03-11-13 Fiscal Affairs Committee

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CITY OF LA PORTE, TEXAS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Total expenses decreased for fiscal year 2012 in comparison to fiscal year 2011. Public Works expenses decreased due to fewer project costs in 2012 compared to 2011. Business-type Activities. Revenues without transfers in the business-type activities totaled $10,572 million, a $0.8 million decrease from the prior year. This decrease is mainly due to a decrease in capital grants and contributions. A comparison between expenses and program revenues (charges for services) relating to Utility operations follows. Expenses and Program Revenues -Business-Type Activities $9,000 $8,000 $7,000 $6,000 $5,000 Revenue $4,000 Expense $3,000 $2,000 $1,000 $- 2012201120122011 Water ServicesSewer Services Financial Analysis of the Government’s Funds The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $43.1 million, an increase of$0.5 million from the prior year. This increase is due to an increase in sales and use taxes and intergovernmental revenues. Governmental Funds. The focus of the City’s governmental funds is to provide information on near- term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. The General fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the general fund was $23.8 million, an increase of $4.6 million compared to last year. The increase in General Fund fund balance is due in part to a reduction of transfers to other funds; transfers to the Capital Projects fund decreased by $1.5 million since capital construction was decreased. The General Fund also saw an increase in property and other tax revenues from 2011. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 69% of total general fund expenditures and total fund balance represents 70% of the same. The Debt Service fund had a total fund balance of approximately $3.1 million, all of which is reserved for the payment of debt service. The net decrease in fund balance from the prior year of $22,346 was due to more debt service payments made than revenues collected. 8