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HomeMy WebLinkAbout2023 Management Discussion and Analysis 4 Management’s Discussion and Analysis Matthew K. Nielson, Chief Financial Officer Our discussion and analysis of the City of Rexburg’s financial performance provides an overview of the City’s financial activities for the fiscal year ended September 30, 2023. Please read this in conjunction with the City’s financial statements, which begin on page 22. FINANCIAL HIGHLIGHTS The assets and deferred outflows of the City exceeded its liabilities and deferred inflows at September 30, 2023 by $161,111,367. • Of this amount, $5,206,407 of unrestricted net position and $36,075,674 of restricted assets is available to meet the City’s ongoing obligations to citizens and creditors. • The City’s net position increased $7,987,297 as a result of this year’s operations, which includes an increase of governmental type net position by $5,110,086 and of business-type net position by $2,877,211. • At fiscal year end, the City’s governmental funds reported combined ending fund balances of $23,400,732, a increase of $449,368 from last year. • The General Fund Balance was $6,941,876 or 43.84% of the total General Fund Expenditures and Fund Transfers. This leaves over a 5-month reserve in place. This is a .59% increase over the prior year. Of this balance, $1,000,300 was appropriated in the budget of the following fiscal year. OVERVIEW OF THE FINANCIAL STATEMENTS The Government-wide Financial Statements are presented in a format designed to provide a broad overview in a business-like manner. These statements include all assets and liabilities using full accrual accounting, which is similar to accounting used by most large businesses. Full accrual accounting reports all of the current year’s revenues and expenses when they are obligated, regardless of whether or not cash has yet been received or paid out. You will also need to consider non-financial factors, such as changes in the City’s property tax base and the condition of its streets, to assess its overall health. These statements distinguish functions that are principally supported by taxes and inter-governmental revenues (governmental activities) from functions that are supported by user fees (business-type activities). Governmental activities include: general administration, public safety, streets, parks, recreation, and arts. The business-type activities include: water, wastewater, and sanitation. The government-wide financial statements also include separately the financial information of the Rexburg Redevelopment Agency as a component unit. 5 The Statement of Net Position presents information on all of the City’s assets, liabilities, and deferred inflows/outflows of the City. The difference between them is called the Net Position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities defines the change in Net Position by reporting expenses of the different functions of the City and related revenues. Here expenses are listed before revenues to emphasize that in City government, revenues are generated to support the different functions and are not the driving force, service needs or functions are. The City is not here to make a profit, unlike business; it first identifies the service needs of its citizens and then raises the resources to meet those needs. Fund Financial Statements are used to maintain control over resources that have been segregated for specific activities, objectives or as may be required by law or grant or bond agreements. Major funds are shown in separate columns and include the General Fund, Streets, Emergency Services, Water, Wastewater, and Sanitation; all other funds are non-major funds and are summarized in one column. Details of the non-major funds are shown under Other Supplementary Information on pages 75-84 of this report. All funds of the City are also divided into two categories, governmental or enterprise (business-type). Governmental Funds Financial Statements focus more on current inflows, outflows and balances (reporting more on a cash/partial accrual accounting basis instead of a full accrual basis) rather than on long term effects on net position, such as depreciation might have, which is included in the Government-wide Statements. The City maintains 81 active funds, 74 are governmental funds and 7 are categorized as Enterprise Funds, which are the Utility funds. Enterprise Funds Financial Statements are used to report the business-type activities (supported by user fees) of the City that include the Utility Funds. These funds are reported on a full accrual basis, which is the same as the business-type accounting used in the Government-wide Financial Statements for all funds but includes more detail here. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net Position For the years ended September 30, 2022 and September 30, 2023, Net Position changed as follows: Governmental Business-type All Activities Activities Activities Net Position 9/30/22 $ 93,343,125 $ 59,780,945 $153,124,070 Increase in Net Position $ 5,110,086 $ 2,877,211 $ 7,987,297 Net Position 9/30/22 $ 98,453,211 $ 62,658,156 $161,111,367 Percent Increase 5.47% 4.81% 5.22% 6 Large Capital Item Expenses (over $50,000) included: SMALL LIGHTING PROJECTS $50,326 SOUND SYSTEM-TABERNACLE $50,579 TRAF SIG UPGRADE-7TH S/YEL $57,945 STREET PATCHING $59,113 BUILDING REMODEL-ROMANCE $63,649 RESTORE TAB TOWER WINDOWS $68,663 LIFT REPLACE-WW PUMP STAT $69,597 BURY POWER LINE-PORTER PARK $70,341 BASEBALL/SOFTBALL QUAD-FINAL $75,727 FAIRWAY MOWER-GOLF $79,512 HEAVY BRUSH RIG-FIRE $84,536 TRAFF SIG/WIDEN 12TH W - UNIV $96,665 CART PURCHASE-GOLF COURSE $97,200 HYDRANTS $99,757 TL-EXPAND PARKING LOT SOUTH $141,542 SEAL COAT/CHIP/SLURRY-STREET $151,920 TOWER STAIR REPAIR-REX RAPID $174,497 METERS $179,554 CRACKSEAL COAT/MARKING-FAA $184,200 LID WATER PROJECTS $186,562 FIBER INITIATIVE DESIGN $198,217 TETON RIVER PARK DEVELOP. $229,526 7TH S RR CROSSING UPGRADE $275,430 ROUNDABOUT--PIONEER/7TH S $278,516 LID WW PROJECTS $483,607 FIRE ENGINE-FIRE $723,071 CONTRIBUTED CAPITAL-STREETS $1,100,131 LID STREET CONSTRUC. COSTS $1,820,185 FIBER RING CONSTRUCTION $2,950,566 Also, see Note #3 on page 40 to 41. 7 Because the City has not been required by the Governmental Accounting Standards Board (GASB) to list streets and storm sewers acquired before October 1, 2003, those items are not included in the Beginning Net Asset amounts under Governmental Activities. All acquisitions of streets and storm sewers on or after that date will be included. The City may decide in the future to estimate the historical cost of those previously acquired streets and storm sewers and adjust the beginning balances at that time. 8 A summary of long-term transactions of the City for the year ended September 30, 2023, is as follows: Changes in Long-Term Liabilities: Long-Term Long-Term Obligations Obligations September 30,Obligations Obligations September 30, 2022 Incurred Paid 2023 Governmental activities: Local improvement district warrants payable (Note 9)-$ -$ -$ -$ Obligations under capital Lease (Note 12)207,170$ 97,200$ (78,202)$ 226,168$ Accrued compensated absences (Note 6)448,540$ 98,788$ -$ 547,329$ Long Term Lease Liability 335,806$ 89,374$ -$ 425,180$ PERSI Net Pension Liability (See Notes)8,743,103$ 140,736$ 8,883,839$ Governmental Activity Long-Term Liabilities 9,734,620$ 426,098$ (78,202)$ 10,082,516$ Business-type activities: Accrued compensated absences (Note 6)67,811$ 4,557$ -$ 72,368$ Obligations under capital -$ -$ -$ -$ Lease PERSI Net Pension Liability 1,454,755$ -$ (144,690)$ 1,310,065$ (See Notes) Water DEQ Loan (Note 11)7,331,420$ -$ (191,820)$ 7,139,600$ Wastewater revenue bonds payable (Note 10)2,350,000$ -$ (775,000)$ 1,575,000$ Business-type Activity Long-Term Liabilities 11,203,986$ 4,557$ (1,111,510)$ 10,097,033$ Total Governmental and Business-type Activiites Long-Term Liabilities 20,938,606$ 430,655$ (1,189,712)$ 20,179,549$ There are currently no outstanding General Obligation Bonds. 9 Governmental Activities The format of the Statement of Activities lists the expenses first and then the revenues with a resulting Net Expense. The reason for this kind of format is to highlight the relative financial burden or subsidy of each of the functions on the general revenues of the City, including property tax, after that function’s specific revenues are subtracted. Below is a comparison of the changes in the net position from 2022 to 2023. 10 Below are some details about some of the activities found in the Statement of Activities. Governmental Activities General and Administrative (Mayor & City Council, Economic Development, Customer Services, Information Systems, Financial Management, Human Resources, Building Maintenance, Legal, Planning and Zoning, Engineering, GIS, Building Safety, Shop, and miscellaneous other departments). Most of these departments’ expenditures is offset by revenues from overhead charges. Public Safety (Police and Emergency Services) It is important to note that the Police and Fire functions create the most financial burden on the general revenues, but, customarily, that is what property tax is for. To provide the most efficient and effective funding of fire and ambulance services in Madison County, the City of Rexburg, the Madison County Ambulance District, and the Madison County Fire Protection District have formed a joint venture doing business as the Madison Fire Department. Madison County reimburses the City for Ambulance expenses and its portion of shared expenses. Madison County Fire Protection District also reimburses the City for its portion of shared expenses. In Fiscal Year 2019, a change was made on charges for personnel in the joint venture from 50% ambulance/50% fire to 48% ambulance/52% fire, which increased costs for the city and fire district to help alleviate funding concerns related to the ambulance district. 11 Parks, Recreation and Cultural Arts The Parks Department is mostly funded by General Revenues. Only $39,682 was taken in as operating revenue from park reservations and filed prep fees in 2023. The Recreation Administrative expenses in the general fund are subsidized completely by General Revenues, while the Recreation Programs are intended to be more self-sufficient. In 2023, a transfer of $78,911 from the general fund was made to subsidize 2023 losses in the Recreation Program Fund. 2023 was the last year of our lease and operations for “The Zone Rexburg Recreation Center and Kidsburg Play and Learning Center” that had been operating at a considerable deficit each year. We anticipate the general fund subsidy to the Recreation Program Fund to drop considerably over the next few years as we also raised some rates to help this fund sustain itself in the future. The City hired a Golf Professional during 2021 and ended the Golf Manager contract on December 31, 2020. This decision has continued to help the City and County to better address capital needs and reduce operating losses at the courses under this new model. The Golf Courses experienced their highest operating revenue and patron usage of all time in the Fiscal Year 2023. Major parking lot improvements and cart parking improvements were made in 2023 at Teton Lakes Golf Course. In 2023 the operating fund of the water park Rexburg Rapids experienced an operating loss of $76,115. In 2023, the thirteen-year combined operating loss reached an amount of $155,895, which means Rexburg Rapids has operated with an average loss of $11,992 per year in its first thirteen seasons. The City Council also transferred $65,004 from the general fund in 2023 that will be kept in reserve for future major capital projects or repairs at the water park. The capital reserve carryover was $105,460 at fiscal year-end 2023. It is anticipated that the council will continue to transfer additional funds from the general fund for these ongoing capital replacement expenses. Cultural Arts includes the Tabernacle Civic Center and Museum of Rexburg, the Legacy Flight Museum, the Romance Theater, and the Rexburg Cultural Arts fund. General revenues and taxes heavily subsidize the Cultural Arts Funds. The Cultural Arts Funds were subsidized approximately $543,938 in 2023 by the general fund. Major capital projects will begin to occur at the Tabernacle over the next several years. Streets The Street operating fund is funded by State Highway User Fees, County Road & Bridge Property Taxes, and other charges and is not subsidized by General Revenues, except for 100% of the franchise fees that have been allocated to that fund. The City shifted 100% of the franchise revenues from the general fund to streets a few years ago to address needed street repairs/replacement more quickly. Streets had an increase in State Highway User Fees over the prior fiscal year of over $226,971. The street operations fund transferred nearly $3 million to the Street reconstruction fund for future projects in 2022. 12 Business-type Activities Utility Funds The Utility Departments include the Sanitation, Water, and Wastewater departments. The City maintains separate Capital Reserve Funds for Water and Wastewater that are funded through capacity fees and used for large construction projects to expand capacity. In 2010, the City started a project to expand the Wastewater Treatment plant and wastewater lines to increase capacity and to address some other maintenance concerns at the existing plant, which work was substantially finalized by the end of 2018. The improvements helped eliminate odors and with the disposal of bio-solids, and added new capacity as mentioned above. To pay for the construction maintenance upgrades and expansion of the plant, the city secured a revenue bond of 10 million dollars on December 8, 2010, which will be paid back with capital reserve funds and increases in utility fees. The city did complete a tax-exempt current refunding (refinance of bond) in June of 2020, and anticipates saving $309,460 in cash flow savings from interest savings (after fees) by privately placing this debt. The utility funds, which include three respective utility operating funds, water capital reserve, sewer capital reserve, water capital construction, and the sewer plant construction fund, increased in cash and short-term investments by $2,599,578, ending the year with a balance of $20,992,776, which can be seen on the Statement of Net Position. The City of Rexburg provides wastewater treatment services to the City of Sugar City and the City of Teton at a per gallon charge that includes operating costs. Both cities have provided their share of capital up front through the payment of capitalization fees that reserve certain amounts of capacity for their usage. Those two cities together provide 6.05% of the total monthly-billed revenue for the wastewater department. Sewer rates were last increased on October 1, 2023. Water rates were last increased on October 1, 2023. Sanitation rates were last increased on October 1, 2023. Water and sewer capacity fees and Impact Fees were last updated December 7, 2022. The city received the final findings of the water facilities planning study at the end of 2015 and began construction in 2016. The projected improvements required additional funding beyond that available in our capital and operating reserve funds. The water upgrades were funded with a combination of reserves and a loan that was finalized in 2022 from the Department of Environmental Quality (DEQ). The loan included principal forgiveness of $2,211,300. The water project will provide needed production, storage, and delivery capacity to meet the current water demands and future water demands as our population grows. In 2012 the City began to provide curb-side pickup for recycling to single family residents at no additional cost to the customer. In 2015, the majority of single-family residents were receiving the recycling option. The Recycling Program is a joint effort with a third-party vendor. In 2014, 2015, and 2016 it became necessary to increase the recycling contract expenses to maintain the program at its current service level. There was no increase in recycling costs in 2017, but a substantial increase in fees in 2018 was necessary because the vendor was no longer able to sell all recyclables and was forced to pay tipping fees for some items, which costs were passed on to the city. This same fee from the vendor was increased in 2022. The city is not currently seeking to add the recycling option to commercial and multi-family users because the costs have increased, and the value of the recycled products has dropped. When we recycle goods, it reduces the Madison County tipping fees expense we would otherwise pay for disposing goods. The city 13 analyzed the recycling with the oversight committee/council members during 2022 and determined to continue to offer the service with no changes, other than fee changes. FUND FINANCIAL STATEMENT ANALYSIS As noted earlier, the City of Rexburg uses fund accounting to ensure and demonstrate compliance with legal, grant and budget requirements. Governmental Funds The focus of the City of Rexburg Governmental Funds is to provide information on the current year cash flows and balances. Such information is useful in assessing the City’s current year financing requirements. Unassigned fund balances that are not held for emergencies or cash flow purposes, may serve as a useful measure of the City’s net resources available for spending at the end of the fiscal year that could be added to expected revenues for the following fiscal year. The General Fund Balance (see page 68) increased by $40,502 during the year. The Street Funds Balance (see page 69) increased by $1,627,919, leaving a fund balance of $3,733,635 in the street operations, street repair, and street reconstruction funds. This carryover excludes that in the street impact fund. The fund balance will be carried over for projects that are already planned and budgeted for in future years. The Emergency Services Fund (see page 70) is financed by three entities: the City of Rexburg (for fire suppression services), the Madison County Fire Protection District, and the Madison County Ambulance District. All expenditures are billed to the three entities based on the benefit received by each. The fund balance is normally always zero because the three entities reimburse all expenditures. The Emergency Services Fund ended the fiscal year $299,564 under budget. Police, Fire, Parks and Street Development Impact Fees combined were up in 2023 over 2022 and the city collected in the amounts of $56,455, $42,844, $200,101, and $167,101 respectively, totaling $466,501 for qualified capital improvements in those departments. It is important to illustrate the need for impact fees by looking at the fund balances of each respective fund to determine the health of those funds in providing the necessary capital to meet the demands of the growth in our community and its impact on our current service levels. At the end of the fiscal year 2023, the Police Impact Fee Fund was at $295,803. We hope to expand or purchase a larger police station in 2026 and plan to save impact fees to help with this cost. The Fire Impact Fee Fund had a balance of $8,329, which will help fund the future replacement of fire engines and expansion or addition of fire stations. The Parks Impact Fee Fund balance was $420,715 and is being accumulated for future park projects. The Street Impact Fees Fund balance available to be used for qualified street projects was $2,079,432. The city finalized the respective Capital Improvement plans and Impact Fee Analysis for each type of impact fee in May of 2020. We also performed an update to the parks impact fees in May of 2023. The Joint Fire Equipment Fund had a positive fund balance of $1,169,297, which comes from contributions by the City and the Madison County Fire Protection District. These funds are for future purchases of fire equipment and facilities. The GIS (Geographic Information System) Fund was first created in 2004 to track the funding of the joint City/County GIS Department on a 50/50 financing split. 14 The golf courses, Teton Lakes of 27 holes and the Legacy Course of 9 holes, are jointly owned and managed by the City of Rexburg and Madison County. Their governing boards appoint a Golf Board consisting of six citizens and a member of each of the governing boards to act as a liaison to the Board. At the end of the fiscal year the Golf Operating fund had a surplus of $415,962 and much of this will go towards future capital projects. The Golf Construction fund deficit was $111,853 which is covered by a loan from the City. There was a transfer of $84,417 to the Golf Course Construction Fund at the end of the fiscal year from the Golf Operations Fund that was used to pay back the golf carts purchased with a loan from the city/county. The County paid off its share of the deficit in 2023 and the city did reduce the deficit $25,000 as well, which we plan to continue to do in the future. Proprietary Funds The City of Rexburg proprietary fund statements provide the same type of information found in the government-wide statements, but in more detail. These statements include information from both the capital reserve and operating funds. Fund 25 is the Sanitation Fund, Fund 26 the Water Operations Fund, and Fund 27 the Wastewater Operations Fund. These operating funds ended the year with net income of $2,053,468, of which $480,373 was due to grants and contributed assets from developers. The Utility Operations Funds increased in cash and investments by $833,083, ending the year with a balance of $14,834,470 in cash and investments. The Sanitation Fund ended with a balance of $2,096,603. The Water Operation Fund ended with a balance of $6,781,143. The Wastewater Operations Fund ended with a balance of $5,956,724. The Water Capital Reserve and Capital Construction fund ended with a combined balance of $2.51 million in cash and investments. The Wastewater Capital Reserve and Wastewater Treatment Plant Construction fund ended with a combined balance of $3.65 million in cash and investments. GENERAL FUND BUDGETARY HIGHLIGHTS The City strives to maintain a total general fund committed fund balance equal to a minimum of 25%, or greater, of general fund budgeted expenditures for necessary cash flow, for unforeseen emergencies, and to mitigate current and future risks. At the end of 2023, the fund balance was 43.84% of the 2023 actual expenses. The city expects this fund balance to continue to decrease over the next few years as it anticipates saving for expansion of or moving of the police station and constructing a new municipal building along with some other large capital expenditures for our historical buildings. A large portion of this carryover is also typically used as a fund balance carryover in the budgeted revenues to balance the budget from year to year. Included in the fund balance is the savings/reserve for the health/dental insurance. The City plans to move that out into a trust fund once the decision is made to move forward with a self-insured plan at some future date. 15 However, some individual accounts or departments in the general fund showed variations that are notable ($60,000 or more): Significant Revenues Overage (Shortage) Sales Tax $ 454,748 Sale of Assets $ (99,828) Investments/Unrealized Gain (Loss) $ 455,514 Significant Expenditures Under (Over) Budget IT $ 72,899 Police Patrol $ 96,864 Police Admin $ 305,246 Parks $ 134,374 Transfer to Tabernacle $ 506,101 Transfer to Joint Fire Operations $ 81,713 Transfer to Fiber Reserve $ 316,158 16 STREET FUND BUDGETARY HIGHLIGHTS However, some individual accounts showed variations that are notable ($60,000 or more): Significant Revenues Overage (Shortage) Property Tax-County Road and Bridge $ (164,405) Franchise Fees $ 181,740 State Highway User Funds $ 220,904 Federal Grant $ (622,254) Street Clawback Fees $ 145,280 Sale of Assets $ (350,000) Transfer in-Street Operations to Street Repair Fund $ 745,353 Contributions-New Street Construction Fund $ 600,131 Urban Renewal Reimbursements $ 548,771 Significant Expenditures Under (Over) Budget Shop Overhead Expenses Street Operations $ 68,103 Fund Transfer from Street Operations to Street Repair Fund $ (745,353) Street Sweeper $ 300,000 Fund Transfer from Street Replacement to LID construction $ 710,785 Seal Coat/Chip or Slurry Seal $ 68,079 East Parkway $ 739,754 Roundabout-Pioneer/7th and RR Crossing Upgrade-URA $ 226,054 Contributed Capital (new finished streets) $ (600,131) Storm Drain Replacement $ 100,000 Traffic Signal/Widen 12th W-University $ 103,335 New Sidewalk-7th S-US 20 to 12th W $ 224,721 17 EMERGENCY SERVICES DEPARTMENT FUND BUDGETARY HIGHLIGHTS The City of Rexburg, through an agreement with Madison County Fire Protection District and the Madison Ambulance District, is responsible for the administration and accounting of the Emergency Services Department (ESD) operations. A governing board made up of one elected official from each entity and a doctor, sets policies as needed for the department. ESD Fund Revenues are almost all provided by the sharing of costs by three entities: the City of Rexburg and the Madison Fire Protection District through an Operating Transfer in, and the Madison Ambulance District through warrants paid to the City. Costs are reimbursed based on benefits received by the three entities. The ESD Department utilized ambulance and fire equipment on site at various wild land fires throughout the state and nation. For their work, the respective entity that supplied the equipment received reimbursement revenues that helped reduce the shared costs needed by the three entities that fund the ESD operations. They also sent out personnel to help in the wild land fire efforts and received reimbursement revenues to cover the wages and benefits paid to the employees. The Madison Ambulance District paid approximately 46% of the costs during the past fiscal year. The City and the Madison Fire District each paid about 35% and 19% respectively. ESD Operating Fund Revenues and Expenses were both approximately $299,564 under budget – both because this fund is usually zeroed out at the end of the year and any savings or overruns are shared by the three entities immediately. The City’s share of the net expenses was $1,491,188 of a $1,572,900 budget, or $81,712 under budget. REXBURG URBAN RENEWAL AGENCY Separately issued financial statements for the Rexburg Urban Renewal Agency, a component unit of the City of Rexburg is available at the City offices. 18 The Actual Total Expense pie chart shows the relative size of the departments or categories of expenses. Each Total Expense category includes both operating expense and capital purchase expense. Operating Expense does not typically include capital expense and is the amount needed to fund the day-to-day operations of the City. Capital Expense is usually defined as an expense if the benefit or item purchased is expected to last two or more years and is depreciated over multiple years as determined by the city’s depreciation schedule. Construction is generally a large piece of the pie each year and is capital in nature, but varies widely from year to year in amount, due to the available funding and the needs of that year. Fund Transfers are made between different funds to pay for charges for services given or to fund the deficit position of funds with a transfer from the General Fund. The total expenses in 2023 decreased by approximately 7% or $4.42 million dollars compared to 2022. This was due in large part to fewer street construction projects/costs. 19 The Actual Total Revenue pie chart shows the relative size of the categories of revenue by source. Total Revenue categories include both operating revenue and revenue that is restricted to capital purchases. Operating Revenue does not include revenue reserved for capital purchases and is the amount needed to fund the day-to-day operations of the City. Capital Revenue is usually defined as revenue reserved to be used on purchases that are expected to last two or more years. Fund Transfers and Interfund Charges are made between different funds to pay for charges for services given or to fund the deficit position of a particular fund with a transfer from the General or another Fund. LID Assessments are revenues charged against a particular benefited property for improvements made by the City through a Local Improvement District (LID). State Taxes include Sales Tax, Gas Tax, and Liquor Tax Revenues that are distributed to the Cities by the State of Idaho. It is relevant to point out that Property Tax, however important it is to the financial well- being of the City, is a relatively small part of the Total Revenue Budget. Road & Bridge Tax is property taxes levied by the County for their Road & Bridge Fund that are turned over by state law to the City. The amount of tax transferred is equal to half of the Road & Bridge Tax collected on properties within the City limits. The Road & Bridge Tax has decreased steadily for several years. The total revenues in 2023 decreased by 9.7% or over $6.7 million dollars compared to 2022. Federal Grants also dropped significantly in 2023 by more than $3.55 million. Investment earnings was up considerably in 2023. 20 The Actual Operating Expense pie chart shows the relative size of the departments or categories of operating expenses. Operating Expense does not typically include capital expense funds and is the amount needed to fund the day-to-day operations of the City. Public Safety expenses, which includes the Police, Fire, and Ambulance Departments, comprise about 31% of the operating expenses. The Utility Funds, which include the Wastewater, Sanitation, and Water Departments, account for approximately 33% of the operating expenses. Street operations accounted for 8%, leaving approximately 28% for the rest of the departments or categories. The operating expenses increased by approximately $2.53 million or 7% as compared to 2022, with the largest increase coming from fiber operations. Police expenses increased approximately $463,000 or 8%. Recreation increased $174,000 or 16% and Cultural arts $100,000 or 22%. The utility operating funds combined had an increase of $559,000. All other departments had less significant increases or decreases. 21 The Actual Operating Revenue pie chart shows the relative size of the categories of operating revenues. Operating Revenue does not include money meant for capital expenses and is the amount provided to fund the day-to-day operations of the City. Utility Charges, which include the Wastewater, Sanitation, and Water user fees, are about 30% of the total. Property Tax, State Taxes (with the exception of the gas tax), and Interfund charges for services (Overhead Transfers) are general-purpose revenues that can be used at the City Council’s discretion. Many of the other categories specified are each for a special purpose and must be spent according to state law or agreements signed. The operating revenues increased by approximately 1% or $ 346,000 as compared to 2022, with the largest increase occurring in the utility charges, State Taxes, and Property Taxes. Miscellaneous revenues saw a decrease in revenue of over $1.1 million primarily because of a large drop in Wildland Revenues in 2023 with fewer deployments. The Golf revenues went up substantially in 2023 as we had one of our busiest and most successful financial seasons ever. The other operating increases and decreases were less dramatic than these areas.