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Home My WebLink About2008 Audit ReportSTATE OF NEW MEXICO TOWN OF TAOS AUDIT REPORT JUNE 30, 2008 STATE OF NEW MEXICO TOWN OF TAOS JUNE 30, 2008 TABLE OF CONTENTS Page INTRODUCTORY SECTION Number. OfficialRoster................................................................................................................. 1 FINANCIAL STATEMENTS SECTION Independent Auditors' Report .......................................................................................... 2-3 Basic Financial Statements: Government -wide Financial Statements Statementof Net Assets............................................................................................ 4-5 Statementof Activities.............................................................................................. 6-7 Fund Financial Statements Balance Sheet -Governmental Funds.......................................................................... 8 Statement of Revenues, Expenditures and Changes in Fund Balances - GovernmentalFunds............................................................................................... 9 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances- Governmental Funds to the Statement of Activities ................. 10 Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual GeneralFund.............................................................................................................. 11-14 Statement of Net Assets- Proprietary Funds............................................................ 15 Statement of Revenues, Expenses and Change in Fund Net Assets - ProprietaryFunds.............................................................................. 16 Statement of Cash Flows- Proprietary Funds ............................................. 17 Statement of Fiduciary Assets and Liabilities.......................................................... 18 Notes to the Financial Statements.......................................................... 19-42 SUPPLEMENTARY INFORMATION Nonmajor Governmental Funds.......................................................... 43-45 Combining and Individual Fund Financial Statements: Combining Balance Sheet- Nonmajor Governmental Funds ......................... 46-51 Combining Statement of Revenues, Expenditures and Changes in FundBalances......................................................................................................... 52-57 I 10 STATE OF NEW MEXICO TOWN OF TAOS JUNE 30, 2008 TABLE OF CONTENTS (continued) Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: FireProtection Fund..................................................................................................... RecreationFund............................................................................................................ Lodger's Tax Fund........................................................................................................ Local Government Corrections Fund............................................................................ Law Enforcement Protection Fund............................................................................... CivicCenter Fund......................................................................................................... CommunityGrants Fund............................................................................................... Public Transportation Fund........................................................................................... Municipal Road Gasoline Tax Fund............................................................................. '/a Cent Municipal Gross Receipts Tax Fund................................................................ Central Communications Fund..................................................................................... 1989/1999 Gross Receipts Tax Revenue Bond Reserve .............................................. 1.993 Receipts Tax Revenue.......................................................................................... 2007 NMFA Land Purchase........................................................................................ 1995 Gross Receipts Tax R.B. Retirement.................................................................. 2008 Gross Receipts Tax Revenue Bond Retirement .................................................. 1995 Gross Receipts Tax Acquisition Reserve............................................................. 1999 Gas Tax R.B. Retirement..................................................................................... 2001 Gross Receipts Tax R.B. Retirement.................................................................. 2001 Gross Receipts Tax R.B. Reserve........................................................................ Capital Projects Fund — Individual Fund...................................................................... AirportConstruction Fund............................................................................................ 1994 GRT Revenue Bond Acquisition........................................................................ Domestic Violence Shelter Fund................................................................................. Facilities Improvements Fund...................................................................................... VehicleReplacement Fund.......................................................................................... 1999 Gas Construction Fund....................................................................................... Statement of Revenues, Expenditures and Changes in Fund Net Assets — Budget and Actual: Water and Sewer Fund...................................................................................... Landfill............................................................................................................. SolidWaste...................................................................................................... M 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 STATE OF NEW MEXICO TOWN OF TAOS JUNE 30, 2008 TABLE OF CONTENTS (continued) Schedule of Changes in Assets and Liabilities - Agency Funds .................................. Federal Compliance and Findings: 1:1:3 Schedule of Expenditures of Federal Awards ................................................ 89 Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards ....................................................................................................................................... 90-91 Independent Auditors' Report On Compliance with Requirements Applicable To Each Major Program and Internal Control_ Over Compliance In Accordance With OMB Circular A-133 ............................................................................................................................... 92-93 Schedule of Findings and Questioned Costs .................................................. 94-96 ExitConference..................................................................................:............................ 97 iii s INTRODUCTORY SECTION Name Bobby F. Duran Rudy Abeyta Eugene Sanchez Darren Cordova Amy Quintana Daniel Miera Marietta Fambro STATE OF NEW MEXICO TOWN OF TAOS JUNE 30, 2008 OFFICAL ROSTER ADMINISTRATIVE OFFICIALS 1 Title Mayor Council Member Council Member Council Member Council Member Town Manager Finance Director s FINANCIAL STATEMENTS SECTION M4$11 PATTILLO, BROWN & HILL,L.L.P. CERTIFIED PUBLIC ACCOUNTANTS 0 BUSINESS CONSULTANTS INDEPENDENT AUDITORS' REPORT Bobby F. Duran, Mayor Town Council Town of Taos Taos, New Mexico and Hector H. Balderas New Mexico State Auditor Santa Fe, New Mexico We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, the aggregate remaining fund information, and the budgetary comparison of the General Fund of the Town of Taos, New Mexico as of and for the year ended June 30, 2008, which collectively comprise the Town's basic financial statements as listed in the table of contents. We have also audited the financial statements of each of the Town's nonmajor governmental funds and the budgetary comparisons presented as supplementary information in the accompanying combining and individual fund financial statements, as of and for the year ended June 30, 2008 as listed in the table of contents. These financial statements are the responsibility of the Town of Taos, New Mexico management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the Town of Taos, New Mexico as of June 30, 2008, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each nonrnajor governmental fund, of the Town of Taos, New Mexico as of June 30, 2008 and the respective changes in financial position and cash flows where applicable and the respective budgetary comparisons for the capital projects fund and each nonmajor governmental fund and enterprise funds, for the year ended in conformity with accounting principles generally accepted in the United States of America. 4301THE 25 WAY NE ■ ALBUQUERQUE, NM 871090 (505) 266-5904 ■ FAX: (505) 268-6444 ■ www.pbhcpa.com AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 ■ HILLSBORO, TX (254) 582-2583 TEMPLE, TX (254) 791-3460 ■ WACO, TX (254) 772-4901 2 In accordance with Government Auditing Standards, we have also issued our reports dated November 25, 2008, on our consideration of the Town of Taos, New Mexico's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of these reports is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. These reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The Town of Taos has not presented the Management's Discussion and Analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not a required part of, the basic financial statements. Our audit was conducted for the purpose of forming opinions on the basic financial statements and the combining and individual fund financial statements and budgetary comparisons. The accompanying Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits of State and Local Governments and Non -Profit Organizations, and is not a required part of the financial statements. The additional schedules listed as "other supplemental information" in the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basis financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. rl tC7ly. LlTc�c� Pattillo, Brown, &Hill, L.L.P. Albuquerque, New Mexico November 25, 2008 �/ � x9xv, 4301THE 25 WAY NE ■ ALBUQUERQUE, NM 871090 (505) 266-5904 ■ FAX: (505) 268-6444 ■ www.pbhcpa.com AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 ■ HILLSBORO, TX (254) 582-2583 TEMPLE, TX (254) 791-3460 ■ WACO, TX (254) 7724901 3 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF NET ASSETS JUNE 30, 2008 Total assets $ 63,351,222 $ 27,313,100 $ 90,664,322 U Governmental Business -type Activities Activities Total ASSETS Current assets: Cash and cash equivalents $ 762,373 $ 3,781,494 $ 4,543,867 Investments 12,557,978 1,612,526 14,170,504 Receivables (net of allowances for wicollectible) 2,070,555 518,631 2,589,186 Interfund balances 14,706 97,000 111,706 Total current assets 15,405,612 6,009,651 21,415,263 Other assets: Restricted cash - 1,327,165 1,327,165 - Totalodterassets - 1,327,165 1,327,165 Noncurrent assets: Other assets - Bond issue cost 179,586 - 179.586 Capital assets not being depreciated Land 5,943,036 262,422 6,205,458 Construction in progress 2,553,198 3,383,782 5,936,980 Capital assets, being depreciated 86,067,763 27,945,592 114,013,355 Less: accumulated depreciation ( 46,797,973) ( 11,615,512) ( 58.413,485) Totalcapital assets 47,945,610 19,976,284 67,921,894 Total mncurrent assets 47,945,610 19,976,284 67,921,894 Total assets $ 63,351,222 $ 27,313,100 $ 90,664,322 U LIABILITIES Current liabilities: Bank overdraft Accounts payable Accrued liabilities Court bonds Interfund balances Accrued interest payable Current portion long term debt Total current liabilities Noncurrent liabilities: Meyer deposits Compensated absences Landfill closure and post closing liability Bond premium Bonds and contracts payable less current portion Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Capital projects Swimming pool Debt service Unrestricted Total net assets Governmental Business -type Activities Activities Total. 225,552 - 225,552 1,050,700 578,436 1,629,136 270,570 39,802 310,372 7,363 - 7,363 - 111.,706 111,706 48,788 - 48,788 879,333 232,983 1,112,316 2,482,306 962,927 3,445,233 - 226,705 226,705 784,354 66,043 850,397 - 235,575 235,575 68,874 - 68,874 7,829,172 4,297,406 12,1.26,578 8,682,400 4,825,729 13,508,129 1.1,164,706 5,788,656 16.953,362 39,168,231 15,445,895 54,614,126 8,994,602 - 8,994,602 823,636 721,595 1,545,231 3,200,047 5,356,954 8,557,001 $ 52,186,516 $ 21,524,444 $ 73,710,960 The notes to the financial statements are an integral part of this statement. 5 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2008 General revenues: Taxes: Property taxes, levied for general purposes State shared Sales Lodgers Franchise Investment earnings Miscellaneous Total general revenues, specialitems, and transfers Change in net assets Net assets, beginning Net assets, ending The notes to the financial statements are an integral part of this statement, Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary Government: Govemmental activities: General. government $ 6,864,848 $ 530,263 $ 374,580 $ 684,050 Public safety 4,163,607 515,702 402,237 - Highway and streets 1,405.271 - 237,796 102,968 Culture and recreation 5,363,217 325,029 130,300 314,371 Interest and fees on long-term debt 227,941 - - - Total governmental activities 18,024,884 1,370,994 1,144,913 1,101,389 Business -type activities: Water and sewer 3,216,742 2,433,403 - 1,255,068 Solid waste 1,049,768 1,184,509 - - Landfill 949,724 1,252,531 Total business -type activities 5,216,234 4,870,443 - 1,255,068 Total primary govemnment $ 23,241,118 $ 6,241,437 $ 1,144,913 $ 2,356,457 General revenues: Taxes: Property taxes, levied for general purposes State shared Sales Lodgers Franchise Investment earnings Miscellaneous Total general revenues, specialitems, and transfers Change in net assets Net assets, beginning Net assets, ending The notes to the financial statements are an integral part of this statement, Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business -type Activities Activibes Total $( 5:275,955) $ - $( 5,275,955) ( 3,245,668) - ( 3,245,668) ( 1,064,507) - ( 1,064,507) ( 4,593,517) - ( 4,593,517) ( 227,941) - ( 227,941) ( 14,407,588) ( 14,407,588) - 471,729 471,729 - 134,741 134,741 302,807 302,807 - 909,277 909,277 ( 14,407,588) 909,277 ( 13,498,31.1) 733,520 - 733,520 83,916 - 83,916 9,993,470 462,538 10,456,008 947,1.26 - 947,126 522,144 - 522,144 425,029 174,969 599,998 862,425 - 862,425 13,567,630 637,507 14,205,137 ( 839,958) 1,546,784 706,826 53,026,474 19,977,660 73,004,134 $ 52,186,516 $ 21,524,444 $ 73,710,960 i I ASSETS Cash Investments Accounts receivable Due from other funds Total assets LIABILITIES AND FUND BALANCES Liabilities: Bank overdrafts Deferred revenue Accounts payable Accrued liabilities Court bonds payable Total liabilities Fund balances: Reserved for: Special revenue -swimming pool Debt service Capital projects Unreserved, undesignated reported in: General fund Capital projects funds Special revenue funds Total fund balances Total liabilities and fund balances STATE OF NEW MEXICO TOWN OF TAOS BALANCESHEET GOVERNMENTAL FUNDS JUNE 30, 2008 General Capital Fund Projects #51 Funds Funds $ 395,685 $ 166,688 1,580,428 7,467,342 845,412 607,036 14,706 2,070,555 $ 2,836,231 $ 8,241,066 26,740 - 195,542 698,791 223,287 - 7,363 - 452,932 698,791 7,542,275 2,383,299 G,J6J,ZYY /,34Z,Z/3 Nonmajor Total Governmental Governmental Funds Funds $ 200,000 $ 762,373 3,510,208 12,557,978 618,107 2,070,555 - 14,706 $ 4,328,315 $ 15,405,612 $ 225,552 $ 225,552 141,109 167,849 156,367 1,050,700 47,283 270,570 - 7,363 570,311 1,722,034 823,636 823,636 1,452,327 8,994,602 - 2,383,299 350,119 350,119 1,131,922 1,131,922 3,758,004 13,683,578 $ 2,836,231 $ 8,241,066 $ 4,328,315 Long term liabilities, including loans payable and compensated absences are not due and payable in the current period and therefore are not reported in the funds. 9,430,935) Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 47,766,024 Recognition of deferred revenue is reflected on the full accrual basis in the statement of net assets. 167,849 Net assets of governmental. activities $ 52,186,516 The notes to the financial statements are an integral part of this statement. 8 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2008 Capital Nonmajor Total Projects Governmental Governmental General Fund #51 Funds Funds REVENUES Taxes: Gross receipts tax Property taxes Lodgers' tax Other state shared taxes Franchise taxes Licenses and permits Intergovernmental Fines and forfeitures Charges for services State shared gross receipts taxes State shared gasoline taxes Miscellaneous Total revenues EXPENDITURES Current operations: General government Public safety Highways and streets Culture and recreation Debt service: Principal Interest & fiscal charges Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Debt proceeds Debt issuance premium Transfers in (out) Total other financing sources (uses) Net change in fund balances Fund balances, beginning of year Fund balances, end of year $ 3,702,112 706,780 64,943 510,461 179,923 45,792 177,057 342,916 4,532,873 66,211 385,554 10,714,622 4,391,748 2,890,623 972,512 2,151,151 5,634 10,411,668 302,954 ( 1,411.,041) ( 1,411,041) ( 1,108,087) 3,491,386 $ 2,383,299 $ 693,780 $ 925,075 947,126 92,392 897,828 1,631,467 - 75,534 75,886 80,202 1,671,810 421,223 184,717 2,862,618 3,468,558 198,873 3,946,353 809,361 788,383 1,777,957 696,495 205,444 732,527 5,010,167 5,320,967 706,780 947,126 157,335 510,461 179,923 2,575,087 252,591 418,802 4,532,873 66,211 664,629 16,332,785 5,622,332 3,679,006 972,512 3,929,108 696,495 390,161 3,600,779 18,890,393 ( 1,796,748) ( 1,063,814) ( 2,557,608) 6,395,000 70,842 479,453 6,945,295 5,148,547 2,393,728 $ 7,542,275 The notes to the financial statements are an integral part of this statement. 9 931,588 931,588 ( 132,226) 3,890,230 $ 3,758,004 6,395,000 70,842 6,465,842 3,908,234 9,775,344 $ 13,683,578 STATE OF NEW MEXICO TOWN OF TAOS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2008 Amounts reported for govenunental activities in the Statement of Activities are different because: Net change in fund balances - total governmental funis Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets are allocated over their estimated useful lives and reported as depreciation expense. 71tis is the amount by which depreciation expense exceeded capital outlay. The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental. funds. Neither transaction, however, has any effect on net assets. Also, govermnental funds report tire effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amoritzed in the statement of activities. Tlris amount is the net effect of these differences in the treatment of long-term debt and related items. Recognition of accounts receivable and deferred revenues is reflected on the full accrual basis within. the statement of activities. The Town has determined that the receivables are not available, therefore, the revenues have been deferred within the governmental funds. Donations of capital assets increase net assets in the statement of activities, but do not appear in the governmental funds because they are not financial resources. Some expenses reported in. the statement of activities do not require the use of current financial. resources and, therefore, are not reported as expenditures in the governmental funds. Change in net assets of governmental activities The notes to the financial statements are an integral part of this statement. 10 3,908,234 56,133 ( 5,584,630) 26,740 825,401 ( 71,836) $( 839,958) STATE OF NEW MEXICO TOWN OF TAOS GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS FOR THE YEAR ENDED JUNE 30, 2008 REVENUES Taxes: Gross receipts tax Property taxes Other state shared taxes Franchise tax Licenses and permits Intergovernmental Fines and forfeitures Charges for services State shared gross receipts taxes State shared gasoline tax Miscellaneous Total revenues EXPENDITURES General Government: Town council Personal services Operating expenses Capital outlay Total town council Executive Personal services Operating expenses Capital outlay Total executive Finance Personal services Operating expenses Capital outlay Total finance Planning and development Personal services Operating expenses Capital outlay Total planning and. development Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) 3,909,683 3,913,184 3,690,106 579,405 579,405 629,696 63,621 63,621 71,044 409,769 409,769 504,858 352,847 352,846 179,923 35,000 35,000 45,792 166,486 166,487 177,057 365,913 328,821 342,916 4,822,670 4,822,670 4,583,679 65,498 65,498 65,498 472,725 509,818 385,554 11,243,617 11,247,119 10,676,123 203,807 204,705 511,281 509,746 5,000 5,000 720,088 719,451 198,032 407,050 $( 223,078) 50,291 7,423 95,089 ( 172,923) 10,792 10,570 14,095 ( 238,991) ( 124,264) ( 570,996)"' 6,673 102,696 5,000 605,082 114,369 203,807 724,340 713,804 10,536 511,281 256,820 140,145 116,675 5,000 5,000 - 5,000 720,088 986,160 853,949 132,211 433,150 458,269 454,113 4,156 432,005 418,549 371,997 46,552 865,155 876,818 826,110 50,708 526,210 565,455 520,745 44,710 233,382 233,384 1.95,314 38,070 759,592 798,839 716,059 82,780 The notes to the financial statements are an integral part of this statement. (continued) ll Y STATE OF NEW MEXICO TOWN OF TAOS GENERALFUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS (continued) FOR THE YEAR ENDED JUNE 30, 2008 Special services Personal services 391,268 320,079 307,231 Variance with Operating expenses Budgeted Amounts 261,720 Final Budget 90,627 Capital outlay 2,695 Actual Positive - Original Final Amounts (Negative) Communications bureau Total general government Building and maintenance 5,580,167 5,037,452 Personal services 296,251 276,079 247,740 28,339 Operating expenses 208,819 218,271 216,709 1,562 Capital outlay 5,150 - - - Total communications bureau 510,220 494,350 464,449 29,901 Fleet maintenance 6,545 Personal services 134,854 134,441 133,101 1,340 Operating expenses 86,369 103,612 98,514 5,098 Total fleet maintenance 221,223 238,053 231,615 6,438 Special services Personal services 391,268 320,079 307,231 12,848 Operating expenses 236,844 261,720 171,093 90,627 Capital outlay 2,695 - - - Total special services 630,807 581,799 478,324 103,475 Total general government Building and maintenance 5,580,167 5,037,452 542,715 Personal services 365,340 382,629 378,647 3,982 Capital outlay 2,867 - - _ Operating expenses 148,960 143,983 141,420 2,563 Total building and maintenance 517,167 526,612 520,067 6,545 Airport Personal services 95,033 92,730 92,578 152 Operating expenses 46,785 52,375 52,313 62 Capital outlay - - - _ Total airport 141,818 145,105 144,891 214 Judicial Personal services 165,504 166,920 166,750 170 Operating expenses 48,023 46,060 30,156 15,904 Capital outlay _ - _ _ Total judicial 213,527 212,980 196,906 16,074 Total general government 5,299,685 5,580,167 5,037,452 542,715 The notes to the financial statements are an integral part of this statement. (continued) 12 s STATE OF NEW MEXICO TOWN OF TAOS GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS (continued) FOR THE YEAR ENDED JUNE 30, 2008 The notes to the financial statements are an integral part of this statement. (continued) 13 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) Public safety Police Personal services 1,829,370 1,824,461 1,772,643 51,818 Operating expenses 299,793 299,793 278,258 21,535 Total police 2,129,163 2,124,254 2,050,901 73,353 We Personal services 472,978 474,714 467,811 6,903 Operating expenses 180,845 177,845 175,005 2,840 Capital outlay - - _ _ Total fire 653,823 652,559 642,816 9,743 Total public safety 2,782,986 2,776,813 2,693,717 83,096 Highways and streets Personal services 620,540 609,580 609,538 42 Operating expenses 418,621 402,537 362,974 39,563 Capital outlay - 5,179 5,179 - Total highways and streets 1,039,161 1.,017,296 977,691 39,605 Culture and recreation Library Personal services 439,314 438,277 428,773 9,504 Operating expenses 138,616 145,300 119,482 25,818 Capital outlay _ - _ _ Total library 577,930 583,577 548,255 35,322 Recreation/aquatics Personal services 880,171 817,380 794,944 22,436 Operating expenses 414,228 415,000 307,344 107,656 Capital outlay _ 2,695 455 2,240 Total recreation/aquatics 1,294,399 1,235,075 1,102,743 132,332 Total culture and recreation 1,872,329 1,818,652 1,650,998 167,654 Excess (deficiency) of revenues over expenditures 249,456 54,191 316,265 262,074 The notes to the financial statements are an integral part of this statement. (continued) 13 STATE OF NEW MEXICO TOWN OF TAOS GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS (continued) FOR THE YEAR ENDED JUNE 30, 2008 OTHER FINANCING SOURCES (USES) Transfers out Total other financing sources (uses) Net change in fund balances Beginning cash and investments balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) ( 1,643,469) L 1,848,276) ( 1,411,041) 437,235 ( 1,643,469) L_1,848,276) ( 1,411,041) 437,235 $( 1,394,013) $( 1.,794,085) $( 1,094,776) $ 699,309 $ 3,013,873 $ 3,013,873 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in payables Change in receivables Change in deferred revenue Net change in fund balances GAAP basis $( 1,094,776) ( 51,810) 11,759 26,740 $( 1,108,087) The notes to the financial statements are an integral part of this statement. 14 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2008 Restricted assets: Customers' meter deposits Water and - Solid Total Debt payments and reserves Sewer Landfill Waste Proprietary Landfill improvements, closures and solid waste issues Fund Fund Fund Funds ASSETS 540,733 786,432 1,549,993 1,3279165 Current assets: 3,640,223 1,960,037 188,396 5,788,656 Cash and cash equivalents $ 1,725,907 $ 1,297,621 $ 757,966 $ 3,781,494 Investments 1,463,426 - 149,100 1,612,526 Accounts receivable (net of allowance for uncollectible) 354,738 32,926 130,967 518,631 Due from other funds - 97,000 - 97,000 Total current assets 3,544,071 1,427,547 1,038,033 6,009,651 Restricted assets: Customers' meter deposits 226,705 - - 226,705 Debt payments and reserves 314,028 407,567 - 721,595 Landfill improvements, closures and solid waste issues - 378,865 - 378,865 Total restricted assets 540,733 786,432 1,549,993 1,3279165 Capital assets: 3,640,223 1,960,037 188,396 5,788,656 Non -depreciable assets: Land - 262,422 - 262,422 Construction in progress 2,670,851 712,931 - 3,383,782 Depreciable assets: Property, plant and equipment 25,255,656 2,273,422 416,514 27,945,592 Less accumulated depreciation (10,687,136) ( 581,351) ( 347,025) (11,615,512) Total capital assets 17,239,371 2,667,424 69,489 1.9,976,284 Total assets 21,324,175 4,881,403 1,107,522 27,31.3,100 LIABILITIES Current Liabilities: Accounts payable 256,191 238,873 83,372 578,436 Accrued liabilities 23,804 9,712 6,286 39,802 Due to other funds 4,672 10,034 97,000 111,706 Current portion long-term debt 81,558 151,425 - 232,983 Total current liabilities 366,225 410,044 186,658 962,927 Long term liabilities: Utility meter deposits 226,705 - - 226,705 Compensated absences 39,630 24,675 1,738 66,043 Landfill closure and post closing liability - 235,575 - 235,575 Bonds and loans payable less current portion 3,007,663 1,289,743 - 4,297,406 Total long-term liabilities 3,273,998 1,549,993 1,738 4,825,729 Total liabilities 3,640,223 1,960,037 188,396 5,788,656 Net Assets Invested in capital assets, net of related debt 14,150,150 1,226,256 69,489 15,445,895 Restricted for debt service 314,028 407,567 - 721,595 Unrestricted 3,219,774 1,287,543 849,637 5,356,954 Total net assets $ 17,683,952 $ 2,921,366 $ 919,126 $ 21,524,444 The notes to the financial statements are an integral part of this statement. 15 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF REVENUES, EXPENSES AND CHANGE IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2008 Operating Revenues: Charges for services Other revenue Total operating revenues Operating Expenses: Personnel services Other Total operating expenses Operating income (loss) Non-operating revenues (expenses): Interest expense Interest income Sales tax Federal grants Total non-operating revenues (expenses) Change in net assets Net assets, beginning of year Net assets, end of year Water and Sewer Landfill Fund Fund $ 2,179,652 $ 1,252,531 253,751 - 2,433,403 1,252,531 Solid Total Waste Proprietary Fund Funds $ 1,083,386 $ 4,515,569 101,123 354,874 1,184,509 4,870,443 595,748 304,158 74,714 974,620 2,464,521 632,176 975,054 4,071,751 3,060,269 936,334 1,049,768 5,046,371 ( 626,866) 316,197 134,741 ( 175,928) ( 156,473) ( 13,390) - ( 169,863) 137,181 37,788 174,969 462,538 - 462,538 1,255,068 1,255,068 1,698,314 24,398 - 1,722,712 1,071,448 340,595 134,741 1,546,784 16,612,504 2,580,771 784,385 19,977,660 $ 17,683,952 $ 2,921,366 $ 919,126 $ 21,524,444 The notes to the financial statements are an integral part of this statement. 16 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2008 The notes to the financial statements are an integral part of this statement. 17 10 Water and Solid Total Sewer Landfill Waste Proprietary Fund Fund Fund Funds Cash flows from operating activities Cash received from customers $ 2,779,383 $ 1,244,056 $ 1,191,435 $ 5,214,874 Cash payments to employees for services (611,787) (299,637) (74,919) (986,343) Cash payments to suppliers for goods and services 1,849,371 328,419 1,076,437 (3,254,227) Net cash provided by operating activities 318,225 616,000 40,079 974,304 Cash flows from noncapital financing activities Transfers from other funds - 3,387 - 3,387 Transfers to other funds (6,355) (568) (6,923) Net cash provided by capital and related activities (6,355) 3,387 (56 8) 3,536 Cash flows from capital and related financing activities (Acquisition) disposition of capital assets (2,005,248) (760,255) - (2,765,503) Grant proceeds 1,255,068 - 1,255,068 Receipt of tax 462,538 - - 462,538 Debt proceeds - 1,000,000 - 1,000,000 Principal paid on debt (79,088) (67,274) - (146,362) Interest paid on debt1( 56,473) 13,390 (169,863) Net cash provided by capital financing activities (523,203) 159,081 ( 364,122) Cash flows from investing activities Interest on investments 137,181 37,788 174,969 Net cash provided by capital and related activities 137,181 37,788 - 174,969 Net increase (decrease) in cash and cash equivalents (74,152) 816,256 39,511 781,615 Cash and equivalents beginning of year 3,804,218 1,267,797 867,555 5,939,570 Cash and equivalents end of year $ 3,730,066 $ 2,084,053 $ 907,066 $ 6,721,185 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income $( 626,866) $ 316,197 $ 134,741 $( 175,928) Adjustments to reconcile operating income to net cash provided (used) in operating activities: Depreciation expense 861,579 113,829 4,005 979,413 Provision for bad debt 37,698 - - 37,698 Decrease (increase) in customer receivable 292,537 ( 8,475) 6,926 290,988 Increase (decrease) in accounts payable ( 246,429) 189,928 ( 105,388) (161,889) Increase (decrease) in accrued liabilities ( 1,673) 419 ( 860) (2,114) Increase (decrease) in customer deposits 15,745 - - 15,745 Increase (decrease) in compensated absences ( 1.4,366) 4,102 655 (9,609) Net cash provided by operating activities $ 318,225 $ 616,000 $ 40,079 $ 974,304 The notes to the financial statements are an integral part of this statement. 17 10 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCYFUNDS JUNE 30, 2008 ASSETS Cash $ 1,950 Investments 61,500 Total assets $ 63,450 - LIABILITIES Deposits payable $ 23,700 Accounts receivable Due to outside entities 39,750 Total liabilities $ 63,450 The notes to the financial statements are an integral part of this statement. 18 STATE OF NEW MEXICO TOWN OF TAOS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 L SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Town of Taos (Town) was incorporated in 1934. The Town operates under a Mayor Council form of government and provides the following services as authorized by its charter: public safety (police and fire), highways and streets, sanitation, health and social services, culture and recreation, planning and zoning, water service, sewer service and general administrative services A. Reporting Entity This summary of significant accounting policies of the Town of Taos is presented to assist in the understanding of the Town of Taos's financial statements. The financial statements and notes are the representation of the Town of Taos's management who are responsible for their integrity and objectivity. The financial statements of the Town have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the government's accounting policies are described below. In evaluating how to define the government, for financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in generally accepted accounting principles (GAAP). The basic (but not the only) criteria for including a potential component unit within the reporting entity is the governing body's ability to exercise oversight responsibility. The most significant manifestation of this ability is financial interdependency. Other manifestations of the ability to exercise oversight responsibility include, but are not limited to, the selection of governing authority, the designation of management, the ability to significantly influence operations, and accountability for fiscal matters. A second criterion used in evaluating potential component units is the scope of public service. Application of this criterion involves considering whether the activity benefits the government and/or its citizens, or whether the activity is conducted within the geographic boundaries of the government and is generally available to its citizens. A third criterion used to evaluate potential component units for inclusion or exclusion from the reporting entity is the existence of special financing relationships, regardless of whether the government is able to exercise oversight responsibilities. Based upon the application of these criteria, the Town has no component units. 19 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government -Wide And Fund Financial Statements The government -wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenue, are reported separately from business -like activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenue. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenue includes 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenue are reported instead as general revenue. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year for which they are levied. Sales, franchise, lodgers', cigarette, gas and other similar taxes are recognized as revenue when the underlying exchange takes place. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenue to be available if collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, sales taxes, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenue of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the Town. 20 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus. Basis of Accounting and Financial Statement Presentation (continued) The Town reports the following major governmental funds: The General Fund is the Town's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Capital Proiects Fund was created to accumulate revenues and other financing sources for the purpose of financing general-purpose capital projects. The Town reports the following major proprietary funds: The Water and Sewer Fund is used to account for the activities of the Town's water and sewer operations. The Landfall Fund is used to account for the activities of the Taos Regional Landfill including debt repayments closure and post closure care estimates as well as operations and administration. The Solid Waste Fund accounts for the provision of solid waste services to the residents of the Town and some residents of the County. All activities necessary to provide such services are accounted for in this fund, including, but not limited to administration, operations, maintenance, financing and related debt service, and billing and collection. Additionally, the Town reports the following fund types: The Fiduciary Fund accounts for resources held for others. Agency funds are custodial in nature (assets equal liabilities), do not present results of operations and are accounted for using the accrual basis of accounting. These funds are used to account for assets that the Town holds for others in an agency capacity. Private -sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government -wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private - sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The Town has elected not to follow subsequent private -sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are charges between the Town's water and sewer function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenue reported for the various functions concerned. 21 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (continued) Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenue includes all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise funds are charges to customers for sales and services. Operating expenses for the enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenue and expenses. When both restricted and unrestricted resources are available for use, it is the Town's policy to use restricted resources first, and then unrestricted resources as they are needed. D. Assets, Liabilities, and Net Assets or Equity Cash and Investments Cash and investments include amounts in demand deposits, certificates of deposit and investments with a maturity date within a year of the date acquired by the Town. Cash in excess of current requirements is invested in the New Mexico State Treasurer's Local Government Pooled Investment Fund. Receivables Accounts receivable of the enterprise fund represents the amounts due from customer utility accounts. The governmental funds report taxes and other fees collected at the Town, County and State level as receivables. All trade and tax receivable are shown net of an allowance for uncollectible. Deferred Revenues Within the governmental funds, revenues must be available in order to be recognized. Revenues such as real estate taxes that are not available are recorded as deferred revenues and reflected as a liability with the balance sheet Restricted Assets Certain resources of the enterprise funds are set aside for revenue bond and note repayment and replacement reserves and are classified as restricted assets on the balance sheet because the use of these monies is limited by applicable bond covenants and loan documents. In addition, customers meter deposits are classified as restricted assets. 22 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (continued) Capital Assets Capital assets, which include property, plant, equipment, improvements, and water and sewer system, are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. The Town defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of library books at conversion were determined to be fully depreciated. Current year purchases of library books do not warrant capitalization. The Town has retroactively reported all major general infrastructure assets. Interest incurred during the construction phase of capital assets of business type activities is included as part of the capitalized value of the asset constructed. During the year the Town did not capitalize any interest costs. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. Property, improvements, equipment, and water and sewer system are depreciated using the straight-line method over the following useful lives: Assets Years Data Processing Equipment & Software 3-5 Machinery and equipment 5-25 Buildings and improvements 1.0-50 Infrastructure 10-50 Compensated Absences The Town's employees earn personal leave at a rate of 22 to 27 days per year based on years of service. Employees can carryover unused personal leave each year with a cap of 500 hours. On an appointed day each year employees may sell back -unused personal leave based on the following schedule. Hours 200 to 299 300 to 399 400 to 499 500 and above Percent of hourly salary 25% 50% 75% 100% Once the employee achieves the 500 hour cap, they can only sell back a total of 136 hours annually; the other 80 hours accrued annually must be used by December 31 or forfeited. At retirement or separation all leave may be sold back at 100% of hourly salary. All personal leave is accrued when incurred in the government -wide and proprietary fund financial statements. 23 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (Continued) Long-term Obligations In the government -wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net assets. Fond Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used for the acquisition, construction or improvements of those assets, and adding back unspent proceeds. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislations adopted by the Town or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates. 24 2. RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government -wide Statement of Net Assets The governmental fund balance sheet includes reconciliation between fund balance — total governmental funds and net assets — governmental activities as reported in the government -wide statement of net assets. One element of that reconciliation explains, "long-term liabilities, including loans payable, are not due and payable in the current period and therefore are not reported in the funds." The details of this difference are as follows: Bonds, loans and contracts payable -current $ 879,333 Bonds, loans and contracts payable - long-term 7,829,172 Bonds premium (to be amortized over life of bond) 68,874 Less:Bond issue costs (to be amortized over life of bond) (179,586) Accrued interest payable 48,788 Compensated absences 784,354 Net adjustment to reduce fund balance - total governmental funds to arrive at - net assets - governmental activities $ 9,430,935 - Explanation of Certain Differences Between the Governmental Fund Statement of Revenue Expenditures and Changes in Fund Balances and the Government -wide Statement of Activities The governmental fund statement of revenue, expenditures and changes in fund balances includes a reconciliation between net changes in fund balances — total governmental fund and changes in net assets of governmental activities as reported in the government -wide statement of activities. One element of that reconciliation explains, "Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of this difference are as follows: Capital outlay $ 3,600,779 Depreciation expense (3,544,646) Net adjustment to decrease net changes in fund balances total governmental funds to arrive at changes in net assets of government activities $ 56,133 Another element of that reconciliation explains that, the issuance of long-term debt provides current financial resources to governmental funds, while repayment of the principal of long-term debt consumes the current financial resources of the governmental funds. Neither transaction, however, has any effect on net assets. The details of this difference are as follows: Proceeds from issuance of debt $ 6,395,000 Proceeds from debt issuance premium 70,842 Bond issue costs (184,717) Principal payments of long-term debt (696,495) Net adjustment to decrease net changes in fund balances total governmental funds to arrive at changes in net assets of government activities $ 5,584,630 25 2. 3. RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS Explanation of Certain Differences Between the Governmental Fund Statement of Revenue Expenditures and Changes in Fund Balances and the Government -wide Statement of Activities (continued) Another element of that reconciliation states, "The net effect of various miscellaneous transactions involving capital assets is to decrease net assets." The details of this difference are as follows: Donations of capital assets increase net assets on the statement of activities, but do not appear in the governmental funds because they are not financial resources. $ 825,401 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities. $ 825,401 Another element of that reconciliation states, "Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds." The details of this difference are as follows: Amortization of bond issue costs $ (5,131) Amortization of bond premium 1,968 Compensated absences -increase (49,339) Accrued interest -increase (19,334) Net adjustment to decrease net changes in fund balances -total governmental funds to arrive at changes in net assets of governmental activities $ (71,836) STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information The Town follows these procedures in establishing the budgetary data reflected in the financial statements: 1. Prior to June 1, the Town Finance Director submits to the Town Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them based on previous year's history. Public hearings are conducted at the Town Ball to obtain taxpayer comments. Prior to July 1, the budget is legally enacted through passage of an resolution. 2. The Town Finance Director is authorized to transfer budgeted amounts between departments within any fund; however, any revisions that alter the total expenditures of any funds must be approved by the Town Council and New Mexico Department of Finance, Division of Local Governments. The original budget that was adopted in July was amended during the fiscal year in a legally permissible manner. 26 3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) Cash, Cash Equivalents Ki Balance Add Less Balance Per Bank Deposits Outstanding Per Books First Community Bank June 30, 2008 In Transit Checks Adjustments June 30, 2008 Checking Accounts Water Sewer System Income Fund 3,392,845 - 18,720 253 3,374,378 Clearing Account 525,685 - 525,685 29 29 Utility Improvement Fund 33,815 - - - 33,815 Utility Construction Fund 42,294 - - - 42,294 Town Debt Service Fund 338 - - - 338 Judicial Bond Fund Municipal Court 7,363 - - - 7,363 Certificate of Deposit 170,500 170,500 Certificate of Deposit 250,000 - - - 250,000 Certificate of Deposit 195,500 195,500 Certificate of Deposit 499,000 - - - 499,000 Certificate of Deposit 235,000 - - - 235,000 Centinel Bank Checking Accounts General Fund 469,279 - - (116) 469,163 Water Waste Water Improvement 384,409 - 46,596 - 337,813 ACH Transfer Account 150 - - (50) 100 Payroll Clearing Account 18 - - (18) _ 1994 GRT RB Acquisition Fund 47,315 - 6,996 - 40,319 HUD Acct -Dom. Violence I - - - 1 Certificate of Deposit 177,500 - 177,500 Total Cash in Banks $ 6,431,012 $ $ 597,997 $ 98 5,833,113 Funds Held by the New Mexico Finance Authority: Bank of Albuquerque US Treasury Fund Accounts 1,209,148 Loan reserve accounts 55,769 State Treasurers Office 12,779,904 Plus Cash on Hand 1,500 Total Cash Per Books $ 19,879,434 As Reported in Financial Statements: Equity in Cash: Cash $ 4,543,867 Bank overdrafts (225,552) Restricted Cash 1,327,165 Investments 14,170,504 Agency Fund 63,450 $ 19,879,434 Ki 3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) Budgetary Information (continued) 3. Formal budgetary integration is employed as a management control device during the year for the General Fund and Special Revenue Funds. 4. Encumbrances are not reported in the budgets or financial statements. 5. The level of classifications detail in which expenditures or expenses may not legally exceed appropriations for each budget is in fund total. Appropriations lapse at year end. 6. Budgets for the General and Special Revenue Funds are adopted on a basis not consistent with generally accepted accounting principles. Throughout the year the accounting records are maintained on the non -GAAP basis of cash receipts and disbursements. Accordingly, certain revenues and the related assets are recognized when paid rather than when the obligation is incurred. The financial statements are presented on the modified accrual basis of accounting. Budgetary comparisons presented for General and Special Revenue Funds in this report are on the non -GAAP budgetary basis and actual (cash basis). Deposits The Town invests its funds in accordance with state statues which require that financial institutions pledge collateral consisting of approved federal or state securities whose market value is equal to at least 50% of the deposits in excess of FDIC insurance coverage. In accordance with state statutes, the Town may have deposits only in financial institutions, federal direct obligations, or the New Mexico State Treasurer's Local Government Pooled Investment Plan. As of June 30, 2008 the Town had $7,640,160 in financial institutions and $12,779,904 invested in the New Mexico State Treasurer's Local Government Pooled Investment. 27 3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) Pledged Collateral Deposit FDIC Total uninsured public funds Collateral pledge: Federal Home Loan Bank of Dallas 8500 Freeport Parkway South,Irving, TX First 200,090 Community Centinel Bank Bank 5,352,340 1,078,672 (200,000) (200,000) 5,152,340 878,672 Total 6,431,012 (400,000) 6,031,012 Federal Home Loan Bank - CUSIP 31339YVV I, 3.38%,7/21108 200,090 - 200,090 Federal Home Loan Bank- CUSIP 31339YVVI, 3.38%,7/21/08 50,023 - 50,023 Federal Home Loan Bank - CUSIP 3133XOU6, 3.75%, 8/15/08 60,087 - 60,087 Federal Home Loan Bank - CUSIP 3133X2BZ7 3.63%,11/14/08 75,277 - 75,277 Federal Home Loan Bank - CUSIP 3133X2BZ7 3.63%, H/14108 14/08 70,259 70,259 Federal Home Loan Bank - CUSIP 31339YB43 3.23%, 1/16/09 350,097 - 350,097 Federal Home Loan Bank - CUSIP 3133X4ZC8, 3.00%, 4/15/09 736,061 736,061 Federal Home Loan Bank - CUSIP 3133X4ZC8, 3.00%, 4/15/09 25,036 - 25,036 Federal Home Loan Bank - CUSIP 3133X8CS9, 3.88%, 8/14/09 767,443 - 767,443 FN22003-64 YA- CUSIP 31393DKWO, 3.00%,525/23 379,363 - 379,363 Texas Independent Bank 350 Phelps Court, Irving, TX GNMA 780373- CUSIP 36225AMW7,7.00%, 015/23 - 80,020 80,020 GNMA 80342 - CUSIP 36225CLY0, 6.50%,11/20129 - 35,097 35,097 Santa Rosa GO- CUSIP 80275 ICKI, 4.60%,07/01/11 - 109,119 109,119 FHLB -CUSIP M31336TDO, 5.49%,12/22108 - 101,313 101,313 FHLB - CUSIP 3133M8AU8, 5.82%, 03/30/09 - 153,244 153,244 FHLB - CUSIP 3133M8AU8, 5.82%, 03/30/09 - 102,162 102,162 FHLB - CUSIP 3133M8AU8, 5.82%,03/30/09 - 255,406 255,406 FHLB - CUSIP 3133M8AU8, 5.82%, 03/30/09 _ - FHLB - CUSIP 3133M8AU8, 5.82%, 03/30/09 - FHLB -CUSIP 3133M86T6, 5.959, 03/16/09 _ - FHLB - CUSIP 3133M86T6, 5.95%, 03/16/09 _ - FHLB - CUSIP 3133M86T6, 5.95%, 03/16/09 2,713,736 836,361 3,550,097 Uninsured and uncollaterahzed $ 2,438,604 $ 42,311 $ 2,480,915 IFE go 3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (continued) Custodial Credit Risk Custodial credit risk is the risk that in the event of a bank failure, the Town's deposits may not be returned. The Town does not have a deposit policy for custodial credit risk. As of June 30, 2008, $6,031,012 of the Town's bank balance of $6,431,012 was exposed to custodial credit risk as follows: First Community Centinel Bank Bank Total Uninsured and uncollateralized $ 2,438,604 $ 42,311 $ 2,480,915 Uninsured and collateral held by pledging bank's trust department in the Bank's name 2,713,736 836,361 3,550,097 Total $ 5,152,340 $ 878,672 $ 6,031,012 Also at June 30, 2008 the Town had $1,209,148 held in AP US Treasury Notes, in connection with New Mexico Finance Authority loans. One for wastewater project and the other's for the regional landfill construction. The notes, held by the Bank of Albuquerque Trust Services, in the Bank's name, exposes the Town to custodial credit risk as noted above. The Town does not have an investment policy to limit exposure to custodial credit risk or to manage its exposure to fair value losses due to rising interest rates. At June 30, 2008 these investments were: Bank of Albuquerque NMFA (Wastewater) Reserves $ 61,898 NMFA (Landfill) Reserves 137,644 NMFA (Landfill) Construction 7,347 NMFA (Landfill) Reserves 100,226 NMFA (Landfill) Construction 902,033 Total $ 1,209,148 Additionally, two debt service accounts are managed by the New Mexico Finance Authority (NMFA), on deposit with the State Treasurer's office, in NMFA's name for the benefit of the Town. These accounts are exposed to custodial credit risk in the amount of $55,769. Public Project Revolving Fund Program $ 20,758 2001A W&S Reserve 14,842 2004 Taos Landfill Reserve 20,169 Total $ 55,769 Investments The Town invests excess cash in the State Treasurer Local Government Investment Pool. The Pool's investments are valued at fair value based on quoted market prices as of the valuation date. The New Mexico State Treasurer Investment Pool is not SEC registered. Section 6-10-10 I, NMSA 1978, empowers the State Treasurer, with the advice and consent of the State Board of Finance, to invest money held in the short-term investment fund in securities that are issued or backed by the United States Government or by its departments or agencies and are either direct obligations of the United States Government or agencies sponsored by the United States Government. The Local Government Investment Pool investments are monitored by the same policies and procedures that apply to all other state investments. The pool does not have unit shares. Per 6-10-10.1 F, NMSA 1978, at the end of each month all interest earned is distributed by the State Treasurer to the contribution entities in amounts directly proportionate to the respective amounts deposited in the fund and the length of time the amounts were invested. Participation in the fund is voluntary. The Pool is AAAm rated with a 46 - day weighted average maturity, with an account balance of $12,779,904 as of June 30, 2008. ggm 4. DETAILED NOTES ON ALL FUNDS Receivables Receivables as of year-end for the Town's individual major funds and nonmajor funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Receivables: Customer Accounts Property Taxes Franchise Taxes Gross Receipts Taxes Gas Taxes Cigarette Taxes Lodgers Taxes Motor Vehicle Fees Other governments Gross receivables Less: allowance for uncollectible Net total receivables Governmental Funds Proprietary Funds Water Capital Non- and Solid General Projects Major Sewer Waste Landfill Total - 583,492 147,864 32,926 764,282 103,824 - - - 103,824 78,010 - - - 78,010 651,874 54,933 73,244 36,622 - - 816,673 6,252 - 6,058 - - - 12,310 - - 1,456 X1,456 - - 253,248 253,248 5,452 - - - 5,452 552,103 284,101 135,222 971,426 845,412 607,036 618,107 755,336 147,864 32,926 3,006,681 - - - 400,598 16,897 417,495 845,412 $ 607,036 $ 618,107 $ 354,738 $ 130,967 $ 32,926 $ 2,589,186 Reserved Fund Balance/Restricted Net Assets Reserved for Capital Projects - Capital Projects Fund, Airport Construction, 1994 GRT Revenue Bond, Enhanced 911, 1999 Gas Construction - The amounts are to be used for capital project expenditures as restricted by the grants and bond issues. The restricted amounts of $8,994,602 are shown as reserved in the government -wide statements. Restricted for Debt Service - All Debt Service Funds - The reserve of $823,636 is to be used for future debt service payments and is restricted by the debt agreement. This amount is restricted in the government -wide statements. Restricted for Debt Services - Proprietary Funds - The reserve of $721,595 represents the amount to be used for future debt service payments as required by the debt agreements. 31 4. DETAILED NOTES ON ALL FUNDS (Continued) Capital Assets Capital asset activity for the year ended June 30, 2008 was as follows: Beginning Balance Increases Decreases Governmental Activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets, being depreciated: Land improvements Buildings and improvements Machinery and equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation: Land improvements Buildings and improvements Machinery and equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net Business -type Activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets, being depreciated: Land improvements Buildings and improvements Machinery and equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation: Land improvements Buildings and improvements Machinery and equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Business -type activities capital assets, net $ 5,117,635 520,846 5,638,481 4,452,972 21,948,369 12,825,749 45,331,546 84,558,636 2,620,383 8,287,067 7,898,516 24,506,661 43,312,627 41,246,009 $ 46,884,490 $ 825,401 2,080,552 2,905,953 37,505 162,749 1,108,420 211,553 1,520,227 R (59,300) (59,300) Ending Adiustments Balance $ - $ 5,943,036 (48,200) 2,553,198 (48,200) 8,496,234 - 4,490,477 22,111,118 48,200 13,923,069 - 45,543,099 48,200 86,067,763 243,737 - - 2;864,129 723,931 - - 9,010,998 1,076,307 59,300 - 8,915,523 1,500,671 - - 26,007,332 3,544,646 59,300 - 46,797,973 (2,024,419) - 48,200 39,269,790 $ 881,534 $ - $ - $ 47,766,024 $ 262,422 $ - $ - $ - $ 262,422 2,293,421 1,466,093 - (375,732) 3,383,782 2,555,843 1,466,093 - (375,732) 3,646,204 97,515 7,380 - - 104,895 3,976,878 - - 3,976,878 7,990,569 261,002 - 8,251,571 14,205,488 1,031,028 - 375,732 15,612,248 26,270,450 1,299,410 - 375,732 27,945,592 63,516 7,486 - - 71,002 1,399,147 135,410 - - 1,534,557 4,890,146 297,522 - 5,187,668 4,283,290 538,995 - - 4,822,285 10,636099 979,413 - - 11,615,512 15,634,351 319,997 - 375,732 16,330,080 $ 18,190,194 $ 1,786,090 $ - $ 375,732 $ 19,976,284 Governmental activities -capital outlay $3,600,779 Donated land 825,401 Governmental activities total increase to capital assets 4 426 180 32 4. DETAILED NOTES ON ALL FUNDS (Continued) Capital Assets (continued) Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General government $ 1,233,410 Public safety 480,979 Highways and streets 1,401,386 Culture and recreation 428,871 Total Depreciation Expense - Governmental Activities $ 3,544,646 Business -type Activities: Water and sewer $ 861,579 Solid waste 4,005 Landfill 113,829 Total Depreciation Expense - Business -type Activities $ 979,413 Interfund Receivables, Payables and Transfers Operating Transfers: The outstanding balances between funds result mainly from the time lag between the dates the (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. All balances are expected to be repaid within one year. Interfund transfers: Transfers out General Transfers in: Capital Projects $ 479,453 Non -major 931,588 $ 1,411,041 Legally authorized transfers between funds, other than those described above, are recorded as other financing sources and uses in the respective funds. Receivable Fund Payable Fund Amount Landfill General fund General fund Accrued Liabilities: Accrued liabilities at June 30, 2008 Solid waste fund Water and sewer fund Landfill $ 97,000 4,672 10,034 consisted of the following: Government Business -Type Activities Activities Accrued salaries & payroll liabilities $ 269,133 $ 26,873 Sales tax payable 1,437 12,929 Total $ 270,570 $ 39,802 33 4. DETAILED NOTES ON ALL FUNDS (Continued) SHORT TERM DEBT: The Town does not have any short-term debt. LONG TERM DEBT: Description of Governmental Activities Bonds Gross Receipts and Gasoline Tax Revenue Bond. Gross Receipts Tax Revenue Refunding Bonds dated July 31, 2001, Series 2001 were issued in the amount of $4,125,000 to provide funds to advance refund the Town's outstanding Series 1993 gross receipts tax refunding and improvement revenue bonds of $1,195,000 and the Town's outstanding Series 1994 gross receipts tax revenue bonds of $3,110,000. Interest is to be paid semi-annually on June 1 and December 1. The bonds are secured by the gross receipts tax revenue of the Town. Gasoline Tax Revenue Bonds, dated March 1, 1999, Series 1999 in the amount of $1,955,000 for the purpose of laying off, opening, constructing, reconstructing, resurfacing, maintaining, acquiring rights of way, repairing and otherwise improving alleys, streets, public roads and bridges or any combination of the foregoing. Interest to be paid semi-annually April 1 and October 1. The bonds are secured by and payable from gasoline tax revenues distributed monthly by the State of New Mexico to the Town. Gross Receipts Tax Revenue Bonds dated January 30, 2008, Series 2008 were issued in the amount of $6,395,000 to provide funds for the purpose of constructing and improvements to the town administration building. Interest is to be paid semi-annually on December 1 and June 1. The bonds are secured by gross receipts tax revenue of the Town. Series Issue Maturity Rate Outstanding Revenue Bonds: Series 2001 Gross Receipts Tax $ 4,125,000 6/1/2009 3.5% - 5.250/a $ 470,000 Series 1999 Gasoline Tax 1,955,000 10/1/2012 3.6%-4.75% 855,000 Series 2008 Gross Recepts Tax 6,395,000 6/1/2026 4%-5% 6,395,000 $ 7,720,000 Debt Service requirements for the Governmental Activities Bonds are as follows: Year June 30 Principal Interest 2009 $ 775,000 $ 345,028 2010 400,000 288,568 2011 415,000 271,577 2012 435,000 253,872 2013 450,000 235,212 2014-2018 1,570,000 961,275 2019-2023 2,160,000 589,365 2024-2026 1,515,000 128,940 Total $ 7,720,000 $ 3,073,837 34 4. DETAILED NOTES ON ALL FUNDS (Continued) LONG TERM DEBT: Governmental Activities Loans Payable: New Mexico Finance Authority Note, dated April 13, 2007 in the amount of $954,000 for the purpose of acquiring land for a public recreation building. Interest is to be paid semi-annually May 1 and November 1. The loan is secured by the gross receipts tax revenue of the Town. Original Final Interest Loans Issue Maturity Rate Outstanding NMFA- Land Loan $ 954,000 5/1/2017 3.50% 880,505 $ 880,505 Debt Service requirements for the Governmental loan are as follows: Year Ending Governmental Activites June 30 Principal Interest 2009 $ 86,333 $ 24,673 2010 89,293 22,437 2011 91,860 20,100 2012 94,540 17,656 2013 97,362 15,077 2014-2017 421,117 31,727 $ 108,000 $ 880,505 $ 131,670 Governmental Activities Contracts Payable: The Town has contracts payable to U.S. Department of Agriculture: Future scheduled requirements are: Year Principal Interest Total 2009 $ 18,000 $ - $ 18,000 2010 18,000 - 18,000 2011 18,000 - 18,000 2012 18,000 - 18,000 2013 18,000 - 18,000 2014-2014 18,000 - 18,000 $ 108,000 $ - $ 108,000 35 9 DETAILED NOTES ON ALL FUNDS (Continued) LONG TERM DEBT: Description of Business -Type activities Bonds Water & Selver and Utility Revenue Bonds: Water and Sewer Revenue Bonds dated March 16, 1993, Series 1993A were issued in the amount of $635,600 to provide funds for financing improvements to the Town's water and sewer utility system. Principal and interest is to be paid annually. The bonds are secured by, and payable exclusively from, the net revenues of the water and sewer utility system. Water and Sewer Revenue Bonds dated March 16, 1993, Series 1993B were issued in the amount of $123,000 to provide funds for financing improvements to the Town's water and sewer utility system. Principal and interest is to be paid annually. The bonds are secured by, and payable exclusively from, the net revenues of the water and sewer utility system. Utility Revenue Bonds dated December 5, 1995, Series 1995A were issued in the amount of .� $1,315,000 to provide funds for constructing an expansion to the wastewater treatment plant. Interest is to be paid annually on December 5. The bonds are secured by, and payable exclusively from, the net revenues of the water and sewer utility system. Water and Sewer Revenue Bonds dated July 1, 1999, Series 1998A were issued in the amount of $475,000 to provide fund for improving the sewer plant to enable the Town to recover solid biowaste. Principal and interest is to be paid annually. The bonds are secured by, and payable exclusively from, the net revenues of the water and sewer utility system. Series Revenue Bonds: Series 1993A Water & Sewer Series 1993E Water & Sewer Series 1995A Utility Series 1998B Water & Sewer Original Final Interest Issue Maturity Rate Outstanding $ 635,600 3/16/2033 123,000 3/16/2033 1,315,000 12/5/2035 475,000 1/1/2038 36 0.05625 $ 537,600 0.055 105,000 0.0513 1,145,000 0.0475 429,000 $ 2,216,600 I i 4. DETAILED NOTES ON ALL FUNDS (Continued) LONG TERM DEBT: (continued) Business -Type Activities Notes Payable On May 11, 2001, the Town borrowed $950,391 from the New Mexico Finance Authority for the purpose of expansion of the existing wastewater transmission lines. Principal and interest at 4.34% is to be paid annually. The term of the loan is 20 years. The note is secured by, and payable exclusively from, the net revenues of the water and sewer utility system. In December 18, 2000, the Town borrowed $250,000 from the Rural Utilities Service for the purpose of expansion of the water system. Principal and interest at 5.00% is to be paid annually. The term of the loan is 40 years. The note is secured by, and payable exclusively from, the net revenues of the water and sewer utility system. The Town borrowed $1,372,684 from the New Mexico Finance Authority on April 23, 2007 for the construction and equipping of the Solid Waste Landfill Facility. The 10 -year loan requires semi- annual interest payments at a rate of 2.399% and annual principal payments. The note is secured by, and payable exclusively from, the net revenues of the Regional Landfill System. The Town borrowed $1,000,000 from the New Mexico Finance Authority on April 11, 2008 for the construction of two new cells for the existing landfill. The 10 -year loan requires semi-annual interest payments at the rate of 2.911% and annual principal payments. The note is secured by, and payable exclusively from the revenues of the Regional Landfill System. Original Final Interest Loans Issue Maturity Rate Outstandine Series 2000A Water & Sewer $ 250,000 12/18/2040 5.00% $ 234,000 Taos Regional Landfill 1,372,684 5/1/2014 0.790% - 3.34% 638,621 Series 2001A Water and Sewer 950,391 7/1/2020 4.16% - 5.410% 441,168 Series 2008A PPRF-Landfill 1,000,000 4/11/2008 2.91% 1,000,000 $ 2,313,789 Bonds and Loan Payable A summary of the terms of revenue bonds and loan outstanding and their corresponding allocations to the business -type activities at June 30, 2008 follows: Year Ending June 30, 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024-2028 2029-2033 2034-2038 2039-2041 Principal $ 232,983 244,791 251,349 259,353 268,851 1,197,138 516,324 484,000 636,600 393,000 46,000 $ 4,530,389 Interest $ 200,538 192,118 184,356 176,335 167,627 698,112 488,371 360,516 223,123 68,986 5,050 $ 2,765,132 37 4. DETAILED NOTES ON ALL FUNDS (Continued) LONG TERM DEBT: (continued) Changes in Long-term Liabilities Long-term liability activity for the year ended June 30, 2008, was as follows: Governmental activities Revenue Bond Loan and Contracts Payable Compensated absences Governmental activities long-term liabilities Business -type activities Revenue Bonds Loans Payable Compensated Absences Business -type activities long-term liabilities Beginning Balance Additions $ 1,930,000 $ 6,395,000 1,080,000 - 735,015 1,281,069 Reductions $ 605,000 91,495 1,231,730 $ 3,745,015 $ 7,676,069 $ 1,928,225 $ 2,252,600 1,424,151 75,652 $ 3,752,403 1,000,000 145,439 $ 1,145,439 Landfill Closure and Post Closure Costs $ 36,000 110,362 155,048 $ 301,410 Ending Due Within Balance One Year $ 7,720,000 $ 775,000 988,505 104,333 784,354 - $ 9,492,859 $ 879,333 $ 2,216,600 $ 37,000- 2,313,789 195,983 66,043 - $ 4,596,432 $ 232,983 ;a State and Federal laws regulations require the Town to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and post closure care will be paid only near or after the date that the landfill stops accepting waste, the Town reports a portion of these closure and post closure care costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. The $235,575 reported as landfill closure and post closure care liability at June 30, 2008, represents the cumulative amount reported to date based on management's estimates and on the area used by the landfill. Actual costs may differ due to inflation and changes in technology and regulations. The Town is required by state regulations to make annual contributions to a restricted cash account to finance closure and post closure care. The Town is in compliance with these requirements, and, as of June 30, 2008, had transferred $378,865. The cumulative contribution is reported as restricted assets on the balance sheet. M. 0 DETAILED NOTES ON ALL FUNDS (Continued) LONG TERM DEBT: (continued) Restricted Assets The balances of the restricted asset accounts are as follows: Enterprise Funds Meter deposits $ 226,705 Debt requirements 721,595 Landfill closure and solid waste reserve 378,865 Total restricted assets $ 1,327,165 Pension Plan — Public Employees Retirement Association Plan Description. Substantially all of the Town's full-time employees participate in public employee retirement system authorized under the Public Employees' Retirement Act (Chapter 10, Article 11, NMSA 1978). The Public Employees Retirement Association (PERA) is the administrator of the plan, which is a cost-sharing multiple -employer defined benefit retirement plan. The plan provides for retirement benefits, disability benefits, survivor benefits and cost-of—living adjustments to plan members and beneficiaries. PERA issues a separate, publicly available financial report that includes financial statements and required supplementary information for the plan. That report may be obtained by writing to PERA, P.O. Box 2123, Santa Fe, New Mexico 87504-2123. This report is also available on PERA's website at www.pera.state.nm.us. Funding Policy. Plan members are required to contribute a 9.15 percentage of their gross salary. The Town is required to contribute 13.15 to 28.3 percent of the gross covered salary. The contribution requirements of plan members and the Town of Taos are established in State statute under Chapter 10, Article 11 NMSA 1978. The requirements may be amended by acts of legislature. The Town of Taos's contributions to PERA for the fiscal years ending June 30, 2008, 2007 and 2006 were $640,410, $581,742 and $503,150, respectively, which equal the amount of the required contributions for each year. 0 4. DETAILED NOTES ON ALL FUNDS (Continued) Deferred Compensation Plan The State of New Mexico offers local governments a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all local government employees whose employers have elected participation in the plan, permits participants to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are held in trust by the State of New Mexico for the benefit of the participants. Approximately forty-eight employees of the Town participate in the Deferred Compensation Plan. Neither the Town of Taos nor the State of New Mexico makes any contributions to the Deferred Compensation Plan. All contributions withheld from participants by the Town of Taos, have been paid to New Mexico Public Employees' Retirement Association, which administers the plan. Post — Employment Benefits — State Retiree Health Care Plan The Town of Taos contributes to the New Mexico Retiree Health Care Fund, a cost-sharing multiple - employer defined benefit postemployment healthcare plan administered by the New Mexico Retiree Health Care Authority (RHCA). The RHCA provides health care insurance and prescription drug benefits to retired employees of participating New Mexico government agencies, their spouses, dependents, and surviving spouses and dependents. The RHCA Board was established by the Retiree Health Care Act (Chapter 10, Article 7C NMSA 1978). The Board is responsible for establishing and amending benefit provisions of the healthcare plan and is also authorized to designate optional and/or voluntary benefits like dental, vision, supplemental life insurance, and long-term care policies. Eligible retirees are: (1) retirees who make contributions to the fund for at least five years prior to retirement and whose eligible employer during that period of time made contributions as a participant in the RHCA on the person's behalf, unless that person retires on or before the employer's RHCA effective date, in which event the time period required for employee and employer contributions shall become the period of time between the employer's effective date and the date of retirement; (2) retirees defined by the Act who retired prior to July 1, 1990; 3) former legislators who served at least two years; 4) former governing authority members who served at least four years. The RHCA issues a publicly available stand-alone financial report that includes financial statements and required supplementary information for the postemployment healthcare plan. That report and further information can be obtained by writing to the Retiree Health Care Authority at 4308 Carlisle NE, Suite .104, Albuquerque, NM 87107. Funding Policy. The Retiree Health Care Act (Section 10-7C-13 NMSA 1978) authorizes the RHCA Board to establish the monthly premium contributions that retirees are required to pay for healthcare benefits. Each participating retiree pays a monthly premium according to a service based subsidy rate schedule for the medical plus basic life plan and an additional participation fee of five dollars if the eligible participant retired prior to the employer's RHCA effective date or is a former legislator or former 40 4. DETAILED NOTES ON ALL FUNDS (Continued) Post - Employment Benefits — State Retiree Health Care Plan: (Continued) governing authority member. Former legislators and governing authority members are required to pay 100% of the insurance premium to cover their claims and the administrative expenses of the plan. The monthly premium rate schedule can be obtained from the RHCA or viewed on their website at www.nmncca. state.nm.us. The Retiree Health Care Act (Section 10-7C-15 NMSA 1978) is the statutory authority that establishes the required contributions of participating employers and their employees. The statute requires each participating employer to contribute 1.3% of each participating employee's annual salary; each participating employee is required to contribute .65% of their salary. Employers joining the program after 1/1/98 are also required to make a surplus -amount contribution to the RHCA based on one of two formulas at agreed-upon intervals. The RHCA plan is financed on a pay-as-you-go basis. The employer, employee and retiree contributions are required to be remitted to the RHCA on a monthly basis. The statutory requirements for the contributions can be changed by the New Mexico State Legislature. The Town of Taos contributions to the RHCA for the years ended June 30, 2008, 2007 and 2006 were $75,902, $66,225, $64,735, respectively, which equal the required contributions for each year. Risk Manaeement The Town is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Town has obtained insurance through the Self Insurance Fund operating as a common risk management and insurance program. The Town pays an annual premium to the New Mexico Self Insurers Fund for its general insurance coverage and all risk of loss is transferred. Deficit Fund Equit The Civic Center Fund has a deficit fund balance of $1,410 as of June 30, 2008. It is anticipated that the deficit will be funded by future increases in revenue or transfers from the General Fund. 41 4. DETAILED NOTES ON ALL FUNDS (Continued) Joint Powers Agreements The Town has entered into a joint powers agreement on July 6, 1998, with the County of Taos, Town of Questa, and Village of Taos Ski Valley to provide an enhanced 911 -response system. The Town is responsible for all operations. The agreement is to provide an answering point for information regarding needed emergency services. The estimated annual cost is $480,000 with the Town providing $219,494. The Town contributed $302,170 during the current year. The audit responsibility lies with the Town. The agreement has no termination date. An agreement between the Town, County of Taos, Village of Questa, Village of Red River and Village of Taos Ski Valley was entered into on November 2, 2000 to establish the Taos Regional Landfill Board. The Town of Taos was designated as fiscal agent and administrator of the regional landfill. The parties to the agreement pay a tipping fee based on their percentage of usage and these fees should be adjusted to meet the operations, maintenance and financing requirements. Expenditures reported by the Town were $735,895 during 2008. The audit responsibility lies with the Town. The agreement is for 50 years. The Town has entered into a mutual agreement with the Village of Taos Ski Valley to provide: a bud line route between the Town and the Village on December 13, 2007. The Village agrees to forward the sum of $25,000 to the Town as partial payment of the cost of service. The mutual agreement was for a four month period ending April 6`h 2008. Contingencies The Town and the Taos Pueblo entered into an agreement dated December 16, 1983 that called for the Town to receive and treat sewage from the Pueblo for a 40 year period. Two major issues have been disputed by both parties over the years. The Town has acknowledged that the Pueblo contributed money in excess of what was due for its participation in the 1995 expansion of the Town's treatment plant. The Pueblo has disputed the sewer service fees charged by the Town. The Town has made an offer to pay the Pueblo a settlement, no longer bill the Pueblo for any disputed past due amounts and for the parties to negotiate a new sewer rate to settle these issues. The parties are still in negotiations. The Town has fully reserved the past due sewer charges owed by the Pueblo. 42 s SUPPLEMENTARY INFORMATION NON -MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS FIRE PROTECTION FUND — To account for the operations and maintenance of the fire department. Financing is provided by an allotment from the State of New Mexico Fire Marshal's Office. State Statue Section 59A-53-2, NMSA, 1978 compilation, requires the allotment be used only to operate fire departments. RECREATION FUND — To account for establishing and maintaining recreational programs in the Town. Financing is provided by program revenue and by a 1 -cent tax on cigarette sales, which is collected and distributed by the State of New Mexico. State Statute Section 7-12-15, NMSA, 1978 compilation requires this tax be used in the above manner. LODGER'S TAX FUND — To account for the operations of tourist facilities or for half of advertising, promoting and publicizing such facilities and tourist attractions. Financing is provided by one and a half percent of a five percent tax on lodging gross receipts within the Town of Taos. State Statute Section 4-6-41 provides for this tax to be imposed by the Town. Additionally, revenues received pursuant to the Lodger's Tax Act (Section 3-38-15, NMSA 1978). Monies in the Lodger's Tax Fund may be used to build, operate, and maintain tourism related facilities. LOCAL GOVERNMENTAL CORRECTIONS FUND — The local government corrections fee fund is used to account for the collection of a mandatory correction fee for violations of any municipal ordinance. Funds collected can only be used for jailer training, construction planning, construction, operation and maintenance of a municipal jail, and for paying for costs of housing. Authority is NMSA 1978 Section 35- 14-11B(1). LAW ENFORCEMENT PROTECTION FUND — The law enforcement protection fund is created to account for revenues received pursuant to the law enforcement protection fund (Section 29-13-7,NMSA 1978). Amounts distributed form this fund may only be expended for the following purpose: (1) the repair and purchase of law enforcement apparatus and equipment that meet nationally recognized standards; (2) expenses associated with advanced law enforcement planning and training; (3) complying with match or contribution requirements of federal funds for criminal justice programs; (4) no more than fifty percent (50%) of the replacement salaries of municipal and county law enforcement personnel while attending a specified advanced law enforcement planning and training. CIVIC CENTER FUND —This fund is created to account for that portion of lodger's tax receipts allocated for Civic Center operations and promotional expenditures, as well as the revenues earned from Civic Center operations, including rentals, catering fees, and related charges for services. Authority is Town council resolution. COMMUNITY GRANTS FUND — This fund receives various small grants for various community purposes. Each grant is authorized by the granting agency. The fund is authorized by Town Council resolution. PUBLIC TRANSPORTATION FUND — The public transportation fund is created to account for the portion of Lodger's Tax receipts allocated for the purpose of providing transportation to the public. 43 MUNICIPAL ROAD GASOLINE TAX FUND — The Municipal Road Gasoline Tax is used to account for a 1(� gasoline tax that is used for repairing and construction of roads. Also included in this fund is revenue from the State Department of Transportation under a municipal arterial project agreement. Authority is 7-7-6.9 and 7-1-6.27 NMSA 1978. 1/4 CENT MUNICIPAL GROSS RECEIPTS TAX FUND — This fund receives the proceeds from a supplemental municipal gross receipts tax, a portion of which is pledged toward payment of principal and interest on Series 1988 Gross Receipts Tax Revenue Bonds. After required debt service transfers have been made, the remaining income of this fund is restricted for capital improvement purposes. NMSA 1978 Chapter 7, Article 20E-1 to 22. CENTRAL COMMUNICATIONS FUND — To account for money collected by the Town from three other government entities to share centralized dispatch services throughout the County of Taos. Funding is authorized by a joint power agreement as authorized by Sections 11-1-1 through 11-1-7 NMSA 1978 SWIMMING POOL FUND — The fund was established to account for the contributions given to the Town for the purpose of building a swimming pool. DEBT SERVICE FUNDS 1989 GASOLINE TAX REVENUE BOND — This fund shall be credited with transfers for the General State Shared Gasoline Tax Income Fund for the purpose of accumulating monies for payment of principal and interest on Series 1989 Gasoline Tax Revenue Bonds. 1993 RECEIPTS TAX REVENUE — This fund was created to account for tax revenue earmarked for the debt repayment. 2007 NMFA LAND PURCHASE FUND — This fund was created to be credited with transfers from the General Fund for the purpose of accumulating monies for payment of principal and interest on the debt for repayment of land purchase. 1995 GROSS RECEIPTS TAX ACQUISITION RETIREMENT — This fund was created with transfers from the �/4 cent Gross Receipts Tax Acquisition Improvement Fund for the purpose of accumulating monies for the payment of principal and interest on Series 1995 Gross Receipts Tax Revenue Bonds. 2008 GROSS RECEIPTS TAX REVENUE BOND RETIREMENT — This fund was created for the purpose of repayment of the bond issue from the 1.225% distribution of State Shared Gross Receipts Tax revenues. 1995 GROSS RECEIPTS TAX ACQUISITION RESERVE — This fund was created to guarantee payment of principal and interest on Series 1995 Gross Tax Receipts Tax Revenue Funds. 1999 GASOLINE TAX RESERVE BOND — This fund was created with transfers from the Gas Tax Fund for the purpose of accumulating monies for the payment of principal and interest on Series 1999 Gas Tax Revenue Bonds. El DEBT SERVICE FUNDS (Continued) 2001 GROSS RECEIPTS TAX REVENUE BOND RETIREMENT — This fund was created with transfers from Gross Receipts Tax revenues for the purpose of accumulating monies for payment of principal and interest on Series 2001 Gross Receipts Tax Revenue Bonds. 2001 GROSS RECEIPTS TAX REVENUE BOND RESERVE — To accumulate monies for the payment of interest and principal becoming due each year on outstanding revenue bond. CAPITAL PROJECTS FUNDS Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds. AIRPORT CONSTRUCTION — This fund is created to receive proceeds from federal and state grants for the purpose of financing improvements to the Taos Municipal Airport. 1994 GROSS RECEIPTS TAX REVENUE BOND ACQUISITION — This fund is created to receive the 1994 Gross Receipts Tax Bond proceeds for the purpose of construction of affordable housing. ENHANCED 911 FUND — This fund is created to receive grants and transfers for the purpose of expanding benefits of the basic 911 emergency telephone number to achieve faster response time. DOMESTIC VIOLENCE SHELTER — This fund is created to receive the appropriations and grants for the purpose of constructing the Domestic Violence Shelter Home. FACILITIES IMPROVEMENTS — This fund is created to receive transfers from other funds for the purpose of improving facilities of the Town. VEHICLE REPLACEMENT —This fund is created to receive transfers from other funds for the purpose of purchasing vehicles for the Town of Taos. Authorization is a resolution of the Town Council. 1999 GAS CONSTRUCTION — This fund was created to receive the bond proceeds and to account for the capital outlay associated with the bond issue. 45 STATE OF NEW MEXICO TOWN OF TAOS COMBINING BALANCE SKEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2008 ASSETS Cash Investments Accounts receivable Total assets LIABILITIES AND FUND BALANCES Liabilities: Bank overdrafts Deferred revenue Accounts payable Accrued liabilities Total liabilities Fund balances: Fund balances: Reserved for swimming pool Reserved for debt service Reserved for capital projects Unreserved and undesignated Total fund balances Total liabilities and fund balances Special Revenue 308 308 260,570 260,570 $ 260,878 59 59 75,216 75,216 $ 75,275 The notes to the financial statements are an integral part of this statement. 46 $ 51,471 $ $ 141,109 - 11,125 6,600 353 203,893 6,600 353 94,105 56,721 6 94,105 56,721 6 $ 297,998 $ 63,321 $ 359 Local Fire Lodgers Government Law Protection Recreation Tax Correction Enforcement Fund #21 Fund #22 Fund #23 & 24 Fund #25 Fund #26 $ 1,658 $ 1,819 $ - $ 11,321 $ 359 259,220 72,000 44,750 52,000 - - 1,456 253,248 $ 260,878 $ 75,275 $ 297,998 $ 63,321 $ 359 308 308 260,570 260,570 $ 260,878 59 59 75,216 75,216 $ 75,275 The notes to the financial statements are an integral part of this statement. 46 $ 51,471 $ $ 141,109 - 11,125 6,600 353 203,893 6,600 353 94,105 56,721 6 94,105 56,721 6 $ 297,998 $ 63,321 $ 359 Special Revenue (Continued) 47 Municipal 1/4 Cent Civic Community Public Road Municipal Central Swimming Center Grants Transportation Gas Tax Gross Receipts Communication Pool Fund #27 Fund #30 Fund #29 Fund #31 Fund #32 Fund #34 Fund #39 $ 26,880 $ 12,196 $ 23,802 $ - $ - $ 31,700 $ - 2,000 322,000 - - - 217,000 - 12,747 16,248 6,058 73,244 28,880 $ 346,943 $ 40,050 $ 6,058 $ 73,244 $ 248,700 $ 13,371 20,251 13,041 4,813 16,919 14 11,303 18,859 30,290 20,265 24,344 23,672 ( 1,410) 326,678 15,706 6,058 73,244 225,028 ( 1,410) 326,678 15,706 6,058 73,244 225,028 $ 28,880 $ 346,943 $ 40,050 $ 6,058 $ 73,244 $ 248,700 $ (Continued) 47 ASSETS Cash Investments Accounts receivable Total assets STATE OF NEW MEXICO TOWN OF TAOS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2008 Special Revenue Debt Service 1989 1993 2007 NMFA 1995 Gross Gas Tax Receipts Tax Land Receipts Tax Reserve Revenue Purchase Acquisition Total Fund #46 Fund Fund #47 Retirement $ 109,735 $ - $ $ 30,888 $ 968,970 195,500 - 363,001 - $ 1,441,706 $ 195,500 $ $ 30,888 $ LIABILITIES AND FUND BALANCES Liabilities: Bank overdrafts $ 51,471 $ - $ - $ $ Deferred revenue 141,109 - _ _ Accounts payable 69,921 - - Accrued liabilities 47,283 - - Total liabilities 309,784 - Fund balances: Fund balances: Reserved for swimming pool Reserved for debt service Reserved for capital projects Unreserved and undesignated Total fund balances Total liabilities and fund balances 1,131,922 1,131,922 195,500 195,500 30,888 30,888 $ 1,441,706 $ 195,500 $ $ 30,888 $ The notes to the financial statements are an integral part of this statement. HI Debt Service 2008 Gross 1995 Gross 1999 2001 Gross 2001 Gross 823,636 Receipts Tax Receipts Tax Gas Tax Receipts Tax Receipts Tax Revenue Bond Acquisition R. B. R. B. R. B. 170,500 $ Retirement #41 Reserve #45 Retirement #43 Retirement #40 Reserve #49 Total $ 9,449 $ - $ 4,689 $ 110 $ - $ 45,136 170,500 - 412,500 778,500 $ 9,449 $ 170,500 $ 4,689 $ 110 $ 412,500 $ 823,636 9,449 170,500 4,689 110 412,500 823,636 9,449 170,500 4,689 110 412,500 823,636 $ 9,449 $ 170,500 $ 4,689 $ 110 $ 412,500 $ 823,636 (Continued) 49 STATE OF NEW MEXICO TOWN OF TAOS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2008 Fund balances: Fund balances: Reserved for swimming pool Reserved for debt service _ _ _ Reserved for capital projects 57,043 851,161 25,309 1 - Umeserved and undesignated - - - 92,506 Total fund balances 57,043 851,161 25,309 Capital Projects 92,506 Total liabilities and fund balances 1994 GRT $ 881,531 $ Domestic 526 $ 223,436 Airport Revenue Enhanced Violence Facilities Construction Bond 911 Shelter Improvements ASSETS Fund #52 Acquisition #51 Fund #53 Fund #28 Fund # 50 Cash $ 1,858 $ 40,348 $ 309 $ 1 $ - Investments 56,000 841,183 25,000 - 80,000 Accounts receivable 46,177 - 525 143,436 Total assets $ 104,035 $ 881,531 $ 25,309 $ 526 $ 223,436 LIABILITIES AND FUND BALANCES Liabilities: Bank overdrafts $ $ $ $ $ 129,371 Deferred revenue _ _ Accounts payable 46,992 30,370 525 1,559 Accrued liabilities - - Total liabilities 46,992 30,370 525 130,930 Fund balances: Fund balances: Reserved for swimming pool Reserved for debt service _ _ _ Reserved for capital projects 57,043 851,161 25,309 1 - Umeserved and undesignated - - - 92,506 Total fund balances 57,043 851,161 25,309 1 92,506 Total liabilities and fund balances $ 104,035 $ 881,531 $ 25,309 $ 526 $ 223,436 The notes to the financial statements are an integral part of this statement. 50 $ $ 44,710 $ 174,081 $ 225,552 - - 141,109 7,000 86,446 156,367 - - 47,283 51,710 260,527 570,311 823,636 - 518,813 1,452,327 1,452,327 257,613 350,119 1,482,041 257,613 518,813 1,802,446 3,758,004 $ 257,613 $ 570,523 $ 2,062,973 $ 4,328,315 (Continued) 51 Capital Projects 1999 Vehicle Gas Nonmajor Replacement Construction Governmental Fund #54 Fund #59 Total Funds $ 2,613 $ - $ 45,129 $ 200,000 255,000 505,555 1,762,738 3,510,208 - 64,968 255,106 618,107 $ 257,613 $ 570,523 $ 2,062,973 $ 4,328,315 $ $ 44,710 $ 174,081 $ 225,552 - - 141,109 7,000 86,446 156,367 - - 47,283 51,710 260,527 570,311 823,636 - 518,813 1,452,327 1,452,327 257,613 350,119 1,482,041 257,613 518,813 1,802,446 3,758,004 $ 257,613 $ 570,523 $ 2,062,973 $ 4,328,315 (Continued) 51 STATE OF NEW MEXICO TOWN OF TAOS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2008 Revenue The notes to the financial statements are an integral part of this statement. 52 Local Fire Lodgers Government Law Protection Recreation Tax Corrections Enforcement Fund #21 Fund #22 Fund #23 & 24 Fund #25 Fund #26 REVENUES Taxes: Gross receipts tax $ - $ _ $ $ _ $ - Property taxes _ _ _ Lodgers'tax - - 947,126 Other state shared taxes - 18,973 - - Intergovernmental 188,280 - - 33,200 Fines and forfeitures - 43,844 - Charges for services _ _ _ Miscellaneous - 11,430 20,393 - Total revenues 188,280 30,403 967,519 43,844 33,200 EXPENDITURES Current operations: General government - - _ _ _ Public safety 83,260 - - 82,743 34,033 Culture and recreation - 26,054 535,622 - - Debt service: Principal _ _ _ Interest and fiscal charges - _ Capital outlay 63,378 - 11,730 Total expenditures 146,638 26,054 547,352 82,743 34,033 Excess (deficiency) of revenues over expenditures 41,642 4,349 420,167 ( 38,899) ( 833) Other financing sources (uses): Transfers in (out) ( 464,904) Total other financing sources (uses) - ( 464,904) Net change in fund balances 41,642 4,349 ( 44,737) ( 38,899) ( 833) Fund balances, beginning of year 218,928 70,867 138,842 95,620 839 Fund balances, end of year $ 260,570 $ 75,216 $ 94,105 $ 56,721 $ 6 The notes to the financial statements are an integral part of this statement. 52 Special Revenue $ $ $ $ $ 925,075 $ 73,419 127,267 237,796 - 31,690 - 75,886 - _ 50 - 53,233 75,936 158,957 291,029 73,419 925,075 - 67,430 - 533,478 121,051 553,907 10,455 12,000 543,933 200,481 553,907 318,696 318,696 520,917 17,273 538,190 7,845 7,845 ( 467,997) ( 41,524) ( Municipal 1/4 Cent 925,075 ( Civic Community Public Road Municipal Central Swimming Center Grants Transportation Gas Tax Gross Receipts Communication Pool Fund #27 Fund #30 Fund #29 Fund #31 Tax Fund #32 Fund #34 Fund #39 $ $ $ $ $ 925,075 $ 73,419 127,267 237,796 - 31,690 - 75,886 - _ 50 - 53,233 75,936 158,957 291,029 73,419 925,075 - 67,430 - 533,478 121,051 553,907 10,455 12,000 543,933 200,481 553,907 318,696 318,696 520,917 17,273 538,190 7,845 7,845 ( 467,997) ( 41,524) ( 262,878) 73,419 925,075 ( 219,494) ( 7,845) 388,633 188,000 279,200 ( 73,867) ( 935,445) 302,170 - 388,633 188,000 279,200 ( 73,867) ( 935,445) 302,170 - ( 79,364) 146,476 16,322 ( 448) ( 10,370) 82,676 ( 7,845) 77,954 180,202 ( 616) 6,506 83,614 142,352 7,845 $( 1,410) $ 326,678 $ 15,706 $ 6,058 $ 73,244 $ 225,028 $ - (Continued) 53 STATE OF NEW MEXICO TOWN OF TAOS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2008 REVENUES Taxes: Gross receipts tax Property taxes Lodgers' tax Other state shared taxes Intergovernmental Fines and forfeitures Charges for services Miscellaneous Total revenues EXPENDITURES Current operations: General government Public safety Culture and recreation Debt service: Principal Interest and fiscal charges Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in (out) Total other financing sources (uses) Net change in fund balances Fund balances, beginning of year Fund balances, end of year Special Revenue Debt Service ( 316,213) ( 8,345) ( 9,442) 108,969 - ( 9,442) 1,022,953 195,500 9,442 $ 1,131,922 $ 195,500 $ - The notes to the financial statements are an integral part of this statement. 54 134,749 ( 19,221) 30,888 ( 19,221) - 19,221 $ 30,888 $ - 1989 1993 2007 NMFA 1995 Gross Gas Tax Receipts Tax Land Receipts Tax Reserve Revenue Purchase Acquisition Total Fund #46 Fund Fund #47 Retirement 925,075 947,126 - _ _ _ 92,392 - _ _ _ 905,239 - - - _ 75,534 - _ _ _ 75,886 - - _ _ 85,106 8,345 3,106,358 8,345 788,383 1,777,957 _ 73,495 - 30,366 114,836 - 2,681,176 103,861 425,182 8,345 - ( 103,861) - ( 316,213) ( 8,345) ( 9,442) 134,749 ( 19,221) ( 316,213) ( 8,345) ( 9,442) 108,969 - ( 9,442) 1,022,953 195,500 9,442 $ 1,131,922 $ 195,500 $ - The notes to the financial statements are an integral part of this statement. 54 134,749 ( 19,221) 30,888 ( 19,221) - 19,221 $ 30,888 $ - Debt Service 2008 Gross 1995 Gross 1999 2001 Gross 2001 Gross Receipts Tax Receipts Tax Gas Tax Receipts Tax Receipts Tax Revenue Bond Acquisition R. B. R. B. R. B. Retirement #41 Reserve #45 Retirement #43 Retirement #40 Reserve #49 Total 193,748) ( 498,329) 18,092 ( 849,273) 97,450 ( 8,229) 197,910 481,371 ( 18,879) 847,364 97,450 ( 8,229) 197,910 481,371 ( 18,879) 8,229 9,449 - 18,092 34,666 16,958) ( 787) ( 1,909) - 8.229 527 17,068 18,092 34,666 - 150,000 455,000 678,495 88,001 43,748 43,329 205,444 88,001 193,748 498,329 883,939 ( 88,001) 8,229 ( 193,748) ( 498,329) 18,092 ( 849,273) 97,450 ( 8,229) 197,910 481,371 ( 18,879) 847,364 97,450 ( 8,229) 197,910 481,371 ( 18,879) 847,364 9,449 - 4,162 ( 16,958) ( 787) ( 1,909) - 170,500 527 17,068 413,287 825,545 $ 9,449 $ 170,500 $ 4,689 $ 110 $ 412,500 $ 823,636 (Continued) 55 STATE OF NEW MEXICO TOWN OF TAOS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2008 REVENUES Taxes: Gross receipts tax Property taxes Lodgers' tax Other state shared taxes Intergovernmental Fines and forfeitures Charges for services Miscellaneous Total revenues EXPENDITURES Current operations: General government Public safety Culture and recreation Debt service: Principal Interest and fiscal charges Capital outlay Total expenditures Excess (deficiency) or revenues over expenditures Other financing sources (uses): Transfers in (out) Total other financing sources (uses) Net change in fund balances Fund balances, beginning of year Fund balances, end of year , Capital Projects 409,039 61,005 409,039 61,005 314,174 157,036 136,041 - 450,215 157,036 ( 41,176) ( 96,031) 149,999 64,222 149,999 64,222 150,000 188,151 18,000 - 130,932 150,000 337,083 ( 1) ( 272,861) 154,104 - 154,104 ( 41,176) ( 96,031) - ( 1) ( 118,757) 98,219 947,192 25,309 2 211,263 $ 57,043 $ 851,161 $ 25,309 $ 1 $ 92,506 The notes to the financial statements are an integral part of this statement. 56 1994 GRT Domestic Airport Revenue Enhanced Violence Facilities Construction Bond 911 Shelter Improvements Fund #52 Acquisition #56 Fund #53 Fund #28 Fund # 50 409,039 61,005 409,039 61,005 314,174 157,036 136,041 - 450,215 157,036 ( 41,176) ( 96,031) 149,999 64,222 149,999 64,222 150,000 188,151 18,000 - 130,932 150,000 337,083 ( 1) ( 272,861) 154,104 - 154,104 ( 41,176) ( 96,031) - ( 1) ( 118,757) 98,219 947,192 25,309 2 211,263 $ 57,043 $ 851,161 $ 25,309 $ 1 $ 92,506 The notes to the financial statements are an integral part of this statement. 56 Capital Projects 1999 Vehicle Gas Nonmajor Replacement Construction Governmental Fund #54 Fund #59 Total Funds 925,075 947,126 92,392 102,968 726,228 1,631,467 - - 75,534 - - 75,886 18,096 79,101 198,873 121,064 805,329 3,946,353 - 809,361 809,361 - 788,383 - 1,777,957 18,000 696,495 - - - 205,444 124,900 225,818 617,691 732,527 124,900 225,818 1,445,052 5,010,167 ( 124,900) ( 104,754) ( 639,723) ( 1,063,814) 56,000 190,333 400,437 931,588 56,000 190,333 400,437 931,588 ( 68,900) 85,579 ( 239,286) ( 132,226) 326,513 433,234 2,041,732 3,890,230 $ 257,613 $ 518,813 $ 1,802,446 $ 3,758,004 (Continued) 57 STATE OF NEW MEXICO TOWN OF TAOS FIRE PROTECTION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Intergovernmental Miscellaneous Total revenues EXPENDITURES Operating expenses Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Net change in fund balances Beginning cash and investments balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 168,558 $ 188,280 $ 188,280 $ 168,558 188,280 188,280 205,067 224,789 85,953 138,836 182,419 182,419 63,378 119,041 387,486 407,208 149,331 257,877 ( 218,928) ( 218,928) 38,949 257,877 $( 218,928) $( 218,928) $ 38,949 $ 257,877 $ 221,929 $ 221,929 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in payables Net change in fund balances GAAP basis $ 38,949 2,693 $ 41,642 The notes to the financial statements are an integral part of this statement. 58 STATE OF NEW MEXICO TOWN OF TAOS RECREATION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Taxes Miscellaneous Total revenues EXPENDITURES Operating expenses Total expenditures Excess (deficiency) of revenues over expenditures Net change in fund balances Beginning cash balance $( 8,327) $ 20,753 RECONCILIATION TO GAAP BASIS Net increase(decrease)in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis $( 7,070) $ 5,066 $ 12,136 $ 20,753 $ 5,066 ( 658) ( 59) $ 4,349 The notes to the financial statements are an integral part of this statement. 59 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 18,145 $ 18,145 $ 19,631 $ 1,486 11,480 11,480 11,430 ( 50) 29,625 29,625 31,061 1,436 37,952 36,695 25,995 10,700 37,952 36,695 25,995 10,700 ( 8,327) ( 7,070) 5,066 12,136 $( 8,327) $ 20,753 RECONCILIATION TO GAAP BASIS Net increase(decrease)in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis $( 7,070) $ 5,066 $ 12,136 $ 20,753 $ 5,066 ( 658) ( 59) $ 4,349 The notes to the financial statements are an integral part of this statement. 59 STATE OF NEW MEXICO TOWN OF TAOS LODGER'S TAX FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Taxes Miscellaneous Total revenues EXPENDITURES Operating expenses Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash and investment balance Budgeted Amounts Original Final $ 982,912 $ 987,015 - 13,328 982,912 1,000,343 Variance with Final Budget Actual Positive Amounts (Negative) $ 941,339 20,393 961,732 474,230 571,380 544,328 - 11,775 11,730 $( 45,676) 7,065 ( 38,611) 27,052 -+ 45 474,230 583,155 556,058 27,097 508,682 417,188 405,674 ( 11,514) ( 524,120) ( 54,491) ( 464,904) 410,413 ( 524,120) ( 54,491) ( 464,904) 410,413 $( 15,438) $ 362,697 $( 59,230) $( 421,927) $ 52,509 $ 52,509 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis $( 59,230) 5,787 8,706 $( 44,737) The notes to the financial statements are an integral part of this statement. E1 STATE OF NEW MEXICO TOWN OF TAOS LOCAL GOVERNMENT CORRECTIONS FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Fines and forfeits $ 49,146 $ 49,147 $ 43,844 $( 5,303) Total revenues 49,146 49,147 43,844 ( 5,303) EXPENDITURES Operating expenses 125,000 127,082 80,428 46,654 Total expenditures 125,000 127,082 80,428 46,654 Excess (deficiency) of revenues over expenditures ( 75,854) ( 77,935) ( 36,584) 41,351 Net change in fund balances $( 75,854) $( 77,935) $( 36,584) $ 41,351 Beginning cash and investment balance $ 99,905 $ 99,905 RECONCILIATION TO GAAP BASIS Net increase (decrease)in fund balances budget basis Change in payables Net change in fund balances GAAP basis $( 36,584) ( 2,315) $( 38,899) The notes to the financial statements are an integral part of this statement. .31 STATE OF NEW MEXICO TOWN OF TAOS LAW ENFORCEMENT PROTECTION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Intergovernmental Total revenues EXPENDITURES Operating expenses Total expenditures Excess (deficiency) of revenues over expenditures Net change in fund balances Beginning cash balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 32,000 $ 33,200 $ 33,200 32,000 33,200 33,200 32,000 35,040 33,999 1,041 32,000 35,040 33,999 1,041 ( 1,840) ( 799) 1,041 $ $( 1,840) $( 799) $ 1,041 $ 1,158 Ji 1.158 RECONCILIATION TO GAAP BASIS Net increase (decrease)in fund balances budget basis Change in payables Net change in fund balances GAAP basis $( 799) ( 34) $( 833) The notes to the financial statements are an integral part of this statement. 62 STATE OF NEW MEXICO TOWN OF TAOS CIVIC CENTER FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Charges for services Miscellaneous Total revenues EXPENDITURES Operating expenses Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 100,052 $ 100,052 $ 75,886 $( 24,166) - - 50 50 100,052 100,052 75,936 ( 24,116) 0 513,222 565,887 521,253 44,634 4,000 10,455 10,455 - 517,222 576,342 531,708 44,634 ( 417,170) ( 476,290) ( 455,772) ( 20,518) 380,027 778,482 388,633 389,849 380,027 778,482 388,633 389,849 $( 37,143) $ 302,192 $( 67,139) $ 369,331 Beginning cash balance $ 59,019 $ 59,019 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in payables Net change in fund balances GAAP basis $( 67,139) ( 12,225) $( 79,364) The notes to the financial statements are an integral part of this statement. rov STATE OF NEW MEXICO TOWN OF TAOS COMMUNITY GRANTS FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Intergovernmental $ 286,010 $ 431,477 $ 127,267 $( 304,210) Miscellaneous 41,564 27,749 18,943 ( 8,806) Total revenues 327,574 459,226 146,210 ( 313,016) EXPENDITURES Operating expenses 563,743 608,856 173,494 435,362 Capital outlay 99,101 175,327 12,000 163,327 Total expenditures 662,844 784,183 185,494 598,689 Excess (deficiency) of revenues over expenditures ( 335,270) ( 324,957) ( 39,284) 285,673 OTHER FINANCING SOURCES (USES) Transfers in (out) 173,000 188,000 188,000 Total other financing sources (uses) 173,000 188,000 188,000 - Net change in fund balances $( 162,270) $( 136,957) $ 148,716 $ 285,673 Beginning cash and investments balance $ 185,480 $ 185,480 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis $ 148,716 12,747 ( 14,987) $ 146,476 The notes to the financial statements are an integral part of this statement. 64 STATE OF NEW MEXICO TOWN OF TAOS PUBLIC TRANSPORTATION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Intergovernmental Miscellaneous Total revenues EXPENDITURES Operating expenses Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 367,329 $ 320,431 - 46,898 367,329 367,329 $ 237,796 57,230 295,026 $( 82,635) 10,332 ( 72,303) 575,402 578,171 545,284 32,887 — 575,402 578,171 545,284 32,887 ( 208,073) ( 210,842) ( 250,258) ( 39,416) 207,200 279,200 279,200 207,200 279,200 279,200 $( 873) $ 68,358 $ 28,942 $( 39,416) RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis $ 28,942 ( 3,997) ( 8,623) $ 16,322 The notes to the financial statements are an integral part of this statement. risy STATE OF NEW MEXICO TOWN OF TAOS MUNICIPAL ROAD GASOLINE TAX FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Taxes Total revenues OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash and receivables balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 77,146 $ 77,146 $ 73,867 $( 3,279) 77,146 77,146 73,867 ( 3,279) ( 77,146) ( 77,146) ( 73,867) 3,279 ( 77,146) ( 77,146) ( 73,867) 3,279 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Net change in fund balances GAAP basis ( 448) $( 448) The notes to the financial statements are an integral part of this statement. 66 STATE OF NEW MEXICO TOWN OF TAOS 1/4 CENT MUNICIPAL GROSS RECEIPTS TAX FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Taxes Total revenues OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash and receivables balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 984,218 $ 984,218 $ 935,445 $( 48,773) 984,218 984,218 935,445 ( 48,,773) ( 984,218) ( 984,218) ( 935,445) 48,773 ( 984,218) ( 984,218) ( 935,445) 48,773 RECONCILIATION TO GAAP BASIS Net increase (decrease)in fund balances budget basis Change in receivables Net change in fund balances GAAP basis ( 10,370) $( 10,370) The notes to the financial statements are an integral part of this statement. 67 STATE OF NEW MEXICO TOWN OF TAOS CENTRAL COMMUNICATIONS FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Intergovernmental Total revenues EXPENDITURES Operating expenses Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash balance Budgeted Amounts Original Final Variance with Final Budget Actual Positive Amounts (Negative) $ 329,170 $ 329,170 $ 318,696 329,170 329,170 318,696 $( 10,474) ( 10,474) 597,570 572,070 512,987 59,083 18,000 25,000 17,273 7,727 615,570 597,070 530,260 66,810 ( 286,400) ( 267,900) ( 211,564) 56,336 272,596 482,087 302,170 ( 179,917) 272,596 482,087 302,170 ( 179,917) $( 13,804) $ 214,187 $ 90,606 $( 123,581) $( 58,094) $( 58,094) RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in payables Net change in fund balances GAAP basis $ 90,606 ( 7,930) $ 82,676 The notes to the financial statements are an integral part of this statement. M STATE OF NEW MEXICO TOWN OF TAOS 1989/1999 GROSS RECEIPTS TAX REVENUE BOND RESERVE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Miscellaneous Total revenues OTHER FINANCING SOURCES (USES) Transfers out Total other financing sources (uses) Net change in fund balances Beginning cash balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ $ 8,407 $ 8,345 $( 62) 8,407 8,345 ( 62) ( 8,407) ( 8,407) ( 8,345) 62 ( 8,407) ( 8,407) ( 8,345) 62 $( 8,407) $ - $ - $ The notes to the financial statements are an integral part of this statement. M STATE OF NEW MEXICO TOWN OF TAOS 1993 RECEIPTS TAX REVENUE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) OTHER FINANCING SOURCES (USES) Transfers in (out) ( 9,442) ( 9,442) ( 9,442) Total other financing sources (uses) ( 9,442) ( 9,442) ( 9,442) Net change in fund balances $( 9,442) $( 9,442) $( 9,442) $ Beginning cash balance $ 9,442 $ 9,442 The notes to the financial statements are an integral part of this statement. 70 STATE OF NEW MEXICO TOWN OF TAOS 2007 NMFA LAND PURCHASE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) EXPENDITURES Miscellaneous $ 2,504 $ 2,644 $ - $ 2,644 Debt Service: Principal retirement 73,495 81,286 73,495 7,791 Interest and fiscal charges 27,862 29,441 30,366 ( 925) Total expenditures 103,861 113,371 103,861 9,510 OTHER FINANCING SOURCES (USES) Transfers in (out) 114,000 123,500 134,749 11,249 Total other financing sources (uses) 114,000 123,500 134,749 11,249 Net change in fund balances $ 10,139 $ 10,129 $ 30,888 $( 20,759) Beginning cash balance $ _ $ _ The notes to the financial statements are an integral part of this statement. 71 STATE OF NEW MEXICO TOWN OF TAOS 1995 GROSS RECEIPTS TAX R.B. RETIREMENT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash balance Budgeted Amounts Original Final ( 19,221) ( 19,221) ( 19,221) $( 19,221) $( 19,221) $ 19,221 $ 19,221 The notes to the financial statements are an integral part of this statement. 72 Variance with Final Budget Actual Positive Amounts (Negative) ( 19,221) ( 19,221) $( 19,221) $ STATE OF NEW MEXICO TOWN OF TAOS 2008 GROSS RECEIPTS TAX REVENUE BOND RETIREMENT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 EXPENDITURES Debt Service: Principal retirement Interest and fiscal charges Total expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 173,895 $ 173,895 $ - $ 173,895 287,500 287,500 88,001 199,499 461,395 461,395 88,001 373,394 442,329 442,329 97,450 ( 344;879) 442,329 97,450 ( 344,879) $( 461,395) $( 1.9,066) $ 9,449 $ 28,515) The notes to the financial statements are an integral part of this statement. 73 STATE OF NEW MEXICO TOWN OF TAOS 1995 GROSS RECEIPTS TAX ACQUISITION RESERVE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Miscellaneous Total revenues OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash and investments balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ $ 8,729 $ 8,229 $( 500) 8,729 8,229 ( 500) ( 8,729) ( 8,729) ( 8,729) ( 8,729) $( 8,729) $ - The notes to the financial statements are an integral part of this statement. 74 ( 8,229) 500 - a ( 8,229) 500 STATE OF NEW MEXICO TOWN OF TAOS 1999 GAS TAX R.B. RETIREMENT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 EXPENDITURES Debt Service: Principal retirement Interest and fiscal charges Total expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 150,000 $ 150,000 $ 150,000 $ - 47,373 47,373 43,748 3,625 197,373 197,373 193,748 3,625 197,550 197,550 197,910 360 197,550 197,550 197,910 360 $ 177 $ 177 $ 4,162 $ 3,985 $ 527 $ 527 The notes to the financial statements are an integral part of this statement. FE7 STATE OF NEW MEXICO TOWN OF TAOS 2001 GROSS RECEIPTS TAX R.B. RETIREMENT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 EXPENDITURES Debt Service: Principal retirement Interest and fiscal charges Total expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash balance Budgeted Amounts Original Final Variance with Final Budget Actual Positive Amounts (Negative) $ 455,000 $ 455,000 $ 455,000 $ 43,329 43,329 43,329 498,330 498,329 498,329 482,087 482,087 481,371 ( 716) 482,087 482,087 481,371 ( 716) $( 16,243) $( 16,242) $( 16,958) $( 716) $ 17,068 $ 17,068 The notes to the financial statements are an integral part of this statement. 76 STATE OF NEW MEXICO TOWN OF TAOS 2001 GROSS RECEIPTS TAX R.B. RESERVE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Miscellaneous $ $ 22,000 $ 18,092 $( 3,908) Total revenues 22,000 18,092 ( 3,908) OTHER FINANCING SOURCES (USES) Transfers in (out) ( 22,787) ( 22,787) ( 18,879) 3,908 Total other financing sources (uses) ( 22,787) ( 22,787) ( 18,879) 3,908 Net change in fund balances $( 22,787) $( 787) $( 787) $ - Beginning cash balance $ 787 $ 787 The notes to the financial statements are an integral part of this statement. 77 STATE OF NEW MEXICO TOWN OF TAOS CAPITAL PROJECTS FUND - INDIVIDUAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Intergovernmental Taxes Miscellaneous Total revenues EXPENDITURES Operating expenses Capital outlay Debt service Interest & fiscal charges Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Debt proceeds Debt issuance premium Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash, investments and receivables balance RECONCILIATION TO GAAP BASIS $( 18,401) $( 18,401) Net increase (decrease) in fund balances budget basis $ 5,419,431 Change in receivables 419,850 Change in payables ( 690,734) Net change in fund balances GAAP basis $ 5,148,547 The notes to the financial statements are an integral part of this statement. 78 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 2,660,148 $ 2,722,148 $ 477,978 $( 2,244,170) 728,197 728,197 693,780 ( 34,417) - - 80,202 80,202 3,388,345 3,450,345 1,251,960 ( 2,198,385) 324,148 503,274 421,223 82,051 11,797,435 12,222,680 2,171,884 10,050,796 - - 184,717 ( 184,717) 12,121,583 12,725,954 2,777,824 9,948,130 ( 8,733,238) ( 9,275,609) ( 1,525,864) 7,749,745 5,750,000 6,332,025 6,395,000 62,975 - - 70,842 70,842 553,161 403,360 479,453 76,093 6,303,161 6,735,385 6,945,295 209,910 $( 2,430,077) $( 2,540,224) $ 5,419,431 $ 7,959,655 $( 18,401) $( 18,401) Net increase (decrease) in fund balances budget basis $ 5,419,431 Change in receivables 419,850 Change in payables ( 690,734) Net change in fund balances GAAP basis $ 5,148,547 The notes to the financial statements are an integral part of this statement. 78 STATE OF NEW MEXICO TOWN OF TAOS AIRPORT CONSTRUCTION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 REVENUES Intergovernmental Totalrevenues EXPENDITURES Operating expenses Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash and investments balances Budgeted Amounts Original Final Variance with Final Budget Actual Positive Amounts (Negative) $ 2,768,316 $ 1,231,622 $ 362,862 $( 868,760) 2,768,316 1,231,622 362,862 ( 868,760) 680,953 668,532 267,182 401,350 2,238,243 687,724 136,041 551;683 2,919,196 1,356,256 403,223 953,033 ( 150,880) ( 124,634) ( 40,361) 84,273 53,000 68,000 ( 68,000) 53,000 68,000 68,000 $( 97,880) $( 56,634) $( 40,361) $ 16,273 $ 98,219 $ 98,219 RECONCILIATION TO GAAP BASIS Net increase (decrease)in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis $( 40,361) 46,177 ( 46,992) $( 41,176) The notes to the financial statements are an integral part of this statement. 79 STATE OF NEW MEXICO TOWN OF TAOS 1994 GRT REVENUE BOND ACQUISITION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Miscellaneous $ 235,852 $ 235,852 $ 61,005 $( 174,847) Total revenues 235,852 235,852 61,005 ( 174,847) EXPENDITURES Operating expense 164,228 259,228 126,666 132,562 Capital outlay 151,466 302,932 - 302,932 m Total expenditures 315,694 562,160 126,666 435,494 Excess (deficiency) of revenues over expenditures ( 79,842) ( 326,308) ( 65,661) 260,647 Net change in fund balances $( 79,842) $( 326,308) $( 65,661) $ 260,647 Beginning cash and investments balance $ 947,192 $ 947,192 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in payables Net change in fund balances GAAP basis The notes to the financial statements are an integral part of this statement. 80 $ (65,661) (30,370) $ (96,031) STATE OF NEW MEXICO TOWN OF TAOS DOMESTIC VIOLENCE SHELTER FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 The notes to the financial statements are an integral part of this statement. 611 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Intergovernmental $ 150,000 $ 150,000 $ 149,999 $( 1) Total revenues 150,000 150,000 149,999 ( 1) EXPENDITURES Operating expenses 150,000 150,000 150,000 Total expenditures 150,000 150,000 150,000 Excess (deficiency) of revenues over expenditures - - ( 1) ( 1) Net change in fund balances $ $ $( 1) $( 1) Beginning cash balance $ 2 $ 2 The notes to the financial statements are an integral part of this statement. 611 STATE OF NEW MEXICO TOWN OF"TAGS FACILITIES IMPROVEMENTS FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Intergovernmental $ 1,171,313 $ 1,171,313 $ 49,473 $( 1,121,840) Miscellaneous - 500 - ( 500) Total revenues 1,171,313 1,171,813 49,473 ( 1,122,340) EXPENDITURES Operating expenses 187,273 280,887 183,515 97,372 Capital outlay 1,340,604 1,260,990 130,932 1,130,058 Debt service - 18,000 ( 18,000) Total expenditures 1,527,877 1,541,877 332,447 1,209,430 Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash, investments and receivables balance ( 356,564) ( 370,064) ( 282,974) 87,090 154,104 160,104 154,104 ( 6,000) 154,104 $( 202,460) 160,104 $( 209,960) $ 217,458 $ 217,458 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis The notes to the financial statements are an integral part of this statement. 82 154,104 $( 128,870) $( 128,870) 14,749 ( 4,636) $( 118,757) ( 6,000) $ 81,090 STATE OF NEW MEXICO TOWN OF TAOS VEHICLE REPLACEMENT FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Miscellaneous $ $ 5,000 $ $( 5,000) Total revenues 5,000 ( 5,000) EXPENDITURES Operating expense 4,832 4,832 Capital outlay 134,832 130,000 128,834 1,166 . Total expenditures 134,832 134,832 128,834 5,998 OTHER FINANCING SOURCES (USES) Transfers in (out) 200,000 200,000 56,000 ( 144,000) Total other financing sources (uses) 200,000 200,000 56,000 144,000 Excess (deficiency) of revenues over expenditures 65,168 70,168 ( 72,834) ( 143,002) Net change in fund balances $ 65,168 $ 70,168 $( 72,834) $( 143,002) Beginning cash and investments balances $ 330,447 $ 330,447 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in payables Net change in fund balances GAAP basis The notes to the financial statements are an integral part of this statement. 83 $( 72,834) 3,934 $( 68,900) STATE OF NEW MEXICO TOWN OF TAOS 1999 GAS CONSTRUCTION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2008 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Intergovernmental $ 1,180,508 $ 1,863,644 $ 38,000 $( 1,825,644) Miscellaneous 24,030 24,030 18,096 ( 5,934) Total revenues 1,204,538 1,887,674 56,096 ( 1,831,578) EXPENDITURES Capital outlay 1,666,952 2,510,421 222,418 2,288,003 - a Total expenditures 1,666,952 2,510,421 222,418 2,288,003 OTHER FINANCING SOURCES (USES) Transfers in (out) 190,333 190,333 Total other financing sources (uses) - 190,333 190,333 - Excess (deficiency) of revenues over expenditures ( 462,414) ( 432,414) 24,011 ( 4,119,581) Net change in fund balances $( 462,414) $( $ 24,011 $ 456,425 Beginning cash and investments balance $ 436,834 $ 436,834 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis The notes to the financial statements are an integral part of this statement. 84 $ 24,011 64,968 ( 3,400) $ 85,579 STATE OF NEW MEXICO TOWN OF TAOS WATER AND SEWER FUND STATEMENT OF REVENUES, EXPENSES AND CHANGE IN FUND NET ASSETS BUDGET and ACTUAL FOR THE YEAR ENDED JUNE 30, 2008 Operating Revenues: Charges for services Otherrevenue Total operating revenues Operating Expenses: Personnel services Capital outlay Other Total operating expenses Operating income (loss) Non-operating income (deductions): Interest expense Interest income Sales tax Federal and state grants Total non-operating income (deductions) Other financing sources (uses): Transfers in (out) from other funds Total other financing sources (uses) Non -budgeted items: Bad debt Depreciation Total other financing sources (uses) Net income (loss) ( 5,328,053) ( 4,721,215) 272,411 4,993.626 ( 151,115) ( 160,534) ( 156,473) Variance with Budgeted Amounts 161,926 Final Budget ( 24,745) 508,254 Actual Postive Original Final Amounts (Negative) ( 2,000,001) $ 2,063,993 $ 2,128,304 $ 2,179,652 $ 51,348 385,127 215,566 253,751 38,185 2,449,120 2,343,870 2,433,403 89,533 2,759,608 ( 88,134) ( 2,759,608) 629,043 637,312 595,748 41,564 5,313,549 3,645,572 - 3,645,572 1,834,581 2,782,201 1,565,244 1,216,957 7,777,173 7,065,085 2,160,992 4,904,093 ( 5,328,053) ( 4,721,215) 272,411 4,993.626 ( 151,115) ( 160,534) ( 156,473) 4,061 56,677 161,926 137,181 ( 24,745) 508,254 508,254 462,538 ( 45,716) 3,960,225 3,255,069 1,255,068 ( 2,000,001) 4,374,041 3,764,715 1,698,314 ( 2,066,401) ( 6,700) ( 2,759,608) - 2,759,608 ( 88,134) ( 2,759,608) - 2,759,608 - ( 37,698) ( 37,698) ( 861,579) ( 861,579) - ( 899,277) ( 899,277) $( 1,042,146) $( 3,716,108) $ 1,071,448 $ 4,787,556 The notes to the financial statements are an integral part of this statement. 85 go STATE OF NEW MEXICO TOWN OF TAOS LANDFILL STATEMENT OF REVENUES, EXPENSES AND CHANGE IN FUND NET ASSETS BUDGET and ACTUAL FOR THE YEAR ENDED JUNE 30, 2008 Operating Expenses: Personnel services 282,046 310,247 Variance with 6,089 Budgeted Amounts 602,913 Final Budget - 1,789,338 Actual Postive 473,473 Original Final Amounts (Negative) Operating Revenues: 2,573,058 822,505 1,750.553 Charges for services $ 1,145,000 $ 1,145,000 $ 1,252,531 $ 107,531 Total operating revenues 1,145,000 1,145,000 1,252,531 107,531 Operating Expenses: Personnel services 282,046 310,247 304,158 6,089 Capital outlay 602,913 1,789,338 - 1,789,338 Other 441,989 473,473 518,347 ( 44,874) - Total operating expenses 1,326,948 2,573,058 822,505 1,750.553 Operating income (loss) ( 181,948) ( 1,428,058) 430,026 1.858.084 Non-operating income (deductions): Interest expense ( 13,390) ( 13,390) ( 13,390) - Interest income 12,000 12,000 37,788 25,788 Federal grants 366,073 732,146 - ( 732,146) Total non-operating income (deductions) 364,683 730,756 24,398 ( 706,358) Other financing sources (uses): Debt proceeds - 1,000,000 - ( 1,000,000) Transfers in (out) from other funds - ( 462,161) - 462,161 Total other financing sources (uses) - 537,839 - ( 537,839) Non -budgeted items: Depreciation - - ( 113,829) ( 113,829) Total other financing sources (uses) - ( 113,829) ( 113,829) Net income (loss) $ 115,460 $( 159,463) $ 340,595 $ 1,037,897 The notes to the financial statements are an integral part of this statement. a STATE OF NEW MEXICO TOWN OF TAOS SOLID WASTE FUND STATEMENT OF REVENUES, EXPENSES AND CHANGE IN FUND NET ASSETS BUDGET and ACTUAL FOR THE YEAR ENDED JUNE 30, 2008 Operating Revenues: Charges for services Other revenue Total operating revenues Operating Expenses: Personnel services Capital outlay Other Total operating expenses Operating income (loss) Non -budgeted items: Bad debt Depreciation Total other financing sources (uses) Net income (loss) $( 200,263) $( 200,263) $ 134,741 $( 2,284) The notes to the financial statements are an integral part of this statement. 87 Variance with Budgeted Amounts Final Budget - Actual Postive Original Final Amounts (Negative) $ 934,492 $ 934,492 $ 1,083,386 $ 148,894 79,652 79,652 101,123 21,471 1,014,144 1,014,144 1,184,509 170,365 116,871 103,089 74,714 28,375 81000 8,000 - 8,000 1,089,536 1,103,318 971,049 132,269 1,214,407 1,214,407 1,045,763 168.644 ( 200,263) ( 200,263) 138,746 1,721 ( 4,005) ( 4,005) ( 4,005) ( 4,005) $( 200,263) $( 200,263) $ 134,741 $( 2,284) The notes to the financial statements are an integral part of this statement. 87 STATE OF NEW MEXICO TOWN OF TAOS SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND JUNE 30, 2008 M Balance Balance June 30, June 30, 2007 Receipts Disbursements 2008 ASSETS Cash $ 27,787 $ 20,520 $ 46,357 $ 1,950 Investments 30,500 31,000 - 61,500 Total assets $ 58,287 $ 51,520 $ 46,357 $ 63,450 LIABILITIES Deposits payable $ 18,680 $ 36,900 $ 31,880 23,700 Accounts payable _ - - - Due to outside entities 39,607 14,620 14,477 39,750 Total liabilities $ 58,287 $ 51,520 $ 46,357 $ 63,450 M STATE OF NEW MEXICO TOWN OF TAOS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDING JUNE 30, 2008 U.S. Enviromental Protection Agency: Arsenic Removal Technologies 66.xxx U.S. Department of Housing & Urban Development Pass Through the State of New Mexico, Department of Finance & Administration: Community Against Violence 14.235 EDI Special Project 14.xxx Subtotal U.S. Department of Housing & Urban Development U.S. Department of Transportation Federal Aviation Administration (FAA) Airport PAPI - FAA Phase 111 Federal Program CFDA Number Grant ID Number Airport PAPI - FAA U.S. Department of Justice: Land Runway 22 - FAA Enforcement Assistance 16.580 2005-FFNC-1109 RUS- Police Equipment xx.xxx COPS Technology Grant 2005 16.710 2005-CK-WX-0428 Subtotal U.S. Department of Justice U.S. Enviromental Protection Agency: Arsenic Removal Technologies 66.xxx U.S. Department of Housing & Urban Development Pass Through the State of New Mexico, Department of Finance & Administration: Community Against Violence 14.235 EDI Special Project 14.xxx Subtotal U.S. Department of Housing & Urban Development U.S. Department of Transportation Federal Aviation Administration (FAA) Airport PAPI - FAA Phase 111 20.106 2004 Recreational Trails Program 20.xxx Airport PAPI - FAA 20.106 Land Runway 22 - FAA 20.106 Airport EIS - FAA 20.106 Subtotal Federal Aviation Administration Total Federal Financial Awards Expenditures NM02B001003 B -04 -SP -NM -0478 3-35-0041-017-2007 06-521-0500-0053 3-35-0041-116-2006 3-35-0041-018-2007 3-35-0041-014-2003 Award Amount $ 287,113 15,750 123,330 426,193 200,000 450,000 1,590,560 2,040,560 613,268 367,577 167,436 150,000 355,300 1,040,313 $ 3,707,066 Note A - Significant Accounting Policies: The accompanying schedule of expenditures of federal awards is prepared on the modified accrual basis of accounting. 89 Federal Expenditures $ 18,198 427 2,252 20,877 200,000 149,999 431,225 581,224 287,648 251,412 103,987 5,142 7,189 655,378 $ 1,457,479 FEDERAL COMPLIANCE AND FINDINGS PATTILLO, BROWN & HILL,L.L.P. CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Bobby Duran, Mayor Town Council Town of Taos Taos, New Mexico and Hector H. Balderas New Mexico State Auditor Santa Fe, New Mexico We have audited the financial statements of the governmental activities, the business -type activities, each major fund, the aggregate remaining fund information, and the budgetary comparisons for the general fund and the combining and individual funds presented as supplemental information of the Town of Taos as of and for the year ended June 30, 2008, and have issued our report thereon, dated November 25, 2008. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reuortine In planning and performing our audit, we considered the Town of Taos, New Mexico's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town of Taos, New Mexico's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Town of Taos, New Mexico's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Town of Taos, New Mexico's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted principles such that there is more than a remote likelihood that a misstatement of the Town of Taos, New Mexico's financial statements that is more than 4301 THE 25 WAY NE ■ ALBUQUERQUE, NM 87109 ■ (505) 266-5904 ■ FAX: (505) 268-6444 ■ www.pbhepa.com AFFILIATE OFFICES: WACO, TX (254) 772-4901 ■ BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583 ■ TEMPLE, TX (254) 791-3460 90 I inconsequential will not be prevented or detected by the Town of Taos, New Mexico's internal control. We consider the deficiencies described in the accompanying schedule of findings and questioned costs to be significant deficiencies in internal control over financial reporting of findings 2007-1 and 2007-3. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Town of Taos, New Mexico's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that none of the significant deficiencies described above is a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Town of Taos basic financial statements. -,are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance, or other matters that are required to be reported under Governmental Auditing Standards, which are described in the accompanying schedule of findings and questioned costs as items 2007-1 and 2007-3. Town of Taos, New Mexico's response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit Town of Taos, New Mexico's responses and, accordingly, we express no opinion on them. This report is intended solely for the information and use of management, the Town, the Office of State Auditor, and federal awarding agencies and pass-through entities, the Office of the State Auditor, the New Mexico Legislature, and the New Mexico Department of Finance and Administration and should not be used by anyone other than these specified parties. Pattillo, Brown & Hill, L.L.P. Albuquerque, New Mexico November 25, 2008 4301 THE 25 WAY NE ■ ALBUQUERQUE, NM 87109 ■ (505) 266-5904 ■ FAX: (505) 268-6444 ■ www.pbhcpa.com AFFILIATE OFFICES: WACO, TX (254) 772-4901 ■ BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583 ■ TEMPLE. TX (254) 791-3460 91 M PATTILLO, BROWN & HILL,L.L.P. CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Bobby Duran, Mayor Town Council Town of Taos Taos, New Mexico and Hector H. Balderas New Mexico State Auditor Santa Fe, New Mexico Compliance We have audited the compliance of the Town of Taos, New Mexico, with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2008. The Town of Taos, New Mexico's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the Town of Taos, New Mexico's management. Our responsibility is to express an opinion on the Town of Taos, New Mexico's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Town of Taos, New Mexico's compliance with those requirements and performing such other procedures, as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the Town of Taos, New Mexico's compliance with those requirements. In our opinion, the Town of Taos, New Mexico, complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2008. 4301 THE 25 WAY NE N ALBUQUERQUE, NM 87109 ■ (505) 266-5904 s FAX: (505) 268-6444 ■ www.pbhcpa.com AFFILIATE OFFICES: WACO, TX (254) 772-4901 ■ BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583 ■ TEMPLE, TX (254) 791-3460 92 Internal Control Over Compliance The management of the Town of Taos, New Mexico, is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the Town of Taos, New Mexico's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Town of Taos, New Mexico's control over compliance. A control deficiency in an entity's internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect non compliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity's internal control. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the management, Town Council, and federal awarding agencies and pass-through entities, the Office of the State Auditor, the New Mexico Legislature, and the New Mexico Department of Finance and Administration and is not intended to be and should not be used by anyone other than these specified parties. Pattillo, Brown & Hill, L.L.P. Albuquerque, New Mexico November 25, 2008 4301 THE 25 WAY NE ■ ALBUQUERQUE, NM 87109 ■ (505) 266-5904 ■ FAX: (505) 268-6444 ■ www.pbhcpa.com AFFILIATE OFFICES: WACO, TX (254) 772-4901 ■ BROWNSV ILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583 ■ TEMPLE, TX (254) 791-3460 93 IV STATE OF NEW MEXICO TOWN OF TAOS SCHEDULE OF FINDINGS AND QUESTIONED COSTS NNE 30, 2008 Summary of Audit Results 1. The auditors' report expresses an unqualified opinion on the financial statements of the Town of Taos. 2. Two significant deficiencies in internal control were disclosed during the audit but were not considered material weaknesses. 3. No instances of noncompliance material to the financial statements were disclosed during the audit. 4. There were no significant deficiencies disclosed during the audit of the major federal awards programs reported in the Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133. 5. The auditors' report on compliance for the major federal awards programs for the Town of Taos expresses an unqualified opinion. 6. There were no audit findings relative to the major federal awards programs for the Town of Taos to be reported in Part C of this schedule. 7. The programs tested as major programs included: U.S. Department of Justice — Enforcement Grant U.S. Enviromental Protection Agency — Arsenic Removal U.S. Department of Housing & Urban Development — EDI Special Project U.S. Department of Transportation — Airport PAPI — FAA, Phase III 8. The threshold for distinguishing Types A and B programs was $300,000. 9. The Town of Taos did not qualify as a low risk auditee. Findings — Financial Statements Audit Prior Year 2007-1 Bank Reconciliations - repeat 2007-2 Travel and Per Diem- resolved 2007-3 Lodgers Tax - repeat Current Year 2007-1 Bank reconciliations — repeat 2007-3 Lodgers Tax —repeat 99 STATE OF NEW MEXICO TOWN OF TAOS SCHEDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2008 CURRENT YEAR FINDINGS AND RECOMMENDATIONS 2007-1 Bank Reconciliations Condition: The Town's clearing bank accounts were not reconciled to the general ledger. Criteria: NMSA 6-10-2 discusses the duty of public officials to balance public money at the close of each business day. Good accounting practices also require bank reconciliation are prepared at least monthly. Effect: The Town's clearing accounts are not reconciled to the general ledger causing large adjustments to the general ledger to balance cash. Cause: Finance department turnover caused the workload in the department to increase due to training new employees. Reconciliations were not prepared and payroll transactions — postings were supplicated. Instead of preparing an adjusting entry to correct the general ledger the reconciler removed the duplicate transactions from the reconciliation there by balancing the reconciliation. Recommendation: The Town should review the general ledger history and prepare adjusting entries for the duplicate transactions. Response: Management agrees with the recommendation, and will resolve in the current fiscal year. 2007-3 Lodgers Tax Condition: On October 5, 2007 the Town's attorney entered into an agreement with a Lodge for $11,250 in settlement of past due lodgers tax for the years 2002-2005. On July 31, 2008 an additional settlement was reached with two lodger's facilities for $8,975. Per the lodgers tax audit the amount due for 2002-2005 was $138,814. Criteria: The Lodgers Tax act, Sections 3-38-13 through 3-38-24 NMSA, in conjunction with the Ordinance imposing the local tax, Ordinance No. 627, Section 19-55 of the Town of Taos Municipal Code, as amended by Ordinance 83-6, 91-6, 92-4 and 97-32 impose collection of lodgers tax on gross rental income. In addition the New Mexico Constitution, Article IV, section 32, prohibits the Town from extinguishing the amount due except by receipt of payment in full or by proper proceedings in court. Effect: By the Town not enforcing their policy and following State Constitution the Town is potentially not collecting funds that are due, which could be utilized for promoting and publicizing such facilities and tourist attractions. 95 STATE OF NEW MEXICO TOWN OF TAOS SCI3EDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2008 CURRENT YEAR FINDINGS AND RECOMMENDATIONS Cause: Several lodging facilities were reducing lodging revenue by the value of complimentary meals and beverages in order to arrive at the amount of revenue subject to the Town's lodgers tax, despite the fact that occupants are paying lodgers' tax on the full room charge. The above described deductions are only allowable when there is affirmative approval from the Town pursuant to Taos Municipal Code, Section 4.12.030. No such approvals were found by the auditor of the lodgers tax for 2002-2005. Recommendation: The Town should consult with legal council to collect deficiencies based upon the unapproved deductions for complimentary meals and beverages. The Town should clarify its lodgers' tax ordinance to specifically address what constitutes amounts received that are subject to lodgers tax. The Town should hold an educational forum to inform all lodgers' of their responsibilities. Response: Management agrees with the recommendation and will take collection action with legal council. Oil STATE OF NEW MEXICO TOWN OF TAOS EXIT CONFERENCE JUNE 30, 2008 EXIT CONFERENCE An exit conference was held on November 25, 2008, by Cindy James, CPA of Pattilio, Brown & Hill, L.L.P. with Rudy Abeyta, Council Member, Eugene Sanchez, Council Member, Daniel Miera, Town Manager and Marietta Fambro, Finance Director, of the Town of Taos. The audit was discussed. PREPARATION OF FINANCIAL STATEMENTS The financial statements presented in this report have been prepared by the auditors, Pattillo, Brown and Hill, L.L.C., Certified Public Accountants; however the financial statements are the responsibility of the management. 97