PR tax revenues go up; so does reliance on property tax
By Anna Erickson
The 2012 Park Rapids audit showed healthy fund balances in the city but also revealed an increasing tax capacity rate.
The report, compiled by Kern, DeWenter, and Viere, was presented Tuesday, June 25, to the city council. It includes a financial analysis.
General Fund revenues in 2012 were over budget by $69,165. Taxes were under budget by $72,170 due to current year delinquent taxes. Miscellaneous revenues were over budget $57,057 as a result of budgeting conservatively for investment income, according to the audit report. All other revenue sources were close to their budgeted amounts.
General Fund expenditures decreased 6.9 percent from $2,674,944 in 2011 to $2,490,867 in 2012. Public safety operating expenditures are the largest component within the General Fund, accounting for 44.8 percent of the total, followed by general government with 26.5 percent and public works with 19.4 percent.
The city’s tax revenues have increased 30.7 percent over the past five years, resulting in a greater reliance on property taxes for General Fund sources of revenue, the audit noted. In 2008, taxes contributed 51.9 percent of total General Fund revenues, while taxes in 2012 made up 75.7 percent.
Over the same five years, Local Government Aid received from the state has decreased 24.3 percent from $414,812 in 2008 to $314,126 in 2012. In 2008, LGA comprised 16.1 percent of total General Fund revenues while LGA in 2012 was 11.8 percent.
The city’s fund balance policy states the city will strive to maintain an unassigned General Fund balance of no less than 50 percent of the operating expenditures. At Dec. 31, 2012, the city had 48.1 percent of operating expenses covered by their unassigned fund balance.
At the end of 2012, the city’s total fund balance reached a five year high of $1,975,022. It increased 14.6 percent, or $251,364 from 2011. The cash and investment balance also increased in 2012, for a total of $1,734,752. This is an increase of 16.2 percent, or $241,288 from 2011.
The city did, however, experience a 4.8 percent decrease in General Fund revenues, from $2,802,750 to $2,667,455 in 2012.
Intergovernmental revenues decreased $210,360. Most of this decrease, $208,207, is for grants that the city was the fiscal agent for in 2011, according to the audit report.
At the end of 2012, the city had total long-term bonded debt of $19,518,000. Of that, $15,775,000 was for General Obligation Improvement Debt and $3,743,000 in revenue debt associated with the financing of the RDO wastewater treatment plant. The city receives payments from RDO to pay off this obligation.
The city maintains an A+ rating from Standard and Poor’s on its general obligation debt.