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<br />CITY OF LA PORTE, TEXAS
<br />
<br />Management's Discussion and Analysis
<br />For the Year Ended September 30,2006
<br />
<br />FINANCIAL ANAL YS/S OF THE GOVERNMENT'S FUNDS
<br />
<br />Governmental funds - The focus of the City of La Porte's governmental funds is to provide information on
<br />near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the
<br />City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a
<br />government's net resources available for spending at the end of the fiscal year.
<br />
<br />As of the end of the current fiscal year, the City of La Porte's governmental funds reported combined ending
<br />fund balances of $37,296,935. Approximately 95% of this total amount ($34,077,006) constitutes unreserved
<br />fund balance. The remainder of the fund balance is reserved to indicate that it is not available for new spending
<br />because it has already been committed 1) to pay for encumbrances ($140,055), 2) to provide for inventories
<br />($72,109), 3) to pay for debt service ($1,813,887), 4) to provide for municipal court building security ($106,652),
<br />5) to provide for municipal court technology ($73J24), 6) to provide for park zone ($80,902) and 7) to provide
<br />for confiscated funds ($116,391).
<br />
<br />In the general fund, the City budgeted for a decrease in the fund balance of $213,070. Due to actual expenses
<br />being less than budgeted, the actual fund balance increase for fiscal year 2006 was $1,963,031. The 2005
<br />General Obligation Fund balance decreased by $604,347 due to the expenditure of bond proceeds. Other
<br />Governmental fund balances increased in 2006 by $3,162,306 due to increased revenues and other sources of
<br />financing. The Section 4B Fund balance increased by $627,110 due to additional revenues.
<br />
<br />Proprietary funds - The City's proprietary fund statements provide the same type of information found in the
<br />government-wide financial statements, but in more detail.
<br />
<br />Unrestricted net assets of the respective proprietary funds are Utility - $1,337,241, Airport $338,580, La Porte
<br />Area Water Authority - $1,338,767, Sylvan Beach Convention Center -$134,357 and Bay Forest Golf Course-
<br />$(306,824)The change (decrease) in net assets of the proprietary funds in 2006 was as follows: Utility-
<br />$4,177,504, Airport -$(74,748), La Porte Area Water Authority - $123,645, Sylvan Beach Convention Center--
<br />$14,539), and Bay Forest Golf Course -$(147,958).
<br />
<br />General Fund Budgetary Highlights - The City made revisions to the original appropriations approved by the
<br />City Council. Overall these changes resulted in an increase from the original budget of 1 % or $210,076.
<br />
<br />Variances noted in the general fund are due to City Council appropriating additional capital projects, increased
<br />spending for public safety projects and salary savings.
<br />
<br />CAPITAL ASSETS AND DEBT ADMINfSTRA TION
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<br />Capital Assets - The City of La Porte's investment in capital assets for its governmental and business-type
<br />activities as of September 30,2006 amounts to $84,445,230 (net of accumulated depreciation). This investment
<br />in capital assets includes land, building, equipment, improvements, infrastructure and construction in progress.
<br />
<br />Major capital asset events during the current fiscal year included the following:
<br />
<br />. Construction in progress Fire Station Number 2 $1.2 million.
<br />. Construction in progress Police Station $3.1 million.
<br />. Automated Meter Reading $2.3 million.
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