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The City earns interest revenue on available cash balances through various
investment vehicles in accordance with Idaho State Code. The City�s investment
portfolio is monitored daily and constantly reviewed as to security type,
maturity, duration, and source to maintain a balanced portfolio.
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| Fiscal
Year |
1998a |
1999a |
2000a |
2001 a |
2002 a |
2003 b |
2003 p |
2004 p |
2005 p |
2006 p |
2007 p |
| General
Fund $ |
604 |
684 |
1,240 |
1,080 |
546 |
710 |
550 |
570 |
710 |
724 |
739 |
| % Change |
-5.0% |
13.3% |
81.3% |
-13.0% |
-49.5% |
30.0% |
0.8% |
3.6% |
24.6% |
2.0% |
2.0% |
| Capital
Fund $ |
348 |
114 |
118 |
206 |
99 |
150 |
100 |
101 |
101 |
103 |
105 |
| % Change |
34.8% |
-67.1% |
3.4% |
73.9% |
-51.6% |
50.9% |
0.6% |
1.0% |
0.0% |
2.0% |
1.9% |
| Total
Interest Income |
952 |
799 |
1,359 |
1,285 |
645 |
860 |
650 |
671 |
811 |
827 |
844 |
| % Change |
6.5% |
-16.1% |
70.1% |
-5.4% |
-49.8% |
33.3% |
0.8% |
3.2% |
20.9% |
2.0% |
2.0% |
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| Historical Events |
| Cash balances fluctuate year to year due to economic vitality, the
number and size of capital projects, and related debt issuances.
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In FY 1996, the "refinancing" of revenue anticipation notes ended
a cycle of borrowing to meet the cash flow needs of the General Fund. Current
revenues within the fiscal year have since been used to meet the City�s current
cash flow requirements.
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During FY 1996 through FY 2001, the City experienced strong economic growth
resulting in record building and development related revenues, as well as,
enterprise fee growth. This resulted in surpluses at year-end.
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Beginning in December 2000, the Federal Reserve began decreasing
the Fed Funds rate (the rate charged to banks borrowing from the Federal
Reserve) from 6.2% to the current rate of 1.22% (as of February 2003) to
stimulate the economy. The significant decrease in interest rates eroded
potential interest income.
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| Projection/Assumptions |
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The TYB projections are estimated based on average cash balances in each fund
during FY 2002, adjusted by an increase of three percent to reflect increasing
projected balances in most funds. Projected short-term interest rates are 2.2%
to 4.2%.
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Beginning in FY 2002, for the General Fund, City Council directed that a 2%
cash flow designation be established over a five-year period to assure
investors of the City�s ability to meet minimum tax-supported debt service
requirements. This is the basis for the projected average cash balance for the
General Fund.
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Moderate increases in cash balances are projected through FY 2005 based on
population growth and a slow growing economy.
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Projected rates of return are based on average historic yields adjusted for
present and projected economic conditions.
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The FY 2004 estimate assumes a fairly flat short-term yield curve as a result
of a low interest rates and projected slow economic growth, at a projected
earnings rate of 2.2%.
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FY 2005 budget amounts are based on projected increases in short term interest
rates assuming an economic recovery that results in higher interest earnings.
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The projection for FY 2004 is slightly less than the February 2003 Six Year
Financial Plan. The FY 2005 projection is $104,000 higher than February 2003.
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Threats/Opportunities
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The economic recovery remains slow, thus, interest rates remaining very low.
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International events such as war with Iraq.
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