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1 t 1 1 I , 1 1 1 1 1 1 1 1 1 Generally, a healthy financial position allows the City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the adequate and consistent funding of services, repairs, and unexpected costs; and can be a factor in determining the City's bond rating and resulting interest costs. The following chart reflects the City's General Fund reliance on its revenue sources for 2008: General Fund Revenue by Source ❑ Taxes • Intergovernmental Revenue Fines • Licenses and Permits • Charges for Services 0 Other Total General Fund revenues for 2008 were $9,402,228, an increase of $498,352 from the previous year and $107,269 more than budget. Most of the budget excess was better than expected investment earnings. The following graph presents the City's General Fund revenues by source for the last 10 years: General Fund Revenue by Source Year Ended December 31, $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $ — 75.8% -9- r 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 Taxes • Intergovernmental • All Other The trend of increased tax revenue and decreasing intergovernmental (primarily state revenue) is typical to Minnesota cities. The property tax reform that began in 1997 caused a higher dependency on local taxes to fund the operations of a city, and less on intergovernmental. The positive aspect of this change is that property taxes are typically more stable than state revenues, which are subject to the volatility of the economy. This is particularly important given the drastic changes in the economy over the years. The downside of this change is the confusion and potential misunderstanding relating to the necessary increase in the city portion of property taxes. Cities should be concerned with the stability of the continued funding from the state, and plan accordingly. This also places a greater emphasis for other governmental funds to be self - supporting and enterprise funds to be profitable in order to cover their share of overhead costs. The City has received a significant amount of other revenue in the form of licenses, permits, and charges for services relating to new development in the past few years, but as displayed in the graph above, these sources have been declining with the slowing economy.