Agenda - Council Work Session - 06/27/2023

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GOVERNMENT -WIDE FINANCIAL ANALYSIS (CONTINUED) Investment earnings (charges) decreased $121,901. The city is required per the Governmental Accounting Standards Board to reflect most investments at fair value as of December 31 It of the current year. The city reflects any changes in fair value against interest earnings (charges). Property taxes saw an increase of $2,876,465 or 19% which was attributed to the City increasing their 2022 tax levy by approximately 18% over the 2021 adopted levy. A large percentage of this levy increase pertained to a new Pavement Management Levy due to the termination of the franchise fee, thus franchise fee collections decreased by $2,066,617 in 2022. Charges for services decreased by $1,103,755 as the City now records the collection of park dedication fees under capital grants and contributions. The public safety function increased by $1,625,756 due largely to the change in the Public Employees Retirement Account (PERA) pension expense for the Public Employees Police and Fire Fund (PEPFF). Highways and streets expense increased by $621,796 due to an increase in depreciation expense on the new public works campus and an overall increase in general operations. The economic development function decreased by $1,043,845 due to a decrease in construction in the COR area. Business -Type Activities — Business -type activities, which are the City's utility operations of water, sewer, street light, recycling, and storm water, increased the City's net position by $1,299,697. Key elements of this increase are as follows. Revenues exceeded expenses before transfers by $1,392,844, with this excess decreasing $4,023,516 from the prior year. Capital grants and contributions increased by $1,083,334 from the prior year. This is primarily due to an increase in capital contributions from developers for water, sewer and storm water utility improvements. Investment earnings decreased $4,714,503. The city is required per the Governmental Accounting Standards Board to reflect most investments at fair value as of December 31 It of the current year. The city reflects any changes in fair value against interest earnings (charges). Due to a large cash inflow needed for the city's proposed water treatment plant, the city's investments, due to the requirement to write down to market value, were greatly affected by the sharp and quick increase in interest rates by the Federal Reserve in 2022. Governmental Activities — The following graph illustrates the City's governmental activities: Expenses and Program Revenues — Governmental Activities 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 General Public Safety Highways & Government Streets ■ Program Revenues Culture & Economic Interest & Recreation Development Fiscal Charges ■ Expenses The graph clearly reflects the need for property taxes to supplement the governmental activities of the City. The trend of property taxes shows an increasing reliance on this source of revenue. 31