Alice Pickering
Wyoming Area Reporter

City of Wyoming budget reserves are higher at the end of 2006 than they were at the end of the previous year and the city is generally in good financial shape, according to auditor Steve McDonald, of Abdo, Eick, & Meyers, LLP. McDonald summarized for the council key points of the 2006 financial report at the council meeting on March 6.

The general government part of the budget covers everything in the city budget except the enterprise fund which covers the water and sewer payments. The general fund had a balance reserve of $647,134 at the end of 2006, compared to $451,239 at the end of 2005.

Not only was the absolute number of dollars greater in the reserve for 2006, but it represents 35 percent of the 2006 budget of $1,743,740. The 2005 budget had a balance reserve of 25 percent at the end of the year on a budget of $1,299,962.

McDonald said $120,000 more revenue came into the general fund than anticipated. In addition, $88,476 budgeted for capital outlay was not spent.

McDonald said the reserve is OK, but “not a lot of cushion.” The goal is to get closer to 50 percent of the budget as a reserve to meet payments, until July when the city gets the first half of property taxes from Chisago County, he said.

The enterprise fund is the water and sewer fund, which is funded by user fees. Payment to the Chisago Lakes Joint Sewer Treatment Commission was $500,000 in 2006. About $1.6 million will come into this fund at the end of 2007, when money from the conclusion of the land sale of the wastewater treatment ponds acreage to Polaris arrives.

Fees are collected from residents for water and sewer utilities and cover the cost of providing these services and maintaining infrastructure. The analysis of revenue and operating expenses of the water and sewer fund for 2004-2006 show a gradual increase in operating expenses compared with money collected.

McDonald strongly encouraged a rate study for water and sewer. The purpose of a study would be to determine if the fees collected are keeping pace with costs of services. If not, rates should be raised, he said.

Capital projects

Of the capital projects in the city, TIF District 3-1 will be reduced over the next seven or eight years, to be paid off in 2015. TIF District 3-3 shows a deficit of $36,029 for the past two years. McDonald recommended this be eliminated.

Addressing items in the special revenue section of the budget, McDonald said the police impound lot should break even. In 2005 it showed a deficit of $13,778; in 2006 the deficit was $21,650.

Abdo, Eick, & Meyers serves about 90 other cities. McDonald made comparisons between Wyoming and the average of the other cities served by this firm.

Dividing assets by liabilities is a measure of liquidity, ability to meet short-term obligations with cash on hand. It is a ratio of assets to liabilities and should be between 1 and 2. A current ratio below 1 means the city liabilities exceed assets. If the ratio is high, it may not be using assets efficiently. The ratio for 2005 was 12.1 compared with peer group average of 5.7. In 2006 this is 28.5. Wyoming is meeting short-term obligations.

A debt service coverage ratio compares cash generated by operations to the total debt service payments. It determines if there is enough cash from operations to meet debt obligations.

McDonald’s summary explained that anything above 100 percent is acceptable. This ratio for Wyoming for 2004-2006 is 372 percent, 278 percent, and 258 percent, respectively.

More data details

McDonald also compared debt per capita, the bonded city debt divided by the number of residents. The goal is to keep this low.

Taxes-per-capita is the amount determined by dividing the total tax revenues by the number of people in the city. This is one ratio where Wyoming is slightly about the comparison group average. For 2004 this was $323; in 2005 it was $395; and in 2006, $458. The averages for the peer group were $343 (2004) and $367 (2005).

Expenditure per capita shows how much the city is spending to provide services for residents. This is determined by dividing government expenditure by the number of residents and may vary depending on capital improvements.

The trend for the city is upward, $503 (2004), $593 (2005) and $791(2006). But its averages are below those of the comparison group; $981 in 2004 and $1163 in 2005.

McDonald also took a look at the amount of depreciation in capital assets. This percentage indicates the usable life of city structures and infrastructure. An older city is likely to need more repair and replacement.

A higher number indicates newer assets being constructed. In the case of Wyoming, these percentages are relatively high, for the years examined (2004-2006); 73 percent, 79 percent, and 78 percent. The comparison averages were 66 percent and 67 percent for 2004 and 2005.

Government charges for services compared to the total city revenue shows that user fees have dropped in Wyoming. User fees are usually non-levy revenue. The averages for the cities compared were 24 percent and 26 percent, for 2004 and 2005. For the years 2004-2006, Wyoming averages have been 24 percent, 23 percent, and 11 percent.

McDonald compared unrestricted net assets to operating expenses. This means some flexibility in using undesignated money for current expenses and is determined by dividing the total expenses by the unrestricted net assets of the city.

According to McDonald, eight percent equals roughly the money to cover a month’s expenses. For Wyoming these are 144 percent (2004), 61 percent (2005), and 47 percent (2006). Averages for the 90 other cities are 103 percent (2004) and 61 percent (2005).

McDonald said this ratio is the one that changes the most.

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