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GENERAL FUND
<br />The City's General Fund accounts for the financial activity of the basic services provided to the
<br />community. The primary services included within this fund are the administration of the municipal
<br />operation, police and fire protection, building inspection, streets and highway maintenance, and parks and
<br />recreation. The graph below illustrates the change in the General Fund financial position over the last
<br />five years. We have also included a line representing annual revenues to reflect the change in the size of
<br />the General Fund operation over the same period.
<br />$12, 000,000
<br />$10, 000,000
<br />$8,000,000
<br />$6,000,000
<br />$4,000,000
<br />$2,000,000
<br />$-
<br />2013
<br />Fund Balance $6,771,394
<br />11=1 Cash (Net) $6,872,395
<br />Revenue $9,030,710
<br />General Fund Financial Position
<br />Year Ended December 31,
<br />2014 2015 2016 2017
<br />$6,982,569 $7,273,045 $7,517,393 $7,912,618
<br />$7,135,815 $7,280,307 $7,524,681 $8,004,958
<br />$9,154,981 $10,223,395 $10,110,798 $10,583,302
<br />The City's General Fund cash and investments balance (net of interfund borrowing) at December 31,
<br />2017 was $8,004,958, an increase of $480,277 from the previous year. Total fund balance at year-end was
<br />$7,912,618, an increase of $395,225 from the prior year.
<br />The stability of the General Fund's financial position is greatly attributed to the City's "Fund Balance and
<br />Excess Revenue Policy" as well as the general budgeting policies. These policies have allowed the City to
<br />provide funding for equipment replacement and recurring capital maintenance programs without
<br />disrupting the General Fund's financial position. This is an important factor because a government, like
<br />any organization, requires a certain amount of equity to operate. The amount of required equity increases
<br />as the size of the operation increases. Increase in the size of the operation is natural, caused by such things
<br />as inflation, population growth, desired increases in services, and —something which has impacted cities
<br />significantly in recent years —mandated increases in services and administrative requirements.
<br />Generally, a healthy financial position allows the City to avoid volatility in tax rates; helps minimize the
<br />impact of state funding changes; allows for the adequate and consistent funding of services, repairs, and
<br />unexpected costs; and can be a factor in determining the City's bond rating and resulting interest costs.
<br />A trend that is typical to Minnesota local governments, especially the General Fund of cities, is the
<br />unusual cash flow experienced throughout the year. The City's General Fund cash disbursements are
<br />made fairly evenly during the year other than the impact of seasonal services such as snowplowing, street
<br />maintenance, and park activities. Cash receipts of the General Fund are quite a different story. Property
<br />taxes comprise 81.2 percent of the fund's total annual revenue. Approximately half of these revenues are
<br />received by the City in July and the rest in December. Consequently, the City needs to have adequate cash
<br />reserves to finance its everyday operations between these payments.
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