Comprehensive Annual Financial Report Financial Report Financial Report Financial Report For the Fiscal Year Ended June 30, 2001 City of Prescott, Arizona City of Prescott, Arizona City of Prescott, Arizona City of Prescott, Arizona Comprehensive Annual Financial Report of the City of Prescott, Arizona For the Fiscal Year Ended June 30, 2001 Submitted by the Budget and Finance Department Citizens Boards & Commissions 1. Board of Adjustment 2. Industrial Development Authority 3. Municipal Property Corporation 4. Planning & Zoning Commission 5. Prescott Preservation Commission Citizen Board of Appeal 1. Advisory & Appeals Board – building, electrical, mechanical 2. Fire Board of Appeals Standing Committees 1. Acker Trust Board 2. Parks, Recreation and Library Advisory Committee 3. Employee Appeals Board 4. Keep Prescott Beautiful Committee 5. Transportation Coordinating Committee City of Prescott Organization Chart - FY2002 Marie Watson City Clerk (2) John Moffitt City Attorney (8) Robert Kuebler City Magistrate (5.75) Information Technology GIS Personnel Risk Management Volunteer Services Mark Alver Admin. Svcs. (14.5) Historic Preservation Planning and Zoning Building Inspection Economic Development Airport Operations Tom Guice Community Dev. (35) Maintenance Pro Shop Cart Rentals Concession Jim Noe Golf Course (28.4) Investigations Patrol Animal Control Training Communications/Records Traffic Enforcement Comm. Svc. Work Program Robert Reed Police (101.75) Accounting/Budget Treasury Utility Administration Sales Tax Mark Woodfill Budget/Finance (14.75) Fire Prevention Training Suppression Technical Services Emergency Medical Svcs. Communications/Public Safety Vegetation Management Darrell Willis Fire (68) Streets Engineering Building Maintenance Central Garage Airport Capital Improvements Parking Garage Tom Long Public Svcs. (59.25) Park Maintenance Recreation Programming Lake Management Library Adult Center Open Space Landscaping & Urban Forestry Prescott Connection Elks Theatre Jim McCasland Parks, Rec & Library (61.775) Water Sewer Solid Waste Transfer Station Alternative Water Brad Huza Env. Svcs. Director (83) Larry Asaro City Manager (6.125) MAYOR and COUNCIL (7) CITIZENS 33,938 CITY OF PRESCOTT COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2001 iii Exhibit Page INTRODUCTORY SECTION Title Page....................................................................................................................... i Organizational Chart ...................................................................................................... ii City Officials ................................................................................................................... vi Letter of Transmittal....................................................................................................... vii Certificate of Achievement for Excellence in Financial Reporting ................................. xvii FINANCIAL SECTION Independent Auditor’s Opinion ...................................................................................... 1 General Purpose Financial Statements Combined Balance Sheet - All Fund Types and Account Groups......................... A-1 2 Combined Statement of Revenues, Expenditures and Changes in Fund Balance - All Governmental Fund Types and Expendable Trust Funds . A-2 4 Combined Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Budget Basis - General, Special Revenue and Capital Projects Funds .................................................. A-3 5 Combined Statement of Revenues, Expenses and Changes in Retained Earnings (Deficit) - All Proprietary Fund Types ................................. A-4 6 Combined Statement of Cash Flows - All Proprietary Fund Types ....................... A-5 7 Notes to the Financial Statements: 1. Summary of Significant Accounting Policies ................................................. 9 2. Cash and Investments................................................................................... 15 3. Summary of Interfund Transactions .............................................................. 16 4. Fixed Assets .................................................................................................. 17 5. Capital Leases............................................................................................... 17 6. Long-Term Debt ............................................................................................ 18 7. Risk Management ......................................................................................... 22 8. Litigation ........................................................................................................ 23 9. Contingent Liabilities ..................................................................................... 23 10. Intergovernmental Agreements ..................................................................... 23 11. Retirement and Pension Plans ...................................................................... 23 12. Landfill Closure and Postclosure Care Cost.................................................. 25 13. Segment Information for Enterprise Funds ................................................... 26 14. Prior Period Adjustment ................................................................................ 27 15. Other Required Disclosures .......................................................................... 27 Combining, Individual Fund and Account Group Statements and Schedules General Fund Explanatory Comments ......................................................................................... 29 Comparative Balance Sheet.................................................................................. B-1 30 Comparative Statement of Revenues, Expenditures, and Changes in Fund Balance ................................................................................................ B-2 31 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Budget Basis ............................................................................. B-3 32 Schedule of Revenues - Budget and Actual - Budget Basis ................................. B-4 33 Schedule of Expenditures - Budget and Actual - Budget Basis............................. B-5 34 Special Revenue Funds Explanatory Comments ......................................................................................... 39 Combining Balance Sheet ..................................................................................... C-1 40 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance ...................................................................... C-2 42 TABLE OF CONTENTS (Continued) Exhibit Page iv Highway User Special Revenue Fund - Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Budget Basis ............. C-3 44 Streets and Open Space Special Revenue Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Budget Basis ............ C-4 45 Transient Lodging Tax Special Revenue Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Budget Basis ............ C-5 46 Grant Special Revenue Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Budget Basis.................................... C-6 47 Capital Improvement Special Revenue Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Budget Basis .................... C-7 48 Impact Fees Special Revenue Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Budget Basis .................... C-8 49 Debt Service Fund Explanatory Comments ......................................................................................... 51 Combining Balance Sheet ..................................................................................... D-1 52 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance ...................................................................... D-2 53 City of Prescott Debt Service Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Budget Basis .................... D-3 54 Community Facilities District Debt Service Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual - Budget Basis................................................................. D-4 55 Capital Projects Funds Explanatory Comments ......................................................................................... 57 Combining Balance Sheet ..................................................................................... E-1 58 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance ...................................................................... E-2 59 Lakes Purchase Capital Project Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual – Budget Basis ............ E-3 60 Community Facilities District Capital Project Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual – Budget Basis ................................................................................................. E-4 61 Enterprise Funds Explanatory Comments ......................................................................................... 63 Combining Balance Sheet ..................................................................................... F-1 64 Combining Statement of Revenues, Expenses, and Changes in Retained Earnings ......................................................................................... F-2 66 Combining Statement of Cash Flows .................................................................... F-3 68 Water Enterprise Fund - Schedule of Revenues and Expenditures - Budget and Actual - Budget Basis................................................................. F-4 70 Sewer Enterprise Fund - Schedule of Revenues and Expenditures - Budget and Actual - Budget Basis................................................................. F-5 71 Golf Course Enterprise Fund - Schedule of Revenues and Expenditures - Budget and Actual - Budget Basis................................................................. F-6 72 Airport Enterprise Fund - Schedule of Revenues and Expenditures - Budget and Actual - Budget Basis................................................................. F-7 73 Sanitation Enterprise Fund - Schedule of Revenues and Expenditures - Budget and Actual - Budget Basis................................................................. F-8 74 Regional Transfer Station Enterprise Fund - Schedule of Revenues and Expenditures - Budget and Actual - Budget Basis ................................. F-9 75 Internal Service Fund Explanatory Comments ......................................................................................... 77 Combining Balance Sheet ..................................................................................... G-1 78 Combining Statement of Revenues, Expenses and Changes in Retained Earnings ......................................................................................... G-2 80 Combining Statement of Cash Flows .................................................................... G-3 82 TABLE OF CONTENTS (Continued) Exhibit Page v Central Garage Internal Service Fund - Schedule of Revenues and Expenditures – Budget and Actual - Budget Basis........................................ G-4 84 General Self-Insurance Internal Service Fund - Schedule of Revenues and Expenditures – Budget and Actual - Budget Basis........................................ G-5 85 Workers’ Compensation Internal Service Fund - Schedule of Revenues and Expenditures – Budget and Actual - Budget Basis........................................ G-6 86 Engineering Services Internal Service Fund - Schedule of Revenues and Expenditures – Budget and Actual - Budget Basis........................................ G-7 87 Expendable Trust and Agency Funds Explanatory Comments ......................................................................................... 89 Combining Balance Sheet ..................................................................................... H-1 90 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance ................................................................................................ H-2 91 Statement of Changes in Assets and Liabilities .................................................... H-3 92 General Fixed Assets Account Group Explanatory Comments ......................................................................................... 93 Comparative Schedule of General Fixed Assets by Source.................................. I-1 94 Schedule of General Fixed Assets by Function and Activities .............................. I-2 95 Schedule of Changes in General Fixed Assets by Function and Activities ........... I-3 96 Schedule of Changes in General Fixed Assets - By Sources ............................... I-4 97 General Long-Term Debt Account Group Explanatory Comments ......................................................................................... 99 Statement of General Long-Term Debt ................................................................. J-1 100 Other Supporting Schedules Schedule Schedule of General Obligation Bonds Payable.................................................... A-1 102 Schedule of Contracts Payable ............................................................................. A-2 103 Schedule of Special Assessments Bonds Payable ............................................... A-3 104 Schedule of Community Facilities District Bonds Payable .................................... A-4 105 STATISTICAL SECTION Table General Government Expenditures by Function - General and Special Revenue Funds - Last Ten Fiscal Years.......................................................................................... I 107 General Government Revenues by Sources - General and Special Revenue Funds - Last Ten Fiscal Years.......................................................................................... II 108 Property Tax Levies and Collections - Last Ten Fiscal Years ..................................... III 109 Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years . IV 110 Property Tax Rates and Tax Levies - All Direct & Overlapping Governments – Last Ten Fiscal Years.......................................................................................... V 111 Property Tax Information ............................................................................................. VI 112 Tax Revenues By Source - Last Ten Fiscal Years ...................................................... VII 113 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita - Last Ten Fiscal Years ...................................................................... VIII 114 Special Assessment Collections - Last Ten Fiscal Years............................................ IX 115 Computation of Direct and Overlapping Debt .............................................................. X 116 Computation of Legal Debt Margins ............................................................................ XI 117 Ratio of Annual Debt Service Expenditures for General Obligation Bond Debt to Total General Expenditures - Last Ten Fiscal Years.................................................... XII 118 Schedule of Water and Sewer Revenue Bond Coverage - Last Ten Fiscal Years ..... XIII 119 Property Value, Construction, and Bank Deposits - Last Ten Fiscal Years ................ XIV 120 Principal Taxpayers ..................................................................................................... XV 121 Schedule of Insurance in Force ................................................................................... XVI 122 Miscellaneous Statistical and Demographic Data........................................................ XVII 123 City Council Sam Steiger, Mayor Robert Behnke Steve Blair Dick Cooper Lee Nidess Tom Reilly John Steward City Manager Larry Asaro Budget and Finance Department Mark Woodfill, CPA Director vii September 28, 2001 The Honorable Mayor, City Council, Citizens of the City of Prescott The Comprehensive Annual Financial Report of the City of Prescott, Arizona, for the fiscal year ended June 30, 2001, is submitted herewith. The City’s Budget and Finance Department prepared this report. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data presented is accurate in all material respects and that it presents fairly the financial position and results of operations of the various funds and account groups of the City as verified by independent auditors. We have included all disclosures necessary to enable the reader to gain an understanding of the City’s financial activities. The Comprehensive Annual Financial Report is presented in three sections: introductory, financial and statistical. The introductory section includes the City’s organizational chart, the table of contents, this transmittal letter, and a Certificate of Achievement for Excellence in Financial Reporting as presented to the City by the Government Finance Officers Association (GFOA). The financial section includes the Auditor’s report, the general-purpose financial statements, and the combining and individual fund and account group financial statements and schedules. The statistical section, which is generally presented on a multi-year basis, includes selected financial and demographic information. This report fulfills the City of Prescott Charter requirement for an annual independent audit of financial transactions. The City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984 and U.S. Office Management and Budget Circular A-128, Audits of State and Local Governments. Information related to this single audit, including the schedule of federal financial assistance, findings and recommendations, and auditors’ reports on the internal control structure and compliance with applicable laws and regulations, are included in separate reports. Financial Reporting Entity The City of Prescott was founded in 1864 and incorporated February 27, 1883 with a population of approximately 1,836 and an area of 1.1 square miles. The City’s charter was adopted August 19, 1958 providing for a Council-Manager form of government. The Mayor is elected for two years and six council members are elected at large on a nonpartisan basis for staggered four-year terms. The City Council appoints the City Manager who has full responsibility for carrying out council policies and administering City operations. The City Council also appoints the City Attorney, City Clerk, and City Magistrate. The City Manager appoints department heads. A staff of 453 full-time equivalent employees provides City government and enterprise operations. This report includes the financial data of all entities with which the City has a significant operational or financial relationship and which are consequently includable as component units in the City’s financial reporting entity, in accordance with Governmental Accounting Standards Board Statement No. 14 . The City’s component units include the City of Prescott Municipal Property Corporation and Hassayampa Community Facilities District one and two. Note 1 to the financial statements discusses in more detail the financial reporting entity. The City provides a full range of municipal services, including police and fire protection, parks and recreation, library, community development, public works and general administration. The City also owns and operates six enterprises whose activities include water, sewer, golf course, airport, sanitation, landfill, recycling and transfer station. CITY OF PRESCOTT 201 S Cortez / PO Box 2059 Prescott, Arizona 86302 viii The City of Prescott is the largest city in Yavapai County within the State of Arizona and is located 95 miles north of Phoenix, the State Capitol. Prescott is the County seat for Yavapai County. At the elevation of 5,200 feet, the City enjoys a moderate year-round climate. The City has experienced moderate growth. During the decade of the 90’s, the City grew from a population of 26,455 to 33,938, an increase of 28%. The population as of June 30, 2001 was estimated to be 34,685. The area of the City has also grown from 23.7 square miles in 1980 to 31.2 square miles in 1990. The present area, as of June 30, 2001, is 38.4 square miles. Economic Condition and Outlook The City experienced moderate growth during FY2001 and the projection for FY2002 is continued growth at about the same rate. Privilege tax collections ended the year up nearly 6%. The goal for FY2002 is to sustain the 6% annual growth rate. The construction category led the way with a 26% increase that reflects the development of several large commercial projects including the new Prescott Gateway Mall along with major roads that will expand capacity and help alleviate congestion. Auto dealers and specialty retailers experienced declines of 3-9% during FY 2000 that can be tied to the overall economic downturn experienced last year. Although the expectations are for continued growth in all categories, we cannot expect the robust growth in construction to continue at the same pace. The retail picture should be bolstered in the years to come by the combination of the following: • A regional mall, Prescott Gateway Mall is scheduled to open in the spring of 2002; This 600,000 square foot mall will be comprised of three anchor stores, Dillard’s, JC Penney and Sears, five “mini-majors,” and various other shops. This mall will create numerous construction jobs and 175 full time equivalent jobs upon opening. • The addition of a new Wal-Mart Supercenter located across from Prescott Gateway Mall. • The relocation of two major automobile dealers to expanded facilities within the same retail corridor as the Wal-Mart. • The planned redevelopment of the Ponderosa Plaza mall. In recognition of the importance of Prescott’s downtown as a tourism attraction and contributor to the tax base, the City has committed $4.2 million towards the construction of a multi-story parking facility located at the current site on Granite Street. The Council has decided that a public/private partnership will be used for the remaining cost of the garage. The City’s share of many state-shared revenues will decline over the next year due our relatively stable population. Many cities population increased at a higher rate than Prescott’s during the last census period. Since these funds are shared based on population we have budgeted for a decline in this revenue. The overall decline in the state's economy may lead to further reductions in this revenue source. Of all the City’s enterprise funds, only the Airport fund had a net loss for the year, but after the adjustment for depreciation of contributed assets it had a $331,562 increase to retained earnings. The Airport Specific Area Plan was adopted during 2001. This plan was initiated to bring a regional focus on land use planning and to insure that the immediate area around the airport be developed in a manner compatible with the airport's present and future opportunities. Major Initiatives Fiscal Year 2000-2001 has been a year filled with accomplishments and successes. Substantial progress continues to be made in implementing the Prescott Community Strategic Plan, the 1997 adopted General Plan, other adopted specific area plans and achieving the goals and priorities of the Prescott City Council and the community. The following are some of the accomplishments of city staff during FY 2001: Police Continued to advance the "Community Oriented Policing" and problem solving partnership philosophy within the Department and Prescott community. Examples include the implementation of a community policing traffic officer position to work with local community leaders and residents to address traffic issues of ix neighborhood concern, officer attendance at Block Watch meetings, officer attendance at School Lunch programs, the Shop-with-a-Cop program and the Prescott Area Narcotics Task Force. By securing grant funding, the Police Department leveraged over $650,000 in federal funds to help support community policing programs and specific community concerns. Fire Hired six additional firefighters that enabled the formation of another Paramedic Engine Company that provides 24 hour a day service in the downtown area. Participated in the Western Wildland Urban Interface Grant Program that provides staffing for a ten-member vegetation management crew to prevent and suppress wildfires. Open Space Conservation By using funds from the voter-approved streets and open space privilege tax initiative (May 2000), the city was able to acquire three open space properties. The first consists of 27 acres located directly between and adjacent to the Granite Dells Preserve and the Watson Lake Wildlife Corridor and Open Space. This property can be characterized as undeveloped open space and contains spectacular rock formations. The other two properties consist of approximately 8 acres and 24 acres respectively. Both are located at the peak of a prominent ridge top known locally as Prescott Butte. These two parcels can be characterized as undeveloped open space and are visible from all of downtown Prescott. Cultural and Recreational Began the renovation and restoration process for the historic Elks Opera House. The library expanded service levels by opening on Sunday. Future service levels will be met through the expansion of the Goodwin Street facility and the creation of a modest "branch" library in the City's space in the Prescott Gateway Mall. Obtained grants from Arizona State Parks Lake Improvement Fund ($1,048,310) and National Park Service Land & Water Conservation Fund ($560,000) for development and improvements to Watson and Willow Lakes. Streets Completed numerous chip seal, rubber chip seal, and reconstruction road projects throughout the city. Completed Phase I of Highway 69/89 and the widening of a 3,500-foot stretch of Highway 89 near Prescott Lakes Parkway. Completed Willow Creek Road – Phase IIB and IIIA. The Loop road at the new mall and improvements to Lee Boulevard were also completed. Water, Sewer and Solid Waste Completed the major reservoir program adding 6.5 million gallons to the storage capacity of the City's water system. Increased the number of residential solid waste collections by 5% and commercial solid waste collections by 3% with no increase in rates or decrease in service levels. Successfully contracted the Spring Cleanup Program with approximately 500 tons of material being collected and disposed of. Continued the in-house Christmas Tree Collection Program, collecting and mulching approximately 1,200 trees. Collected and diverted over 2,000 tons of recyclable materials from landfill disposal saving more than $100,000 in related fees. x Completed the City's obligations to extend water mains to eligible Chino Valley Irrigation District landowners. Completed study of radio-read meter change out and new meter fees. Continued the water delivery and wastewater collections ongoing maintenance programs to identify and solve problem areas thus assuring the reliability and efficiency of our systems. General Government A comprehensive classification and compensation study was completed and implemented. The new plan provides internal and external equity and should aid in staff retention as well as helping to attract well- qualified applicants for future job vacancies. The fiscal year 2000-2001 budget was adopted and implemented. The following established financial policies, goals and objectives were achieved: • The primary property tax levy remained stable consistent with Council’s intent, • There were no increases in general taxes or fees, • The fund reserve requirements were met, the General Fund surplus enabled a $3,290,176 transfer to the Capital Improvement Fund. Obtained accurate actuarial funding recommendation for our property and liability self-insurance, based on more realistic reserves and assertive claims administration practices. The findings of this actuarial study resulted in increases in charges to departments in FY2002. Financial Information Management of the City is responsible for establishing and maintaining an internal control structure which is designed to ensure that the assets of the City are protected from loss, theft, or misuse, and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived, and (2) the valuation of costs and benefits requires that estimates and judgments be made by management. In addition to accounting controls, the City maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget as approved by the City Council. Activities of the general fund, special revenue funds, and capital project funds are included in the annual appropriated budget. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is at the department level, City Council approval is required for additional adjustments. Expenditure budgets are presented on a non-GAAP basis. This basis excludes items that are included on a GAAP basis, such as accruals and depreciation. As demonstrated by the statements and schedules included in the financial section of this report, the City continues meeting its responsibility for sound financial management. All amounts presented in the remainder of this letter are expressed in thousands. General Government Functions General government functions are reported in governmental type funds (General Fund, Special Revenue Funds, Debt Service Fund, and Capital Projects Funds). The following schedule presents a summary of revenues of the governmental type funds for the fiscal year ended June 30, 2001, and the amount and percentage of increases and decreases in relation to prior year revenues. xi (In thousands of dollars) Increase (Decrease) Fiscal Year 2000-2001 Over FY 1999-2000 Revenue Source Amount % of Total Amount % Local Taxes Property Tax 2,463 $ 5.77 272 $ 12.41 Privilege and Use Tax - General 8,706 20.39 417 5.03 Privilege Tax - Major Streets 8,445 19.78 445 5.56 Utility Franchise Tax 961 2.25 183 23.52 Transient Lodging Tax 291 0.68 25 9.40 Intergovernmental Revenues 14,968 35.06 1,150 8.32 Licenses and Permits 1,562 3.66 (3) -0.19 Charges for Services 733 1.72 40 5.77 Fines and Forfeitures 362 0.85 (18) -4.74 Interest Income 3,096 7.25 904 41.24 Miscellaneous 1,101 2.59 64 6.17 Total Revenues 42,688 $ 100.00 3,479 $ 8.87 The reasons for the significant increases or decreases in revenues are as follows: Property Tax - The increase in property tax is attributable to a higher debt service payment on the General Obligation bonds for the lakes purchase approved by the voters in 1998. The primary tax levy remained at $820,000. It is an adopted policy of the Council to decrease the primary property tax rate slightly each year. It is possible to drop the rate and still maintain or increase the amount of the primary levy slightly due to increases in the assessed valuation throughout the City. This increase in assessed valuation can result from new construction or an increase in assessed valuation of existing property. Utility Franchise Tax – This category increased by $185,000 or nearly 24%. The increase resulted from a one-time payment received from a utility company for underpaid franchise fees during the previous four-year period. Interest Income – This category increased by 41% compared to FY2000. The increase resulted from profitable sales of investments, early calls on investments and the mark to market valuation as required under GASB 28. The following schedule presents a summary of expenditures of the governmental type funds for the fiscal year ended June 30, 2001, and the percentage of increases and decreases in relation to prior year amounts. (In thousands of dollars) Increase (Decrease) Fiscal Year 2000-2001 Over FY 1999-2000 Expenditures Amount % of Total Amount % Current: General Government 3,290 $ 5.98 443 $ 15.56 Community Development 1,346 2.45 243 22.03 Culture and Recreation 3,392 6.17 128 3.92 Public Safety 9,856 17.91 867 9.65 Public Works 2,082 3.78 200 10.63 Capital Outlay 32,174 58.48 19,692 157.76 Debt Service 2,877 5.22 96 3.45 Total Expenditures 55,017 $ 100.00 21,669 $ 64.98 xii The reasons for significant changes in expenditures are as follows: General Government – Expenditures in this category increased overall by $443,000. The majority of the increase is related to fees paid to outside consultants for work performed on the multi-purpose facility, the classification and salary study and various legal services. Community Development – Increased emphasis on economic development incentives, marketing, brochures, initial stages of zoning code revision and additional staffing account for the increase in expenditures within this Department. Public Safety – The increase in Public Safety is due to additional personnel and the formation of an additional Paramedic Engine Company Capital Outlay – The increase in Capital Outlay is due to several major road projects and the acquisition of additional open space. Debt Service – Debt service payments increased due to addition of three special assessment districts. General Fund Balances The fund balance of the general fund increased by $181,146, or 5% during the fiscal year. The ending general fund balance is $3,877,522, of which $22,151 has been reserved for advances to other funds. The unreserved fund balance of $3,855,371 is the equivalent of 77 working days of general fund expenditures. Fund balances and increases or decreases from the prior year for governmental type funds other than the general fund are as follows: (In thousands of dollars) Fund Balance Increase (Decrease) Fund 06/30/2001 From Prior Year Special Revenue Highway User 3,166 $ 420 $ Street & Open Space 1,156 (10,019) Transient Lodging Tax 438 122 Grants (25) (5) Capital Improvement 13,287 1,039 Impact Fees 1,559 573 Debt Service City of Prescott 14 81 Community Facilities Districts 1,217 28 Capital Projects Lakes Purchase 1,670 (55) Downtown Parking Garage - - Community Facilities Districts 623 (252) Unreserved fund balances in the major governmental funds were maintained at adequate levels. Enterprise Funds The City maintains six Enterprise Funds to account for proprietary type operations where a majority of revenues are derived from user charges. The Enterprise Funds are as follows: 1. Water Fund - This fund is used to account for the delivery of water services to the residents of the City and some residents of Yavapai County. xiii 2. Sewer Fund - This fund is used to account for the sewer services to the residents of the City and some residents of Yavapai County. 3. Golf Course Fund - This fund is used to account for the operations of the City-owned Antelope Hills Golf Courses, which provides year-round recreational activity for the residents and visitors to the City. 4. Airport Fund - This fund is used to account for operations at the City-owned Ernest A. Love Airport. Services include fueling, hangar and tie down rentals, aircraft maintenance and general aviation services. 5. Sanitation Fund - This fund accounts for sanitation, landfill and recycling services provided by the City. 6. Regional Transfer Station - This fund is used to account for the intergovernmental agreement between the City and Yavapai County to provide solid waste transfer station services to the residents of the City and County. The Station began operations in September 1991. Water Fund The City’s Water Fund was established to account for utility operations. Principal revenue sources are metered water sales, connection fees, and related income. Water revenues are also dependent upon the annual precipitation in the area. Comparative data for the past two fiscal years is illustrated below: (In thousands of dollars) Increase 2000-2001 1999-2000 (Decrease) Operating Revenues 6,163 $ 5,888 $ 275 $ Operating Income (Loss) 1,173 1,392 (219) Net Income (Loss) 1,497 1,827 (330) Increase in Retained Earnings 1,832 2,088 (256) Sewer Fund The City’s Sewer Fund was established to account for utility operations. Principal revenue sources are service fees, connection fees, and related income. Sewer charges are based upon the average winter water usage. Comparative data for the past two fiscal years is illustrated below: (In thousands of dollars) Increase 2000-2001 1999-2000 (Decrease) Operating Revenues 4,299 $ 4,307 $ (8) $ Operating Income (Loss) 374 769 (395) Net Income (Loss) 231 419 (188) Increase in Retained Earnings 854 985 (131) Golf Course Fund The Golf Course Enterprise Fund accounts for the operations of the City’s Antelope Hills Golf Courses. The Fund also accounts for the costs associated with the development of a second municipal course immediately south of the existing Antelope Hills Course. The second course opened July 1, 1992. Principal revenue sources are green fees, cart rentals, and restaurant income. Green fees and pro-shop revenues declined during the current year. xiv Comparative data for the past two fiscal years is as follows: (In thousands of dollars) Increase 2000-2001 1999-2000 (Decrease) Operating Revenues 2,186 $ 2,293 $ (107) $ Operating Income (Loss) 407 521 (114) Net Income (Loss) 305 285 20 Airport Fund The Airport Enterprise Fund accounts for the operations of the Ernest A. Love Field in north Prescott. The airport, as measured by takeoffs and landings, is the second busiest in the State of Arizona. Principal revenue sources are fuel sales, tie down fees, hangar rentals, and leases. The operating revenues of the airport experienced a decline in fuel sales. Comparative data for the past two fiscal years is illustrated below: (In thousands of dollars) Increase 2000-2001 1999-2000 (Decrease) Operating Revenues 2,441 $ 2,495 $ (54) $ Operating Income (Loss) (377) (390) 13 Net Income (Loss) (262) (529) 267 Increase (Decrease) in Retained Earnings 332 62 270 Sanitation Fund The Sanitation Enterprise Fund accounts for the trash and garbage collection function within the City and the operations of the City’s landfill. City workers and equipment performed all residential and commercial trash collection. Operating income increased as the result of receiving substantially more income from the sale of recyclables and routine growth in the number of customers. Comparative data for the past two fiscal years is illustrated below: (In thousands of dollars) Increase 2000-2001 1999-2000 (Decrease) Operating Revenues 3,826 $ 3,524 $ 302 $ Operating Income (Loss) 519 145 374 Net Income (Loss) 631 195 436 Regional Transfer Station The Regional Transfer Station access charges were established at a rate sufficient to cover all operating costs and yield a small profit, which it has managed to do. Operating rev