegon LLC 2,696,300 8 0.5% - 0.0%
Fleet Engineers 2,638,785 9 0.5% - 0.0%
Broadstone PC Michigan LLC 2,585,787 10 0.5% - 0.0%
Sappi (S.D. Warren Co.) 35,802,173 2 4.7%
Hinman Lake LLC 5,651,361 5 0.7%
Esco Company 5,844,530 6 0.8%
Honeywell Inc 5,271,800 7 0.7%
Brunswick 4,973,900 8 0.6%
Coles Quality Foods 5,583,238 9 0.7%
Lorin Industries 4,911,077 10 0.6%
Total - 10 Largest 68,274,461 12.4% 157,126,382 20.5%
Total - All Other 482,527,122 87.6% 609,329,833 79.5%
$ 550,801,583 100.0% $ 766,456,215 100.0%
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 Library
Year Operating Promotion Sanitation City District Debt
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 -
2010 9.5000 0.0680 2.5000 12.0680 2.4000 -
2011 9.5000 0.0749 2.5000 12.0749 2.4000 -
2012 9.5000 0.0789 2.5000 12.0789 2.4000 -
2013 9.5000 0.0865 2.5000 12.0865 2.4000 -
2014 10.0000 0.0875 3.0000 13.0875 2.4000 -
2015 10.0000 0.0869 3.0000 13.0869 2.4000 0.5611
2016 10.0000 0.0905 3.0000 13.0905 2.4000 0.4962
Overlapping - County-Wide Rates
Muskegon Intermediate Special Vocational Community MAISD Community
Year County School Education Education College Gen Ed College Debt
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 - -
2010 6.6957 0.4597 2.2987 0.9996 2.2037 - -
2011 6.6957 0.4597 2.2987 0.9996 2.2037 - -
2012 6.6957 0.4597 2.2987 0.9996 2.2037 - -
2013 6.6957 0.4597 2.2987 0.9996 2.2037 - -
2014 6.6557 0.4597 2.2987 0.9996 2.2037 1.0000 0.3400
2015 6.6357 0.4597 2.2987 0.9996 2.2037 1.0000 0.3400
2016 6.8957 0.4597 2.2987 0.9996 2.2037 1.0000 0.3400
Overlapping - School District Grand Total
State Non-
Year Operating Debt Total Education Homestead Homestead
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
2010 18.0000 5.7500 23.7500 6.0000 38.8754 56.8754
2011 18.0000 6.2500 24.2500 6.0000 39.3823 57.3823
2012 18.0000 7.1000 25.1000 6.0000 40.2363 58.2363
2013 18.0000 7.1000 25.1000 6.0000 40.2439 58.2439
2014 18.0000 7.6000 25.6000 6.0000 43.0449 61.0449
2015 18.0000 6.8000 24.8000 6.0000 42.7854 60.7854
2016 18.0000 6.3500 24.3500 6.0000 42.5341 60.5341
128
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
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%
2010 8,945,500 7,784,052 87.0% 1,077,056 8,861,108 99.1% 58,027 70,745 13,647 1.59%
2011 8,583,284 7,457,610 86.9% 1,030,902 8,488,512 98.9% 54,707 80,068 12,935 1.72%
2012 7,872,541 6,882,534 87.4% 915,950 7,798,484 99.1% 27,163 68,945 5,113 1.29%
2013 7,668,166 6,703,147 87.4% 912,362 7,615,509 99.3% 102,713 45,361 7,296 2.03%
2014 8,032,955 7,069,804 88.0% 917,806 7,987,610 99.4% 57,680 41,074 2,788 1.26%
2015 8,132,782 7,247,701 89.1% 848,266 8,095,967 99.5% 62,345 33,407 1,862 1.20%
2016 7,719,829 6,828,816 88.5% 853,639 7,682,455 99.5% 42,063 23,671 1,365 0.87%
129
SOURCE: City of Muskegon Treasurer' Office
City of Muskegon
SEGMENTED DATA ON INCOME TAX FILERS, RATES AND LIABILITY
Most recent Year and Ten Years Previous
Year Ended June 30, 2017 Year Ended December 31, 2007
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 859 5% $ 825,100 $ 8,251 0% 1,132 5% $ 943,800 $ 9,438 0%
$2,501-$7,500 559 3% 5,363,900 53,639 1% 898 4% 6,354,100 63,541 1%
$7,501-$25,000 1,502 8% 46,350,900 463,509 5% 2,248 10% 50,880,400 508,804 7%
$25,001-$50,000 1,465 8% 100,541,500 1,005,415 12% 1,902 8% 98,079,200 980,792 13%
$50,001-$100,000 864 5% 111,816,600 1,118,166 13% 965 4% 91,652,000 916,520 12%
More than $100,000 215 1% 63,579,700 635,797 7% 163 1% 42,426,600 424,266 6%
Subtotal 5,464 31% $ 328,477,700 $ 3,284,777 38% 7,308 32% $ 290,336,100 $ 2,903,361 38%
Non-Residents Taxpayers:
130
(Non-residents are taxed at a rate of 0.5% on income earned within the City.)
$2,500 or less 1,625 9% $ 860,000 $ 7,538 0% 2,230 10% $ 1,265,852 $ 9,395 0%
$2,501-$7,500 966 5% 4,602,400 43,479 1% 1,331 6% 6,407,400 45,323 1%
$7,501-$25,000 2,162 12% 34,727,600 305,940 4% 3,447 15% 56,191,600 394,402 5%
$25,001-$50,000 2,768 16% 101,449,400 893,740 10% 3,854 17% 142,114,800 997,762 13%
$50,001-$100,000 2,331 13% 155,160,600 1,366,920 16% 2,493 11% 165,312,800 1,160,765 15%
More than $100,000 726 4% 158,580,000 1,397,044 16% 628 3% 134,013,400 940,903 12%
Subtotal 10,578 59% $ 455,380,000 $ 4,014,661 47% 13,983 60% $ 505,305,852 $ 3,548,550 47%
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 1,750 10% $ 1,311,374 15% 1,850 8% $ 1,166,550 15%
Total 17,792 100% $ 8,610,812 100% 23,141 100% $ 7,618,461 100%
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.
City of Muskegon
RATIO OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Governmental Activities Business-Type Activities
General
Obligation Special Total
Limited Tax Assessment Governmental Revenue Total Business- Total Primary Per
Year Bonds Bonds State Loans Activities Bonds State Loans Type Activities Government Capita
2008 $ 6,844,970 $ 215,000 $ 1,416,900 $ 8,476,870 $ 7,075,000 $ 12,170,000 $ 19,245,000 $ 27,721,870 $ 696
2009 6,623,499 70,000 1,120,000 7,813,499 6,565,000 11,570,000 18,135,000 25,948,499 659
2010* 6,444,605 - 1,065,428 7,510,033 5,995,000 11,570,000 17,565,000 25,075,033 639
2011 5,920,000 - 244,850 6,164,850 5,415,000 10,955,000 16,370,000 22,534,850 587
2012 7,725,000 - 150,253 7,875,253 4,815,000 10,325,000 15,140,000 23,015,253 599
131
2013 7,350,000 - 130,042 7,480,042 4,205,000 9,685,000 13,890,000 21,370,042 577
2014 6,954,535 - 112,550 7,067,085 3,630,728 9,030,000 12,660,728 19,727,813 533
2015 6,555,436 - 94,708 6,650,144 2,949,368 8,360,000 11,309,368 17,959,512 483
2016 6,243,903 - 76,509 6,320,412 2,246,962 7,675,000 9,921,962 16,242,374 436
2017 5,940,903 - 57,946 5,998,849 1,523,661 6,980,000 8,503,661 14,502,510 378
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
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.
City of Muskegon
DIRECT AND OVERLAPPING DEBT
June 30, 2017
Total Debt Debt Supported by City
Name of Governmental Unit Outstanding Self Supporting General Revenues
Direct Debt
City of Muskegon:
Revenue Bonds $ 8,503,661 $ 8,503,661 $ -
Capital Improvement Bonds 5,940,903 - 5,940,903
Intergovernmental Bonds 57,946 - 57,946
Component Unit Debt:
Downtown Development Authority 1,335,327 1,335,327 -
Local Development Finance Authority 2,942,948 2,942,948 -
Total City Direct Debt $ 18,780,785 $ 12,781,936 $ 5,998,849
City Share as
Gross Percent of Gross Net
Overlapping Debt
Muskegon School District $ 14,340,000 95.08% $ 13,634,472
Orchard View School District 41,835,872 19.58% 8,191,464
Reith's Puffer School District 68,097,768 1.84% 1,252,999
Hackley Public Library 2,635,000 95.08% 2,505,358
Muskegon County 70,305,000 12.81% 9,006,071
Muskegon Community College 27,150,000 12.81% 3,477,915
Total Overlapping Debt $ 224,363,640 38,068,279
Total City Direct and Overlapping Debt $ 44,067,128
NOTE: None of the debt issued by the City is payable through the levy of property tax millages.
The percentage of overlapping debt is estimated using taxable property values. Applicable percentages were estimated by
determining the portion of the City's taxable value that is within each overalapping government unit's boundaries. 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.
132
City of Muskegon
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
2008 2009 2010* 2011 2012 2013 2014 2015 2016 2017
Debt Limit $ 85,933,940 $ 82,198,965 $ 82,198,965 $ 78,308,925 $ 73,585,150 $ 68,555,700 $ 61,706,477 $ 61,510,980 $ 60,962,090 $ 61,333,841
Total net debt applicable to limit 15,481,870 14,778,499 14,435,033 12,929,850 14,375,253 13,655,042 12,847,550 11,969,708 11,313,794 10,290,785
Legal debt margin $ 70,452,070 $ 67,420,466 $ 67,763,932 $ 65,379,075 $ 59,209,897 $ 54,900,658 $ 48,858,927 $ 49,541,272 $ 49,648,296 $ 51,043,056
Total net debt applicable to the limit as 18.02% 17.98% 17.56% 16.51% 19.54% 19.92% 20.82% 19.46% 18.56% 16.78%
a percentage of debt limit
Legal Debt Margin Calculation for 2017:
Assessed Valuation: $ 613,338,410
Legal Debt Limit (10% ) 61,333,841
Total Indebtedness: $ 18,780,785
Debt not Subject to Limitation:
Paid by Special Assessment -
Revenue Bonds (8,490,000)
133
Debt Subject to Limitation 10,290,785
Legal Debt Margin $ 51,043,056
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
SOURCE: The information in these schedules
(unless otherwise noted) is derived from the
comprehensive annual financial reports for the
relevant year.
City of Muskegon
REVENUE BOND COVERAGE
Last Ten Fiscal Years
Water Supply System
Direct Net Revenue
Fiscal Gross Operating Available For Debt Service Requirements
Year Revenue (a) Expenses (b) Debt Service Principal Interest Total Coverage
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
2010* 2,904,735 1,575,275 1,329,460 535,000 271,522 806,522 1.65
2011 5,467,785 3,294,530 2,173,255 1,195,000 451,323 1,646,323 1.32
2012 5,273,720 3,441,078 1,832,642 1,230,000 410,187 1,640,187 1.12
2013 5,907,784 3,729,276 2,178,508 1,250,000 384,694 1,634,694 1.33
2014 6,109,144 3,511,477 2,597,667 1,295,000 352,634 1,647,634 1.58
2015 6,388,474 3,774,508 2,613,966 1,330,000 320,857 1,650,857 1.58
2016 7,498,376 4,460,076 3,038,300 1,370,000 283,360 1,653,360 1.84
2017 7,449,646 4,997,912 2,451,734 1,405,000 246,434 1,651,434 1.48
Sewage Disposal System
Direct Net Revenue
Fiscal Gross Operating Available For Debt Service Requirements
Year Revenue (a) Expenses (b) Debt Service Principal Interest Total Coverage
2008 $ 5,338,647 $ 4,979,343 $ 359,304 $ 546,278 $ 12,550 $ 558,828 0.64
2009 No Direct System Indebtedness
2010* No Direct System Indebtedness
2011 No Direct System Indebtedness
2012 No Direct System Indebtedness
2013 No Direct System Indebtedness
2014 No Direct System Indebtedness
2015 No Direct System Indebtedness
2016 No Direct System Indebtedness
2017 No Direct System Indebtedness
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
For years in which "revenue bond coverage" is less than 1.00, the shortfall was made up either by use of net position 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.
134
City of Muskegon
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Fiscal Years
Fiscal Personal Per Capita Median Public School Building Permits
Year Population Income Income Age Enrollment Number Value Unemployment
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%
2010 39,259 735,734,614 18,741 32.8 5,931 374 11,900,915 17.8%
2011 38,401 737,646,617 19,209 34.1 5,162 835 18,829,825 13.8%
2012 38,225 752,622,470 19,689 34.1 5,428 891 21,932,738 8.5%
2013 37,046 747,644,037 20,182 34.1 4,367 826 24,613,938 12.0%
2014 37,213 769,789,707 20,686 34.1 4,808 1,108 54,065,115 9.6%
2015 37,213 789,034,450 21,203 35.8 4,387 1,102 46,541,966 10.3%
2016 37,213 808,760,311 21,733 35.8 4,206 1,112 58,924,856 8.3%
135
2017 38,349 854,285,543 22,277 35.8 3,985 1,075 78,271,395 4.8%
SOURCE: US Census Bureau, Muskegon Area Intermediate School Distrct (MAISD), City of Muskegon Inspections Department, Michigan Department of Technology,
Management, & Budget
City of Muskegon
PRINCIPAL EMPLOYERS
Current Year and Ten Years Ago
2017 2007
Percentage Percentage
of total of total
City City
Employer Employees Rank employment Employees Rank employment
Mercy General Health Partners* 4,114 1 27.4% 1,954 1 11.7%
ADAC Automotive 979 2 6.5% 500 6 3.0%
County of Muskegon 755 3 5.0% 1,211 3 7.2%
Port City Group 667 4 4.4%
Muskegon Public Schools 565 5 3.8% 931 5 5.6%
SAF Holland USA 345 6 2.3%
G.E. Aviation (formerly Johnson Technology Inc.) 331 7 2.2% 425 7 2.5%
Knoll Inc 310 8 2.1%
136
Muskegon Area Intermediate 253 9 1.7%
Betten Automotive Group 232 10 1.5%
State of Michigan 1,064 4 6.4%
Verizon 350 8 2.1%
Sappi Fine Paper (formerly SD Warren) 250 10 1.5%
City of Muskegon 270 9 1.6%
Hackley Hospital 1,578 2 9.4%
* Hackley Hospital merged with the former Mercy Hospital to become Mercy General Health Partners.
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 2007 2008 2009 2010* 2011 2012 2013 2014 2015 2016 2017
Administration 1.50 1.50 - - 0.40 0.40 0.40 0.40 - - -
Affirmative Action 1.50 1.50 1.50 1.50 1.10 1.10 1.10 1.10 1.30 1.30 1.46
Cemetaries 3.25 3.25 3.25 2.50 2.20 1.75 1.25 1.25 1.25 1.25 1.25
City Clerk & Elections 4.00 4.00 4.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.54
City Commission 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
City Hall Maintenance 1.00 1.00 1.00 1.00 0.55 0.55 0.55 0.55 0.55 0.55 0.55
City Manager's Office 1.75 1.75 3.25 2.25 2.25 2.25 2.25 2.25 2.05 2.05 1.75
City Treasurer's Office 4.00 5.00 5.00 5.00 5.00 5.00 5.00 4.50 5.50 5.50 5.50
Civil Service 2.00 2.00 2.00 2.00 1.00 - - - - - -
Environmental Services 2.00 2.00 2.00 2.00 2.00 5.00 5.00 5.00 2.00 2.00 2.00
Farmers Market - - 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 -
Finance Administration 4.00 4.00 4.00 3.00 3.00 3.00 2.00 2.00 3.00 3.00 3.00
Fire 38.00 38.00 38.00 36.00 33.00 35.00 28.00 28.83 32.00 35.00 35.00
Fire Safety Inspections 12.00 12.00 12.00 9.00 8.00 6.00 6.00 0.83 - - -
General Recreation 1.33 1.66 1.66 2.00 - - - - - - -
Income Tax Administration 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.50 3.50 3.50 3.50
Information Systems 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Parks 8.15 8.15 7.99 7.15 6.00 6.05 6.05 6.00 6.00 6.00 7.05
Planning, Zoning & Economic Development 6.00 6.00 6.00 5.00 4.00 3.00 3.00 3.00 3.40 3.40 3.45
137
Police 94.00 94.00 94.00 88.00 88.00 88.00 88.00 87.34 88.00 88.00 88.00
Sanitation 1.00 1.00 1.00 - 0.30 0.20 0.20 0.20 0.20 0.20 0.20
Senior Transit - - - - - 0.05 0.05 0.05 - - -
MVH-Major Streets 17.75 15.75 13.75 12.00 12.00 11.70 10.70 10.70 10.70 10.70 10.70
MVH-Local Streets 7.00 6.00 8.00 7.00 7.00 6.70 6.70 6.70 6.70 6.70 6.70
Community Development 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Home Program 1.00 1.00 1.00 0.25 0.25 - - - - - -
Lead Program - - - 0.75 0.75 - - - - - -
Sewer Maintenance 16.20 15.20 13.20 10.20 10.20 9.75 9.75 9.80 9.80 9.80 9.80
Water Filtration 10.00 10.00 10.00 10.00 10.00 9.00 10.00 10.00 10.00 10.00 10.00
Water Maintenance 12.50 13.50 15.40 12.40 12.40 11.75 11.75 11.75 11.75 11.75 11.75
Hartshorn Marina Fund 0.67 0.34 0.05 0.05 0.05 0.30 0.30 0.30 0.30 0.30 0.30
Public Service Building 3.45 3.45 3.70 8.95 8.05 7.95 8.45 8.45 8.50 8.50 8.50
Engineering 7.45 7.45 7.45 5.45 4.95 4.95 4.95 4.95 4.95 4.95 4.95
Equipment 8.25 8.25 8.50 7.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25
282.00 280.00 280.00 256.00 244.00 241.00 233.00 227.00 228.00 231.00 232.45
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
SOURCE: City of Muskegon Finance Department
City of Muskegon
OPERATING INDICATORS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Function/Program 2008 2009 2010* 2011 2012 2013 2014 2015 2016 2017
Administrative Services
Elections
Number of registered voters 27,678 26,136 26,136 26,330 26,324 26,098 26,025 24,014 24,005 24,612
Number of votes cast:
Last general election 15,271 15,271 15,271 8,106 1,933 13,487 3,029 7,763 2,547 13,179
Last city election 1,101 2,254 2,254 8,106 1,933 2,131 3,029 7,763 2,547 13,179
Percentage of registered voters voting:
Last general election 55% 58% 58% 31% 7% 52% 12% 32% 11% 54%
Last city election 4% 9% 9% 31% 7% 8% 12% 32% 11% 54%
Financial Services
Property Tax Bills 15,350 15,435 - 15,351 15,261 15,291 15,211 14,528 14,611 14,243
Income Tax Returns 22,598 21,071 19,963 19,688 18,699 17,857 18,222 17,839 17,800 17,792
Paper Check Issued to Vendors 3,346 3,113 1,486 2,986 3,746 1,677 1,404 1,527 1,608 1,675
Electronic Payments to Vendors 763 963 450 884 1,334 1,251 1,579 1,471 1,849 1,998
138
Public Safety
Fire Protection
Number of firefighter and officer positions 41 37 37 37 36 41 38 35 35 35
Number of emergency calls 4,298 4,220 2,062 4,402 4,676 4,563 4,354 4,881 4,938 4,895
Police Protection
Number of sworn officer positions 84 79 79 79 79 79 76 76 76 75
Part I (Major) Crimes 3,107 3,071 1,305 2,859 2,772 2,647 2,240 2,107 1,989 2,816
Public Works
Refuse Collected (Tons per Year) 10,401 10,526 6,042 12,703 10,153 9,958 10,217 10,512 10,994 11,009
Recyclables Collected (Tons per Year) 626 309 - - - - - - - -
Water & Sewer
Number of consumers 13,131 12,987 12,966 13,037 13,109 13,144 13,086 13,223 13,307 13,248
Average daily water consumption (GPD) 8,879,000 7,976,000 7,163,000 8,417,000 7,700,000 7,651,000 7,666,000 8,293,570 11,027,945 10,947,233
Water main breaks repaired 34 17 6 12 5 11 30 15 16 12
Sewer flows (Millions Gallons per Year) 2,181 1,979 965 1,625 1,695 1,777 1,833 2,013 1,794 1,815
Sewer Service Calls 533 508 263 591 522 508 532 501 521 462
* The City changed its fiscal year end from December 31 to June 30.
SOURCE: City of Muskegon Departments
City of Muskegon
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
2008 2009 2010* 2011 2012 2013 2014 2015 2016 2017
Debt Limit $ 85,933,940 $ 82,198,965 $ 82,198,965 $ 78,308,925 $ 73,585,150 $ 68,555,700 $ 61,706,477 $ 61,510,980 $ 60,962,090 $ 61,333,841
Total net debt applicable to limit 15,481,870 14,778,499 14,435,033 12,929,850 14,375,253 13,655,042 12,847,550 11,969,708 11,313,794 10,290,785
Legal debt margin $ 70,452,070 $ 67,420,466 $ 67,763,932 $ 65,379,075 $ 59,209,897 $ 54,900,658 $ 48,858,927 $ 49,541,272 $ 49,648,296 $ 51,043,056
Total net debt applicable to the limit as 18.02% 17.98% 17.56% 16.51% 19.54% 19.92% 20.82% 19.46% 18.56% 16.78%
a percentage of debt limit
Legal Debt Margin Calculation for 2017:
Assessed Valuation: $ 613,338,410
Legal Debt Limit (10% ) 61,333,841
Total Indebtedness: $ 18,780,785
Debt not Subject to Limitation:
Paid by Special Assessment -
Revenue Bonds (8,490,000)
133
Debt Subject to Limitation 10,290,785
Legal Debt Margin $ 51,043,056
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
SOURCE: The information in these schedules
(unless otherwise noted) is derived from the
comprehensive annual financial reports for the
relevant year.
City of Muskegon
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Fiscal Years
Fiscal Personal Per Capita Median Public School Building Permits
Year Population Income Income Age Enrollment Number Value Unemployment
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%
2010 39,259 735,734,614 18,741 32.8 5,931 374 11,900,915 17.8%
2011 38,401 737,646,617 19,209 34.1 5,162 835 18,829,825 13.8%
2012 38,225 752,622,470 19,689 34.1 5,428 891 21,932,738 8.5%
2013 37,046 747,644,037 20,182 34.1 4,367 826 24,613,938 12.0%
2014 37,213 769,789,707 20,686 34.1 4,808 1,108 54,065,115 9.6%
2015 37,213 789,034,450 21,203 35.8 4,387 1,102 46,541,966 10.3%
2016 37,213 808,760,311 21,733 35.8 4,206 1,112 58,924,856 8.3%
135
2017 38,349 854,285,543 22,277 35.8 3,985 1,075 78,271,395 4.8%
SOURCE: US Census Bureau, Muskegon Area Intermediate School Distrct (MAISD), City of Muskegon Inspections Department, Michigan Department of Technology,
Management, & Budget
City of Muskegon
PRINCIPAL EMPLOYERS
Current Year and Ten Years Ago
2017 2007
Percentage Percentage
of total of total
City City
Employer Employees Rank employment Employees Rank employment
Mercy General Health Partners* 4,114 1 27.4% 1,954 1 11.7%
ADAC Automotive 979 2 6.5% 500 6 3.0%
County of Muskegon 755 3 5.0% 1,211 3 7.2%
Port City Group 667 4 4.4%
Muskegon Public Schools 565 5 3.8% 931 5 5.6%
SAF Holland USA 345 6 2.3%
G.E. Aviation (formerly Johnson Technology Inc.) 331 7 2.2% 425 7 2.5%
Knoll Inc 310 8 2.1%
136
Muskegon Area Intermediate 253 9 1.7%
Betten Automotive Group 232 10 1.5%
State of Michigan 1,064 4 6.4%
Verizon 350 8 2.1%
Sappi Fine Paper (formerly SD Warren) 250 10 1.5%
City of Muskegon 270 9 1.6%
Hackley Hospital 1,578 2 9.4%
* Hackley Hospital merged with the former Mercy Hospital to become Mercy General Health Partners.
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 2007 2008 2009 2010* 2011 2012 2013 2014 2015 2016 2017
Administration 1.50 1.50 - - 0.40 0.40 0.40 0.40 - - -
Affirmative Action 1.50 1.50 1.50 1.50 1.10 1.10 1.10 1.10 1.30 1.30 1.46
Cemetaries 3.25 3.25 3.25 2.50 2.20 1.75 1.25 1.25 1.25 1.25 1.25
City Clerk & Elections 4.00 4.00 4.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.54
City Commission 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
City Hall Maintenance 1.00 1.00 1.00 1.00 0.55 0.55 0.55 0.55 0.55 0.55 0.55
City Manager's Office 1.75 1.75 3.25 2.25 2.25 2.25 2.25 2.25 2.05 2.05 1.75
City Treasurer's Office 4.00 5.00 5.00 5.00 5.00 5.00 5.00 4.50 5.50 5.50 5.50
Civil Service 2.00 2.00 2.00 2.00 1.00 - - - - - -
Environmental Services 2.00 2.00 2.00 2.00 2.00 5.00 5.00 5.00 2.00 2.00 2.00
Farmers Market - - 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 -
Finance Administration 4.00 4.00 4.00 3.00 3.00 3.00 2.00 2.00 3.00 3.00 3.00
Fire 38.00 38.00 38.00 36.00 33.00 35.00 28.00 28.83 32.00 35.00 35.00
Fire Safety Inspections 12.00 12.00 12.00 9.00 8.00 6.00 6.00 0.83 - - -
General Recreation 1.33 1.66 1.66 2.00 - - - - - - -
Income Tax Administration 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.50 3.50 3.50 3.50
Information Systems 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Parks 8.15 8.15 7.99 7.15 6.00 6.05 6.05 6.00 6.00 6.00 7.05
Planning, Zoning & Economic Development 6.00 6.00 6.00 5.00 4.00 3.00 3.00 3.00 3.40 3.40 3.45
137
Police 94.00 94.00 94.00 88.00 88.00 88.00 88.00 87.34 88.00 88.00 88.00
Sanitation 1.00 1.00 1.00 - 0.30 0.20 0.20 0.20 0.20 0.20 0.20
Senior Transit - - - - - 0.05 0.05 0.05 - - -
MVH-Major Streets 17.75 15.75 13.75 12.00 12.00 11.70 10.70 10.70 10.70 10.70 10.70
MVH-Local Streets 7.00 6.00 8.00 7.00 7.00 6.70 6.70 6.70 6.70 6.70 6.70
Community Development 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Home Program 1.00 1.00 1.00 0.25 0.25 - - - - - -
Lead Program - - - 0.75 0.75 - - - - - -
Sewer Maintenance 16.20 15.20 13.20 10.20 10.20 9.75 9.75 9.80 9.80 9.80 9.80
Water Filtration 10.00 10.00 10.00 10.00 10.00 9.00 10.00 10.00 10.00 10.00 10.00
Water Maintenance 12.50 13.50 15.40 12.40 12.40 11.75 11.75 11.75 11.75 11.75 11.75
Hartshorn Marina Fund 0.67 0.34 0.05 0.05 0.05 0.30 0.30 0.30 0.30 0.30 0.30
Public Service Building 3.45 3.45 3.70 8.95 8.05 7.95 8.45 8.45 8.50 8.50 8.50
Engineering 7.45 7.45 7.45 5.45 4.95 4.95 4.95 4.95 4.95 4.95 4.95
Equipment 8.25 8.25 8.50 7.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25
282.00 280.00 280.00 256.00 244.00 241.00 233.00 227.00 228.00 231.00 232.45
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
SOURCE: City of Muskegon Finance Department
City of Muskegon
OPERATING INDICATORS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Function/Program 2008 2009 2010* 2011 2012 2013 2014 2015 2016 2017
Administrative Services
Elections
Number of registered voters 27,678 26,136 26,136 26,330 26,324 26,098 26,025 24,014 24,005 24,612
Number of votes cast:
Last general election 15,271 15,271 15,271 8,106 1,933 13,487 3,029 7,763 2,547 13,179
Last city election 1,101 2,254 2,254 8,106 1,933 2,131 3,029 7,763 2,547 13,179
Percentage of registered voters voting:
Last general election 55% 58% 58% 31% 7% 52% 12% 32% 11% 54%
Last city election 4% 9% 9% 31% 7% 8% 12% 32% 11% 54%
Financial Services
Property Tax Bills 15,350 15,435 - 15,351 15,261 15,291 15,211 14,528 14,611 14,243
Income Tax Returns 22,598 21,071 19,963 19,688 18,699 17,857 18,222 17,839 17,800 17,792
Paper Check Issued to Vendors 3,346 3,113 1,486 2,986 3,746 1,677 1,404 1,527 1,608 1,675
Electronic Payments to Vendors 763 963 450 884 1,334 1,251 1,579 1,471 1,849 1,998
138
Public Safety
Fire Protection
Number of firefighter and officer positions 41 37 37 37 36 41 38 35 35 35
Number of emergency calls 4,298 4,220 2,062 4,402 4,676 4,563 4,354 4,881 4,938 4,895
Police Protection
Number of sworn officer positions 84 79 79 79 79 79 76 76 76 75
Part I (Major) Crimes 3,107 3,071 1,305 2,859 2,772 2,647 2,240 2,107 1,989 2,816
Public Works
Refuse Collected (Tons per Year) 10,401 10,526 6,042 12,703 10,153 9,958 10,217 10,512 10,994 11,009
Recyclables Collected (Tons per Year) 626 309 - - - - - - - -
Water & Sewer
Number of consumers 13,131 12,987 12,966 13,037 13,109 13,144 13,086 13,223 13,307 13,248
Average daily water consumption (GPD) 8,879,000 7,976,000 7,163,000 8,417,000 7,700,000 7,651,000 7,666,000 8,293,570 11,027,945 10,947,233
Water main breaks repaired 34 17 6 12 5 11 30 15 16 12
Sewer flows (Millions Gallons per Year) 2,181 1,979 965 1,625 1,695 1,777 1,833 2,013 1,794 1,815
Sewer Service Calls 533 508 263 591 522 508 532 501 521 462
* The City changed its fiscal year end from December 31 to June 30.
SOURCE: City of Muskegon Departments
City of Muskegon
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Function/Program 2008 2009 2010* 2011 2012 2013 2014 2015 2016 2017
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 197.79 196.95 196.95 196.95 196.95 196.95 196.95 196.95 196.95 196.95
Number of streetlights 3,134 3,192 3,125 3,065 2,838 2,838 2,838 2,838 2,900 2,984
Culture and Recreation
Number of parks (acres) 701 701 701 701 701 701 701 701 701 701
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
139
Sanitary sewers (miles) 177.04 177.04 177.04 177.04 177.04 177.04 177.04 177.04 177.04 177.04
Storm sewers (miles) 183.60 184.35 184.35 184.35 184.35 184.35 184.25 184.35 184.35 184.35
Water
Water mains (miles) 195.58 195.69 195.69 195.69 195.40 195.95 195.95 195.95 195.95 195.95
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
SOURCE: City of Muskegon Departments
City of Muskegon
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Function/Program 2008 2009 2010* 2011 2012 2013 2014 2015 2016 2017
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 197.79 196.95 196.95 196.95 196.95 196.95 196.95 196.95 196.95 196.95
Number of streetlights 3,134 3,192 3,125 3,065 2,838 2,838 2,838 2,838 2,900 2,984
Culture and Recreation
Number of parks (acres) 701 701 701 701 701 701 701 701 701 701
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
139
Sanitary sewers (miles) 177.04 177.04 177.04 177.04 177.04 177.04 177.04 177.04 177.04 177.04
Storm sewers (miles) 183.60 184.35 184.35 184.35 184.35 184.35 184.25 184.35 184.35 184.35
Water
Water mains (miles) 195.58 195.69 195.69 195.69 195.40 195.95 195.95 195.95 195.95 195.95
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
SOURCE: City of Muskegon Departments
[This page was intentionally left blank.]
140
SINGLE AUDIT OF FEDERAL FINANCIAL ASSISTANCE PROGRAMS
141
INDEPENDENT AUDITOR’S 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
December 1, 2017
City Commission
City of Muskegon
Muskegon, Michigan
We have audited, in accordance with the auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in the Government Auditing Standards issued by the
Comptroller General of the United States, the 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 June 30, 2017, and the related notes to the
financial statements, which collectively comprise the City of Muskegon’s basic financial statements, and have
issued our report thereon dated December 1, 2017.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City of Muskegon’s internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of
expressing an opinion on the effectiveness of the City of Muskegon’s internal control. Accordingly, we do not
express an opinion on the effectiveness of the City of Muskegon’s internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was
not designed to identify all deficiencies in internal control that might be material weaknesses or significant
deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified.
However, as described in the accompanying Schedule of Findings and Responses, we identified a certain
deficiency in internal control 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 the
accompanying Schedule of Findings and Responses to be a material weakness, as Finding 2017-001.
Grand Haven | Grand Rapids | Hart | Muskegon
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142
BRICKLEY DELONG
City Commission
City of Muskegon
December 1, 2017
Page 2
Compliance or Other Matters
As part of obtaining reasonable assurance about whether the City of Muskegon’s financial statements are free
from 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.
City of Muskegon’s Response to Findings
The City of Muskegon’s response to the findings identified in our audit is described in the accompanying
Schedule of Findings and Responses. The City of Muskegon’s response was not subjected to auditing procedures
applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not
suitable for any other purpose.
Muskegon, Michigan
143
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL
PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM
GUIDANCE
December 1, 2017
City Commission
City of Muskegon
Muskegon, Michigan
Report on Compliance for Each Major Federal Program
We have audited the City of Muskegon’s compliance with the types of compliance requirements described in the
OMB Compliance Supplement that could have a direct and material effect on each of the City of Muskegon’s
major federal programs for the year ended June 30, 2017. the City of Muskegon’s major federal programs are
identified in the Summary of Auditor’s Results section of the accompanying Schedule of Findings and Responses.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its
federal awards applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the City of Muskegon’s major federal
programs based on our audit of the types of compliance requirements referred to above. 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 the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200,
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). Those standards and the Uniform Guidance 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 on compliance for each major federal
program. However, our audit does not provide a legal determination of the City of Muskegon’s compliance.
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144
BRICKLEY DELONG
City Commission
City of Muskegon
December 1, 2017
Page 2
Opinion on Each Major Federal Program
In our opinion, the City of Muskegon complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major federal programs
for the year ended June 30, 2017.
Report on Internal Control Over Compliance
Management of the City of Muskegon is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and performing our
audit of compliance, we considered the City of Muskegon’s internal control over compliance with the types of
requirements that could have a direct and material effect on each major federal program to determine the auditing
procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for
each major federal program and to test and report on internal control over compliance in accordance with the
Uniform Guidance, 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.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance
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 a 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. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance requirement of a
federal program that is less severe than a material weakness in internal control over compliance, yet important
enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control over compliance that might be
material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over
compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not
been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of
internal control over compliance and the results of that testing based on the requirements of the Uniform
Guidance. Accordingly, this report is not suitable for any other purpose.
Muskegon, Michigan
145
City of Muskegon
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended June 30, 2017
Accrued Cash or Accrued
Federal Program or (Unearned) Adjustments Payments In- Amount of (Unearned) Passed
Federal Grantor/Pass-Through Grantor/ CFDA Award Revenue and Kind Received Grant Revenue Through to
Program or Cluster Title/Identifying Number Number Amount July 1, 2016 Transfers (Cash Basis) Expenditures June 30, 2017 Subrecipents
U.S. Department of Agriculture
Direct programs
Farmers Market Promotion Program 10.168
15FMPPMI0088 $ 75,000 $ 8,906 $ - $ 23,486 $ 26,268 $ 11,688 $ -
U.S. Department of Housing and Urban Development
Direct programs
Community Development Block Grants/Entitlement Grants 14.218
B-14-MC-26-0026 897,025 - 17,342 21,777 4,435 - -
B-15-MC-26-0026 895,410 50,991 (17,342) 24,209 - 9,440 -
B-16-MC-26-0026 886,662 - - 439,332 725,507 286,175 3,000
Program Income 73,476 - - 28,072 28,072 - -
Total Community Development Block Grants/
Entitlement Grants 2,752,573 50,991 - 513,390 758,014 295,615 3,000
HOME Investment Partnerships Program 14.239
146
M-14-MC-26-0215 275,421 - - 22,532 22,532 - -
M-15-MC-26-0215 268,639 4,275 - 96,984 111,054 18,345 -
M-16-MC-26-0215 264,277 - - 27,728 126,478 98,750 -
Program Income 133,726 10,637 - 428,656 418,019 - -
Total HOME Investment Partnerships Program 942,063 14,912 - - 575,900 678,083 117,095 -
Total U.S. Department of Housing and Urban Development 3,694,636 65,903 - 1,089,290 1,436,097 412,710 3,000
City of Muskegon
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS—Continued
For the year ended June 30, 2017
Accrued Cash or Accrued
Federal Program or (Unearned) Adjustments Payments In- Amount of (Unearned) Passed
Federal Grantor/Pass-Through Grantor/ CFDA Award Revenue and Kind Received Grant Revenue Through to
Program or Cluster Title/Identifying Number Number Amount July 1, 2016 Transfers (Cash Basis) Expenditures June 30, 2017 Subrecipents
U.S. Department of Justice
Direct programs
Bulletproof Vest Partnership Grant 16.607
2014 Grant $ 9,076 $ 3,476 $ - $ 3,476 $ - $ - $ -
2015 Grant 4,628 - - 1,896 1,896 - -
13,704 3,476 - 5,372 1,896 - -
Edward Byrne Memorial Justice Assistance Grant 16.738
Program
2016-DJ-BX-0581 45,788 - - 35,732 35,732 - -
Total direct programs 59,492 3,476 - 41,104 37,628 - -
Passed through Ottawa County
Edward Byrne Memorial Justice Assistance Grant 16.738
Program
147
2015-MU-BX-0964 14,000 - - 14,000 14,000 - -
Total U.S. Department of Justice 73,492 3,476 - 55,104 51,628 - -
U.S. Environmental Protection Agency
Direct programs
Great Lakes Program 66.469
00E01414 110,449 2,616 - 107,868 107,832 2,580 -
Brownfields Assessment and Cleanup 66.818
Cooperative Agreements
00E01538 400,000 30,117 - 133,338 152,243 49,022 -
.
Total U.S. Environmental Protection Agency 510,449 32,733 - 241,206 260,075 51,602 -
TOTAL FEDERAL ASSISTANCE $ 4,353,577 $ 111,018 $ - $ 1,409,086 $ 1,774,068 $ 476,000 $ 3,000
The accompanying notes are an integral part of this schedule.
City of Muskegon
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended June 30, 2017
1. The accompanying Schedule of Expenditures of Federal Awards (the “schedule”) includes the federal award activity of the City under programs of the federal government for the year
ended June 30, 2017. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of the City, it
is not intended to and does not present the financial position or change in net position of the City.
2. Please see the financial statement footnotes for the significant accounting policies used in preparing this schedule. Expenditures are recognized following the cost principles contained
in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the schedule represent adjustments
or credits made in the normal course of business to amounts reported as expenditures in prior years. The City is not using the ten-percent de minimis indirect cost rate as allowed under
the Uniform Guidance.
3. 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's financial
statements for the year ended June 30, 2017 and federal expenditures per the Schedule of Expenditures of Federal Awards.
Federal revenues per City of Muskegon financial statements
General Fund $ 51,628
Major Street and Trunkline Fund 400,000
Other governmental funds 1,276,349
1,727,977
148
Plus program income 446,091
Less MDOT contracted projects as shown below (400,000)
Federal expenditures per the Schedule of Expenditures of Federal Awards $ 1,774,068
4. The Michigan Department of Transportation (MDOT) requires that cities report all federal and state grants pertaining to their city. During the year ended June 30, 2017 the federal aid
received and expended by the City of Muskegon was $400,000 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 of Muskegon 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 (Federal-Aid Highway Program) 20.205
Proj STP 1661(011) Fed Item HK 0932 Contract 16-5190 $ 400,000 $ 400,000
City of Muskegon
SCHEDULE OF FINDINGS AND RESPONSES
Year ended June 30, 2017
SECTION I—SUMMARY OF AUDITOR’S RESULTS
A. Financial Statements
1. Type of report the auditor issued on whether the financial statements audited were prepared in accordance
with GAAP: Unmodified
2. Internal control over financial reporting:
Material weakness(es) identified? X yes no
Significant deficiency(ies) identified? yes X none reported
3. Noncompliance material to financial statements noted? yes X no
B. Federal Awards
1. Internal control over major federal programs:
Material weakness(es) identified? yes X no
Significant deficiency(ies) identified? yes X none reported
2. Type of auditor’s report issued on compliance for major federal programs: Unmodified
3. Any audit findings disclosed that are required to be reported in accordance with 2 CFR
200.516(a)? yes X 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 Grants/Entitlement
Grants
5. Dollar threshold used to distinguish between type A and type B programs: $750,000
6. Auditee qualified as low-risk auditee? X yes no
149
City of Muskegon
SCHEDULE OF FINDINGS AND RESPONSES
Year ended June 30, 2017
SECTION II – FINANCIAL STATEMENT FINDINGS
Finding 2017-001: MATERIAL WEAKNESS—Year-end Closing Procedures
Criteria or Specific Requirement: General ledger account balances should be fully adjusted at year-end.
Condition: Material journal entries were proposed by auditors at year-end. These misstatements were not
detected by the City’s internal controls. The City subsequently made these proposed adjustments.
Context: During our year-end substantive testing, we noted three material adjustments that were necessary to
adjust fixed assets, grants receivable, and payables.
Cause: There was significant turnover in the City’s Finance Department near year-end.
Effect: The financial statements would have been materially misstated without these proposed entries.
Repeat Finding: This is not a repeat finding.
Recommendation: We recommend that the City improve its controls surrounding year-end closing to ensure
that all accounts are fully adjusted.
Views of Responsible Officials: The City agrees with this finding.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
There were no findings reported in relation to major federal awards during the single audit for the year ended
June 30, 2017.
150
CLIENT DOCUMENTS
151
Affirmative Action
(231)724-6703
FAX (231)722-1214
Assessor/
Equalization Co.
(231)724-6386
FAX (231)724-1129
Cemetery/Forestry
(231)724-6783
FAX (231)724-4188
City Manager
(231)724-6724
FAX (231)722-1214
Clerk
(231)724-6705
FAX (231)724-4178
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
Comm. & Neigh.
Services
(231)724-6717
FAX (231)726-2501 December 1, 2017
Computer Info.
Technology
(231)724-4126 U.S. Department of Housing and Urban Development
FAX (231)722-4301
Washington, D.C.
Engineering
(231)724-6707
FAX (231)727-6904
The City of Muskegon respectfully advises you that there were no audit findings reported in our
Finance
(231)724-6713
single audit report, dated December 5, 2016, for the year ended June 30, 2016.
FAX (231)726-2325
Fire Department
Sincerely,
(231)724-6795
FAX (231)724-6985
Human Resources
Co. (Civil Service)
(231)724-6442
Elizabeth Lewis
FAX (231)724-6840 Finance Director
Income Tax
(231)724-6770
FAX (231)724-6768
Mayor’s Office
(231)724-6701
FAX (231)722-1214
Planning/Zoning
(231)724-6702
FAX (231)724-6790
Police Department
(231)724-6750
FAX (231)722-5140
Public Works
(231)724-4100
FAX (231)722-4188
SafeBuilt
(Inspections)
(231)724-6715
FAX (231)728-4371
Treasurer
(231)724-6720
FAX (231)724-6768
Water Billing
(231)724-6718
FAX (231)724-6768
Water Filtration City of Muskegon, 933 Terrace Street, P.O. Box 536, Muskegon, MI 49443-0536
(231)724-4106 http://www.shorelinecity.com
FAX (231)755-5290
152
Affirmative Action
(231)724-6703
FAX (231)722-1214
Assessor/
Equalization Co.
(231)724-6386
FAX (231)724-1129
Cemetery/Forestry
(231)724-6783
FAX (231)724-4188
City Manager
(231)724-6724
FAX (231)722-1214
Clerk
(231)724-6705
FAX (231)724-4178 CORRECTIVE ACTION PLAN
Comm. & Neigh.
Services
(231)724-6717
FAX (231)726-2501 December 1, 2017
Computer Info.
Technology
(231)724-4126 U.S. Department of Housing and Urban Development
FAX (231)722-4301 Washington, D.C.
Engineering
(231)724-6707
FAX (231)727-6904
The City of Muskegon respectfully submits the following Corrective Action Plan for the year
Finance ended June 30, 2017.
(231)724-6713
FAX (231)726-2325
Name and address of independent public accounting firm:
Fire Department
(231)724-6795 Brickley DeLong, P.C.
FAX (231)724-6985
P.O. Box 999
Human Resources Muskegon, Michigan 49443
Co. (Civil Service)
(231)724-6442 Audit period: June 30, 2017
FAX (231)724-6840
Income Tax The findings from the Schedule of Findings and Responses for the year ended June 30, 2017 are
(231)724-6770
FAX (231)724-6768 discussed below. The findings are numbered consistently with the numbers assigned in the
schedule.
Mayor’s Office
(231)724-6701
FAX (231)722-1214
Planning/Zoning
SECTION II – FINANCIAL STATEMENT FINDINGS
(231)724-6702
FAX (231)724-6790 Finding 2017-001: MATERIAL WEAKNESS—Year-end Closing Procedures
Police Department
(231)724-6750 Recommendation: We recommend that the City improve its controls surrounding year-end
FAX (231)722-5140
closing to ensure that all accounts are fully adjusted.
Public Works
(231)724-4100
FAX (231)722-4188 Action Taken: The City will review and update its year-end closing policies to ensure that all
entries are made prior to the audit.
SafeBuilt
(Inspections)
(231)724-6715 Responsible Person and Anticipated Completion Date: Assistance Finance Director – June
FAX (231)728-4371 2018
Treasurer
(231)724-6720
FAX (231)724-6768
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Water Billing
(231)724-6718
FAX (231)724-6768 There were no findings reported in relation to major federal programs.
Water Filtration
City of Muskegon, 933 Terrace Street, P.O. Box 536, Muskegon, MI 49443-0536
(231)724-4106 http://www.shorelinecity.com
FAX (231)755-5290 153
U.S. Department of Housing and Urban Development
December 1, 2017
Page 2
If the U.S. Department of Housing and Urban Development has questions regarding this plan, please call
Elizabeth Lewis at (231) 724-6917.
Sincerely,
Elizabeth Lewis
Finance Director
154
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