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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 />General Fund Financial Position
<br />Year Ended December 31,
<br />1114,000,VVV
<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 />—
<br />—
<br />—
<br />2014
<br />2015
<br />2016
<br />2017
<br />2018
<br />$6,982,569
<br />$7,273,045
<br />$7,517,393
<br />$7,912,618
<br />$8,490,127
<br />Fund Balance
<br />o Cash (Net)
<br />$7,135,815
<br />$7,280,307
<br />$7,524,681
<br />$8,004,958
<br />$8,422,544
<br />$9,154,981
<br />$10,223,395
<br />$10,110,798
<br />$10,583,302
<br />$11,856,968
<br />— Revenue
<br />The City's General Fund cash and investments balance (net of interfund borrowing) at December 31,
<br />2018 was $8,422,544, an increase of $417,586 from the previous year. Total fund balance at year-end was
<br />$8,490,127, an increase of $577,509 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
<br />to 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 79.4 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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