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Finance Department

City Finances

Financial highlights for the fiscal year ended June 30, 2004 are outlined below and shown in more detail in the accompanying tables.

Financial Highlights

The City’s governmental activities total assets exceeded liabilities (net assets) at the close of the fiscal year by $10,512,673, an increase of $1,207,720 over 2003. Of this amount, $1,949,283 is in unrestricted net assets, which is available to meet the City’s ongoing financial obligations.

CITY OF SONORA
NET ASSETS
JUNE 30, 2004 AND 2003

	Governmental Activities
	2004	2003
Current and other assets	$ 5,934,811	$ 5,426,617
Capital assets	7,400,428	6,861,359
Total assets	13,335,239	12,287,976

Long-term liabilities outstanding	1,838,583	1,960,276
Other liabilities	983,983	1,022,747
Total liabilities	2,822,566	2,983,023

Net assets:
Invested in capital assets, net of related debt	5,561,845	4,901,083
Restricted	3,001,545	2,410,877
Unrestricted	1,949,283	1,992,993
Total net assets	$ 10,512,673	$ 9,304,953

The statement of net assets presents information on all the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as one indicator of whether the City’s financial position is improving or deteriorating.

General and program revenues exceeded expenses by $1,207,720, an increase of $177,657 or 17%. City program expenses totaled $5,106,661 for 2004. Public safety (police and fire protection) costs comprised $2,449,353 or 48% of this amount.

CITY OF SONORA
STATEMENT OF ACTIVITIES
FOR THE YEARS ENDED JUNE 30, 2004 AND 2003

	Governmental Activities
	2004	2003
Revenues:
Program Revenues:
Charges for services	$ 1,299,768	$ 1,110,426
Operating grants and contributions	219,650	232,607
Capital Grants & Contributions	638,335	504,282
General Revenues:
Property tax	1,097,981	925,324
Sales tax	2,293,154	2,198,300
Motor vehicle tax	207,703	266,583
Transient lodging tax	202,790	200,559
Motor fuel tax	103,221	101,519
Other taxes	106,945	84,077
Investment earnings	144,834	160,050
Total revenues	$ 6,314,381	$ 5,783,727
Expenses:
General government	783,465	786,320
Public safety	2,449,353	2,259,883
Public works	854,144	855,726
Community development (building & planning)	809,787	627,209
Culture and leisure	93,608	95,902
Interest on long-term debt	116,304	128,624
Total expenses	$ 5,106,661	$ 4,753,664
Increase in net assets	$ 1,207,720	$ 1,030,063

The statement of activities presents information showing how the City’s net assets changed in the most recent fiscal year. All changes of net assets are reported as soon as the underlying event giving rise to the change occurs. Therefore, revenues and expenses are reported on this statement for some items that will result in cash flows in future fiscal periods.

The City’s General Fund ended the year with a fund balance of $2,576,767, an increase of $150,902 from the previous year. General Fund revenues exceeded expenditures by $50,902 as a result of strong building permit activity and increased property tax collections offset by increases in departmental spending by Public Safety and Public Works. General Fund expenditures totaled $3,851,825. Police and fire protection costs were $1,593,763 or 42% and $573,589 or 15%, respectively, of total General Fund expenditures.

Economic Factors and Next Year's Budget

In preparing the budget for fiscal year 2004-2005, City management looked at the following economic factors:

The State of California ’s adopted budget for fiscal year 2004-2005 incorporates agreed upon “contributions” from cities, counties, special districts, and redevelopment agencies. In exchange for these contributions in fiscal years 2004-2005 and 2005-2006, Governor Schwarzenegger agreed to support a state-wide measure on the November, 2004 ballot that will severely restrict the State’s ability to shift local government revenues in future years. While this measure was resoundingly approved by California voters, local governments are currently facing loss of revenue from the sources listed below.

¨ Sales tax - the State has adopted legislation that will exchange a portion of the City’s sales tax revenue for property tax revenue. Different distribution dates of these two types of revenue will adversely affect the City’s cash flow and interest earnings.

¨ Vehicle license fees – the City’s allocation of motor vehicle license fees collected by the State will be reduced in fiscal year 2004–2005 by $94,269 in accordance with the agreement between Governor Schwarzenegger and the League of California Cities.

¨ Property tax revenue shifts to the Education Relief Augmentation Fund – the State continues to transfer a portion of City and Redevelopment Agency property tax revenue to fund education.

A strong local economy continues to make sales tax revenue a reliable source of income for the City.

Increasing market values of existing homes and continuing demand for new housing has resulted in higher than average building permit activity and related revenue.

· Rising property tax assessed values, combined with a strong housing market are providing the City with increasing property tax revenue.

· The City proposed a city-wide Transaction and Use Tax increase of ½ %. The ballot measure was brought before the City’s registered voters in a Special Election with a mail-in ballot on August 31, 2004 . The measure was approved with a 73.1% “yes” vote, providing additional revenue to be used to enhance police, fire, and public works services.

For Fiscal year 2004-2005, the City’s general fund revenues are projected to increase by $161,200. General fund expenditures are budgeted to increase by $68,350. Both amounts represent a 4% increase over the prior year’s budget. Total projected revenues and expenses for the upcoming fiscal year are budgeted at $3,859,100 and $3,803,800, respectively. Due to the continuing shift of revenue from the General Fund by the State of California , City management has taken a position of conservative revenue projection and a reduction of 5% for all General Fund department expenditures from the prior year. The adopted fiscal year 2004-2005 General Fund budget does not include funding for any new positions or the purchase of capital items.

Karen Stark, Finance Director

Finance Department City Finances

Finance Department

City Finances