2006 Comprehensive Annual Financial Report

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charges (business-type activities). The major governmental activities of the City of South Bend include police and fire, highways and streets, community and economic development and general government. The major business-type activities of the City include the wastewater utility, water utility and solid waste. Fund financial statements. A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or ob'ectives. The City,. like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of South Bend 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 government-wide financial statements, governmental fund financial statements focus on short-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's short-term financing requirements. Governmental funds use the modified accrual accounting,, an accounting method that is different from many private-sector coinpanies. The City maintains four major ggovernmental funds (General Parks and Recreation, TIF Airport, County Option Income Tax) and 66 non-major governmental funds. General Governmental Revenue -The followingg schedule presents a summary of general governmental revenue for the year ended December 31, 2006: Revenue 2006 Amount % of Total Taxes: General Property $ 72,289,253 51.2% County Option Income 6,410,405 4.5% County Economic Development 4,013,475 2.8% Professional Sports Development 336,281 0.2% Community Revitalization District 1,000,000 0.7% Licenses and Permits 186,470 0.1% Intergovernmental 31,275,541 22.2% Charges for Services 16,931,744 12.0% Fines and Forfeits 444,861 0.3% Interest 4,762,484 3.4% Donations 137,535 0.1 Other 3,277,196 2.5% Total Revenue $ 141,065,245 100.0% As shown above, taxes continue to represent a significant source of revenue needed to support the services provided by the City. The City s single largest source of revenue is generated by property taxation. This revenue calculation is based on a relationship between two variables. The first variable is the assessed property valuation of industrial, commercial and residential parcels for both real and personal property. ,The second variable is the application of a tax rate to arrive at the total tax levy. Taxable property is assessed at 100% of the true tax value. The above general property tax revenue includes taxes collected on behalf of the following funds: General Fund, Park and Recreation Fund, Cumulative Capital Development Fund, various capital funds for the City's Redevelopment Tax Incremental Financing (TIF) Funds and a special levy to cover debt service on general obligation bonds. One of the maj or focuses for the City continues to be the need to diversify its revenue stream. This is necessary to reduce the dependency on general roperty taxes and to ensure that a broad base of users, including nonresidents who work m the ~ity, share m the funding of basic City services. 22