She said the fund balance decreased by $102,173 to $2,037,513, which is 22.8 percent of the city’s 2008 annual expenditures.

The preferred target encouraged by the state of Minnesota is 35 to 40 percent of a city’s annual expenditures, according to Gaffy. The city’s goal is 35-50 percent.

At these levels, it provides the city secure funding, cash flow and emergency funds to prevent short-term borrowing. 

The average for Minnesota cities’ general fund balance is 36 percent, according to Gaffy.

Robin Roland, city finance director, said the city’s general fund balance was 43 percent prior to  losing market value homestead credit aid from the state in 2002 and 2003.

Gaffy said the city could levy taxpayers to boost the fund balance, but could not imagine a council voting for this.

Roland said the city will rely on finding additional revenues and cutting expenditures to pad the fund balance.

In the past five years, the bulk of the city’s general fund has been generated from property tax as state aid has been reduced.

“For a city your size, you can’t rely on governmental revenues and you can’t rely on state aid. You need to take it from your own entities and make sure you have the property taxes to support your services,” Gaffy said.

By the numbers

In 2008, the city’s general fund revenues were $10,834 less than projected.

Expenditures were $103,093 more than budgeted, resulting in a decrease of the fund balance by 4.8 percent.

Gaffy said it was incredible that there was a less than a 1 percent variance between the projected and final budget amounts.

“So, you should be very proud of yourselves for laying out this budget and for Robin and the rest of this staff for anticipating what this budget is going to be,” Gaffy said.

“You should be proud of the city department heads sticking to that budget,”  Gaffy said.

Last year was a good year collecting building permits and fees with the new high school being built, said Gaffy, but she added this year revenues will decrease because of a decline in residential and commercial construction.

Other small variances in the budget were increased spending for police overtime during the Republican National Convention and an usually high amount of salt needed on roads this winter.

The 2008 City of Farmington Comprehensive Annual Financial Report is available on the city Web site at  www.ci.farmington.mn.us under City Departments and Finance.Kara Hildreth is at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Comments (0)

Subscribe to this comment's feed