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The city's expenditures in 2009 were less than budgeted due to moderate spending by department heads. The fund balance currently reflects about eight months of expenditures.

City audit shows a healthy financial prognosis - for now

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News Park Rapids, 56470
Park Rapids Enterprise
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Park Rapids Minnesota PO Box 111 56470

The city of Park Rapids has maintained a healthy fund balance despite a tough recession.

The 2009 auditor's report was presented Tuesday at the City Council meeting.

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Beth Bertram, an associate with Kern, DeWenter, Viere, Ltd., said the audit turned out well, with revenues above projections and expenditures under projections.

The financial analysis compared 2009 general fund revenues and expenditures compared to the previous four years. The city experienced a 2 percent increase in general fund revenues from $2,583,669 in 2008 to $2,634,811 in 2009.

Taxes increased $88,882 or 6.6 percent due to an increase in the levy. Miscellaneous revenue increased $19,302 or 12.4 percent due to an increase in investment income offset by a decrease in permit fees due to current housing market conditions. Intergovernmental revenue decreased $55,098 or 7.1 percent due to decreases in federal grants for the Housing and Urban Development grant that flowed through the city in 2008, offset by a slight increase in Local Government Aid.

Bertram noted that the 2010 audit would show a decrease in LGA due to unallotment this year.

Overall, total revenues were over budget $121,105 or 4.8 percent. Conservative budgeting was a reason for being over budget in revenues, along with high investment income, Bertram said.

Total general fund expenditures show a 6 percent increase from 2005 to 2009. However, general fund expenditures decreased 12.1 percent from $2,606,030 in 2008 to $2,289,407 in 2009. Public safety expenditures decreased by $44,089 due to fewer building inspections as a result of the current housing market conditions. Also, public works decreased due to decreases in street maintenance expenditures.

Overall, expenditures were under budget by $197,482 as a result of efforts to moderate spending.

The general fund balance increased $212,091 to $1,529,741 in 2009. The city's tax revenues have increased 15 percent over the past five years. The general fund balance reflects approximately eight months of 2009 expenditures.

The state auditor recommends cities maintain an unreserved fund balance between 35 and 50 percent of fund operating revenues, or no less than five months of operating expenditures.

Comparing 2005 through 2009, the city's tax capacity has increased from $2,386,972 to $3,629,438, or 52.1 percent in five years. The city's certified levy over this same five-year time frame increased from $1,351,902 to $1,736,892, or 28.5 percent. As a result, the city's tax capacity rate has decreased from 60.6 percent in 2005 to 47.9 percent in 2009.

Mayor Nancy Carroll asked what Bertram thought next year would bring as far as the city's fund balance.

"It depends on so many factors, it's hard to tell until the end of the year," Bertram said.

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Anna Erickson
Anna Erickson is editor of the Wadena Pioneer Journal.
(218) 631-2561
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