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The City's General Fund has three major categories of funding sources which accounted for 78% of the total revenue (including transfers) in 2004: general property taxes at 49%, licenses and permits at 16%, and transfers from other funds at 13%. In prior years, intergovernmental revenue was the second largest category of revenue for the General Fund, whereas for year 2004, it contributed approximately 5% of total revenue. Intergovernmental revenue includes state aids, such as Local Government Aid (LGA), Market Value Homestead Credit (MVHC), Highway Maintenance Aid, Fire Relief Aid, Police Aid, and county gq-ants. Due to severe budget deficits in the state of Minnesota, the City has not received LGA since fiscal year 2003. The LGA distribution formula has been revised and funding greatly reduced, with the City being one of the many developing cities seeing a total reduction of LGA in an amount of approximately $303,000 annually. The City has an unemployment rate of 4.6% in comparison to the state's average of 4.7% and a national average of 5.2%. Anoka County, in which Ramsey is located, has an employed labor force of approximately 189,740. MAJOR INITIATIVES Since 1990, the City has been attempting to provide improved services to a dramatically increasing number of households in a time of fiscal constraints at the state level. From the 1990 census to the 2004 projection, Ramsey's population has increased by 79%. At the same time, aids from the state of Minnesota have decreased at the rate of 42%. The year 2004 was characterized by the undertaking of the largest construction project that the City will most likely ever see. The project, known as Ramsey Town Center, saw the construct/on of infrastructure within the 360 acre, mixed-use parcel, and the completion of the first buildings for a charter school and insurance company. Full buildout of the Ramsey Town Center site is expected by year 2011. CERTIFICATE OF ACHIEVEMENT The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting (CAEFR) to the City for its CAFR for the year ended December 31, 2003. This was the eighth consecutive year the City has received this prestigious award. Also, the City had previously received the award from 1981 through 1988, after which the City did not participate in the program for several years. The CAEFR is valid for a period of one year only. We believe our current CAFR continues to meet the CAEFR Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. ACKNOWLEDGMENT The 2004 CAFR of the City meets the highest professional standards and was prepared in a timely and cost-effective manner. This could never have been accomplished without the excellent work of the entire Finance Department. We would like to express our appreciation to the Finance Department and all members of the City's staff who contributed to its preparation. Respectfully submitted, James Norman Q,)City Administrator Diana Lund Finance Officer -V-