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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 />$16, 000,000
<br />$14, 000,000
<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 />2016
<br />General Fund Financial Position
<br />Year Ended December 31,
<br />2017
<br />Fund Balance $7,517,393 $7,912,618
<br />o Cash (Net) $7,524,681 $8,004,958
<br />Revenue $10,110, 79 8 $10,5 8 3, 302
<br />2018 2019 2020
<br />$8,490,127 $8,880,446 $10,090,053
<br />$8,422,544 $8,846,081 $10,098,653
<br />$11,856,968 $12,305,492 $15,101,548
<br />The City's General Fund cash and investments balance at December 31, 2020 was $10,098,653, an
<br />increase of $1,252,572 from the previous year. Total fund balance at year-end was $10,090,053, an
<br />increase of $1,209, 607 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. An increase in the size of the operation is natural, caused by such
<br />things as inflation, population growth, desired increases in services, and something which has impacted
<br />cities 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,
<br />street maintenance, and park activities. Cash receipts of the General Fund are quite a different story.
<br />Property taxes comprise 70.0 percent of the fund's total annual revenue. Approximately half of these
<br />revenues are received by the City in July and the rest in December. Consequently, the City needs to have
<br />adequate cash reserves to finance its everyday operations between these payments.
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