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The State Legislature kept the same distribution method used in the prior biennium (HB01, Section 325). Each municipality receives a base payment of $10,000 (towns with population of less than 35 receive $5,000). The remainder is based on a formula which distributes the remaining funds in proportion to population and a hardship component. Hardship assistance is distributed to counties, cities and towns based upon a history of low property tax/and or sales tax collections.
Other significant revenue sources include auto and property tax revenue, miscellaneous tax revenue (severance, gas and fuels, and cigarette), mineral royalties, and other inter-governmental revenue, such as grants. For the 2014 budget, these revenue sources account for about 26% of General Fund revenue.
The City of Laramie controls very few of its revenue sources. These include charges for services, licenses and permits, franchise fees, and some miscellaneous sources. Combined, these sources account for less than 15% of the City’s revenues. Since the City has so little control over revenue, a conservative approach is taken during budget planning which includes adopting a biennium budget. Biennium planning provides the City with forecasts necessary to take any action required, should revenue estimates not meet expectations.
The state allocates the levies for both Sales and Use Tax as follows:• 69% of the state’s tax goes to the state general fund, with 31% going back to local governments.• Of the local government share, the state deducts a 1% administrative fee.• Distribution is determined by computing the percentage that net sales and use taxes collected by vendors in each county (including cities and towns) bears to the total net sales collected from the state.• The state pays a flat $40,000 to each county annually. The county receives these monies in equal monthly installments and then the state distributes the remainder to each county in the proportion that the total population of the county bears to the total population of the state.• The city portion is also based on the total population of the city to the total population of the county.
(Reference Wyoming Statute: W.S. 39-15-101 through 39-15-111, W.S. 39-16-101 through 39-16-111)
The Department of Revenue collects and disperses the monies, keeping 1% for an administration fee and distributing 99% to the City.
(Reference Wyoming Statute: W.S. 39-15-203)
Albany County voters approved $42 million in specific purpose tax projects in 2010, and the 1% tax remains in place until the non-bonded projects are fully funded and debt payments (made from tax collections) fully pay off the bonded debt. The City’s portion of these projects totals $22,550,550. As of June 30, 2014, $11.64 million (52%) of the City’s portion of the tax had been collected. The City bonded 95% of its projects, and the assets received from the sale of these bonds are held by a trustee who distributes funds to vendors at the request of the City.
(Reference Wyoming Statute: W.S. 39-15-204)
Other types of debt the City carries includes funding of loans at the State level for such programs as the Business Ready loans, Water Development Commission, and State Land and Investment Board. The City is authorized to do lease purchase options on equipment and other leasing needs.
The Specific Purpose tax projects debt are being paid through the Specific Purpose Tax of 1% monthly collections. The debt associated with this bonding has a net interest rate of 2.32% with a total bonded debt obligation at FY14 of $17.325M, excluding the debt issuance premium. The general fund obligation (Street and Landfill) has a current obligation of $6.3M. Wastewater has a general obligation debt of $4.61M and Water has $6.415M. Payments (made by tax collections) made in FY14 totaled $1,825,000.
There is a loan payable for $10.0M for the Wyoming Territorial Park loan to the state which is being paid with an investment of a zero coupon bond which is coming due in December 2014. There is no payment required by the City.
The total debt obligation in the Enterprise funds at fiscal year-end 2014 was $12.9M. The Water fund had $7.6M in obligations with total debt payments in FY14 of $790,454. The Wastewater Fund had $4.2M in obligations with total debt payments in FY14 of $975,443. The Solid Waste fund had capital lease obligations totaling $1.1M with total debt payments in FY14 of $235,233.
The legal level of spending control is at the department level for operating expenditures and at the item or project level for capital expenditures. Budgets may be amended by the City Council through a public hearing process as defined by state statute and City management can transfer appropriations between line items or departments. A transfer does not result in a net budget increase.
The City recognizes depreciation in all funds in accordance with the accrual accounting requirements for Government Wide statements required for the Comprehensive Annual Financial Report (CAFR). However, the City is also statutorily required to recognize depreciation in its utility rate structure (§15-7-407) so that income generated by rates is sufficient to fund future replacements.
In the Financial Outlook Report the depreciation is stated as a “memo” only number and is not included in the report of actual expenditures. This allows the reader to compare how much the City is funding in capital and equipment related to the depreciated number.
In technical terms, fund balance is the term used in external governmental financial reporting for statements prepared on the modified accrual basis of accounting and the current financial resources measurement focus. Net Assets is the term used in external governmental financial reporting for statements prepared on the accrual basis of accounting and the economic resources measurement focus.
The value of net assets does not represent the net position of an entity in a cash value – net position is driven by the associated assets and liabilities on the balance sheet. For example, Government Wide and Enterprise Fund statements for the City of Laramie are prepared using accrual accounting and an economic resources measurement focus. These conventions require recognition of assets at historical cost on the balance sheet. The value of a street at $1 million on the balance sheet increases both the value of total assets and net assets, assuming no offsetting debt. It is unlikely that the City would sell a street (e.g. convert the asset to cash) but the City’s net position is driven up by the recognition of this asset. Financial statement users should be careful to interpret net assets as a function of the value of all the assets and liabilities on the balance sheet – not just those that are readily convertible to cash.The value of fund balance comes closer to representing a governmental entity’s “true” residual value because the focus is on currently available resources. For external reporting, only governmental funds are reported this way. For purposes of this financial outlook, Enterprise funds have also been prepared using this approach so that users can see net position in terms of currently available resources and be able to better assess the resources at the City’s disposal.
The modified balance sheet also presents the same breakout for Net Assets in Enterprise Funds as is required for governmental fund basis reporting on the CAFR. The categories represent net assets or fund balance to be used in some way by the City at that point in time.
Days of Operation Reserve is presented for each fund in the financial outlook. The calculation shows how many months the City could survive, based on the current annualized budget, if all of its fund balance (net assets) commitments were realized. For example, the General Fund has 3.7 months of operation in reserves. If all the commitments on fund balance materialized today, the City could survive for 3.7 months on its unassigned reserves.
In FY 2014-15, the City began billing for utility services (garbage collection, water, etc.) used in its buildings. In the past, these charges were accounted for as part of the net fund transfer and reduced the total amount due to the General Fund from the Enterprise Funds. As compared to prior years, the net fund transfer appears significantly higher in FY 2015 (986K in FY 2014-15 as compared to 770K for FY 2012-13 and FY 2013-14). The transfer is higher because the service use credits are now being accounted for independently, but the net effect to the Enterprise Funds is the same.