Mohave County annual financial report fiscal year ended 2007

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Mohave County
Annual Financial Report
Fiscal Year Ended June 30, 2007
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JOHN TIMKO 700 West Beale Street Phone: ( 928) 753- 0735
Financial Services Director P. O. Box 7000 Fax: ( 928) 753- 0704
Kingman, AZ 86402- 7000
Management’s Discussion and Analysis
This discussion and analysis of the County’s financial performance is intended to provide an overview of the County’s
financial activities for the year ended June 30, 2007 based on currently known facts, decisions or conditions. Please read
it in conjunction with the County’s basic financial statements, which begin on page 16.
Financial Highlights
· Total assets of the County exceeded its liabilities at the close of the fiscal year by $ 250 million, an increase of
8.86% from the prior year. Of this amount, $ 81.5 million is unrestricted and may be used to meet the
government’s ongoing obligations to citizens and creditors.
· Property tax revenue increased by $ 5.6 million. This increase is due to a 12% increase in the tax levy created
by higher assessed values and new construction. The tax increase was predominantly in the secondary taxes
for special districts. The amount of increase for primary property taxes is limited to 2%.
· The County’s total net assets as reported in the Statement of Activities increased by $ 20.4 million. Of this
amount, $ 19.9 million ( 98%) is attributable to governmental activities and $. 5 million ( 2%) is attributable to
business- type activities.
· As reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances, the County’s
governmental funds reported combined fund balances of $ 91.9 million, an increase of $ 11.7 million, after
restatement of the prior year’s fund balance.
· The unreserved fund balance for the General Fund increased by $ 1.5 million ( 13%) and General Fund
revenues were short of budgeted revenues by $ 422 thousand and expenditures were only 82% of the original
adopted General Fund budget and 86% of the final General Fund budget.
Overview of the Financial Statements
The intent of this discussion and analysis is to serve as an introduction to Mohave County’s basic financial statements.
Mohave County’s basic financial statements comprise three components: 1) government- wide financial statements, 2)
fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary
information in addition to the basic financial statements themselves.
Government- wide financial statements are designed to provide readers with a broad overview of Mohave County’s
finances, in a manner similar to a private- sector business.
The statement of net assets presents information on all of Mohave County’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 a useful indicator of
whether the financial position of Mohave County is improving or deteriorating.
The statement of activities presents information showing how the government’s net assets changed during the most
recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs,
regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items
that will only result in cash flows in future fiscal periods ( e. g., uncollected taxes and earned but unused accrued leave).
Both of these government- wide financial statements distinguish functions of Mohave County that are principally
supported by taxes and intergovernmental revenues ( governmental activities) from other functions that are intended to
recover all or a significant portion of their costs through user fees and charges ( business- type activities). The
governmental activities of Mohave County include general government, public safety, highways and streets, health,
welfare, education, and culture and recreation. The business- type activities of Mohave County include water companies,
recreation, and landfill operations.
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The government- wide financial statements include not only Mohave County itself ( known as the primary government),
but blended component units. The blended component units are legally separate entities for which Mohave County is
financially accountable.
Blended component units include the following: a television district, two tax- levying districts, special assessment
districts, and a finance corporation. The County’s Board of Supervisors serves as the board of directors for all of the
component units except the finance corporation which has a separate board of directors made up of County management.
The list of blended component units follows:
· Mohave County Television District provides and maintains communication equipment for TV signals.
· Mohave County Library District provides and maintains library services for County residents.
· Mohave County Flood Control District provides flood control systems for the County.
· Mohave County Special Assessment Districts provide funds to construct or improve roads, bridges, and water
distribution systems.
· Mohave Administration Building Finance Corporation provides financing and oversight of the construction and
operation of the Mohave County administration building.
Financial information for the blended component units is combined with the financial information presented for the
primary government itself. The government- wide financial statements are on pages 16- 17 of this report.
Fund financial statements are groupings of related accounts that are used to maintain control over resources that have
been segregated for specific activities or objectives. Mohave County, like other state and local governments, uses fund
accounting to ensure and demonstrate compliance with finance- related legal requirements. All of the funds of Mohave
County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental funds - Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government- wide financial statements. However, unlike the government- wide financial
statements, governmental fund financial statements focus on near- term inflows and outflows of spendable resources, as
well as on balances of spendable resources available at the end of the fiscal year.
Because the focus of governmental funds is narrower than that of the government- wide financial statements, it is useful
to compare the information presented for governmental funds with similar information presented for governmental
activities in the government- wide financial statements. By doing so, readers may better understand the long- term impact
of the government’s near- term financing decisions. Both the governmental funds balance sheet and the governmental
funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this
comparison between governmental funds and governmental activities. The governmental funds financial statements can
be found on pages 18- 21 of this report.
Mohave County maintains 178 individual governmental funds. Information is presented separately in the governmental
funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for
the General Fund, Road Fund, Flood Control Fund, Scenic Debt Service Fund, and the County Capital Improvement
Fund, all of which are major funds. Data from the other 173 governmental funds are combined into a single, aggregated
presentation, under the heading Other Governmental Funds.
Mohave County adopts an annual appropriated budget for all its funds. A budgetary comparison schedule has been
provided for the General Fund and the major Special Revenue Funds to demonstrate compliance with their budgets.
These schedules are presented on pages 52 to 56.
Proprietary funds - Mohave County maintains two different types of proprietary funds. Enterprise funds are used to
report the same functions presented as business- type activities in the government- wide financial statements. Mohave
County uses enterprise funds to account for its water companies, park services, and landfill operations.
Internal Service Funds are an accounting device used to accumulate and allocate costs internally among Mohave
County’s various functions. Mohave County uses internal service funds to account for its fleet of vehicles, employee
benefit health insurance trust, self- insurance trust, janitorial services, communication services, central print shop
services, and for its management information systems. Because all of these services predominantly benefit governmental
rather than business- type functions, they have been included within governmental activities in the government- wide
financial statements.
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Proprietary funds financial statements provide the same type of information as the government- wide financial
statements, only in more detail. The proprietary funds financial statements provide separate information for the water
companies and the landfill operations, which are major funds of Mohave County. Conversely, all of the internal service
funds are combined into a single, aggregated presentation in the proprietary funds financial statements. The proprietary
funds financial statements are located on pages 22- 24 of this report.
Fiduciary funds - Fiduciary funds account for resources held for the benefit of parties outside the government.
Fiduciary funds are not reflected in the government- wide financial statements because the resources of those funds are
not available to support Mohave County’s own programs. The accounting used for fiduciary funds is much like that
used for proprietary funds. The fiduciary funds financial statements can be found on pages 25- 26 of this report.
Notes to the financial statements - The notes provide additional information that is essential to a full understanding of
the data provided in the government- wide and fund financial statements. The notes to the financial statements are
located on pages 27- 50 of this report.
Other information - In addition to the basic financial statements and accompanying notes, pages 52- 58 present required
supplementary information including budgetary comparison schedules and Mohave County’s progress in funding its
obligation to provide pension benefits to some of its employees. Other supplementary information presenting budgetary
comparison schedules for the Scenic Debt Service Fund and County Capital Improvement Fund are located on pages 59-
60.
Government- wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of
Mohave County, assets exceeded liabilities by $ 250 million at the close of the most recent fiscal year, after restatement
of the beginning net assets. For details regarding the restatement of July 1, 2006, refer to Note 2 on page 33.
By far the largest portion of Mohave County’s net assets ( 56%) reflects its investment in capital assets ( e. g., land,
buildings, infrastructure, machinery, and equipment) less accumulated depreciation and any related debt used to acquire
those assets that is still outstanding. Mohave County uses these capital assets to provide services to citizens;
consequently, these assets are not available for future spending. Although Mohave County’s investment in its capital
assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided
from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
11% of Mohave County’s net assets represent resources subject to external restrictions on how they may be used. The
remaining $ 81.5 million of unrestricted net assets may be used to meet the government’s ongoing obligations to citizens
and creditors. The largest changes in the net assets occurred in the governmental funds. The changes are discussed
separately under the following sections; Governmental activities – net assets highlights, Business- type activities – net
assets highlights, and Capital Asset and Debt Administration.
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2006 Increase %
As restated 2007 ( Decrease) Change
Current assets and other assets $ 119,888,782 $ 127,130,176 $ 7,241,394 6.04%
Capital assets 156,008,318 159,871,120 3,862,802 2.48%
Total assets 275,897,100 287,001,296 11,104,196 4.02%
Long- term liabilities outstanding 36,736,008 31,827,818 ( 4,908,190) - 13.36%
Other liabilities 9,459,403 5,119,723 ( 4,339,680) - 45.88%
Total liabilities 46,195,411 36,947,541 ( 9,247,870) - 20.02%
Net assets:
Invested in capital assets, net of related debt 134,634,026 140,275,120 5,641,094 4.19%
Restricted 32,134,041 28,307,368 ( 3,826,673) - 11.91%
Unrestricted 62,933,622 81,471,267 18,537,645 29.46%
Total net assets $ 229,701,689 $ 250,053,755 $ 20,352,066 8.86%
Statement of Net Assets
As of June 30,
Government- wide
Governmental activities - net assets highlights: The net assets invested in capital assets, net of related debt had a net
increase of $ 4.8 million. The details of the increase in assets are discussed later in this report under the Capital Asset and
Debt Administration heading. Total liabilities decreased $ 9.6 million from last year. Long- term liabilities decreased
$ 5.5 mostly due to an early payoff of the Certificates of Participation, Series 2000 along with normal debt payments and
no new debt issuances. Other liabilities decreased $ 4.1 million primarily due to a decrease in accrued liabilities from the
prior year of $ 2.8 million in the Flood Control Fund for payments made to cities under an intergovernmental agreement
for flood control projects. The expense did not decrease for the current year, and did not need to be accrued as it was
paid earlier. In addition, deferred revenues decreased by $ 2 million due to the restatement discussed in Note 2 on page
33.
2006 Increase %
As restated 2007 ( Decrease) Change
Current assets and other assets $ 106,029,308 $ 113,292,245 $ 7,262,937 6.85%
Capital assets 140,730,557 143,737,677 3,007,120 2.14%
Total assets 246,759,865 257,029,922 10,270,057 4.16%
Long- term liabilities outstanding 33,227,870 27,744,359 ( 5,483,511) - 16.50%
Other liabilities 8,764,837 4,658,816 ( 4,106,021) - 46.85%
Total liabilities 41,992,707 32,403,175 ( 9,589,532) - 22.84%
Net assets:
Invested in capital assets, net of related debt 119,356,265 124,141,677 4,785,412 4.01%
Restricted 24,577,330 20,790,722 ( 3,786,608) - 15.41%
Unrestricted 60,833,563 79,694,348 18,860,785 31.00%
Total net assets $ 204,767,158 $ 224,626,747 $ 19,859,589 9.70%
Governmental Activities
As of June 30,
Statement of Net Assets
The restricted net assets reflected a net decrease of $ 3.8 million. This was a result of a $ 2.6 million early payoff of the
Certificates of Participation, Series 2000 and the Road Fund spending an additional $ 1.7 million on road maintenance
than was collected this year, offset by small increases in other funds.
Unrestricted net assets increased by $ 18.9 million from the prior year due to unspent revenue in the County Capital
Improvement Fund, Flood Control Fund and remaining funds, of $ 6, $ 3.6, and $ 4.9 million respectively. In addition, the
internal service funds net assets, which are included here, increased by $ 2.1 million over the prior year.
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The majority of this increase represents funds set aside for reserves in the employee benefit trust and self insurance trust.
The remaining $ 2.3 million reflects the net increase resulting from the prior period adjustment changing the recognition
of Federal in- lieu revenue by $ 2 million and correcting for prepaid expenses of $. 3 million.
Governmental activities – comparative statement of activities highlights: Mohave County continues to have steady
population growth while the economy is just now starting to decline. While the downturn in the housing market reduced
the number of homes sold during the year, higher assessed values on those homes resulted in increased property tax
revenues. The County has managed to maintain moderate growth in controllable expenses, due to increased efficiency,
while providing services to an expanding population. The increase in expenses was primarily from a cost of living and
market adjustment to salaries, which the County felt was necessary to attract and keep qualified personnel. The non-controllable
expenses such as court costs from increased caseloads and indigent support continue to rise. The expenses
increased $ 14.3 million over the prior year. The current year governmental financial statements reflect an increase of
$ 13.1 million in total revenues due to several factors. Secondary property taxes rose because of a 12% increase in the
tax levy. The assessed values rose substantially and new construction was still significant. There was an increase in
other taxes: sales tax, auto- lieu tax, and capital projects sales tax. These increases were generated by a strong economy at
the beginning of the year, increased population growth, and tourism. Investment earnings increased by $ 3.8 million over
the prior year due to improved return on investments and an unrealized gain recorded in the current year, as opposed to
an unrealized loss recorded in 2006.
2006 Increase %
As restated 2007 ( decrease) Change
Revenues:
Program revenues
Charges for services $ 17,417,807 $ 18,062,035 $ 644,228 3.70%
Operating grants & contributions 29,522,114 29,222,553 ( 299,561) - 1.01%
Capital grants & contributions - 995,421 995,421 100.00%
Total program revenues 46,939,921 48,280,009 1,340,088 2.85%
General revenues
Property taxes 40,458,411 46,074,384 5,615,973 13.88%
Other taxes 39,964,725 42,422,988 2,458,263 6.15%
Other revenues 1,902,133 5,572,531 3,670,398 192.96%
Total general revenues 82,325,269 94,069,903 11,744,634 14.27%
Total revenues 129,265,190 142,349,912 13,084,722 10.12%
Expenses:
General government 43,763,532 53,094,286 9,330,754 21.32%
Public safety 20,957,064 22,386,950 1,429,886 6.82%
Highways and streets 19,577,244 21,017,921 1,440,677 7.36%
Health 13,382,160 14,550,332 1,168,172 8.73%
Welfare 3,941,590 4,379,337 437,747 11.11%
Culture and recreation 3,759,007 4,406,920 647,913 17.24%
Education 1,290,580 1,410,847 120,267 9.32%
Interest on long- term debt 1,550,006 1,243,730 ( 306,276) - 19.76%
Total expenses 108,221,183 122,490,323 14,269,140 13.19%
Increase in net assets before transfers 21,044,007 19,859,589 ( 1,184,418) - 5.63%
Transfers 1,997 - ( 1,997) - 100.00%
Increase in net assets 21,046,004 19,859,589 ( 1,186,415) - 5.64%
Net assets beginning of year 183,721,154 204,767,158 21,046,004 11.46%
Net assets end of year $ 204,767,158 $ 224,626,747 $ 19,859,589 9.70%
Year Ended June 30,
Comparative Statement of Activities
Governmental Activities
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The chart below represents all revenues collected from governmental activities, including general revenues, as reported
in the Statement of Activities.
Revenues by source - Governmental Activities
Property taxes
$ 46,074,384
31%
Capital grants and
contributions
$ 995,421
1%
Operating grants and
contributions
$ 29,222,553
21%
Charges for services
$ 18,062,035
13%
Sales taxes
$ 29,878,867
21%
Other
$ 18,116,652
13%
The following graph represents the expenses and program revenues for governmental activities as reported in the
Statement of Activities. Program revenue does not include the general revenues listed on the bottom portion of the
Statement of Activities. Total revenues generated by governmental activities ( program revenues and general revenues)
were $ 142 million. $ 94 million of general revenues, which are not included in this graph, represents 66% of total
revenues reported for governmental activities. While this graph indicates expenses exceeded program revenues, the
addition of general revenues produced an increase to net assets of $ 19.9 million for the fiscal year as indicated on the
Statement of Activities.
Expenses and program revenues - Governmental activities
$-
$ 10,000,000
$ 20,000,000
$ 30,000,000
$ 40,000,000
$ 50,000,000
$ 60,000,000
Expense
Revenue
Expense $ 53,094,286 $ 22,386,950 $ 21,017,921 $ 14,550,332 $ 4,379,337 $ 4,406,920 $ 1,410,847 $ 1,243,730
Revenue $ 13,686,395 $ 9,050,091 $ 14,305,703 $ 5,395,010 $ 4,239,998 $ 535,637 $ 1,067,175 $-
General
government
Public safety Highways and
streets
Health Welfare Culture and
recreation
Education Interest on long-term
debt
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Business- type activities - net assets highlights: Net assets increased by $ 492 thousand. The majority of this increase
was due to a capital project in the Landfill Fund to construct septage ponds at the Cerbat landfill. Offsetting the $ 855
thousand increase to capital assets was an increase in total liabilities of $ 341 thousand. Of this increase, $ 562 thousand
resulted from an increase in projected closure and postclosure costs for the Landfill Fund. This increase was offset by a
decrease of $ 234 thousand to other liabilities resulting from a lump sum payment by Griffith Energy for sales taxes
accrued in 2006 and paid to the State of Arizona in fiscal year 2007.
2006 Increase %
As restated 2007 ( Decrease) Change
Current assets and other assets $ 13,859,474 $ 13,837,931 $ ( 21,543) - 0.16%
Capital assets 15,277,761 16,133,443 855,682 5.60%
Total assets 29,137,235 29,971,374 834,139 2.86%
Long- term liabilities outstanding 3,508,138 4,083,459 575,321 16.40%
Other liabilities 694,566 460,907 ( 233,659) - 33.64%
Total liabilities 4,202,704 4,544,366 341,662 8.13%
Net assets:
Invested in capital assets, net of related debt 15,277,761 16,133,443 855,682 5.60%
Restricted 7,556,711 7,516,646 ( 40,065) - 0.53%
Unrestricted 2,100,059 1,776,919 ( 323,140) - 15.39%
Total net assets $ 24,934,531 $ 25,427,008 $ 492,477 1.98%
Statement of Net Assets
As of June 30,
Business- type Activities
The chart below represents all revenues collected from business- type activities, including general revenues, as reported
in the Statement of Activities.
Revenues by source - Business- type activities
Capital grants and
contributions,
$ 196,613,
3%
Charges for services,
$ 4,493,571,
77%
Property taxes,
$ 117,
0%
Unrestricted investment
earnings,
$ 662,710,
11%
Other,
$ 109,901,
2%
Operating grants and
contributions,
$ 413,274,
7%
Analysis of revenue changes - The Business- type Activities Comparative Statement of Activities schedule on the
following page shows the increases and decreases in total revenue with an overall decrease to total revenues of $ 3.6
thousand. The decrease was caused by a reduction in operating grants and contributions from the previous year. These
grants were for improvements to Davis Camp Park restroom facilities and the Hualapai Mountain Park visitor center.
This decrease was offset by an increase of $ 350 thousand in other income resulting from interest earnings and increased
use fees.
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Business- type activities - comparative statement of activities highlights: Net assets for all enterprise funds increased
$ 492 thousand from the prior year. Net assets of the Landfill Fund increased by $ 759 thousand due to increased interest
income, decreases in operating expenses that resulted from being in the off year of the two- year cycle for the waste- tire
removal contract, and the addition of septage ponds at the Cerbat landfill booked as an infrastructure asset. In addition,
the library district repaid a loan issued in fiscal year 2005. Water company expenses increased in total by $ 460
thousand. The major contributors to this increase were from an increase in cost of liability insurance for the I- 40 Water
Corridor Fund and payments to an engineering firm to evaluate the Golden Valley Improvement District water supply
and develop a plan for future usage. Salaries for both water companies increased due to a cost of living adjustment and
the addition of one utility service worker.
2006 Increase %
As restated 2007 ( decrease) Change
Revenues:
Program revenues
Charges for services $ 4,419,205 $ 4,493,571 $ 74,366 1.68%
Operating grants & contributions 1,038,163 413,274 ( 624,889) - 60.19%
Capital grants & contributions - 196,613 196,613 100.00%
Total program revenues 5,457,368 5,103,458 ( 353,910) - 6.48%
General revenues
Property taxes - 117 117 100.00%
Other taxes 100,000 100,000 - 0.00%
Other revenues 322,439 672,611 350,172 108.60%
Total general revenues 422,439 772,728 350,289 82.92%
Total revenues 5,879,807 5,876,186 ( 3,621) - 0.06%
Expenses:
Landfill 1,722,728 1,526,240 ( 196,488) - 11.41%
Recreation 1,437,477 1,487,227 49,750 3.46%
Water companies 1,910,426 2,370,242 459,816 24.07%
Total expenses 5,070,631 5,383,709 313,078 6.17%
Increase in net assets before transfers 809,176 492,477 ( 316,699) - 39.14%
Transfers ( 1,997) - 1,997 - 100.00%
Increase in net assets 807,179 492,477 ( 314,702) - 38.99%
Net assets beginning of year 24,127,352 24,934,531 807,179 3.35%
Net assets end of year $ 24,934,531 $ 25,427,008 $ 492,477 1.98%
Business- type Activities
Comparative Statement of Activities
Year Ended June 30,
The graph below represents the expenses and program revenues for business- type activities as reported in the Statement
of Activities. Please note that program revenue does not include the general revenues on the bottom portion of the
statement.
Expenses and program revenues - Business- type activities
$-
$ 500,000
$ 1,000,000
$ 1,500,000
$ 2,000,000
$ 2,500,000
Expense
Revenue
Expense $ 1,526,240 $ 1,487,227 $ 2,370,242
Revenue $ 1,769,978 $ 1,484,099 $ 1,652,768
Landfill Recreation Water companies
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Financial Analysis of the Government’s Funds
As noted earlier, Mohave County uses fund accounting to ensure and demonstrate compliance with finance- related legal
requirements.
Governmental funds - The focus of Mohave County’s governmental funds is to provide information on near- term
inflows, outflows, and balances of spendable sources. Such information is useful in assessing Mohave County’s
financing requirements. In particular unreserved fund balance may serve as a useful measure of a government’s net
resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, Mohave County’s governmental funds reported combined ending fund balances
of $ 91.8 million, an increase of $ 11.7 million in comparison with the prior year. The reserved fund balances consist of
$ 5.5 million reserved for debt service and $ 324,618 invested in inventory.
The General Fund is the chief operating fund of Mohave County. At the end of the current fiscal year, the unreserved
fund balance of the General Fund was $ 13.5 million. As a measure of the General Fund’s liquidity, it may be useful to
compare both unreserved fund balance and total fund balance to total fund expenditures. The General Fund unreserved
fund balance represents 20% of total General Fund expenditures.
During the current fiscal year, the fund balance of Mohave County’s General Fund increased by $ 1.5 million. This
represents a 12.5% increase from the fiscal year 2006 ending balance. Revenues increased by $ 5.9 million ( 8.7%), while
expenditures increased $ 7.2 million ( 11.9%) over the previous year. Total expenditures as a percentage of the total
original budget were only 82% in fiscal year 2007. The increases are the result of rapid population growth in the county.
The County addressed personnel requirements to provide services to a growing Mohave County population by giving
market adjustments and COLA increases. These increases along with increased retirement and health insurance costs
accounted for a 12% increase in personnel costs. Other cost increases occurred in the following areas: legal services,
mental health and AHCCCS services, inmate costs, and equipment automation.
The Road Fund had a total fund balance of $ 11 million, of which $ 324,618 is reserved for inventories and $ 10.7 million
is unreserved and will be used for road maintenance. The net decrease in unrestricted fund balance during the current
year in the Road Fund was $ 1.7 million. The decrease results from more road projects completed in this fiscal year than
the amount of funds collected. The balance reflects funds available for ongoing road projects of the County.
The Flood Control Fund balance increased by 3.6 million. The majority of revenue for this fund comes from secondary
taxes which increased due to the rise in assessed values, as discussed previously. There as also a new IGA with the City
of Kingman for Phase III that brought in .8 million. In addition, the expenses decreased due to the completion of one
flood control project and minimal expenses being incurred on the next project.
The Scenic Debt Service Fund had an ending fund balance of $ 1.3 million. The fund balance decreased by $ 40,000.
The County Capital Improvement Fund had a fund balance of $ 34 million at June 30, 2007. This was an increase of $ 5.9
million from the prior year. The increase reflects the fact that there were no major capital projects in 2007. The revenue
stayed the same except for an increase in interest earnings. Revenue was offset by $ 1.5 million in various small capital
projects and a transfer out for debt service and maintenance of the County administration building of $ 1.9 million.
Expenditures decreased by $ 8.8 million from the prior year ( reflecting the decrease in construction). A major jail
construction is scheduled to begin at the end of fiscal year 2008 ( see Note 15) which will use most of the current fund
balance.
The Other Governmental Funds had a combined fund balance of $ 22.7 million at June 30, 2007. This was a net increase
of $ 2.4 million from the prior year. The net increase is primarily from a $ 3.5 million transfer into the Administration
Building debt Service Fund for future debt payoff. Two other major changes include the payoff of the library note of
$ 845,402 and the Certificates of Participation, Series 2000 early payoff of $ 2.6 million. These additional expenses were
offset by an increase in tax revenue of $ 1.4 million, resulting from higher assessed values and collections of delinquent
interest and taxes, and increases in investment earnings and contributions.
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Proprietary funds – Reports for Mohave County’s proprietary funds provide the same type of information found in the
government- wide financial statements, but in more detail. Unrestricted net assets of the water companies, park services,
and landfill operations at the end of the year amounted to $ 1.8 million. Net assets for all enterprise funds increased
$ 492,477, a 2% increase from the prior year. The water companies did not show profits. They had decreases of
$ 290,050 and $ 133,269, respectively. However, if you add back the non- cash expense of depreciation to those funds,
they would have made a small profit. The Landfill Fund’s net assets increased by $ 759,006. The increase is from
reduced expenses for tire disposal, offset by moderate increases in postclosure costs and salaries. The accumulated net
assets will be used for future expansion, as well as closure and postclosure costs. The G. V. I. D. Fund had a small loss of
$ 133,269, after depreciation of $ 293,198. The Other Enterprise Funds posted a small loss of $ 39,823 but after
contributions from grant funds of $ 196,913, they showed an increase of $ 156,790. The contributions were assets
generated from grant funds that were transferred to the parks when completed.
Net assets for the internal service funds increased by $ 2.1 million. $ 1 million of that amount was excess contributions
over claims expense in the Employee Benefit Trust Fund. The Self Insurance Trust Fund also had excess collections
over expenses during the current fiscal year of $. 4 million. These will be used to build up net assets and reduce future
increases in costs passed on to employees and other departments. The motor pool fund had an increase in net assets of
$. 6 million generated by vehicles transferred in from the vehicle replacement fund. The $. 1 million balance of the
increase was a combination of increases and decreases in the remaining funds.
General Fund Budgetary Highlights
Revenues: No changes were made to the General Fund revenue budget during the year. The 2007 budget for revenue
was increased from the prior year by $ 7.6 million. The general fund realized all but $. 4 million of the total amount of
revenue budgeted.
Expenditures: Differences between the original budget and the final amended budget resulted from moving
expenditures between departments and categories of budget. There were $ 3.7 million in decreases to general
government activities, which included a decrease of $ 4.6 million from contingency to cover transfers to other funds as
described below and $ 865 thousand within the general government expenses. The money reallocated from contingency
to other general government departments went mainly to the County attorney’s office and Public defender for legal
expense and court costs of $ 750 thousand. The mandated budget for services for Indigents, received an additional
$ 110,000 to cover excess costs. The net difference for expenditures was a decrease of $ 3.8, 3.5 million of that was
moved from contingency to transfers out.
Transfers out: The increase of $ 3.5 million ( reallocated from expenditures) was used to fund an allocation to the
Administration Building Debt Service Fund for future debt payments.
Variances between actual revenues, expenditures and final budgeted amounts will be discussed below for all significant
differences, as related to the schedule in required supplementary information on pages 53- 54.
Revenues: Overall, revenues fell just short of the budgeted total. However, individually there were variations in several
revenue sources. Tax revenue exceeded budgeted amounts by $ 1.4 million due mainly to the sales of delinquent
properties resulting in a $ 2.4 million excess of delinquent interest and tax revenue over budget. Interest revenue was up
due to a combination of increased investment rates and increased amounts of investments. Miscellaneous income
reflected the recognition of revenue from cancelled warrants of $ 300,000. The primary exceptions for revenue
exceeding budget were in intergovernmental, charges for services, and licenses and permits. An unexpected downturn in
the real estate market had serious repercussions. State shared revenue for sales tax and auto- lieu were below budget by
almost $ 1 million. Planning and zoning, Building inspector’s license and permit revenue, Assessor’s fees, and
Recorder’s fees were down as a direct result of the slowing construction industry.
Expenditures: Expenditures were less than budgetary estimates by $ 11.3 million. As permitted by State statutes, the
County budgets its available unrestricted fund balance at the end of the prior fiscal year as contingency for the next year.
The remaining balance of the prior year contingency at year- end was $ 5.3 million. An additional $ 4.9 million excess
budget was in salary expense from personnel vacancies. Over half of that amount was reflected in Public safety,
Planning and zoning, Building inspector, Public defender, and Public legal defender departments, where the departments
are having trouble filling open positions. Planning and zoning had excess budget of $ 223,000 from not outsourcing the
plans review as they had budgeted. Building inspection had excess budget due to $ 100,000 for plans review that were
not outsourced. The A. H. C. C. C. S. budget was inadvertently doubled for administrative expense by including the same
13
$ 363,000 on two different lines of the budget, which is why there is remaining budget. The remaining balance of
available budget is scattered throughout the other departments in supplies and other services.
Capital Asset and Debt Administration
Capital assets – Mohave County’s investment in capital assets for its governmental and business- type activities as of
June 30, 2007 amounts to $ 159.9 million ( net of accumulated depreciation). This investment in capital assets includes
land, buildings, water systems, improvements other than buildings, machinery and equipment, park facilities, roads,
highways, and bridges. The increase in capital assets of $ 3.9 million ( net of depreciation) resulted from the following
projects and purchases: the Mohave Wash project, completion of the Bullhead City Justice Court building, and the
purchase of vehicles and road equipment that were added to the fleet.
Increase %
2006 2007 Decrease Change
Governmental activities
Capital assets, not being depreciated $ 39,269,707 $ 39,719,073 $ 449,366 1.14%
Capital assets, being depreciated 101,460,850 104,018,604 2,557,754 2.52%
Total governmental assets $ 140,730,557 $ 143,737,677 $ 3,007,120 2.14%
Business- type activities
Capital assets, not being depreciated $ 2,155,257 $ 1,995,208 $ ( 160,049) - 7.43%
Capital assets, being depreciated 13,122,504 14,138,235 1,015,731 7.74%
Total business- type assets $ 15,277,761 $ 16,133,443 $ 855,682 5.60%
Total governmental and
business- type activities
Capital assets, not being depreciated $ 41,424,964 $ 41,714,281 $ 289,317 0.70%
Capital assets, being depreciated 114,583,354 118,156,839 3,573,485 3.12%
Total capital assets $ 156,008,318 $ 159,871,120 $ 3,862,802 2.48%
Capital Assets, net of accumulated depreciation
As of June 30,
Major capital asset events during the current fiscal year include the following:
· Construction continues on the Mohave Wash project with total expenditures in 2007 of $ 758,000.
The County expects to complete the project by June 30, 2009.
· The County spent $ 1.8 million on three major road improvement projects: Shinarump Road,
Vanderslice Road, and Grace Neal Parkway.
· Preliminary architectural and engineering work began for the County Correctional Facility with
expenditures of $ 364,000 for the year.
· The Parks fund spent $ 163,000 on improvements at Davis Camp in Bullhead City.
· Construction was completed on the addition to the Bullhead City court building with expenditures
of $ 233,000 for the year. Total expenditures for the addition were $ 1.5 million.
· The County replaced 66 aging vehicles from the fleet at a total cost of $ 1.8 million. Forty- seven
vehicles were purchased using general government funds, seventeen were purchased with Road
funds, and two with business- type funds.
The 7% decrease to the business- type activities capital assets not being depreciated reflects the completion of the
Hualapai Mountain Park visitor center. The project was previously reported under construction in progress and was not
depreciated. Upon completion, the asset was reclassified as a depreciable asset. Notes 6 and 7, on pages 39- 40 of this
report, contain additional information on Mohave County’s capital assets.
Long- term debt - At the end of the current fiscal year, Mohave County had total debt outstanding of $ 31.8 million. Of
this amount, $ 16.9 million comprises debt backed by buildings of the government used as collateral for Beneficial
Interest Certificates issued and $ 3.2 million is special assessment debt for which the government can sell the taxpayer’s
14
property, to cover the debt, in the event of default by the property owners subject to the assessment. The remainder of
Mohave County’s long- term liabilities represents claims and judgments payable, notes payable, landfill closure and
postclosure care costs payable, and compensated absences payable incurred during normal operations.
State statutes limit the amount of general obligation debt a government entity may issue to 6% of its total secondary
assessed valuation, without taxpayer approval, and up to 15% with the approval of a majority of taxpayers. The debt
limitation for Mohave County, for fiscal year 2006/ 2007, was $ 114 million ( 6% of $ 1.9 billion secondary assessed
value). Mohave County does not have any outstanding general obligation debt and therefore has its full debt limit
capacity available for future needs.
Note 9, on pages 41- 45 of this report, contains additional information on Mohave County’s long- term debt.
Economic Factors and Next Year’s Budgets and Rates
Continued population growth that exceeds State and national growth significantly influences future budgets. More
citizens result in more service demands. A growing and changing economy creates additional costs and additional
demand for public services, requiring public revenues to keep pace with economic growth. Even though there is still a
growing trend in population, the revenue trend for governments is declining. This decline is predicted to continue for the
next year or two. All of these factors were considered in preparing Mohave County’s budget for the 2008 fiscal year.
The unemployment rate for Mohave County for 2007 was 4.7%, which is an increase from a rate of 4.1% in 2006. With
this increase, the County’s unemployment rate is growing faster than other areas and compares unfavorably to the state’s
average unemployment rate of 3.8% and approximates the national average rate of 4.6%.
Requests for Information
This financial report is designed to provide a general overview of Mohave County’s finances for all those with an
interest in the government’s finances. Questions concerning any of the information provided in this report or requests
for additional financial information should be addressed to:
Mohave County Finance
P. O. Box 7000
Kingman, AZ 86402- 7000

Description

Rating
TITLE	Mohave County annual financial report fiscal year ended 2007
DESCRIPTION	62 pages (PDF version). File size: 2774.648 KB.
TYPE	Text
Material Collection	Senate Received Reports
Acquisition Note	Received in paper form from Senate Research Staff via Susan Blixt on 11/24/2008. Cataloger located digital version: http://www.auditorgen.state.az.us/Reports/Counties/Mohave/Financial_Audits/Financial_Audit_June_30_2007/Mohave_Cty_6_30_07_Financial_Report.pdf
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DATE ORIGINAL	2008-03-28
Time Period	2000s (2000-2009)
ORIGINAL FORMAT	Born digital
Source Identifier	LG 6.3:M 54 F 45/ 2007
DIGITAL IDENTIFIER	Mohave_Cty_6_30_07_Financial_Report.pdf
DIGITAL FORMAT	PDF (Portable Document Format)
REPOSITORY	Arizona State Library, Archives and Public Records--Law and Research
Full Text	Mohave County Annual Financial Report Fiscal Year Ended June 30, 2007 3 JOHN TIMKO 700 West Beale Street Phone: ( 928) 753- 0735 Financial Services Director P. O. Box 7000 Fax: ( 928) 753- 0704 Kingman, AZ 86402- 7000 Management’s Discussion and Analysis This discussion and analysis of the County’s financial performance is intended to provide an overview of the County’s financial activities for the year ended June 30, 2007 based on currently known facts, decisions or conditions. Please read it in conjunction with the County’s basic financial statements, which begin on page 16. Financial Highlights · Total assets of the County exceeded its liabilities at the close of the fiscal year by $ 250 million, an increase of 8.86% from the prior year. Of this amount, $ 81.5 million is unrestricted and may be used to meet the government’s ongoing obligations to citizens and creditors. · Property tax revenue increased by $ 5.6 million. This increase is due to a 12% increase in the tax levy created by higher assessed values and new construction. The tax increase was predominantly in the secondary taxes for special districts. The amount of increase for primary property taxes is limited to 2%. · The County’s total net assets as reported in the Statement of Activities increased by $ 20.4 million. Of this amount, $ 19.9 million ( 98%) is attributable to governmental activities and $. 5 million ( 2%) is attributable to business- type activities. · As reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances, the County’s governmental funds reported combined fund balances of $ 91.9 million, an increase of $ 11.7 million, after restatement of the prior year’s fund balance. · The unreserved fund balance for the General Fund increased by $ 1.5 million ( 13%) and General Fund revenues were short of budgeted revenues by $ 422 thousand and expenditures were only 82% of the original adopted General Fund budget and 86% of the final General Fund budget. Overview of the Financial Statements The intent of this discussion and analysis is to serve as an introduction to Mohave County’s basic financial statements. Mohave County’s basic financial statements comprise three components: 1) government- wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government- wide financial statements are designed to provide readers with a broad overview of Mohave County’s finances, in a manner similar to a private- sector business. The statement of net assets presents information on all of Mohave County’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 a useful indicator of whether the financial position of Mohave County is improving or deteriorating. The statement of activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods ( e. g., uncollected taxes and earned but unused accrued leave). Both of these government- wide financial statements distinguish functions of Mohave County that are principally supported by taxes and intergovernmental revenues ( governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges ( business- type activities). The governmental activities of Mohave County include general government, public safety, highways and streets, health, welfare, education, and culture and recreation. The business- type activities of Mohave County include water companies, recreation, and landfill operations. 4 The government- wide financial statements include not only Mohave County itself ( known as the primary government), but blended component units. The blended component units are legally separate entities for which Mohave County is financially accountable. Blended component units include the following: a television district, two tax- levying districts, special assessment districts, and a finance corporation. The County’s Board of Supervisors serves as the board of directors for all of the component units except the finance corporation which has a separate board of directors made up of County management. The list of blended component units follows: · Mohave County Television District provides and maintains communication equipment for TV signals. · Mohave County Library District provides and maintains library services for County residents. · Mohave County Flood Control District provides flood control systems for the County. · Mohave County Special Assessment Districts provide funds to construct or improve roads, bridges, and water distribution systems. · Mohave Administration Building Finance Corporation provides financing and oversight of the construction and operation of the Mohave County administration building. Financial information for the blended component units is combined with the financial information presented for the primary government itself. The government- wide financial statements are on pages 16- 17 of this report. Fund financial statements are groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. Mohave County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. All of the funds of Mohave County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds - Governmental funds are used to account for essentially the same functions reported as governmental activities in the government- wide financial statements. However, unlike the government- wide financial statements, governmental fund financial statements focus on near- term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Because the focus of governmental funds is narrower than that of the government- wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government- wide financial statements. By doing so, readers may better understand the long- term impact of the government’s near- term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The governmental funds financial statements can be found on pages 18- 21 of this report. Mohave County maintains 178 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, Road Fund, Flood Control Fund, Scenic Debt Service Fund, and the County Capital Improvement Fund, all of which are major funds. Data from the other 173 governmental funds are combined into a single, aggregated presentation, under the heading Other Governmental Funds. Mohave County adopts an annual appropriated budget for all its funds. A budgetary comparison schedule has been provided for the General Fund and the major Special Revenue Funds to demonstrate compliance with their budgets. These schedules are presented on pages 52 to 56. Proprietary funds - Mohave County maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business- type activities in the government- wide financial statements. Mohave County uses enterprise funds to account for its water companies, park services, and landfill operations. Internal Service Funds are an accounting device used to accumulate and allocate costs internally among Mohave County’s various functions. Mohave County uses internal service funds to account for its fleet of vehicles, employee benefit health insurance trust, self- insurance trust, janitorial services, communication services, central print shop services, and for its management information systems. Because all of these services predominantly benefit governmental rather than business- type functions, they have been included within governmental activities in the government- wide financial statements. 5 Proprietary funds financial statements provide the same type of information as the government- wide financial statements, only in more detail. The proprietary funds financial statements provide separate information for the water companies and the landfill operations, which are major funds of Mohave County. Conversely, all of the internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. The proprietary funds financial statements are located on pages 22- 24 of this report. Fiduciary funds - Fiduciary funds account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government- wide financial statements because the resources of those funds are not available to support Mohave County’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary funds financial statements can be found on pages 25- 26 of this report. Notes to the financial statements - The notes provide additional information that is essential to a full understanding of the data provided in the government- wide and fund financial statements. The notes to the financial statements are located on pages 27- 50 of this report. Other information - In addition to the basic financial statements and accompanying notes, pages 52- 58 present required supplementary information including budgetary comparison schedules and Mohave County’s progress in funding its obligation to provide pension benefits to some of its employees. Other supplementary information presenting budgetary comparison schedules for the Scenic Debt Service Fund and County Capital Improvement Fund are located on pages 59- 60. Government- wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of Mohave County, assets exceeded liabilities by $ 250 million at the close of the most recent fiscal year, after restatement of the beginning net assets. For details regarding the restatement of July 1, 2006, refer to Note 2 on page 33. By far the largest portion of Mohave County’s net assets ( 56%) reflects its investment in capital assets ( e. g., land, buildings, infrastructure, machinery, and equipment) less accumulated depreciation and any related debt used to acquire those assets that is still outstanding. Mohave County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although Mohave County’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 11% of Mohave County’s net assets represent resources subject to external restrictions on how they may be used. The remaining $ 81.5 million of unrestricted net assets may be used to meet the government’s ongoing obligations to citizens and creditors. The largest changes in the net assets occurred in the governmental funds. The changes are discussed separately under the following sections; Governmental activities – net assets highlights, Business- type activities – net assets highlights, and Capital Asset and Debt Administration. 6 2006 Increase % As restated 2007 ( Decrease) Change Current assets and other assets $ 119,888,782 $ 127,130,176 $ 7,241,394 6.04% Capital assets 156,008,318 159,871,120 3,862,802 2.48% Total assets 275,897,100 287,001,296 11,104,196 4.02% Long- term liabilities outstanding 36,736,008 31,827,818 ( 4,908,190) - 13.36% Other liabilities 9,459,403 5,119,723 ( 4,339,680) - 45.88% Total liabilities 46,195,411 36,947,541 ( 9,247,870) - 20.02% Net assets: Invested in capital assets, net of related debt 134,634,026 140,275,120 5,641,094 4.19% Restricted 32,134,041 28,307,368 ( 3,826,673) - 11.91% Unrestricted 62,933,622 81,471,267 18,537,645 29.46% Total net assets $ 229,701,689 $ 250,053,755 $ 20,352,066 8.86% Statement of Net Assets As of June 30, Government- wide Governmental activities - net assets highlights: The net assets invested in capital assets, net of related debt had a net increase of $ 4.8 million. The details of the increase in assets are discussed later in this report under the Capital Asset and Debt Administration heading. Total liabilities decreased $ 9.6 million from last year. Long- term liabilities decreased $ 5.5 mostly due to an early payoff of the Certificates of Participation, Series 2000 along with normal debt payments and no new debt issuances. Other liabilities decreased $ 4.1 million primarily due to a decrease in accrued liabilities from the prior year of $ 2.8 million in the Flood Control Fund for payments made to cities under an intergovernmental agreement for flood control projects. The expense did not decrease for the current year, and did not need to be accrued as it was paid earlier. In addition, deferred revenues decreased by $ 2 million due to the restatement discussed in Note 2 on page 33. 2006 Increase % As restated 2007 ( Decrease) Change Current assets and other assets $ 106,029,308 $ 113,292,245 $ 7,262,937 6.85% Capital assets 140,730,557 143,737,677 3,007,120 2.14% Total assets 246,759,865 257,029,922 10,270,057 4.16% Long- term liabilities outstanding 33,227,870 27,744,359 ( 5,483,511) - 16.50% Other liabilities 8,764,837 4,658,816 ( 4,106,021) - 46.85% Total liabilities 41,992,707 32,403,175 ( 9,589,532) - 22.84% Net assets: Invested in capital assets, net of related debt 119,356,265 124,141,677 4,785,412 4.01% Restricted 24,577,330 20,790,722 ( 3,786,608) - 15.41% Unrestricted 60,833,563 79,694,348 18,860,785 31.00% Total net assets $ 204,767,158 $ 224,626,747 $ 19,859,589 9.70% Governmental Activities As of June 30, Statement of Net Assets The restricted net assets reflected a net decrease of $ 3.8 million. This was a result of a $ 2.6 million early payoff of the Certificates of Participation, Series 2000 and the Road Fund spending an additional $ 1.7 million on road maintenance than was collected this year, offset by small increases in other funds. Unrestricted net assets increased by $ 18.9 million from the prior year due to unspent revenue in the County Capital Improvement Fund, Flood Control Fund and remaining funds, of $ 6, $ 3.6, and $ 4.9 million respectively. In addition, the internal service funds net assets, which are included here, increased by $ 2.1 million over the prior year. 7 The majority of this increase represents funds set aside for reserves in the employee benefit trust and self insurance trust. The remaining $ 2.3 million reflects the net increase resulting from the prior period adjustment changing the recognition of Federal in- lieu revenue by $ 2 million and correcting for prepaid expenses of $. 3 million. Governmental activities – comparative statement of activities highlights: Mohave County continues to have steady population growth while the economy is just now starting to decline. While the downturn in the housing market reduced the number of homes sold during the year, higher assessed values on those homes resulted in increased property tax revenues. The County has managed to maintain moderate growth in controllable expenses, due to increased efficiency, while providing services to an expanding population. The increase in expenses was primarily from a cost of living and market adjustment to salaries, which the County felt was necessary to attract and keep qualified personnel. The non-controllable expenses such as court costs from increased caseloads and indigent support continue to rise. The expenses increased $ 14.3 million over the prior year. The current year governmental financial statements reflect an increase of $ 13.1 million in total revenues due to several factors. Secondary property taxes rose because of a 12% increase in the tax levy. The assessed values rose substantially and new construction was still significant. There was an increase in other taxes: sales tax, auto- lieu tax, and capital projects sales tax. These increases were generated by a strong economy at the beginning of the year, increased population growth, and tourism. Investment earnings increased by $ 3.8 million over the prior year due to improved return on investments and an unrealized gain recorded in the current year, as opposed to an unrealized loss recorded in 2006. 2006 Increase % As restated 2007 ( decrease) Change Revenues: Program revenues Charges for services $ 17,417,807 $ 18,062,035 $ 644,228 3.70% Operating grants & contributions 29,522,114 29,222,553 ( 299,561) - 1.01% Capital grants & contributions - 995,421 995,421 100.00% Total program revenues 46,939,921 48,280,009 1,340,088 2.85% General revenues Property taxes 40,458,411 46,074,384 5,615,973 13.88% Other taxes 39,964,725 42,422,988 2,458,263 6.15% Other revenues 1,902,133 5,572,531 3,670,398 192.96% Total general revenues 82,325,269 94,069,903 11,744,634 14.27% Total revenues 129,265,190 142,349,912 13,084,722 10.12% Expenses: General government 43,763,532 53,094,286 9,330,754 21.32% Public safety 20,957,064 22,386,950 1,429,886 6.82% Highways and streets 19,577,244 21,017,921 1,440,677 7.36% Health 13,382,160 14,550,332 1,168,172 8.73% Welfare 3,941,590 4,379,337 437,747 11.11% Culture and recreation 3,759,007 4,406,920 647,913 17.24% Education 1,290,580 1,410,847 120,267 9.32% Interest on long- term debt 1,550,006 1,243,730 ( 306,276) - 19.76% Total expenses 108,221,183 122,490,323 14,269,140 13.19% Increase in net assets before transfers 21,044,007 19,859,589 ( 1,184,418) - 5.63% Transfers 1,997 - ( 1,997) - 100.00% Increase in net assets 21,046,004 19,859,589 ( 1,186,415) - 5.64% Net assets beginning of year 183,721,154 204,767,158 21,046,004 11.46% Net assets end of year $ 204,767,158 $ 224,626,747 $ 19,859,589 9.70% Year Ended June 30, Comparative Statement of Activities Governmental Activities 8 The chart below represents all revenues collected from governmental activities, including general revenues, as reported in the Statement of Activities. Revenues by source - Governmental Activities Property taxes $ 46,074,384 31% Capital grants and contributions $ 995,421 1% Operating grants and contributions $ 29,222,553 21% Charges for services $ 18,062,035 13% Sales taxes $ 29,878,867 21% Other $ 18,116,652 13% The following graph represents the expenses and program revenues for governmental activities as reported in the Statement of Activities. Program revenue does not include the general revenues listed on the bottom portion of the Statement of Activities. Total revenues generated by governmental activities ( program revenues and general revenues) were $ 142 million. $ 94 million of general revenues, which are not included in this graph, represents 66% of total revenues reported for governmental activities. While this graph indicates expenses exceeded program revenues, the addition of general revenues produced an increase to net assets of $ 19.9 million for the fiscal year as indicated on the Statement of Activities. Expenses and program revenues - Governmental activities $- $ 10,000,000 $ 20,000,000 $ 30,000,000 $ 40,000,000 $ 50,000,000 $ 60,000,000 Expense Revenue Expense $ 53,094,286 $ 22,386,950 $ 21,017,921 $ 14,550,332 $ 4,379,337 $ 4,406,920 $ 1,410,847 $ 1,243,730 Revenue $ 13,686,395 $ 9,050,091 $ 14,305,703 $ 5,395,010 $ 4,239,998 $ 535,637 $ 1,067,175 $- General government Public safety Highways and streets Health Welfare Culture and recreation Education Interest on long-term debt 9 Business- type activities - net assets highlights: Net assets increased by $ 492 thousand. The majority of this increase was due to a capital project in the Landfill Fund to construct septage ponds at the Cerbat landfill. Offsetting the $ 855 thousand increase to capital assets was an increase in total liabilities of $ 341 thousand. Of this increase, $ 562 thousand resulted from an increase in projected closure and postclosure costs for the Landfill Fund. This increase was offset by a decrease of $ 234 thousand to other liabilities resulting from a lump sum payment by Griffith Energy for sales taxes accrued in 2006 and paid to the State of Arizona in fiscal year 2007. 2006 Increase % As restated 2007 ( Decrease) Change Current assets and other assets $ 13,859,474 $ 13,837,931 $ ( 21,543) - 0.16% Capital assets 15,277,761 16,133,443 855,682 5.60% Total assets 29,137,235 29,971,374 834,139 2.86% Long- term liabilities outstanding 3,508,138 4,083,459 575,321 16.40% Other liabilities 694,566 460,907 ( 233,659) - 33.64% Total liabilities 4,202,704 4,544,366 341,662 8.13% Net assets: Invested in capital assets, net of related debt 15,277,761 16,133,443 855,682 5.60% Restricted 7,556,711 7,516,646 ( 40,065) - 0.53% Unrestricted 2,100,059 1,776,919 ( 323,140) - 15.39% Total net assets $ 24,934,531 $ 25,427,008 $ 492,477 1.98% Statement of Net Assets As of June 30, Business- type Activities The chart below represents all revenues collected from business- type activities, including general revenues, as reported in the Statement of Activities. Revenues by source - Business- type activities Capital grants and contributions, $ 196,613, 3% Charges for services, $ 4,493,571, 77% Property taxes, $ 117, 0% Unrestricted investment earnings, $ 662,710, 11% Other, $ 109,901, 2% Operating grants and contributions, $ 413,274, 7% Analysis of revenue changes - The Business- type Activities Comparative Statement of Activities schedule on the following page shows the increases and decreases in total revenue with an overall decrease to total revenues of $ 3.6 thousand. The decrease was caused by a reduction in operating grants and contributions from the previous year. These grants were for improvements to Davis Camp Park restroom facilities and the Hualapai Mountain Park visitor center. This decrease was offset by an increase of $ 350 thousand in other income resulting from interest earnings and increased use fees. 10 Business- type activities - comparative statement of activities highlights: Net assets for all enterprise funds increased $ 492 thousand from the prior year. Net assets of the Landfill Fund increased by $ 759 thousand due to increased interest income, decreases in operating expenses that resulted from being in the off year of the two- year cycle for the waste- tire removal contract, and the addition of septage ponds at the Cerbat landfill booked as an infrastructure asset. In addition, the library district repaid a loan issued in fiscal year 2005. Water company expenses increased in total by $ 460 thousand. The major contributors to this increase were from an increase in cost of liability insurance for the I- 40 Water Corridor Fund and payments to an engineering firm to evaluate the Golden Valley Improvement District water supply and develop a plan for future usage. Salaries for both water companies increased due to a cost of living adjustment and the addition of one utility service worker. 2006 Increase % As restated 2007 ( decrease) Change Revenues: Program revenues Charges for services $ 4,419,205 $ 4,493,571 $ 74,366 1.68% Operating grants & contributions 1,038,163 413,274 ( 624,889) - 60.19% Capital grants & contributions - 196,613 196,613 100.00% Total program revenues 5,457,368 5,103,458 ( 353,910) - 6.48% General revenues Property taxes - 117 117 100.00% Other taxes 100,000 100,000 - 0.00% Other revenues 322,439 672,611 350,172 108.60% Total general revenues 422,439 772,728 350,289 82.92% Total revenues 5,879,807 5,876,186 ( 3,621) - 0.06% Expenses: Landfill 1,722,728 1,526,240 ( 196,488) - 11.41% Recreation 1,437,477 1,487,227 49,750 3.46% Water companies 1,910,426 2,370,242 459,816 24.07% Total expenses 5,070,631 5,383,709 313,078 6.17% Increase in net assets before transfers 809,176 492,477 ( 316,699) - 39.14% Transfers ( 1,997) - 1,997 - 100.00% Increase in net assets 807,179 492,477 ( 314,702) - 38.99% Net assets beginning of year 24,127,352 24,934,531 807,179 3.35% Net assets end of year $ 24,934,531 $ 25,427,008 $ 492,477 1.98% Business- type Activities Comparative Statement of Activities Year Ended June 30, The graph below represents the expenses and program revenues for business- type activities as reported in the Statement of Activities. Please note that program revenue does not include the general revenues on the bottom portion of the statement. Expenses and program revenues - Business- type activities $- $ 500,000 $ 1,000,000 $ 1,500,000 $ 2,000,000 $ 2,500,000 Expense Revenue Expense $ 1,526,240 $ 1,487,227 $ 2,370,242 Revenue $ 1,769,978 $ 1,484,099 $ 1,652,768 Landfill Recreation Water companies 11 Financial Analysis of the Government’s Funds As noted earlier, Mohave County uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental funds - The focus of Mohave County’s governmental funds is to provide information on near- term inflows, outflows, and balances of spendable sources. Such information is useful in assessing Mohave County’s financing requirements. In particular unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, Mohave County’s governmental funds reported combined ending fund balances of $ 91.8 million, an increase of $ 11.7 million in comparison with the prior year. The reserved fund balances consist of $ 5.5 million reserved for debt service and $ 324,618 invested in inventory. The General Fund is the chief operating fund of Mohave County. At the end of the current fiscal year, the unreserved fund balance of the General Fund was $ 13.5 million. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. The General Fund unreserved fund balance represents 20% of total General Fund expenditures. During the current fiscal year, the fund balance of Mohave County’s General Fund increased by $ 1.5 million. This represents a 12.5% increase from the fiscal year 2006 ending balance. Revenues increased by $ 5.9 million ( 8.7%), while expenditures increased $ 7.2 million ( 11.9%) over the previous year. Total expenditures as a percentage of the total original budget were only 82% in fiscal year 2007. The increases are the result of rapid population growth in the county. The County addressed personnel requirements to provide services to a growing Mohave County population by giving market adjustments and COLA increases. These increases along with increased retirement and health insurance costs accounted for a 12% increase in personnel costs. Other cost increases occurred in the following areas: legal services, mental health and AHCCCS services, inmate costs, and equipment automation. The Road Fund had a total fund balance of $ 11 million, of which $ 324,618 is reserved for inventories and $ 10.7 million is unreserved and will be used for road maintenance. The net decrease in unrestricted fund balance during the current year in the Road Fund was $ 1.7 million. The decrease results from more road projects completed in this fiscal year than the amount of funds collected. The balance reflects funds available for ongoing road projects of the County. The Flood Control Fund balance increased by 3.6 million. The majority of revenue for this fund comes from secondary taxes which increased due to the rise in assessed values, as discussed previously. There as also a new IGA with the City of Kingman for Phase III that brought in .8 million. In addition, the expenses decreased due to the completion of one flood control project and minimal expenses being incurred on the next project. The Scenic Debt Service Fund had an ending fund balance of $ 1.3 million. The fund balance decreased by $ 40,000. The County Capital Improvement Fund had a fund balance of $ 34 million at June 30, 2007. This was an increase of $ 5.9 million from the prior year. The increase reflects the fact that there were no major capital projects in 2007. The revenue stayed the same except for an increase in interest earnings. Revenue was offset by $ 1.5 million in various small capital projects and a transfer out for debt service and maintenance of the County administration building of $ 1.9 million. Expenditures decreased by $ 8.8 million from the prior year ( reflecting the decrease in construction). A major jail construction is scheduled to begin at the end of fiscal year 2008 ( see Note 15) which will use most of the current fund balance. The Other Governmental Funds had a combined fund balance of $ 22.7 million at June 30, 2007. This was a net increase of $ 2.4 million from the prior year. The net increase is primarily from a $ 3.5 million transfer into the Administration Building debt Service Fund for future debt payoff. Two other major changes include the payoff of the library note of $ 845,402 and the Certificates of Participation, Series 2000 early payoff of $ 2.6 million. These additional expenses were offset by an increase in tax revenue of $ 1.4 million, resulting from higher assessed values and collections of delinquent interest and taxes, and increases in investment earnings and contributions. 12 Proprietary funds – Reports for Mohave County’s proprietary funds provide the same type of information found in the government- wide financial statements, but in more detail. Unrestricted net assets of the water companies, park services, and landfill operations at the end of the year amounted to $ 1.8 million. Net assets for all enterprise funds increased $ 492,477, a 2% increase from the prior year. The water companies did not show profits. They had decreases of $ 290,050 and $ 133,269, respectively. However, if you add back the non- cash expense of depreciation to those funds, they would have made a small profit. The Landfill Fund’s net assets increased by $ 759,006. The increase is from reduced expenses for tire disposal, offset by moderate increases in postclosure costs and salaries. The accumulated net assets will be used for future expansion, as well as closure and postclosure costs. The G. V. I. D. Fund had a small loss of $ 133,269, after depreciation of $ 293,198. The Other Enterprise Funds posted a small loss of $ 39,823 but after contributions from grant funds of $ 196,913, they showed an increase of $ 156,790. The contributions were assets generated from grant funds that were transferred to the parks when completed. Net assets for the internal service funds increased by $ 2.1 million. $ 1 million of that amount was excess contributions over claims expense in the Employee Benefit Trust Fund. The Self Insurance Trust Fund also had excess collections over expenses during the current fiscal year of $. 4 million. These will be used to build up net assets and reduce future increases in costs passed on to employees and other departments. The motor pool fund had an increase in net assets of $. 6 million generated by vehicles transferred in from the vehicle replacement fund. The $. 1 million balance of the increase was a combination of increases and decreases in the remaining funds. General Fund Budgetary Highlights Revenues: No changes were made to the General Fund revenue budget during the year. The 2007 budget for revenue was increased from the prior year by $ 7.6 million. The general fund realized all but $. 4 million of the total amount of revenue budgeted. Expenditures: Differences between the original budget and the final amended budget resulted from moving expenditures between departments and categories of budget. There were $ 3.7 million in decreases to general government activities, which included a decrease of $ 4.6 million from contingency to cover transfers to other funds as described below and $ 865 thousand within the general government expenses. The money reallocated from contingency to other general government departments went mainly to the County attorney’s office and Public defender for legal expense and court costs of $ 750 thousand. The mandated budget for services for Indigents, received an additional $ 110,000 to cover excess costs. The net difference for expenditures was a decrease of $ 3.8, 3.5 million of that was moved from contingency to transfers out. Transfers out: The increase of $ 3.5 million ( reallocated from expenditures) was used to fund an allocation to the Administration Building Debt Service Fund for future debt payments. Variances between actual revenues, expenditures and final budgeted amounts will be discussed below for all significant differences, as related to the schedule in required supplementary information on pages 53- 54. Revenues: Overall, revenues fell just short of the budgeted total. However, individually there were variations in several revenue sources. Tax revenue exceeded budgeted amounts by $ 1.4 million due mainly to the sales of delinquent properties resulting in a $ 2.4 million excess of delinquent interest and tax revenue over budget. Interest revenue was up due to a combination of increased investment rates and increased amounts of investments. Miscellaneous income reflected the recognition of revenue from cancelled warrants of $ 300,000. The primary exceptions for revenue exceeding budget were in intergovernmental, charges for services, and licenses and permits. An unexpected downturn in the real estate market had serious repercussions. State shared revenue for sales tax and auto- lieu were below budget by almost $ 1 million. Planning and zoning, Building inspector’s license and permit revenue, Assessor’s fees, and Recorder’s fees were down as a direct result of the slowing construction industry. Expenditures: Expenditures were less than budgetary estimates by $ 11.3 million. As permitted by State statutes, the County budgets its available unrestricted fund balance at the end of the prior fiscal year as contingency for the next year. The remaining balance of the prior year contingency at year- end was $ 5.3 million. An additional $ 4.9 million excess budget was in salary expense from personnel vacancies. Over half of that amount was reflected in Public safety, Planning and zoning, Building inspector, Public defender, and Public legal defender departments, where the departments are having trouble filling open positions. Planning and zoning had excess budget of $ 223,000 from not outsourcing the plans review as they had budgeted. Building inspection had excess budget due to $ 100,000 for plans review that were not outsourced. The A. H. C. C. C. S. budget was inadvertently doubled for administrative expense by including the same 13 $ 363,000 on two different lines of the budget, which is why there is remaining budget. The remaining balance of available budget is scattered throughout the other departments in supplies and other services. Capital Asset and Debt Administration Capital assets – Mohave County’s investment in capital assets for its governmental and business- type activities as of June 30, 2007 amounts to $ 159.9 million ( net of accumulated depreciation). This investment in capital assets includes land, buildings, water systems, improvements other than buildings, machinery and equipment, park facilities, roads, highways, and bridges. The increase in capital assets of $ 3.9 million ( net of depreciation) resulted from the following projects and purchases: the Mohave Wash project, completion of the Bullhead City Justice Court building, and the purchase of vehicles and road equipment that were added to the fleet. Increase % 2006 2007 Decrease Change Governmental activities Capital assets, not being depreciated $ 39,269,707 $ 39,719,073 $ 449,366 1.14% Capital assets, being depreciated 101,460,850 104,018,604 2,557,754 2.52% Total governmental assets $ 140,730,557 $ 143,737,677 $ 3,007,120 2.14% Business- type activities Capital assets, not being depreciated $ 2,155,257 $ 1,995,208 $ ( 160,049) - 7.43% Capital assets, being depreciated 13,122,504 14,138,235 1,015,731 7.74% Total business- type assets $ 15,277,761 $ 16,133,443 $ 855,682 5.60% Total governmental and business- type activities Capital assets, not being depreciated $ 41,424,964 $ 41,714,281 $ 289,317 0.70% Capital assets, being depreciated 114,583,354 118,156,839 3,573,485 3.12% Total capital assets $ 156,008,318 $ 159,871,120 $ 3,862,802 2.48% Capital Assets, net of accumulated depreciation As of June 30, Major capital asset events during the current fiscal year include the following: · Construction continues on the Mohave Wash project with total expenditures in 2007 of $ 758,000. The County expects to complete the project by June 30, 2009. · The County spent $ 1.8 million on three major road improvement projects: Shinarump Road, Vanderslice Road, and Grace Neal Parkway. · Preliminary architectural and engineering work began for the County Correctional Facility with expenditures of $ 364,000 for the year. · The Parks fund spent $ 163,000 on improvements at Davis Camp in Bullhead City. · Construction was completed on the addition to the Bullhead City court building with expenditures of $ 233,000 for the year. Total expenditures for the addition were $ 1.5 million. · The County replaced 66 aging vehicles from the fleet at a total cost of $ 1.8 million. Forty- seven vehicles were purchased using general government funds, seventeen were purchased with Road funds, and two with business- type funds. The 7% decrease to the business- type activities capital assets not being depreciated reflects the completion of the Hualapai Mountain Park visitor center. The project was previously reported under construction in progress and was not depreciated. Upon completion, the asset was reclassified as a depreciable asset. Notes 6 and 7, on pages 39- 40 of this report, contain additional information on Mohave County’s capital assets. Long- term debt - At the end of the current fiscal year, Mohave County had total debt outstanding of $ 31.8 million. Of this amount, $ 16.9 million comprises debt backed by buildings of the government used as collateral for Beneficial Interest Certificates issued and $ 3.2 million is special assessment debt for which the government can sell the taxpayer’s 14 property, to cover the debt, in the event of default by the property owners subject to the assessment. The remainder of Mohave County’s long- term liabilities represents claims and judgments payable, notes payable, landfill closure and postclosure care costs payable, and compensated absences payable incurred during normal operations. State statutes limit the amount of general obligation debt a government entity may issue to 6% of its total secondary assessed valuation, without taxpayer approval, and up to 15% with the approval of a majority of taxpayers. The debt limitation for Mohave County, for fiscal year 2006/ 2007, was $ 114 million ( 6% of $ 1.9 billion secondary assessed value). Mohave County does not have any outstanding general obligation debt and therefore has its full debt limit capacity available for future needs. Note 9, on pages 41- 45 of this report, contains additional information on Mohave County’s long- term debt. Economic Factors and Next Year’s Budgets and Rates Continued population growth that exceeds State and national growth significantly influences future budgets. More citizens result in more service demands. A growing and changing economy creates additional costs and additional demand for public services, requiring public revenues to keep pace with economic growth. Even though there is still a growing trend in population, the revenue trend for governments is declining. This decline is predicted to continue for the next year or two. All of these factors were considered in preparing Mohave County’s budget for the 2008 fiscal year. The unemployment rate for Mohave County for 2007 was 4.7%, which is an increase from a rate of 4.1% in 2006. With this increase, the County’s unemployment rate is growing faster than other areas and compares unfavorably to the state’s average unemployment rate of 3.8% and approximates the national average rate of 4.6%. Requests for Information This financial report is designed to provide a general overview of Mohave County’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: Mohave County Finance P. O. Box 7000 Kingman, AZ 86402- 7000

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Home Mohave County annual financial report fiscal year ended 2007

Mohave County annual financial report fiscal year ended 2007

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