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2010 Audit ReportSTATE OF NEW MEXICO TOWN OF TAOS ANNUAL FINANCIAL REPORT JUNE 30, 2010 (This page intentionally left blank) 2 INTRODUCTORY SECTION 3 STATE OF NEW MEXICO Town of Taos Table of Contents June 30, 2010 Exhibit Page INTRODUCTORY SECTION Table of Contents 4-5 Official Roster 7 FINANCIAL SECTION Independent Auditors’ Report 10-11 Management’s Discussion and Analysis 12-19 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements Statement of Net Assets A-1 22-23 Statement of Activities A-2 24-25 Fund Financial Statements Balance Sheet – Governmental Funds B-1 26 Reconciliation of the Balance Sheet to the Statement of Net Assets 27 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds B-2 28 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 29 Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual General Fund C-1 31 Statement of Net Assets-Proprietary Funds D-1 32-33 Statement of Revenues, Expenses, and Changes in Fund Net Assets-Proprietary Funds D-2 34-35 Statement of Cash Flows –Proprietary Funds D-3 36-37 Statement of Fiduciary Assets and Liabilities – Agency Funds E-1 39 NOTES TO THE FINANCIAL STATEMENTS 40-65 SUPPLEMENTARY INFORMATION Statement Nonmajor Governmental Fund Descriptions 68-71 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Combining Balance Sheet – Nonmajor Governmental Funds A-1 72-76 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds A-2 77-81 Statement of Revenues, Expenditures, and Chan ges in Fund Balance – Budget (GAAP Basis) and Actual Governmental Funds: Fire Protection Special Revenue Fund B-1 82 Recreation Special Revenue Fund B-2 83 Lodger’s Tax Special Revenue Fund B-3 84 Local Government Correction Special Revenue Fund B-4 85 Law Enforcement Protection Special Revenue Fund B-5 86 Civic Center Special Revenue Fund B-6 87 Domestic Violence Shelter Special Revenue Fund B-7 88 Public Transportation Special Revenue Fund B-8 89 Community Grants Special Revenue Fund B-9 90 Municipal Road Gasoline Tax Special Revenue Fund B-10 91 ¼ Cent Municipal Gross Receipts Tax Special Revenue Fund B-11 92 4 STATE OF NEW MEXICO Town of Taos Table of Contents June 30, 2010 SUPPLEMENTARY INFORMATION (CONTINUED)) Statement/Schedule Page Communications Special Revenue Fund B-12 93 2001 Gross Receipts Tax Revenue Bond Retirement Debt Service Fund B-13 94 2008 Gross Receipts Tax Revenue Bond Retirement Debt Service Fund B-14 95 1999 Gasoline Tax Revenue Bond Retirement Debt Service Fund B-15 96 1999 Gasoline Tax Revenue Bond Reserve Debt Service Fund B-16 97 2007 NMFA Land Purchase Debt Service Fund B-17 98 Facilities Improvements Capital Projects Fund B-18 99 Airport Construction Capital Projects Fund B-19 100 Enhanced 911 Capital Projects Fund B-20 101 Vehicle Replacement Capital Projects Fund B-21 102 1994 Gross Receipts Tax Revenue Bond Acquisition Capital Projects Fund B-22 103 1999 Gasoline Tax Acquisition Capital Projects Fund B-23 104 Capital Pr ojects Fund B-24 105 Statement of Revenues, Expenses, and Changes in Net Assets – Budget (Non-GAAP Basis) and Actual –Pr opr ietary Funds Water and Sewer Fund B-25 106 Solid Waste Fund B-26 107 Taos Regional Landfill Fund B-27 108 SUPPORTING SCHEDULES Schedule of Deposit and Investment Accounts I 110 Schedule of Collateral Pledged by Depositor y for Public Funds II 111 Schedule of Changes in Fiduciary Assets and Liabilities - Agency Funds III 113 Schedule of Joint Powers Agreements IV 114-115 COMPLIANCE SECTION 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 118-119 FEDERAL FINANCIAL ASSISTANCE Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Pr ogram and on Internal Control Over Compliance in Accordance with OMB Circular A-133 122-123 Schedule of Expenditures of Federal Awards V 124-125 Schedule of Findings and Questioned Costs VI 126-131 OTHER DISCLOSURES 133 5 (This page intentionally left blank) 6 STATE OF NEW MEXICO Town of Taos Official Roster June 30, 2010 Town Council Name Title Darren Cordova Mayor Michael A. Silva Councilor Rudy Abeyta Councilor Amy Quintana Councilor Gene Sanchez Councilor Administration Daniel Miera Town Manager Abigail Adame Assistant Town Manager Marietta Fambro Finance Director Renee Lucero Town Clerk Richard Chavez Municipal Judge Allen Ferguson Town Attorney 7 (This page intentionally left blank) 8 FINANCIAL SECTION 9 INDEPENDENT AUDITORS’ REPORT Hector Balderas New Mexico State Auditor The United States Office of Management and Budget and The Town Council Town of Taos Taos, New Mexico We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, the budgetary comparison for the general fund and the aggregate remaining fund information of the Town of Taos New Mexico (“the Town”), as of and for the ye ar ended June 30, 2010, which collectively comprise the Town’s basic financial statements as listed in the table of contents. We also have audited the financial statements of each of the Town’s nonmajor governmental funds and the budgetary comparisons of the proprietar y funds, the capital projects fund and the remaining nonmajor governmental funds presented as supplementary information in the accompanying combining and individual fund financial statements as of and for the ye ar ended June 30, 2010 as listed in the table of contents. These financial statements are the responsibility of the Town’s 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Town’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 financial position of the governmental activities, the b usiness-type activities, each major fund, and the aggregate remaining fund information of the Town of Taos, New Mexico, as of June 30, 2010, and the respective changes in financial position and cash flows, where applicable, thereof and the budgetar y comparison for the general fund for the ye ar then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our op inion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each nonmajor governmental fund of the Town as of June 30, 2010, and the r espective changes in financial position thereof,and the budgetary comparisons for the proprietary funds, the capital projects fund and the remaining nonmajor governmental funds p resented as supplementary information for the ye ar then ended in conformity with accounting principles generally accepted in the United States of America. 10 In accordance with Government Auditing Standards, we have also issued our report dated November 22, 2010 on our consideration of the Town’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 that report 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. That report is 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 Management’s Discussion and Analysis on pages 12 through 19 ar e not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. H owever, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s basic financial statements, the combining and individual fund financial statements, and the budgetar y comparisons. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required b y the U.S. Office of Management and Budget Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations, a nd is not a required part of the basic financial statements. T he accompanying financial information listed as supporting Schedules I through IV in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements. S uch information has been subjected to the auditing procedures applied in the audit of the basic financial statements and the combining and individual fund statements and budgetary comparisons listed above a nd, in our opinion, are fairly stated i n all material respects i n relation to the basic financial statements,and the combining and individual fund statements and budgetary comparisons t aken as a whole. T he introductor y section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it. Accounting & Consulting Group, LLP Albuquerque, NM November 22, 2010 11 State of New Mexico Town of Taos Management’s Discussion and Analysis June 30, 2010 As management of the Town of Taos, we offer readers of the Town of Taos financial statements, this narrative overview and analysis of the financial activities of the Town of Taos for the fiscal year ended June 30, 2010. We encourage readers to consider the information presented here in conjunction with the financial statements of the Town of Taos and additional information provided. FINANCIAL HIGHLIGHTS • The assets of the Town of Taos exceeded its liabilities at the close of the most recent fiscal year by $74,248,827 (net assets). Of this amount, $6,616,350(unrestricted net assets) may be used to meet the government’s ongoing obligations to citizens and creditors. • The government’s total net assets increased by $2,066,257 during the fiscal year. The majority of this increase is due to additional capital assets (Pediatric Clinic) and revenue from loan proceeds for our Eco Park project for the year ended June 30, 2010. • As of June 30, 2010, the Town’s governmental funds reported combined ending net assets balances of $52,711,914. Of this total, $5,920,741 is designated for debt service and capital projects. • At the close of the current fiscal year, unreserved, undesignated fund balance for the general fund was $2,759,174, or 40 percent of total general fund expenditures. • The Town of Taos’ total debt increased by $3,077,985 during the current fiscal year. The key factor in this increase was the loan proceeds of $3,112,408 in the Town’s governmental activities and also loan proceeds of $2,213,469 in governmental activities and $1,730,000 in business-type activities . Also during the year $968,695 was paid on the principal of the various government loans, bonds, compensated absences and contracts payable. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Town of Taos’ basic financial statements. The Town’s basic financial statements comprise three components: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the Town of Taos’ finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the Town of Taos’ assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether or not the financial position of the Town of Taos is improving or deteriorating. The statement of activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused personal leave). Both of the government-wide financial statements distinguish functions of the Town of Taos that are principally supported in a majority by taxes and a minimal amount from other miscellaneous receipts (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the Town of Taos include general government, public safety, public works, culture and recreation, and health and welfare. The business-type activities of the Town include joint Water and Sewer Services, Solid Waste Services, and the Taos Regional Landfill. The government-wide financial statements can be found in Exhibits A-1 and A-2 of this report. 12 State of New Mexico Town of Taos Management’s Discussion and Analysis June 30, 2010 Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town of Taos, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Town of Taos can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on daily inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in determining what financial resources are available in the near future to finance the Town’s programs. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Town of Taos maintains twenty-nine individual governmental funds organized according to their type (special revenue, debt service and capital projects). Information is presented separately in the governmental fund balance sheet and statement of revenues, expenditures, and changes in fund balances for the General Fund and Capital Projects, which are considered major funds. Data from the other twenty-seven governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The Town of Taos adopts an annual appropriated budget for its general fund, capital equipment replacement special revenue fund, fire, police, CRT, and Town hall capital projects fund, and all other funds. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with this budget. In addition, the individual financial statements of the nonmajor governmental fund types include budgetary comparison data. The basic governmental fund financial statements can be found in Exhibits B-1 through C-1 of this report. Proprietary funds. Proprietary funds are generally used to account for services for which the Town charges customers – either outside customers or internal units or departments of the Town. Proprietary funds provide the same type of information as shown in the government-wide financial statements, only in more detail. The Town maintains one type of proprietary fund: Enterprise funds. Are used to report the same functions presented as business-type activities in the government-wide financial statements. The Town uses enterprise funds to account for the joint water and sewer services, solid waste and regional landfill operations for the Town. The enterprise funds are considered to be major funds of the Town and can be found in Exhibits D-1 through D-3 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the Town of Taos’ own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The Town of Taos fiduciary funds account for the collection of street cut permits and deposits for reaction events. The basic fiduciary fund financial statement can be found in Exhibit E-1 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 40- 65 of this report. 13 State of New Mexico Town of Taos Management’s Discussion and Analysis June 30, 2010 Combining statements. The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the notes to the financial statements. Combining and individual fund statements and schedules can be found on pages 68-83 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS Analysis of Net Assets As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the Town of Taos, assets exceeded liabilities by $74,248,827 at the close of the current fiscal year. The significant portion of the Town of Taos’ net assets represents the Town’s investment of $60,270,380 in capital assets (e.g., land improvements, buildings, infrastructure and machinery & equipment), less any related outstanding debt used to acquire those assets. The Town of Taos uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Town of Taos’ investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Governmental Business-Type Activities Activities Total Assets Current and other assets 7,844,671$ 6,576,093$ 14,420,764$ Restricted cash and cash equivalents 1,982,949 1,233,536 3,216,485 Bond issuance costs and discount 191,887 - 191,887 Capital assets, net of accumulated 53,726,037 21,782,829 75,508,866 depreciation Total assets 63,745,544 29,592,458 93,338,002 Liabilities Current Liabilities 1,902,366 2,145,969 4,048,335 Non-current liabilities 9,131,264 5,909,576 15,040,840 Total liabilities 11,033,630 8,055,545 19,089,175 Net Assets Invested in capital assets, net of 44,241,055 16,029,325 60,270,380 related debt Restricted 6,128,561 1,233,536 7,362,097 Unrestricted 2,342,298 4,274,052 6,616,350 Total net assets 52,711,914$ 21,536,913$ 74,248,827$ Total Liabilities and Net Assets 63,745,544$ 29,592,458$ 93,338,002$ A portion of the Town of Taos’ governmental net assets (8 percent) represents resources that are subject to restrictions. The restrictions relate to covenants provided by the Town’s long-term debt issuance and capital projects. The remaining balance of unrestricted net assets, $2,342,298 may be used to meet the government’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the Town of Taos is able to report positive balances in all three categories of net assets, for the government as a whole as well as for the business-type activities, as a whole. 14 State of New Mexico Town of Taos Management’s Discussion and Analysis June 30, 2010 Analysis of Changes in Net Assets The Town’s net assets increased by $2,066,257 during the current fiscal year. These increases are explained in the government and business-type activities discussion below, and are primarily a result of increased revenues from gross receipts taxes and capital grants while reducing the Town’s expenditures during the fiscal year. Governmental Business-type Revenues Activities Activities Total Program revenues: Charges for service 1,185,890$ 4,303,931$ 5,489,821$ Operating grants and contributions 1,091,166 - 1,091,166 Capital grants and contributions 3,260,706 1,283,005 4,543,711 General revenues: Property taxes, levied for general purposes 824,507 - 824,507 Gross receipts taxes 10,671,570 544,611 11,216,181 Gasoline and auto distribution taxes 310,526 - 310,526 Other taxes 1,436,096 - 1,436,096 Interest income 19,067 29,374 48,441 Miscellaneous income 114,802 120,268 235,070 Transfers (76,930) 76,930 - Loss on disposal of capital assets (93) - (93) Total Revenues 18,837,307 6,358,119 25,195,426 Program expenses: General government 6,107,535$ - 6,107,535$ Public safety 3,851,290 - 3,851,290 Public works 3,329,397 - 3,329,397 Culture and recreation 3,093,871 - 3,093,871 Health and welfare 646,369 - 646,369 Interest on long-term debt 341,433 - 341,433 Joint water and sewer - 3,552,568 3,552,568 Solid waste - 1,156,439 1,156,439 Taos Regional Landfill - 1,050,267 1,050,267 Total Expenses 17,369,895 5,759,274 23,129,169 Change in net assets 1,467,412 598,845 # 2,066,257 Net assets, beginning 51,244,502 20,938,068 72,182,570 Net assets, ending 52,711,914$ 21,536,913$ 74,248,827$ Governmental activities. Governmental activities increased the Town of Taos’ net assets by $1,467,412. The key elements of this increase are as follows: • Tax revenues account for $13,242,699 or 70 percent of governmental revenues. Tax revenues are made up of property, gross receipts, gasoline and motor vehicle and other taxes. • The General fund received the majority of the Town’s program revenue, accounting for $5,537,762 or 29 percent of total governmental revenues. The primary recipients of these revenues are general government and public safety. • The Town’s direct charges to users of governmental services made up $1,091,166 or 7 percent of total governmental revenues. These charges are for fees, fines and forfeitures, and licenses and permits. 15 State of New Mexico Town of Taos Management’s Discussion and Analysis June 30, 2010 • The increase in revenues is because of operating and capital grants increasing and fair economic conditions within the Town, which have increased gross receipts slightly. Also, other taxes such as property and gas taxes have increased from the prior year. Business-type activities. Business-type activities increased the Town’s net assets by $598,845. The Town received the capital grants this year and due to a drop in expenditures and increased gross receipts taxes, along with capital and operating grants, the Town generated excess revenue over expenditures. FINANCIAL ANALYSIS OF THE TOWN’S FUNDS As noted earlier, the Town of Taos uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the Town of Taos’ governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town of Taos’ financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Types of Governmental funds reported by the Town include the General Fund, Special Revenue Funds, Debt Service Funds and Capital Projects Funds. Revenues for governmental functions overall totaled approximately $18,837,307 in the fiscal year ended June 30, 2010, which represents an increase of $1,864,104 from the fiscal year ended June 30, 2009. This is largely due to the increase in federal and state operating and capital grants. Expenditures for governmental functions, totaling $17,369,895, decreased by approximately $545,322 from the fiscal year ended June 30, 2009. This is largely due to the completion of a $6,000,000 Town Hall project in fiscal year 2009. In the fiscal year ended June 30, 2010, expenditures for governmental functions exceeded revenues by approximately $1,467,412. The General Fund is the chief operating fund of the Town of Taos. At the end of the current fiscal year, unreserved fund balance of the general fund was also the total fund balance of $2,759,174. The fund balance of the Town of Taos’ general fund increased by $655,314 during the current fiscal year, due to an increase in revenue and a decrease in expenditures. Overall, the general fund’s performance resulted in revenues over expenditures in the fiscal year ended June 30, 2010 of $655,314, an increase of $934,753 over the comparable figure from the prior year of $(279,439). Proprietary Funds. The Town’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. At the end of the fiscal year, the unrestricted net assets for enterprise funds were $4,433,052. The total increase in net assets for the enterprise funds was $598,845. Factors concerning the finances of this fund have been addressed previously in the discussion of the Town’s business-type activities. Fiduciary Funds. The Town maintains fiduciary funds for the assets associated with bid bonds, street cuts permits and recreation deposits. Changes to the fiduciary funds were immaterial for the fiscal year. General Fund Budgetary Highlights Town budgets reflect the same pattern as seen in the revenue and expenditures of the Town. The State of New Mexico budget process is defined under state law and regulation. To enhance the process of developing a budget at the Town level, Taos utilizes goals and objectives defined by the Town Council, community input meetings, long term plans and input from various staff groups to develop the Town budget. Town priorities are well defined through this process. GASB Statement No. 34 does not require a statement presenting the overall result of the budget for each year; however, all major budgetary funds are required to be reported as a separate statement. The following table examines the summary budget performance of the general fund for the fiscal year ending June 30, 2010. Detailed budget performance is examined through the Statement of Revenues, Expenditures, and Changes in Fund Balance for the 16 State of New Mexico Town of Taos Management’s Discussion and Analysis June 30, 2010 General Fund Budgetary Highlights (Continued) general fund found at Exhibit C-1. The Town’s final budget differs from the original budget due to budget increases and decreases that were made during the fiscal year and expenditures not needed. Actual general fund expenditures were $396,478 less than the final budget amount (favorable variance). This was primarily to general governmental favorable variance of $233,818. The difference between actual expenditures and budgeted expenditures is due to various expenditures that were expected to occur during the year ended June 30, 2010, but savings from personnel vacancies and cost saving measures caused this favorable variance. Budget Amounts Original Final Expenditures: General government 4,372,081$ 4,256,005$ 4,022,187$ 233,818$ Public safety 3,033,039 2,914,670 2,829,727 84,943 Public works 1,119,748 1,034,103 1,032,020 2,083 Culture and recreation 2,101,984 2,009,566 1,933,932 75,634 Total Expenditures 10,626,852$ 10,214,344$ 9,817,866$ 396,478$ Actual (GAAP Basis) Favorable (Unfavorable) Variance Capital Asset and Debt Administration Capital assets. The Town of Taos’ capital assets for its governmental and business-type activities as of June 30, 2010 amount to $75,508,866 (net of accumulated depreciation). Capital assets include land, land improvements, buildings and improvements, furniture, fixtures and equipment, and infrastructure. The total in the Town’s capital assets for the current fiscal year was an increase of $1,530,338 for governmental activities and an increase of $1,971,140 for business-type activities. The significant additions to capital assets during the year were as follows: • $3,375,077 were additions to governmental buildings and improvements for completion of the Pediatric Clinic, Taos Community Auditorium, Fire Station #2, and Rio Grande Hall HVAC. • $877,384 were additions to governmental machinery and equipments for completion of a Composting Facility and Cell 2B & 3A at the Taos Regional Landfill. • $2,113,095 additions to business type construction in progress for upgrades to the Wastewater Treatment Plant. 17 State of New Mexico Town of Taos Management’s Discussion and Analysis June 30, 2010 Capital assets, net of depreciation Governmental Business-like Activities Activities Total Land 6,277,809$ 262,422$ 6,540,231$ Constuction in progress 7,501,644 2,635,438 10,137,082 Buildings and improvements 27,221,556 4,305,980 31,527,536 Machinery and Equipment 15,242,273 8,452,022 23,694,295 Infrastructure 46,367,444 20,108,528 66,475,972 Land improvements 5,068,985 104,895 5,173,880 Total capital assets 107,679,711 35,869,285 143,548,996 Less: accumulated depreciation (53,953,674) (14,086,456) (68,040,130) Total property, plant and equipment, net of accumulated depreciation 53,726,037$ 21,782,829$ 75,508,866$ For government-wide financial statement presentation, all depreciable capital assets were depreciated from acquisition date to the end of the current fiscal year. Fund financial statements record capital asset purchases as expenditures. See Note 6 in the accompanying Notes to the Financial Statements for further information regarding capital assets. Debt Administration. At the end of the current fiscal year, the Town of Taos had total long-term obligations outstanding of $16,275,339. The significant additions to long term debt during the year were as follows: • $2,213,469 addition for a NMFA loan for the construction of Phase I of a Multi-Phased Recreation Park; • $1,000,000 addition for a NMED ARRA CWSRF loan for Phase 2 and Phase 3 of the Wastewater Treatment Plant Rehabilitation project. Outstanding debt Governmental Business-type Activities Activities Total Revenue Bonds 6,545,000$ 2,139,600$ 8,684,600$ NMFA amd RUS Loans 2,939,982 3,613,904 6,553,886 USDA Contract Payable - - - Compensated absences 646,610 64,390 711,000 Landfill Closure Liability - 480,190 480,190 Total long-term liabilities 10,131,592$ 6,298,084$ 16,429,676$ See Note 7 in the accompanying Notes to the Financial Statements for further information regarding the Town of Taos’ long-term debt. The Town knows of no currently known facts, decisions or conditions that are expected to have a significant effect on financial position or results of operations. 18 State of New Mexico Town of Taos Management’s Discussion and Analysis June 30, 2010 REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the Town of Taos’ finances for all of those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Town of Taos – Finance Director, Town of Taos, 400 Camino de la Placita, Taos, New Mexico, 87571, (575) 751-2024. 19 (This page intentionally left blank) 20 BASIC FINANCIAL STATEMENTS 21 Governmental Activities Business-type Activities Total Assets Current assets Cash and cash equivalents 1,102,120$ 3,148,300$ 4,250,420$ Investments 3,462,425 1,631,164 5,093,589 Receivables: Property taxes 204,811 - 204,811 Other taxes 2,023,756 - 2,023,756 Due from other governments 1,078,207 1,166,171 2,244,378 Customer receivables, net - 603,810 603,810 Internal balances (26,648) 26,648 - Total current assets 7,844,671 6,576,093 14,420,764 Noncurrent assets Restricted cash and cash equivalents 1,982,949 1,233,536 3,216,485 Bond issuance costs, net of accumulated amortization of $25,542 191,887 - 191,887 Capital assets 107,679,711 35,869,285 143,548,996 Less: accumulated depreciation (53,953,674) (14,086,456) (68,040,130) Total noncurrent assets 55,900,873 23,016,365 78,917,238 Total assets 63,745,544$ 29,592,458$ 93,338,002$ STATE OF NEW MEXICO Primary Government The accompanying notes are an integral part of these financial statements June 30, 2010 Statement of Net Assets Town of Taos 22 Exhibit A-1 Governmental Activities Business-type Activities Total Liabilities Current liabilities Accounts payable 684,469$ 1,436,930$ 2,121,399$ Accrued payroll 99,950 11,372 111,322 Deposits held in trust for others 4,853 241,564 246,417 Accrued compensated absences 411,536 50,940 462,476 Accrued interest 51,262 67,595 118,857 Current portion of bonds payable 415,000 41,000 456,000 Current portion of loans and contracts payable 235,296 296,568 531,864 Total current liabilities 1,902,366 2,145,969 4,048,335 Noncurrent liabilities Accrued compensated absences 235,074 13,450 248,524 Accrued landfill closure costs - 480,190 480,190 Bond premiums, net of accumulated amortization of $9,338 61,504 - 61,504 Bonds payable 6,130,000 2,098,600 8,228,600 Loans and contracts payable 2,704,686 3,317,336 6,022,022 Total noncurrent liabilities 9,131,264 5,909,576 15,040,840 Total liabilities 11,033,630 8,055,545 19,089,175 Net Assets Invested in capital assets, net of related debt 44,241,055 16,029,325 60,270,380 Restricted for: Debt service 309,478 1,233,536 1,543,014 Capital projects 4,377,727 - 4,377,727 Special revenue 1,441,356 - 1,441,356 Unrestricted 2,342,298 4,274,052 6,616,350 Total net assets 52,711,914$ 21,536,913$ 74,248,827$ Primary Government 23 Functions/Programs Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Primary Government Governmental Activities: General government 6,107,535$ 1,060,803$ 384,591$ -$ Public safety 3,851,290 - 236,430 - Public works 3,329,397 7,500 - 3,260,706 Culture and recreation 3,093,871 63,012 - - Health and welfare 646,369 54,575 470,145 - Interest on long-term debt 341,433 - - - Total governmental activities 17,369,895 1,185,890 1,091,166 3,260,706 Business-type Activities: Water and sewer 3,552,568 2,094,498 - 1,283,005 Solid waste 1,156,439 1,179,800 - - Taos regional landfill 1,050,267 1,029,633 - - Total business-type activities 5,759,274 4,303,931 - 1,283,005 Total primary government 23,129,169$ 5,489,821$ 1,091,166$ 4,543,711$ General Revenues: Taxes: Property taxes, levied for general purposes Gross receipts taxes Gasoline and motor vehicle taxes Franchise taxes Lodger's taxes Other taxes Interest income Miscellaneous income Transfers Loss on disposal of capital assets Total general revenues and transfers Change in net assets Net assets, beginning Net assets, ending The accompanying notes are an integral part of these financial statements Program Revenues STATE OF NEW MEXICO Town of Taos Statement of Activities For the Year Ended June 30, 2010 24 Exhibit A-2 Governmental Activities Business-Type Activities Total (4,662,141)$ -$ (4,662,141)$ (3,614,860) - (3,614,860) (61,191) - (61,191) (3,030,859) - (3,030,859) (121,649) - (121,649) (341,433) - (341,433) (11,832,133) - (11,832,133) - (175,065) (175,065) - 23,361 23,361 - (20,634) (20,634) - (172,338) (172,338) (11,832,133) (172,338) (12,004,471) 824,507 - 824,507 10,671,570 544,611 11,216,181 310,526 - 310,526 498,222 498,222 922,117 922,117 15,757 - 15,757 19,067 29,374 48,441 114,802 120,268 235,070 (76,930) 76,930 - (93) - (93) 13,299,545 771,183 14,070,728 1,467,412 598,845 2,066,257 51,244,502 20,938,068 72,182,570 52,711,914$ 21,536,913$ 74,248,827$ Primary Government Net (Expense) Revenue and Changes in Net Assets 25 STATE OF NEW MEXICO Exhibit B-1 Town of Taos Page 1 of 2 Balance Sheet Governmental Funds June 30, 2010 General Fund Capital Projects Fund Other Governmental Funds Total Assets Unrestricted cash and cash equivalents 284,236$ 140,253$ 677,631$ 1,102,120$ Restricted cash and cash equivalents 1,672 1,957,973 23,304 1,982,949 Investments 1,016,325 609,522 1,836,578 3,462,425 Receivables: Property taxes 204,811 - - 204,811 Other taxes 1,576,160 124,877 322,719 2,023,756 Due from other governments 1,521 16,717 1,059,969 1,078,207 Due from other funds 32,445 - - 32,445 Total assets 3,117,170$ 2,849,342$ 3,920,201$ 9,886,713$ Liabilities Accounts payable 129,817$ 230,324$ 324,328$ 684,469$ Accrued payroll 82,839 - 17,111 99,950 Deposits held in trust for others - - 4,853 4,853 Deferred revenue 145,340 - - 145,340 Due to other funds - 16,710 42,383 59,093 Total liabilities 357,996 247,034 388,675 993,705 Fund balances Reserved for: Future debt service payments - - 286,886 286,886 Unreserved, reported in: General fund 2,759,174 - - 2,759,174 Special revenue funds - - 1,469,221 1,469,221 Capital projects funds - 2,602,308 1,775,419 4,377,727 Total fund balances 2,759,174 2,602,308 3,531,526 8,893,008 Total liabilities and fund balances 3,117,170$ 2,849,342$ 3,920,201$ 9,886,713$ The accompanying notes are an integral part of these financial statements 26 STATE OF NEW MEXICO Exhibit B-1 Town of Taos Page 2 of 2 Amounts reported for governmental activities in the Statement of Net Assets are different because: Fund balances - total governmental funds 8,893,008$ The Town has unamortized bond issuance costs. Bond issuance costs are not a current financial resource and, therefore, are not reported in the funds.191,887 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds 53,726,037 Delinquent property taxes not collected within sixty days after year end are not considered "available" revenues and are considered to be deferred revenue in the fund financial statements, but are considered revenue in the Statement of Activities.145,340 Interest on long-term debt is not accrued in the fund financial statements unless it is due and payable: Accrued interest (51,262) Some liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds: Accrued compensated absences (646,610) Bond premiums (61,504) Bonds payable (6,545,000) Loans payable (2,867,982) Contracts payable (72,000) Total net assets of governmental activities 52,711,914$ June 30, 2010 The accompanying notes are an integral part of these financial statements Governmental Funds Reconciliation of the Balance Sheet to the Statement of Net Assets 27 STATE OF NEW MEXICO Exhibit B-2 Town of Taos Page 1 of 2 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2010 General Fund Capital Projects Fund Other Governmental Funds Total Revenues Taxes Property 855,755$ -$ -$ 855,755$ Gross receipts 8,912,266 753,987 1,005,317 10,671,570 Gasoline and motor vehicle taxes 229,171 - 81,355 310,526 Other 498,222 - 937,874 1,436,096 Intergovernmental income Federal operating grants 2,650 - 149,549 152,199 Federal capital grants - 412,737 882,839 1,295,576 State operating grants 35,000 - 903,967 938,967 State capital grants - 308,550 1,656,580 1,965,130 Charges for services 407,461 - 456,231 863,692 Licenses and fees 285,166 - 37,032 322,198 Interest income 10,510 2,570 5,987 19,067 Miscellaneous 31,585 - 83,217 114,802 Total revenues 11,267,786 1,477,844 6,199,948 18,945,578 Expenditures Current General government 4,022,187 - 1,628,479 5,650,666 Public safety 2,829,727 - 211,032 3,040,759 Public works 1,032,020 43,712 445,632 1,521,364 Culture and recreation 1,933,932 - 485,761 2,419,693 Health and welfare - - 646,369 646,369 Capital outlay - 2,265,860 3,041,592 5,307,452 Debt service Principal - - 557,159 557,159 Interest - - 331,313 331,313 Bond issuance costs - - 32,712 32,712 Total expenditures 9,817,866 2,309,572 7,380,049 19,507,487 Excess (deficiency) of revenues over expenditures 1,449,920 (831,728) (1,180,101) (561,909) Other financing sources (uses) Proceeds from issuance of bonds - 2,213,469 - 2,213,469 Transfers in 4,808,690 164,457 3,414,664 8,387,811 Transfers out (5,603,296) (1,090,748) (1,770,697) (8,464,741) Total other financing sources (uses)(794,606) 1,287,178 1,643,967 2,136,539 Net change in fund balances 655,314 455,450 463,866 1,574,630 Fund balance - beginning of year 2,103,860 2,146,858 3,067,660 7,318,378 Fund balance - end of year 2,759,174$ 2,602,308$ 3,531,526$ 8,893,008$ The accompanying notes are an integral part of these financial statements 28 STATE OF NEW MEXICO Exhibit B-2 Town of Taos Page 2 of 2 Amounts reported for governmental activities in the Statement of Activities are different because: Net change in fund balances - total governmental funds 1,574,630$ 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: Capital expenditures recorded in capital outlay 5,307,452 Depreciation expense (3,777,021) Loss on disposal of capital assets (93) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenue in the funds: Decrease in deferred revenue related to property taxes receivable (31,248) The issuance of long-term debt (e.g. bonds, loans, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of govermental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities: Amortization of bond issuance costs (11,268) Increase in accrued interest (10,120) Decrease in accrued compensated absences 34,814 Amortization of bond premiums 3,864 Proceeds from issuance of bonds (2,213,469) Bond issuance costs 32,712 Principal payments on bonds payable 400,000 Principal payments on loans payable 139,159 Payments on contracts payable 18,000 Change in net assets of governmental activities 1,467,412$ Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ending June 30, 2010 The accompanying notes are an integral part of these financial statements 29 (This page intentionally left blank) 30 STATE OF NEW MEXICO Exhibit C-1 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes 760,321$ 760,321$ 855,755$ 95,434$ Gross receipts 8,496,816 8,114,755 8,912,266 797,511 Gas and motor vehicle 164,461 229,019 229,171 152 Other 382,496 409,625 498,222 88,597 Intergovernmental income Federal operating grants 5,550 5,550 2,650 (2,900) Federal capital grants - - - - State operating grants 35,000 35,000 35,000 - State capital grants - - - - Charges for services 341,862 378,074 407,461 29,387 Licenses and fees 292,282 247,570 285,166 37,596 Interest income 53,370 8,571 10,510 1,939 Miscellaneous 42,233 33,683 31,585 (2,098) Total revenues 10,574,391 10,222,168 11,267,786 1,045,618 Expenditures Current General government 4,372,081 4,256,005 4,022,187 233,818 Public safety 3,033,039 2,914,670 2,829,727 84,943 Public works 1,119,748 1,034,103 1,032,020 2,083 Culture and recreation 2,101,984 2,009,566 1,933,932 75,634 Health and welfare - - - - Capital outlay - - - - Debt service Principal - - - - Interest - - - - Total expenditures 10,626,852 10,214,344 9,817,866 396,478 Excess (deficiency) of revenues over expenditures (52,461) 7,824 1,449,920 1,442,096 Other financing sources (uses) Designated cash (budgeted increase in cash)469,292 768,017 - (768,017) Transfers in 5,086,022 4,846,728 4,808,690 (38,038) Transfers out (5,502,853) (5,622,569) (5,603,296) 19,273 Total other financing sources (uses)52,461 (7,824) (794,606) (786,782) Net change in fund balance - - 655,314 655,314 Fund balance - beginning of year - - 2,103,860 2,103,860 Fund balance - end of year -$ -$ 2,759,174$ 2,759,174$ Budgeted Amounts Town of Taos General Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 31 Water and Sewer Solid Waste Assets Current assets Cash and cash equivalents 1,810,288$ 885,336$ 452,676$ Investments 1,306,664 249,100 75,400 Customer receivables 358,097 147,065 98,648 Other receivables 1,164,370 1,801 - Interfund receivable 167,518 - 97,000 Total current assets 4,806,937 1,283,302 723,724 Noncurrent assets Restricted cash and cash equivalents 317,720 - 915,816 Capital assets 31,327,887 416,514 4,124,884 Less: accumulated depreciation (12,884,797) (340,123) (861,536) Total noncurrent assets 18,760,810 76,391 4,179,164 Total assets 23,567,747$ 1,359,693$ 4,902,888$ Liabilities and net assets Liabilities Current liabilities Accounts payable 1,271,614$ 144,344$ 20,972$ Accrued payroll 7,023 966 3,383 Meter deposits payable 241,564 - - Accrued compensated absences 33,213 2,709 15,018 Interfund payable 132,299 98,160 7,411 Accrued interest payable 62,425 - 5,170 Current portion of bonds payable 41,000 - - Current portion of loans and contracts payable 133,989 - 162,579 Total current liabilities 1,923,127 246,179 214,533 Noncurrent liabilities Accrued compensated absences 7,094 961 5,395 Accrued landfill closure costs - - 480,190 Bonds payable 2,098,600 - - Loans payable 2,348,847 - 968,489 Total noncurrent liabilities 4,454,541 961 1,454,074 Total liabilities 6,377,668 247,140 1,668,607 Net assets Invested in capital assets, net of related debt 13,861,654 76,391 2,132,280 Restricted for: Debt service 317,720 - 915,816 Unrestricted 3,010,705 1,036,162 186,185 Total net assets 17,190,079$ 1,112,553$ 3,234,281$ June 30, 2010 The accompanying notes are an integral part of these financial statements STATE OF NEW MEXICO Taos Regional Landfill Enterprise Funds Town of Taos Statement of Net Assets Proprietary Funds 32 Exhibit D-1 Total 3,148,300$ 1,631,164 603,810 1,166,171 264,518 6,813,963 1,233,536 35,869,285 (14,086,456) 23,016,365 29,830,328$ 1,436,930$ 11,372 241,564 50,940 237,870 67,595 41,000 296,568 2,383,839 13,450 480,190 2,098,600 3,317,336 5,909,576 8,293,415 16,070,325 1,233,536 4,233,052 21,536,913$ 33 Water and Sewer Solid Waste Operating revenues: Charges for services 2,094,498$ 1,179,800$ 1,029,633$ Total operating revenues 2,094,498 1,179,800 1,029,633 Operating expenses: Personnel services 658,611 85,887 325,291 Contractual services 1,209,435 793,380 388,390 Supplies 86,048 7,691 6,593 Repairs and maintenance 85,961 23,288 136,437 Utilities 296,395 243,367 6,710 Depreciation 1,027,085 2,647 150,221 Other costs 40,774 179 3,291 Total operating expenses 3,404,309 1,156,439 1,016,933 Operating income (loss) (1,309,811) 23,361 12,700 Non-operating revenues (expenses): Gross receipts taxes 544,611 - - Interest expense (148,259) - (33,334) Interest income 25,336 - 4,038 Miscellaneous income 4,311 24,765 91,192 Total non-operating revenues (expenses)425,999 24,765 61,896 State and federal capital grants 1,283,005 - - Transfers in 4,629,640 - 137,268 Transfers out (4,552,710) - (137,268) Change in net assets 476,123 48,126 74,596 Net assets, beginning of year 16,713,956 1,064,427 3,159,685 Net assets, end of year 17,190,079$ 1,112,553$ 3,234,281$ STATE OF NEW MEXICO Town of Taos Statement of Revenues, Expenses and Changes in Fund Net Assets The accompanying notes are an integral part of these financial statements Taos Regional Landfill Enterprise Funds Proprietary Funds For the Year Ended June 30, 2010 34 Exhibit D-2 Total 4,303,931$ 4,303,931 1,069,789 2,391,205 100,332 245,686 546,472 1,179,953 44,244 5,577,681 (1,273,750) 544,611 (181,593) 29,374 120,268 512,660 1,283,005 4,766,908 (4,689,978) 598,845 20,938,068 21,536,913$ 35 Water and Sewer Solid Waste Cash flows from operating activities: Cash received from user charges 913,335$ 1,186,789$ 1,040,461$ Cash payments to employees for services (676,586) (88,564) (332,481) Cash payments to suppliers for goods and services (560,346) (1,008,523) (385,042) Net cash provided (used) by operating activities (323,597) 89,702 322,938 Cash flows from noncapital financing activities: Gross receipts taxes 544,611 - - Miscellaneous income 4,311 24,765 91,192 Change in noncurrent accrued compensated absences (6,599) 961 (2,575) Interfund advances (payments) and transfers 37,491 1,044 (1,971) Net cash provided by noncapital financing activities 579,814 26,770 86,646 Cash flows from capital and related financing activities State and federal capital grants 1,283,005 - - Interest paid (149,563) - (33,933) Proceeds from issuance of long-term debt 1,730,000 - - Principal payments on long-term debt (115,227) - (158,675) Acquisition of capital assets (2,937,825) - (213,268) Net cash (used) by capital and related financing activities (189,610) - (405,876) Cash flows from investing activities: Proceeds from sales and maturities 80,000 - - Purchases of investments (2,790) - - Interest on investments 25,336 - 4,038 Net cash provided by investing activities 102,546 - 4,038 Net increase in cash and cash equivalents 169,153 116,472 7,746 Cash and cash equivalents - beginning of year 1,958,855 768,864 1,360,746 Cash and cash equivalents - end of year 2,128,008$ 885,336$ 1,368,492$ Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss)(1,309,811)$ 23,361$ 12,700$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation 1,027,085 2,647 150,221 Changes in assets and liabilities Receivables (1,181,163) 6,989 10,828 Accounts payable 1,152,185 59,382 2,042 Accrued payroll expenses (24,566) (2,704) (9,180) Current accrued compensated absences 6,591 27 1,990 Meter deposits 6,082 - - Net cash provided (used) by operating activities (323,597)$ 89,702$ 322,938$ The accompanying notes are an integral part of these financial statements Enterprise Funds Taos Regional Landfill STATE OF NEW MEXICO Town of Taos Statement of Cash Flows - Proprietary Funds For the Year Ended June 30, 2010 36 Exhibit D-3 Total 3,140,585$ (1,097,631) (1,953,911) 89,043 544,611 120,268 (8,213) 36,564 693,230 1,283,005 (183,496) 1,730,000 (273,902) (3,151,093) (595,486) 80,000 (2,790) 29,374 106,584 293,371 4,088,465 4,381,836$ (1,273,750)$ 1,179,953 (1,163,346) 1,213,609 (36,450) 8,608 6,082 89,043$ 37 (This page intentionally left blank) 38 STATE OF NEW MEXICO Exhibit E-1 Town of Taos Statement of Fiduciary Assets and Liabilities - Agency Funds June 30, 2010 Assets Cash 5,494$ Investments 62,500 Total assets 67,994$ Liabilities Deposits payable 66,730$ Due to other entities 1,264 Total liabilities 67,994$ The accompanying notes are an integral part of these financial statements 39 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 1.Summary of Significant Accounting Policies The Town of Taos (Town ) was incorporated in 1934. The Town operates under a Council-Mayor form of government and provides the following services as authorized by its charter: public safety (police and fire), highways and streets,public utilities (water, wastewater, and solid waste), health and social services, culture- recreation,education, public improvements, planning and zoning, and general administrative services. The Town of Taos is a body politic and corporate under the name and form of government selected by its qualified electors. The Town may: 1.Sue or be sued; 2.Enter into contracts and leases; 3.Acquire and hold property, both real and personal; 4.Have common seal, which may be altered at pleasure; 5.Exercise such other privileges that are incident to corporations of like character or degree that are not inconsistent with the laws of New Mexico; 6.Protect generally the property of its municipality and its inhabitants; 7.Preserve peace and order within the municipality; and 8.Establish rates for services provided by municipal utilities and revenue-producing projects, including amounts which the governing body determines to be reasonable in the operation of similar facilities. This summar y of significant accounting policies of the Town is presented to assist in the understanding of Town’s financial statements. T he financial statements and notes are the representation of Town’s management who is 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 governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units. The government- wide and the proprietar y funds financial statements have incorporated all applicable GASB pronouncements as well as Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins of the Committee on Accounting Procedures issued after November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. Governments also have the option of following subsequent private sector guidance for their government-wide financial statements and enterprise funds, subject to the same limitation. The Town has elected not to follow the subsequent private sector guidance. The more significant of the Town ’s accounting policies are described below. A.Financial Reporting Entity The financial reporting entity consists of (a) the primar y government, (b) organizations for which the primar y government is financially accountable and (c) other organizations for which the nature and significance of their relationship with the primar y g overnment are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. In evaluating how to define t he Town for financial reporting purposes, management has considered all potential component units. The decision to include any potential component units in the financial reporting entity was made by applying the criteria set forth in GASB Statement No.’s 14 and 39. Blended component units, although legally separate entities, are in substance part of the government’s operations. Each discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the government. 40 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 1.Summary of Significant Accounting Policies (continued) A.Financial Reporting Entity (continued) The basic-but not the only-criterion 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. 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. Finally, the nature and significance of a potential component unit to the primary government could warrant its inclusion within the reporting entity. Based upon the application of these criteria, the Town does not have any component units required to be reported under GASB Statements No. 14 and No. 39. 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 nonfiduciar y a ctivities 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 revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The Statement of Net Assets and the Statement of Activities were prepared using the economic resources measurement focus and the accrual basis of accounting. R evenues, expenses, gains, losses, assets and liabilities resulting from exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets and liabilities resulting from non-exchange transactions are recognized in accordance with the requirements of GASB Statement No. 33, Accounting and Financial Reporting for Non-exchange Transactions. In the government-wide Statement of Net Assets, both the governmental and business-type activities columns (a) are presented on a consolidated basis by column, (b) and are reported on a full accrual, economic resource basis, which recognizes a ll long-term assets and receivables as well as long-term debt and obligations. T he Town’s net assets are reported in three parts – i nvested in capital assets, net of related debt; restricted net assets; and unrestricted net assets. 41 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 1.Summary of Significant Accounting Policies (continued) B.Government-wide and fund financial statements (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by p rogram revenues. Direct expenses a re those that are clearly identifiable with a specific function or segment. Program revenues include 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. T axes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietar y funds and fiduciar y funds, even though the latter are excluded fr om the government-wide financial statements. 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 proprietar y fund and fiduciar y 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, net of estimated refunds, ar e recognized as revenues in the year for which they are levied. 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 a nd the modified accrual basis of accounting. Re venues 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 revenues to be available if they are collected within 60 da ys 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, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period, subject to the availability criterion. Sales and use taxes are classified as derived tax revenues and are recognized as revenue when the underlying exchange takes place and the revenues are measurable and available. Grants and similar items are recognized as revenue as soon as all e ligibility requirements imposed b y the provider have been met, subject to the availability criterion. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. 42 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 1.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 government’s primar y operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Capital Projects Fund was created to accumulate revenue and other financing sources for the purpose of financing general-purpose capital projects. The Town reports its proprietar y funds as major funds. Proprietar y funds include: The Water and Sewer Fund is used to account for the activities of the Town’s water and sewer operations. 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 necessar y t o pr ovide 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. The Taos Regional Landfill 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. As a general rule, the effect of interfund activity has been eliminated fr om the government-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the government’s enterprise funds and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported in the Statement of Activities. Program revenues included in the Statement of Activities are derived directly from the program itself or fr om parties outside the Town’s taxpayer or citizenr y, a s a whole; program revenues reduce the cost of the function to be financed from the Town ’s general revenues. Program revenues are categorized as (a) charges for services, which include revenues collected for fees and use of Town facilities, etc., (b) program-specific operating grants, which includes revenues received from state and federal sources such as small cities assistance to be used as specified within each program grant agreement, and (c) program-specific capital grants and contributions, which include revenues from state sources to be used for capital projects. Internally dedicated resources are reported as general revenues r ather than as program revenues. Likewise, general revenues include all taxes. The Town r eports all direct expenses by function in the Statement of Activities. D irect expenses are those that are clearly identifiable with a function. T he Town does not currently employ indirect cost allocation s ys tems. Depreciation expense is specifically identified b y function and is included in the direct expense of e ach function. Interest on general long-term debt is considered an indirect expense and is reported separately on the Statement of Activities. Proprietary funds distinguish operating revenues and expenses from non-operating items. O perating revenues and e xpenses generally result from providing services in connection with the fund’s principal ongoing operations. The principal operating revenue of the Town’s enterprise fund is charges for services for the Town’s utilities. Operating expenses for enterprise funds include the cost of services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. 43 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 1.Summary of Significant Accounting Policies (continued) C.Measurement focus, basis of accounting, and financial statement presentation (continued) When both restricted and unrestricted resources are available for use, it is the Town’s policy to use restricted resources first, then unrestricted resources as they are needed. D.Assets, Liabilities and Net Assets or Equity Deposits and I nvestments: T he Town’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. State statutes authorize the Town to invest in Certificates of Deposit, obligations of the U.S. Government, and the State Treasurer’s Investment Pool. Investments for the Town are reported at fair value. The State Treasurer’s Pool operates in accordance with appropriate state laws and regulations. T he r eported value of the pool is the same as the fair value of the pool shares. Receivables and Payables: Interfund activity is reported as loans, services p rovided, reimbursements or transfers. Loans are reported as interfund receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or b etween proprietar y funds are netted as part of the reconciliation to the government-wide financial statements. Advances between funds, as reported in the fund financial statements, are offset b y a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable a vailable financial resources in the event they are not received within 60 days of year end. All receivables are reported at their gross value and, where appropriate, are reduced b y the estimated portion that is expected to be uncollectible. I n the government-wide and governmental fund financial statements, delinquent property taxes are recorded when levied. Pr operty taxes are considered to be 100% collectible. Property taxes are levied on November 1 based on the assessed value of property as listed on the previous January 1 and are due in two payments b y N ovember 10th and April 10th. Property taxes uncollected after November 10th and April 10th are considered delinquent and the Town may assess penalties and interest. The taxes attach as an enforceable lien on property thirty (30) days thereafter, at which time they become delinquent. Property taxes are collected by Taos County and remitted monthly to the Town. Restricted Assets: Restricted assets consist of those funds expendable for operating purposes but restricted b y donors or other outside agencies as to the specific purpose for which they may b e used. Capital Assets: Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide fi nancial statements. Capital assets are defined b y the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of one year. S uch assets are recorded at historical cost or estimated historical cost if purchased or constructed. Pursuant to the implementation of GASB Statement No. 34, the historical cost of infrastructure assets, (retroactive to 1979) are included as part of the governmental capital assets reported in the government wide statements. Information 44 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 1.Summary of Significant Accounting Policies (continued) D.Assets, Liabilities and Net Assets or Equity (continued) Technology Equipment including software is being capitalized and included in furniture, fixtures and equipment in accordance with NMAC 2.20.1.9 C (5). D onated capital assets are recorded at estimated fair market value at the date of donation. 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. Librar y b ooks and periodicals are estimated to have a useful life of less than one year or are under the capitalization threshold and are expensed when purchased. Major outlays for capital assets and improvements are capitalized as projects are constructed. I nterest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. The total interest expense capitalized b y the Town during the current fiscal ye ar was $0. No interest was included as part of the cost of capital assets under construction. Property, plant, and equipment of the primary government are depreciated using the straight line method over the following estimated useful lives: Assets Years Land Improvements 20 Buildings and improvements 10-50 Machinery and equipment 5-25 Infrastructure 10-50 Deferred Revenues: Accounting principles generally accepted in the United States of America require that grant revenue (voluntary nonexchange transactions) be recognized as revenue in the government-wide financial statements when all eligibility requirements have been met and recognized as revenue in the governmental fund financial statements based on the same factors subject to the availability criterion. Amounts received from reimbursement basis grants are recorded as deferred revenue in the governmental fund financial statements when received more than 60 days after ye ar end. Compensated Absences: The Town’s employees earn personal leave at a rate of 22 to 27 days per ye ar based on years of service. E mp loyees can carr y over 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: 200 to 299 hours – 25% of hourly salary; 300 to 399 hours – 50% of hourly salar y; 400 to 499 – 75% of hourly salary; 500 hours and above – 100% of hourly salar y. 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. Vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability of the governmental or proprietar y fund that will pay i t. In prior years, substantially all of the related expenditures have been liquidated by the general fund. Amounts of vested or accumulated vacation leave that are not expected to be liquidated with expendable available financial resources are reported in the government-wide statement of net assets. 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. Bond premiums and discounts, as well as issuance costs, are deferred and amortized 45 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 1.Summary of Significant Accounting Policies (continued) D.Assets, Liabilities and Net Assets or Equity (continued) over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. For fund financial reporting, bond premiums and discounts, as well as issuance costs, are recognized in the period the bonds are issued. Bond proceeds are reported as another financing source net of the applicable premium or discount. Issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. Net Assets or Fund Equity: In the fund financial statements, governmental funds report reservations of fund balance 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. Equity is classified as net assets and displayed in three components: a. Invested in capital assets, net of related debt: Net assets invested in capital assets, net of accumulated depreciation and reduced by the outstanding balances of any b onds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted Net Assets: Consist of net assets with constraints placed on the use either b y (1) external groups such as creditors, grantors, contributors, or laws or regulation of other governments; or (2) law through constitutional provisions or enabling legislation. c. Unrestricted Net assets:All other net assets that do not meet the definition of “restricted” or “invested in capital assets, net of related debt.” Interfund Transactions: Q uasi-external transactions are accounted for as revenues, expenditures or expenses. T ransactions that constitute reimbursements to a fund from expenditures/expenses initially made from it that are properly a pplicable t o a nother fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions, except quasi-external transactions and reimbursements are reported a s transfers. Nonrecurring or non-routine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers. Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ fr om those estimates. Significant estimates in the Town’s financial statements include the allowance for uncollectible accounts in the joint utility fund and depreciation on capital assets. Reclassifications: Certain amounts included in the financial statements have been reclassified to conform to the current year presentation. NOTE 2.Stewardship, Compliance and Accountability Budgetary Information Annual budgets of the Town are prepared prior to June 1 and must be approved b y resolution of the Town Commissioners, and submitted to the Department of Finance and Administration for State approval. Once the budget has been formally approved, any amendments must also be approved b y the Town C ouncil Members a nd the Department of Finance and Administration. A separate budget is prepared for each fund. Line items within each budget may be over-expended; however, it is not 46 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 2.Stewardship, Compliance and Accountability (Continued) Budgetary Information (Continued) legally permissible to over-expend any budget in total b y fund. Governmental fund budgets are prepared on the GAAP basis, excluding encumbrances, and secure appropriation of funds for only one year. Carr yover funds must be re-appropriated in the budget of the subsequent fiscal year. Proprietary fund budgets are prepared on the cash basis. The Town does not budget for depreciation expense, only capital outlay. The budgetary information presented in these financial statements has been properly amended by Town Council in accordance with the above procedures. T hese amendments resulted in the following changes: Excess (deficiency) of revenues over expenditures Original Final Budget Budget Budgeted Funds: General Fund $(52,461)$7,824 Capital Projects Fund $(3,650,916)$(2,987,293) Nonmajor Governmental Funds $(2,769,993)$(2,776,017) Water and Sewer $(753,444)$(918,315) Solid Waste $(6,916)$(213,936) Taos Regional Landfill $229,639 $(174,290) The accompanying Statements of Revenues, Expenditures and Changes in Fund Balance – Budget (GAAP Basis) and Actual presents comparisons of the legally adopted budget with actual data on a budgetar y basis. NOTE 3.Deposits and Investments State statutes authorize the investment of Town funds in a wide variety of instruments including certificates of deposit and other similar obligations, state investment pool, money market accounts, and United States Government obligations. The Town is not aware of any invested funds that did not meet the State investment requirements as of June 30, 2010. Deposits of funds may be made in interest or non-interest bearing checking accounts in one or more banks or savings and loan associations within the geographical boundaries of the Town. Deposits may be made to the extent that they are insured by an agency of the United States or collateralized as required by statute. The rate of interest in non-demand interest-bearing accounts shall be set b y the State Board of Finance, but in no case shall the rate of interest be less than one hundred percent of the asked price on United States treasur y bills of the same maturity on the day of deposit. Excess of funds may be temporarily invested in securities which are issued by t he State or by t he United States government, or by their departments or agencies, and which are either direct obligations of the State or the United States or are backed b y the full faith and credit of those governments. According to the Federal Deposit Insurance Corporation (FD IC), p ublic unit deposits are funds owned b y the public unit. Time deposits, savings deposits and interest bearing negotiable order of withdrawal (NOW) accounts of a public unit in an institution in the same state will be insured up to $250,000 in aggregate and separate from the $250,000 coverage for public unit demand deposits at the same institution. However, on 47 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 3.Deposits and Investments (Continued) October 14, 2008, the FDIC announced a new Transaction Account Guarantee (TAG) Program, that provides depositors with unlimited coverage through December 31, 2010 for insured depositor y institutions (IDIs) currently participating in the TAG program, with the possibility of an additional extension of up to 12 months without additional rulemaking, upon a determination by the FD IC’s Board of Directors that continuing economic difficulties warrant further extension. With regards to this Transaction Guarantee Program, noninterest-bearing checking accounts include Demand Deposit Accounts (DDA’s) a nd any other transaction account that has unlimited withdrawals and that cannot earn interest. Also included in this program are low- interest NOW accounts that cannot earn more than 0.5% interest. Custodial Credit Risk – D eposits C ustodial credit risk is the risk that in the event of a bank failure, the Town’s deposits may not be returned to it. The Town does not have a deposit policy for custodial credit risk, other than following state statutes as set for th in the Public Money Act (Section 6-10-1 to 6-10-63, NMSA 1978). At June 30, 2010, $116,000 of the Town’s deposits of $5,520,480 w as exposed to custodial credit risk. $116,000 was uninsured and collateralized by c ollateral held by the p ledging bank’s trust department, not in the Town’s name and $0 was uninsured and uncollateralized. Amount of deposits 3,980,670$ 1,539,810$ 5,520,480$ Transaction Deposit Accounts covered by the "Transaction Account Guarantee Program"(3,364,670) (1,289,810) (4,654,480) FDIC Coverage (500,000) (250,000) (750,000) Total uninsured public funds 116,000 - 116,000 116,000 - 116,000 Uninsured and uncollateralized -$ -$ -$ Collateral requirement (50% of uninsured funds)58,000$ -$ 58,000$ Pledged Collateral 241,630 - 241,630 Over (Under) collateralized 183,630$ -$ 183,630$ TotalCentinel Bank Collateralized by securities held by pledging institutions or by its trust department or agent in other than the Town's name First Community Bank The collateral pledged is listed on Schedule II in this report. The types of collateral allowed are limited to direct obligations of the United States Government and all bonds issued by any agency, district or political subdivision of the State of New Mexico. 48 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 3.Deposits and Investments (continued) Investments The Town invests excess cash in the State Treasurer Lo cal Government Investment Pool. The New MexiGROW Local Government Investment Pool’s (LGIP) investments are valued at fair value based on quoted market prices as of the valuation date. The LGIP is not SEC registered. The New Mexico State Treasurer is authorized to invest the short-term investment funds, with the advice and consent of the State Board of Finance, in accordance with Sections 6-10-10(I) through 6-10-10(P) and Sections 6-10-10.1(A) and (E), NMSA 1978. The pool does not have unit shares. P er Section 6-10-10.(F), NMSA 1978, at the end of each month all interest earned is distributed by the State Treasurer to the contributing entities in amounts directly proportionate to the respective amounts deposited in the fund and the length of time the fund amounts were invested. P articip ation in the LGIP is voluntar y. As of June 30, 2010, the Town’s investment in the State Treasurer Local Government Investment Pool was rated as AAAm b y S tandard & Poor’s. Additionally, the Town has investments held in U.S. Treasury Money Market Mutual Funds at the Bank of Albuquerque in connection with New Mexico Finance Authority (NMFA) loans. Also, the Town has investments which are managed by N MFA, on deposit with the State Treasurer’s office, in NMFA’s name for the benefit of the Town. The Town’s investments at June 30, 2010 include the following: Investments Rated New MexicoGrow Local Government Investment Pool AAAm 50 Days 4,750,853$ Reserve Contingencies Fund Unrated Does not earn interest 39,236 U.S. Treasury Money Market Mutual Funds *AAA >365 Days 441,573 New Mexico State Treasurer Debt Service *AAA >365 Days 2,590,450 $ 7,822,112 Weighted Average Maturity Fair Value *Restricted cash and cash equivalents per Exhibit A-1 Interest Rate Risk – I nvestments. T he Town d oes not have a formal policy l imiting investment maturities that would help manage its exposure to fair value losses from increasing interest rates. Concentration of Credit Risk – Investments. For an investment, concentration of credit risk is when any one issuer is 5% or more of the investment portfolio of the County. T he investments in the New MexiGROW LGIP and U.S Treasur y Money Market Mutual Funds represent 26% and 74%, respectively, of the investment portfolio. Since the County only purchases investments with the highest credit rating, the additional concentration is not viewed to be an additional risk by the County. The County’s policy related to concentration credit risk is to comply with the state statute as put forth in the Public Money Act (Section 6-10-1 to 6-10-63, NMSA 1978). 49 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 3.Deposits and Investments (continued) Reconciliation to the Statement of Net Assets: Unrestricted cash and cash equivalents per Exhibit A-1 4,250,420$ Restricted cash and cash equivalents per Exhibit A-1 3,216,485 Agency funds cash per Exhibit E-1 5,494 Certificates of deposits (maturity > 3 months)366,000 Plus outstanding checks 1,252,577 Less deposits in transit (536,973) Less U.S. Treasury Money Market Mutual Funds (441,573) Less New Mexico State Treasurer Debt Service (2,590,450) Less petty cash (1,500) Bank balance of deposits 5,520,480$ NOTE 4.Receivables Receivables as of June 30, 2010, are as follows: Governmental Activities:Other Capital Governmental General Projects Funds Total Property taxes receivable 204,811$ -$ -$ 204,811$ Other taxes receivable: Gross receipts 1,481,874 124,877 166,503 1,773,254 Gasoline and motor vehicle 20,935 - 8,318 29,253 Franchise taxes 73,351 - - 73,351 Lodger's taxes - - 147,898 147,898 Due from other governments: Intergovernmental: Federal grants - - 68,956 68,956 State grants - 16,717 991,013 1,007,730 Licenses and fees 1,521 - - 1,521 Total receivables 1,782,492$141,594$ 1,382,688$ 3,306,774$ Receivables for governmental activities are considered to be 100% collectible. Governmental funds report deferred revenue i n c onnection with receivables for revenues that are not considered to b e available to liquidate liabilities in the current period. Governmental funds also defer revenue recognition in connection with resources that have been received but not yet earned. Deferred revenue related to property taxes receivable for the Town for the year ended June 30, 2010 was $145,340. 50 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 4.Receivables (Continued) Business-type Activities:Water and Solid Sewer Waste Landfill Total Customer receivables 717,926$ 200,610$ 121,237$ 1,039,773$ Other receivables: Gross receipts taxes 83,251 - - 83,251 Intergovernmental: Federal grants 900,900 - - 900,900 State grants 180,219 - - 180,219 Miscellaneous - 1,801 - 1,801 Total gross receivables 1,882,296 202,411 121,237 2,205,944 Less: allowance for doubtful accounts 359,829 53,545 22,589 435,963 Total net receivables 1,522,467$148,866$ 98,648$ 1,769,981$ NOTE 5.Transfers and Interfund Receivables Net operating transfers, made to close out funds and to supplement other funding sources, were as follows: Transfers In Transfers Out Amount General Fund 1/4 Cent Municipal GRT 350,000$ Airport Construction General Fund 16,000 Lodger's Tax General Fund 245,000 Lodger's Tax Capital Projects 50,000 Civic Center General Fund 72,047 Civic Center Lodger's Tax 313,435 Public Transportation General Fund 38,000 Public Transportation Lodger's Tax 98,375 Communications General Fund 249,880 2001 GRT Revenue Bond Retirement 1/4 Cent Municipal GRT 143,135 2008 GRT Revenue Bond Retirement 1/4 Cent Municipal GRT 140,825 1999 Gas Tax Revenue Bond Retirement General Fund 157,111 1999 Gas Tax Revenue Bond Retirement Municipal Road Gasoline Tax 3,374 1999 Gas Tax Revenue Bond Retirement 1999 Gas Tax Revenue Bond Reserve 76,774 2007 NMFA Land Purchase 1/4 Cent Municipal GRT 110,500 Facilities Improvements General Fund 18,500 Facilities Improvements Capital Projects 350,000 Capital Projects 1/4 Cent Municipal GRT 353,518 1999 Gasoline Tax Acquisition Capital Projects 35,000 2,821,474$ Internal balances have primarily been recorded when funds overdraw their share of pooled cash. The composition of interfund balances as of June 30, 2010 is as follows: 51 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 5.Transfers and Interfund Receivables (Continued) Due from Other Funds Due to Other Funds Amount General Fund Public Transportation 15,496$ General Fund Airport Construction 2,452 General Fund Water and Sewer 5,926 General Fund Solid Waste 1,160 General Fund Taos Regional Landfill 7,411 Water and Sewer 1999 Gasoline Tax Acquisition 24,435 Water and Sewer Capital Projects 16,710 Water and Sewer Water and Sewer 126,373 Taos Regional Landfill Solid Waste 97,000 296,963$ All interfund transactions are short-term and are expected to be repaid within a month. NOTE 6.Capital Assets A summar y of capital assets and changes occurring during the year ended June 30, 2010 follows. Land and construction in progress are not subject to depreciation. Balance Balance Governmental activities:June 30, 2009 Reclassifications Additions Deletions June 30, 2010 Capital assets, not depreciated: Land 6,051,936$ 5,413$ 220,460$ -$ 6,277,809$ Construction in progress 8,226,142 (2,026,517) 1,302,019 - 7,501,644 Total capital assets, not depreciated 14,278,078 (2,021,104) 1,522,479 - 13,779,453 Capital assets, depreciated: Land improvements 4,608,964 5,344 454,677 - 5,068,985 Buildings and improvements 23,291,085 1,922,686 2,007,785 - 27,221,556 Machinery and equipment 14,251,086 (18,027) 1,078,505 69,291 15,242,273 Infrastructure 46,041,637 81,801 244,006 - 46,367,444 Total capital assets, depreciated 88,192,772 1,991,804 3,784,973 69,291 93,900,258 Less accumulated depreciation: Land improvements (3,108,333) - (248,167) - (3,356,500) Buildings and improvements (9,756,065) - (884,234) - (10,640,299) Machinery and equipment (9,855,659) 29,300 (1,052,758) (69,198) (10,809,919) Infrastructure (27,555,094) - (1,591,862) - (29,146,956) Total accumulated depreciation (50,275,151) 29,300 (3,777,021) (69,198) (53,953,674) Net book value 52,195,699$ -$ 1,530,431$ 93$ 53,726,037$ 52 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 6. Capital Assets Depreciation expense for the year ended June 30, 2010 was charged to governmental activities as follows: General government 844,215$ Public safety 623,454 Public works 1,747,086 Culture and recreation 562,266 3,777,021$ Balance Balance Business-type activities:June 30, 2009 Reclassifications Additions Deletions June 30, 2010 Capital assets, not depreciated: Land 262,422$ -$ -$ -$ 262,422$ Construction in progress 1,543,776 (1,378,004) 2,469,666 - 2,635,438 Total capital assets, not depreciated 1,806,198 (1,378,004) 2,469,666 - 2,897,860 Capital assets, depreciated: Land improvements 104,895 - - - 104,895 Buildings and improvements 4,001,908 24,394 279,678 - 4,305,980 Machinery and equipment 8,348,630 - 283,392 8,632,022 Infrastructure 18,455,132 1,353,610 299,786 - 20,108,528 Total capital assets, depreciated 30,910,565 1,378,004 862,856 - 33,151,425 Less accumulated depreciation: Land improvements (76,794) - (3,484) - (80,278) Buildings and improvements (1,671,755) - (148,571) - (1,820,326) Machinery and equipment (5,492,534) - (305,172) (5,797,706) Infrastructure (5,663,991) - (724,155) - (6,388,146) Total accumulated depreciation (12,905,074) - (1,181,382) - (14,086,456) Net book value 19,811,689$ -$ 2,151,140$ -$ 21,962,829$ Depreciation expense for the ye ar ended June 30, 2010 was charged to business-type activities as follows: Water and sewer 1,027,085$ Solid waste 2,647 Landfill 150,221 1,179,953$ 53 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 7.Long-term Debt Governmental Activities: During the ye ar ended June 30, 2010, the following changes occurred in the liabilities reported in the government-wide statement of net assets: Balance Balance Due Within June 30, 2009 Additions Retirements June 30, 2010 One Year Revenue Bonds 6,945,000$ -$ 400,000$ 6,545,000$ 415,000$ NMFA Loans 793,672 2,213,469 139,159 2,867,982 217,296 USDA Contract Payable 90,000 - 18,000 72,000 18,000 Compensated Absences 681,424 376,722 411,536 646,610 411,536 Total Long-Term Debt 8,510,096$ 2,590,191$ 968,695$ 10,131,592$ 1,061,832$ Revenue Bonds At June 30, 2010, the Town had two revenue bonds outstanding. For the Series 1999 Gasoline Tax Revenue Bonds, the Town pledged revenues from the General and Municipal Road Gasoline Tax revenues. For the Series 2008 Gross Receipts Tax Revenue Bonds, the Town pledged revenues fr om the State-Shared Gross Receipts Tax revenues. The revenue bonds are as follows: Original Date of Due Interest Amount Description Issue Date Rate of Issue Series 1999 Gasoline Tax 03/01/99 10/01/12 3.60-4.75%1,955,000$ Series 2008 Gross Receipts Tax 01/30/08 06/01/26 4.00-5.00%6,395,000 Total Revenue Bonds The annual requirements to amortize the revenue bonds as of June 30, 2010, including interest payments, a re as follows: Fiscal Year Total Debt Ending June 30,Principal Interest Service 2011 415,000$ 265,278$ 680,278$ 2012 435,000 247,755 682,755 2013 450,000 229,188 679,188 2014 280,000 209,800 489,800 2015 290,000 198,600 488,600 2016-2020 1,815,000 1,013,650 2,828,650 2021-2025 1,345,000 117,260 1,462,260 2026-2030 1,515,000 63,630 1,578,630 6,545,000$ 2,345,161$ 8,890,161$ 54 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 7.Long-term Debt (continued) NMFA Loan The Town entered into two loan agreements with the New Mexico Finance Authority, wherein the Town pledged revenue derived from State-Shared Gross Receipts Tax to cover debt service. This revenue is not subject to intercept agreements. The NMFA loan is as follows: Original Date of Due Interest Amount Description Issue Date Rate of Issue NMFA Land Purchase Loan 04/13/07 05/01/17 3.32-3.73%954,000$ NMFA Phase I Multi-Phase Eco Park 11/25/09 05/01/25 0.62-3.67%2,213,469 Total NMFA Loans The annual requirements to amortize the NMFA loans as of June 30, 2010, including interest payments, are as follows: Fiscal Year Total Debt Ending June 30,Principal Interest Service 2011 217,296$ 75,420$ 292,716$ 2012 221,078 71,874 292,952 2013 225,410 67,785 293,195 2014 230,226 63,220 293,446 2015 235,585 58,119 293,704 2016-2020 922,970 207,513 1,130,483 2021-2025 815,417 88,362 903,779 2,867,982$ 632,293$ 3,500,275$ USDA Contract Payable At June 30, 2010, the Town had the following USDA contract payable: Original Date of Due Interest Amount Description Issue Date Rate of Issue USDA Contract Payable 02/01/95 06/30/14 0.00%360,000$ The annual requirements to amortize the USDA contract payable as of June 30, 2010, including interest payments, are as follows: 55 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 7.Long-term Debt (continued) Fiscal Year Total Debt Ending June 30,Principal Interest Service 2011 18,000$ -$ 18,000$ 2012 18,000 - 18,000 2013 18,000 - 18,000 2014 18,000 - 18,000 72,000$ -$ 72,000$ In prior ye ars, the debt service funds have t yp ically b een used to liquidate long-term liabilities other than debt associated with the USDA contract payable which is liquidated by t he facilities improvements capital projects fund. Employees of the Town are able to accrue a limited amount of vacation and other compensatory time during the ye ar. During fiscal ye ar June 30, 2010, compensated absences decreased $34,814 from the prior ye ar accrual. Compensated absences are liquidated by the respective funds in which they are accrued. Proprietary Funds The proprietar y funds have incurred various forms of debt which were used for the purposes of constructing, expanding, repairing and making improvements to its property, plant and equipment. The following schedule shows the changes to its various forms of debt during the fiscal year ended June 30, 2010: Balance Balance Due Within June 30, 2009 Additions Retirements June 30, 2010 One Year Revenue Bonds 2,179,600$ -$ 40,000$ 2,139,600$ 41,000$ NMFA and RUS Loans 2,117,806 1,730,000 233,902 3,613,904 296,568 Landfill Closure Liability 325,853 154,337 - 480,190 - Compensated Absences 63,995 51,335 50,940 64,390 50,940 Total Long-Term Debt 4,687,254$ 1,935,672$ 324,842$ 6,298,084$ 388,508$ Revenue Bonds At June 30, 2010, the Town had the following revenue bonds outstanding: Original Date of Due Interest Amount Description Issue Date Rate of Issue Series 1993A Water & Sewer 03/16/93 03/16/33 5.63%635,600$ Series 1993B Water & Sewer 03/16/93 03/16/33 5.50%123,000 Series 1995A Water & Sewer 12/05/95 12/05/35 5.125%1,315,000 Series 1998A Water & Sewer 07/01/99 01/01/38 4.75%475,000 Total Revenue Bonds 56 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 7.Long-term Debt (continued) The annual requirements to amortize the revenue bonds as of June 30, 2010, including interest payments, are as follows: Fiscal Year Total Debt Ending June 30,Principal Interest Service 2011 41,000$ 111,382$ 152,382$ 2012 43,000 109,235 152,235 2013 46,000 106,982 152,982 2014 49,000 104,572 153,572 2015 52,000 102,003 154,003 2016-2020 300,000 466,502 766,502 2021-2025 389,000 378,951 767,951 2026-2030 503,000 265,742 768,742 2031-2035 558,600 120,777 679,377 2036-2040 158,000 12,175 170,175 2,139,600$ 1,778,321$ 3,917,921$ NMFA and USDA Loans The Town entered into loan agreements with the New Mexico Finance Authority and USDA.These loans are not subject to intercept agreements. The loans are as follows: Original Date of Due Interest Amount Description Issue Date Rate of Issue RUS Series 2000A Water & Sewer 12/18/00 12/18/40 5.00%250,000$ NMFA Series 2001A Water & Sewer 05/11/01 05/01/21 4.16-5.41%950,391 NMFA Taos Regional Landfill 04/23/04 05/01/14 .79-3.34%1,372,684 NMFA Series 2008A Landfill 04/11/08 05/01/18 2.72-3.58%1,000,000 NMFA/WTB Water Project Fund Loan 09/11/09 06/01/29 0.00%130,000 NMFA/WTB Water Project Fund Loan 09/11/09 06/01/29 0.00%600,000 NMED/ARRA Water State Revolving Fund Loan 11/23/09 06/30/30 0.00%1,000,000 Total Loans 57 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 7.Long-term Debt (continued) The annual requirement to amortize the loans as of June 30, 2010, i ncluding interest payments, are a s follows: Fiscal Year Total Debt Ending June 30,Principal Interest Service 2011 296,568$ 65,728$ 362,296$ 2012 302,663 59,921 362,584 2013 309,252 53,597 362,849 2014 317,268 46,765 364,033 2015 251,666 39,438 291,104 2016-2020 1,100,015 115,433 1,215,448 2021-2025 477,504 45,297 522,801 2026-2030 432,968 36,950 469,918 2031-2035 46,000 27,150 73,150 2036-2040 59,000 14,350 73,350 2041-2045 21,000 1,050 22,050 3,613,904$ 505,679$ 4,119,583$ NOTE 8.Risk Management The Town is exposed to various risks of loss related to torts, thefts of, damage to, and destruction of property, errors and omissions and natural disasters. T he Town p articipates in the New Mexico Self-Insurers’ Fund risk pool. The Town has not filed any claims for which the settlement amount exceeded the insurance coverage during the past three years. However, should a claim be filed against the Town which exceeds the insurance coverage, the Town would be responsible for a loss in excess of the coverage amounts. As claims are filed, the New Mexico Self-Insurers’ Fund assesses and estimates the potential for loss and handles all aspects of the claim. Insurance coverage’s have not changed significantly from prior ye ars and coverage’s are expected to be continued. At June 30, 2010, no unpaid claims have been filed which exceed the policy limits and to the best of management’s knowledge and belief all known and unknown claims will be covered by insurance. No major lawsuits have been filed against the Town of Taos. New Mexico Self-Insurers’ Fund has not provided information on an entity by e ntity basis that would allow for a reconciliation of changes in the aggregate liabilities for claims for the current fiscal year and the prior fiscal ye ar. 58 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 9.Other Required Individual Fund Disclosures Generally accepted accounting principles require disclosures of certain information concerning individual funds including: A.Deficit fund balance of individual funds. There were no funds with a deficit fund balance as of June 30, 2010. B.Actual expenditures in excess of amount budgeted at the budgetar y authority level. Budgetar y level is fund level. There were no funds that exceeded approved budgetar y authority for the year ended June 30, 2010: C.Designated cash appropriations in excess of available balances. There were no funds t hat had designated cash appropriations in excess of available balances for the year ended June 30, 2010. NOTE 10.PERA Pension Plan Plan Description. Substantially all of the Town of Taos’s full-time employees participate in a public employee retirement system authorized under the Public Employees Retirement Act (Chapter 10, Article 11 NMSA 1978.) T he Public Employee Retirement Association (PERA) is the administrator of the plan, which is a cost- sharing, multiple-employer defined benefit retirement plan. T he p lan provides for retirement b enefits, 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 b y writing to PERA, P.O. Box 2123, Santa Fe, NM 87504-2123. The report is also available on PERA’s website at www.pera.state.nm.us. Funding Po licy. Plan members are required to contribute the following percentages of their gross salar y: 9.15% for law enforcement, fire protection and municipal employees. The Town is required to contribute the following percentages of the gross covered salar y: 25.65% for law enforcement employees, 28.30% for fire protection employees, and 13.15% for municipal employees. The contribution requirements of plan members and the Town are established in State statute under Chapter 10, Article 11, NMSA 1978. The requirements may be amended by acts of the legislature. The Town ’s contributions to PERA for the years ending J une 30, 2010, 2009 and 2008 were $1,050,500, $964,168 and $640,410, respectively, which equals the amount of the required contributions for each fiscal year. 59 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 11 .Post-Employment Benefits – State Retiree Health Care Plan Plan Description. 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. T he 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 plan on the person’s behalf unless that person retires 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; and 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 Po licy. T he 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 plus 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 governing authority member. F ormer 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.nmrhca.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. During the fiscal year ended June 30, 2010, the statute required each participating employer to contribute 1.3% of each participating employee’s annual salar y; each participating employee was required to contribute .65% of their salar y. In the fiscal years ending June 30, 2011 through June 30, 2013 the contribution rates for employees and employers will rise as follows: (1) For employees who are not members of an enhanced retirement plan the contribution rates will be: Fiscal Year Employer Contribution Rate Employee Contribution Rate FY 11 1.666%.833% FY12 1.834%.917% FY 13 2.000%1.000% (2) For employees who are members of an enhanced retirement (state police and adult correctional officer coverage plan 1; municipal police member coverage plans 3, 4, and 5; municipal fire member coverage plan 3, 4 and 5; municipal detention officer member coverage plan 1; and members pursuant to the Judicial Retirement Act [10-12B-1 NMSA 1978]) the contribution rates will be: Fiscal Year Employer Contribution Rate Employee Contribution Rate FY 11 2.084%1.042% FY12 2.292%1.146% FY 13 2.500%1.250% 60 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 11.Post-Employment Benefits – State Retiree Health Care Plan (continued) Also, employers joining the program after 1/1/98 are 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 e mp loyer, employee and retiree contributions are required to be remitted to the RHCA on a monthly basis. The statutor y r equirements for the contributions can be changed b y the New Mexico State Legislature. The Town’s contributions to the RHCA for the ye ars ended June 30, 2010, 2009 and 2008 were $83,627, $76,488 and $75,902, respectively, which equal the required contribution for each year. NOTE 12.Contingent Liabilities There is not any pending litigation that would warrant disclosure in the notes to the financial statements. NOTE 13.Federal and State Grants In the normal course of operations, the Town receives grant funds from various federal and state agencies. Amounts received or receivable from grantor agencies are subject to audit and adjustment by gr antor agencies, the purpose of which is to ensure compliance with conditions precedent to the granting of funds. Any liability for reimbursement which may arise as a result of these audits is not believed to be material. NOTE 14.Landfill Closure and Post Closure Care Costs State and Federal laws and regulations require that the Town place a final cover on its landfill site and perform certain maintenance and monitoring functions at the landfill site for a minimum of thirty years after closure. I n addition to operating expenses related to current activities of the landfill site, an expense provision and related liability are being recognized based on the future closure and postclosure care costs that will be incurred near or after the date the landfill no long accepts waste. The recognition of these landfill closure and postclosure care costs is based on the amount of the landfill used during the year. T he estimated liability for landfill closure and postclosure care costs is $480,190 as of June 30, 2010, which is based on 31 percent usage (filled) of the landfill. It is estimated that an additional $1,058,820 will be recognized as closure and postclosure care expenses between the date of the balance sheet and the date the landfill is currently expected to be filled to capacity. T he estimated total current cost of the landfill closure and postclosure care ($1,549,000) is based on the amount that would be paid if all equipment, facilities, and services required to close, monitor, and maintain the landfill were acquired as of June 30, 2010. However, the actual cost of closure and postclosure care may b e higher due to inflation, changes in technology, or changes in landfill laws and regulations. In addition, the Town is required b y State and Federal laws and regulations to make annual contributions to finance closure and postclosure care. The Town is in compliance with these requirements, and at June 30, 2010, cash of $915,816 is part of the pooled funds held b y the Town and is presented as restricted cash on the statement of net assets. 61 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 15.Construction and Other Significant Commitments The Town h as committed to pay for several construction contracts that were n ot completed a t J une 30, 2010 in the amount of $10,820,805 as follows: Project Description Contractor Eco Park 2,179,594$ Lone Mountain Construction and Living Designs NM 68 Enhancement 287,060 Advantage Asphalt Wastewater Treatment Plant 8,354,151 AUI, Inc., Zenon, and Souder, Miller & Associates Upgrades 10,820,805$ Contract Amount Remaining NOTE 16.Subsequent Events LGIP Investment in the Reserve Primary Fund The New Mexico State Treasurer’s Office invested a portion of the Local Government Investment Pool (LGIP) in the Reserve Primar y Fund (“the Fund”), a money market fund, in fiscal years 2006, 2007, 2008 and 2009. On September 15, 2008, the balance of the LGIP’s investment in the Fund was $381.7 million. On September 16, 2008, The Reserve Primar y Fund’s net asset value fell below $1.00 and holdings in the Fund were frozen. On July 15, 2010, the Reserve announced that it will begin its seventh distribution to Primar y Fund shareholders on or about July 16, 2010. The distribution, in the amount of approximately $215 million, represents approximately 67% of the Fund’s remaining asset value of $323 million as of the close of business on July 9, 2010. Including this seventh distribution, $50.7 billion of Fund assets as of the close of business on September 15, 2008, will have been returned to investors. There is $108 million still remaining with the Reserve at this time and the State Treasurer’s Office has no information about timing nor amounts of potential future distributions. As a result, the State Treasurer’s Office cannot anticipate what the actual loss to the LGIP from The Reserve Primary Fund may be or when the actual loss may be realized. No actual loss has been realized to date. NOTE 17.Restricted Net Assets The government-wide statement of net assets reports $7,362,097 of restricted net assets, all of which is restricted b y enabling legislation. See pages 68 to 71 for descriptions of the related restrictions for special revenue, debt service and capital projects funds. 62 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 18.Utility Revenues Pledged The Town of Taos has pledged future revenues fr om the water and sewer system, net of operation and maintenance expenses, to repay $635,600 in Series 1993A Water & Sewer Revenue Bonds, issued in 1993. The bonds are payable solely from utility customer net revenues and are payable through March 2033. The pledged revenues shall be in an amount sufficient to pay p rincipal, premium, if any, interest and other amounts due under the bond agreement, including an amount sufficient to cure any deficiencies in the debt service account or the bond a greement reserve account, to the USDA or the Trustee, as its assignee, to be deposited in the debt service reserve account or the bond agreement reserve account held b y the trustee, p ayable from and constituting a lien upon the pledged revenues. The total principal and interest remaining to be paid on the bonds is $516,600 and $417,646, respectively. Principal and interest paid for the current ye ar and total customer net revenues were $40,678 and $1,348,652, respectively. The Town of Taos has pledged future revenues fr om the water and sewer system, net of operation and maintenance expenses, to repay $123,000 in Series 1993B Water & Sewer Revenue Bonds, issued in 1993. The bonds are payable solely from utility customer net revenues and are payable through March 2033. The pledged revenues shall be in an amount sufficient to pay p rincipal, premium, if any, interest and other amounts due under the bond agreement, including an amount sufficient to cure any deficiencies in the debt service account or the bond a greement reserve account, to the USDA or the Trustee, as its assignee, to be deposited in the debt service reserve account or the bond a greement reserve account held b y the trustee, payable from and constituting a lien upon the pledged revenues. The total principal and interest remaining to be paid on the bonds is $101,000 a nd $84,095, respectively. Principal and interest paid for the current year and total customer net revenues were $7,665 and $1,348,652, respectively. The Town of Taos has pledged future revenues fr om the water and sewer system, net of operation and maintenance expenses, to repay $1,315,000 in Series 1995A Utilty Bonds, issued in 1995. The bonds are payable solely from utility customer net revenues and are payable through December 2035. The pledged revenues shall be in an amount sufficient to pay principal, premium, if any, interest and other amounts due under the bond a greement, including an amount sufficient to cure any deficiencies in the debt service account or the bond agreement reserve account, to the USDA or the Trustee, as its assignee, to be deposited in the debt service reserve account or the bond agreement reserve account held by the trustee, payable from and constituting a lien upon the pledged revenues. The total principal and interest remaining to be paid on the bonds is $1,106,000 and $920,557, respectively. Principal and interest paid for the current ye ar and total customer net revenues were $77,708 and $1,348,652, respectively. The Town of Taos has pledged future revenues fr om the water and sewer system, net of operation and maintenance expenses, to repay $475,000 in Series 1998A Water & Sewer Revenue Bonds, issued in 1999. The bonds are payable solely from utility customer net revenues and are payable through Januar y 2038. The pledged revenues shall be in an amount sufficient to pay p rincipal, premium, if any, interest and other amounts due under the bond agreement, including an amount sufficient to cure any deficiencies in the debt service account or the bond a greement reserve account, to the USDA or the Trustee, as its assignee, to be deposited in the debt service reserve account or the bond a greement reserve account held b y the trustee, payable from and constituting a lien upon the pledged revenues. The total principal and interest remaining to be paid on the bonds is $416,000 and $356,023, respectively. Principal and interest paid for the current ye ar and total customer net revenues were $27,426 and $1,348,652,respectively. 63 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 18.Utility Revenues Pledged (continued) The Town of Taos has pledged future revenues fr om the water and sewer system, net of operation and maintenance expenses, to repay $250,000 in RUS Series 2000A Water & Sewer Loan, issued in 2000. The loans are payable solely from utility customer net revenues and are payable through December 2040. The pledged revenues shall be in an amount sufficient to pay p rincipal, premium, if any, interest and other amounts due under the loan agreement, including an amount sufficient to cure any deficiencies in the debt service account or the loan agreement reserve account, to the USDA or the Trustee, as its assignee, to be deposited in the debt service reserve account or the loan agreement reserve account held b y the trustee, payable from and constituting a lien upon the pledged revenues. T he total principal and interest remaining to be paid on the loan is $228,000 and $230,250, respectively. Principal and interest paid for the current year and total customer net revenues were $14,550 and $1,348,652, respectively. The Town of Taos has pledged future revenues fr om the water and sewer system, net of operation and maintenance expenses, to repay $950,391 in NMFA Series 2001A Water & Sewer Loan, issued in 2001. The loans are payable solely from utility customer net revenues and are payable through May 2021. The pledged revenues shall be in an amount sufficient to pay principal, premium, if any, interest and other amounts due under the loan a greement, including an amount sufficient to cure any deficiencies in the debt service account or the loan agreement reserve account, to the NMFA or the Trustee, as its assignee, to be deposited in the debt service reserve account or the loan a greement reserve account held by the trustee, payable from and constituting a lien upon the pledged revenues. T he total principal and interest remaining to be paid on the loan is $553,947 and $144,402, respectively. Principal and interest paid for the current ye ar and total customer net revenues were $67,967 and $1,348,652, respectively. The Town of Taos has pledged future revenues from the distribution of the Municipal Environmental Services Gross Receipts Tax revenue, to r epay $1,372,684 in NMFA Taos Regional Landfill Loan, issued in 2004. The loans are payable solely from the Municipal Environmental Services GRT revenue and are payable through May 2014. The pledged revenues shall be in an amount sufficient to pay principal, premium, if any, interest and other amounts due under the loan a greement, including an amount sufficient to cure any d eficiencies in the debt service account or the loan a greement reserve account, to the NMFA or the Trustee, as its a ssignee, to be deposited in the debt service reserve account or the loan a greement reserve account held by t he trustee, payable from and constituting a lien upon the pledged revenues. T he total principal and interest remaining to be paid on the loan is $302,334 and $24,399, respectively. Principal and interest paid for the current ye ar and total customer net revenues were $81,162 and $167,037, respectively. The Town of Taos has pledged future revenues from the Taos Regional Landfill s ys tem, net of operation and maintenance expenses, to repay $1,000,000 i n NMFA Series 2008A Landfill Loan, issued in 2008. T he loans are payable solely from utility customer net revenues and are payable through May 2018. The pledged revenues shall be in an amount sufficient to pay principal, premium, if any, interest and other amounts due under the loan a greement, including an amount sufficient to cure any deficiencies in the debt service account or the loan agreement reserve account, to the NMFA or the Trustee, as its assignee, to be deposited in the debt service reserve account or the loan a greement reserve account held by the trustee, payable from and constituting a lien upon the pledged revenues. T he total principal and interest remaining to be paid on the loan is $828,734 and $106,628, respectively. Principal and interest paid for the current ye ar and total customer net revenues were $112,126 and $167,037, respectively. The Town of Taos has pledged future revenues from the Taos Wastewater project, net of operation and maintenance expenses, to repay $130,000 in NMFA/WTB Water Project, issued in 2010. The loans are payable solely from utility customer net revenues and are payable through May 2029. The pledged revenues shall be in an amount sufficient to pay p rincipal, premium, if any, interest and other amounts due under the loan agreement, including an amount sufficient to cure any deficiencies in the debt service account or the loan agreement reserve account, to the NMFA or the Trustee, as its assignee, to be deposited in the debt service reserve account or the loan a greement reserve account held by the trustee, payable from and constituting a lien upon the pledged revenues. The total principal to be paid on the loan is $124,815 with no interest due. Principal and for the current year and total customer net revenues were $23,926 and $1,348,652, respectively. 64 STATE OF NEW MEXICO Town of Taos Notes to the Financial Statements June 30, 2010 NOTE 18.Utility Revenues Pledged (continued) The Town of Taos has pledged future revenues from the Taos Wastewater project, net of operation and maintenance expenses, to repay $130,000 in NMFA/WTB Water Project, issued in 2010. The loans are payable solely from utility customer net revenues and are payable through May 2029. The pledged revenues shall be in an amount sufficient to pay p rincipal, premium, if any, interest and other amounts due under the loan agreement, including an amount sufficient to cure any deficiencies in the debt service account or the loan agreement reserve account, to the NMFA or the Trustee, as its assignee, to be deposited in the debt service reserve account or the loan a greement reserve account held by the trustee, payable from and constituting a lien upon the pledged revenues. The total principal to be paid on the loan is $576,074 with no interest due. Principal and for the current year and total customer net revenues were $5,185 and $1,348,652, respectively. NOTE 19.Related Parties The Town conducted tr ansactions with several entities which are considered related parties. T hese related party transactions are as follows: Vendor Related Party Amount DMC Broadcasting Mayor Darren Cordova $ 2 9,841 Abeyta Engineering Councilmember Rudy Abeyta’s brother 40,199 In & Out Plumbing Assistant Town Manager – Abigail Adame’s father 13,612 MS Quick Stop Finance Director – Marietta Fambro’s brother 3,061 Dave’s Digital IT Manager – Reuben Martinez’s brother 1,333 Northern NM Job & Drug Screening CEDD – Matt Sprigg’s wife 1,763 Vallecito Courier Cust. Serv. Mgr. – Debbie Medina-Vigil’s husband 4,170 Toop Toops Bldg & Grounds Dir. – Manuel Pacheco’s sister-in-law 1,575 Jireh Electric Paralegal – Cyndee Perez’s husband 1,302 Torres Auto Body Police Admin. Assis. – Valerie Torres’ sister 966 65 (This page intentionally left blank) 66 SUPPLEMENTARY INFORMATION 67 STATE OF NEW MEXICO Town of Taos Nonmajor Governmental Funds June 30, 2010 Special Revenue Funds Fire Protection To account for the operations and maintenance of the fire department. Financing is provided by an allotment from the State of New Mexico Fire Marshall’s Office. State Statute Section 59A-53-2, NMSA, 1978 compilation, requires the allotment be used only to operate fire departments. Recreation To account for establishing and maintaining recreational programs in the Town. Financing is provided by p rogram revenue and by a 1- cent tax on cigarette sales, which is collected and distributed by the State of New Mexico. S tate Statute Section 7-12-15, NMSA, 1978 compilation requires this tax be used in the above manner. Lodger’s Tax 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 t he Town. Revenues received a re p ursuant 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 Government Correction 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 The law enforcement protection fund was created to account for revenues received pursuant to the law enforcement protection fund (Section 29-13-7, NMSA 1978). Amounts distributed from this fund may only be expended for the following purposes: (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 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. Domestic Violence Shelter This fund was created to receive the appropriations and grants for the purpose of construction and maintaining the Domestic Violence Shelter Home. Authority is Town Council resolution. Public Transportation To account for the portion of Lodger’s Tax receipts allocated for the purpose of providing transportation to the public. Authority is Town Council resolution. 68 STATE OF NEW MEXICO Town of Taos Nonmajor Governmental Funds June 30, 2010 Special Revenue Funds (continued) Community Grants To account for various small grants for various community purposes. Each grant is authorized b y the granting agency. The fund is authorized b y Town Council resolution. Municipal Road Gasoline Tax To account for a 1 cent 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. ¼ Cent Municipal Gross Receipts Tax To account for 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. Communications To account for money collected b y the Town from three other government entities to share centralized dispatch services throughout the County of Taos. Funding is authorized b y a joint power agreement as authorized b y S ections 11-1-1 through 11-1-7 NMSA 1978. 69 STATE OF NEW MEXICO Town of Taos Nonmajor Governmental Funds June 30, 2010 Debt Service Funds 2001 Gross Receipts Tax Revenue Bond Retirement This fund was created with transfers fr om Gross Receipts Tax revenues for the purpose of accumulating monies for payment of principal and interest on Series 2001 Gross Receipts Tax Revenue Bonds. Authority is Town Council resolution. 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. Authority is Town Council resolution. 1999 Gasoline Tax Revenue Bond Retirement This fund was created with transfers from the Gas Tax Fund for the purpose of repayment of the Series 1999 Gasoline Tax Revenue Bonds. Authority is Town Council resolution. 1999 Gasoline Tax Revenue Bond Reserve 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 Gasoline Tax Revenue Bonds. Authority is Town Council resolution. 2007 NMFA Land Purchase 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. Authority is Town Council resolution. 70 STATE OF NEW MEXICO Town of Taos Nonmajor Governmental Funds June 30, 2010 Capital Projects Funds Facilities Improvements This fund was created to receive transfers from other funds for the purpose of improving facilities of the Town. Authority is Town Council resolution. Airport Construction This fund was created to receive proceeds from federal and state grants for the purpose of financing improvements to the Taos Municipal Airport. Authority is Town Council resolution. Enhanced 911 This fund was created to receive grants and transfers for the purpose of expanding benefits of the basic 911 emergency telephone number to achieve faster response time. Authority is Town Council resolution. Vehicle Replacement This fund is created to receive transfers from other funds for the purpose of purchasing vehicles for the Town of Taos. Authority is Town Council resolution. 1994 Gross Receipts Tax Revenue Bond Acquisition This fund was created to receive the 1994 Gross Receipts Tax Bond proceeds for the purpose of construction of affordable housing. Authority is Town Council resolution. 1999 Gasoline Tax Acquisition This fund was created to receive the bond proceeds and to account for the capital outlay associated with the bond issue. Authority is Town Council resolution. 71 Fire Protection Recreation Lodger's Tax Local Government Correction Assets Unrestricted cash and cash equivalents 58,369$ 1,972$ 111,794$ 23,449$ Restricted cash and cash equivalents - - - - Investments 377,220 40,000 40,000 7,000 Receivables: Other taxes - - 147,898 - Other - - - - Total assets 435,589$ 41,972$ 299,692$ 30,449$ Liabilities Accounts payable -$ 495$ 5,950$ 8,255$ Accrued payroll - - 2,178 - Deposits held in trust for others - - - - Due to other funds - - - - Total liabilities - 495 8,128 8,255 Fund balances Reserved for: Future debt service payments - - - - Unreserved Special revenue 435,589 41,477 291,564 22,194 Capital projects - - - - Total fund balances 435,589 41,477 291,564 22,194 Total liabilities and fund balances 435,589$ 41,972$ 299,692$ 30,449$ STATE OF NEW MEXICO The accompanying notes are an integral part of these financial statements June 30, 2010 Special Revenue Nonmajor Governmental Funds Combining Balance Sheet Town of Taos 72 Statement A-1 Page 1 of 3 Law Enforcement Protection Civic Center Domestic Violence Shelter Public Transportation Community Grants Municipal Road Gasoline Tax 977$ 43,438$ 1$ -$ 1,998$ -$ - 1,853 - - - - - 25,000 - - 180,000 - - - - - - 8,318 - - - 26,228 32,075 - 977$ 70,291$ 1$ 26,228$ 214,073$ 8,318$ 464$ 3,359$ -$ 3,828$ 2,962$ -$ - 3,788 - 3,945 697 - - 4,853 - - - - - - - 15,496 - - 464 12,000 - 23,269 3,659 - - - - - - - 513 58,291 1 2,959 210,414 8,318 - - - - - - 513 58,291 1 2,959 210,414 8,318 977$ 70,291$ 1$ 26,228$ 214,073$ 8,318$ Special Revenue 73 1/4 Cent Municipal Gross Receipts Tax Communications 2001 Gross Receipts Tax Revenue Bond Retirement 2008 Gross Receipts Tax Revenue Bond Retirement Assets Unrestricted cash and cash equivalents -$ 48,905$ 73$ 230$ Restricted cash and cash equivalents - - - - Investments 39,038 150,000 - - Receivables: Other taxes 166,503 - - - Other - - - - Total assets 205,541$ 198,905$ 73$ 230$ Liabilities Accounts payable -$ 42$ -$ -$ Accrued payroll - 6,503 - - Deposits held in trust for others - - - - Due to other funds - - - - Total liabilities - 6,545 - - Fund balances Reserved for: Future debt service payments - - 73 230 Unreserved Special revenue 205,541 192,360 - - Capital projects - - - - Total fund balances 205,541 192,360 73 230 Total liabilities and fund balances 205,541$ 198,905$ 73$ 230$ The accompanying notes are an integral part of these financial statements June 30, 2010 STATE OF NEW MEXICO Town of Taos Nonmajor Governmental Funds Special Revenue Debt Service Combining Balance Sheet 74 Statement A-1 Page 2 of 3 1999 Gasoline Tax Revenue Bond Retirement 1999 Gasoline Tax Revenue Bond Reserve 2007 NMFA Land Purchase Facilities Improvements Airport Construction Enhanced 911 69,426$ -$ 206$ 33,008$ -$ 309$ - - 21,451 - - - - 195,500 - - - 25,000 - - - - - - - - - 826,841 23,323 - 69,426$ 195,500$ 21,657$ 859,849$ 23,323$ 25,309$ -$ -$ -$ 101,592$ 2,181$ -$ - - - - - - - - - - - - - - - - 2,452 - - - - 101,592 4,633 - 69,426 195,500 21,657 - - - - - - - - - - - - 758,257 18,690 25,309 69,426 195,500 21,657 758,257 18,690 25,309 69,426$ 195,500$ 21,657$ 859,849$ 23,323$ 25,309$ Debt Service Capital Projects 75 STATE OF NEW MEXICO Statement A-1 Town of Taos Page 3 of 3 Vehicle Replacement 1994 Gross Receipts Tax Revenue Bond Acquisition 1999 Gasoline Tax Acquisition Total Nonmajor Governmental Funds Assets Unrestricted cash and cash equivalents 460$ 8,353$ 274,663$ 677,631$ Restricted cash and cash equivalents - - - 23,304 Investments 47,000 652,438 58,382 1,836,578 Receivables: Other taxes - - - 322,719 Other 60,503 - 90,999 1,059,969 Total assets 107,963$ 660,791$ 424,044$ 3,920,201$ Liabilities Accounts payable -$ 4,469$ 190,731$ 324,328$ Accrued payroll - - - 17,111 Deposits held in trust for others - - - 4,853 Due to other funds - - 24,435 42,383 Total liabilities - 4,469 215,166 388,675 Fund balances Reserved for: Future debt service payments - - - 286,886 Unreserved Special revenue - - - 1,469,221 Capital projects 107,963 656,322 208,878 1,775,419 Total fund balances 107,963 656,322 208,878 3,531,526 Total liabilities and fund balances 107,963$ 660,791$ 424,044$ 3,920,201$ Nonmajor Governmental Funds Combining Balance Sheet June 30, 2010 The accompanying notes are an integral part of these financial statements Capital Projects 76 Fire Protection Recreation Lodger's Tax Local Governmental Correction Revenues Taxes Gross receipts -$ -$ -$ -$ Gasoline and motor vehicle taxes - - - - Other - 15,757 922,117 - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants 236,430 - - - State capital grants - - - - Charges for services - 15,494 36,552 - Licenses and fees - - - 36,532 Interest income - - - - Miscellaneous - - 16,141 - Total revenues 236,430 31,251 974,810 36,532 Expenditures Current General government - - 638,066 - Public safety 71,350 - - 103,166 Public works - - - - Culture and recreation - 76,880 - - Health and welfare - - - - Capital outlay 37,770 - 4,405 - Debt service Principal - - - - Interest - - - - Bond issuance costs - - - - Total expenditures 109,120 76,880 642,471 103,166 Excess (deficiency) of revenues over expenditures 127,310 (45,629) 332,339 (66,634) Other financing sources (uses) Transfers in - - 660,473 86,000 Transfers out - - (777,283) - Total other financing sources (uses)- - (116,810) 86,000 Net change in fund balances 127,310 (45,629) 215,529 19,366 Fund balances - beginning of year 308,279 87,106 76,035 2,828 Fund balances - end of year 435,589$ 41,477$ 291,564$ 22,194$ Combining Statement of Revenues, Expenditures, and Changes in Fund Balances The accompanying notes are an integral part of these financial statements Special Revenue For the Year Ended June 30, 2010 STATE OF NEW MEXICO Town of Taos Nonmajor Governmental Funds 77 Statement A-2 Page 1 of 3 Law Enforcement Protection Civic Center Domestic Violence Shelter Public Transportation Community Grants Municipal Road Gasoline Tax -$ -$ -$ -$ -$ -$ - - - - - 81,355 - - - - - - - - 149,549 - - - - - - - - - - - - 300,976 346,941 - - - - - - - - 47,518 - 54,575 - - - 500 - - - - - - - - - - - 300 - 1,380 47 - - 48,318 149,549 356,931 346,988 81,355 - - - - 436,486 - 36,516 - - - - - - - - - - - - 408,881 - - - - - - 150,000 496,369 - - - - - 42,707 - - - - - - - - - - - - - - - - - - - - 36,516 408,881 150,000 539,076 436,486 - (36,516) (360,563) (451) (182,145) (89,498) 81,355 - 385,482 - 181,375 - - - - - - - (76,774) - 385,482 - 181,375 - (76,774) (36,516) 24,919 (451) (770) (89,498) 4,581 37,029 33,372 452 3,729 299,912 3,737 513$ 58,291$ 1$ 2,959$ 210,414$ 8,318$ Special Revenue 78 1/4 Cent Municipal Gross Receipts Tax Communications 2001 Gross Receipts Tax Revenue Bond Retirement 2008 Gross Receipts Tax Revenue Bond Retirement Revenues Taxes Gross receipts 1,005,317$ -$ -$ -$ Gasoline and motor vehicle taxes - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services - 294,592 - - Licenses and fees - - - - Interest income - - 823 - Miscellaneous - - - - Total revenues 1,005,317 294,592 823 - Expenditures Current General government - 545,266 - - Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay - - - - Debt service Principal - - 49,866 235,000 Interest - - 24,105 255,825 Bond issuance costs - - 32,712 - Total expenditures - 545,266 106,683 490,825 Excess (deficiency) of revenues over expenditures 1,005,317 (250,674) (105,860) (490,825) Other financing sources (uses) Transfers in - 258,948 105,860 490,825 Transfers out (869,878) - - - Total other financing sources (uses)(869,878) 258,948 105,860 490,825 Net change in fund balances 135,439 8,274 - - Fund balances - beginning of year 70,102 184,086 73 230 Fund balances - end of year 205,541$ 192,360$ 73$ 230$ The accompanying notes are an integral part of these financial statements For the Year Ended June 30, 2010 Debt ServiceSpecial Revenue Combining Statement of Revenues, Expenditures, and Changes in Fund Balances STATE OF NEW MEXICO Town of Taos Nonmajor Governmental Funds 79 Statement A-2 Page 2 of 3 1999 Gasoline Tax Revenue Bond Retirement 1999 Gasoline Tax Revenue Bond Reserve 2007 NMFA Land Purchase Facilities Improvements Airport Construction Enhanced 911 -$ -$ -$ -$ -$ -$ - - - - - - - - - - - - - - - - - - - - - - 852,690 - - - - 19,620 - - - - - 1,000,181 78,692 - - - - - - - - - - - - - - 3,374 72 - - - - - - 61,349 - - - 3,374 72 1,081,150 931,382 - 500 - 1,978 - - - - - - - - - - - - 128,392 194,908 - - - - - - - - - - - - - - - - 1,099,770 731,907 - 165,000 - 89,293 18,000 - - 28,947 - 22,436 - - - - - - - - - 194,447 - 113,707 1,246,162 926,815 - (194,447) 3,374 (113,635) (165,012) 4,567 - 237,259 - 110,838 846,604 16,000 - - (3,374) (337) (5,000) - - 237,259 (3,374) 110,501 841,604 16,000 - 42,812 - (3,134) 676,592 20,567 - 26,614 195,500 24,791 81,665 (1,877) 25,309 69,426$ 195,500$ 21,657$ 758,257$ 18,690$ 25,309$ Debt Service Capital Projects 80 STATE OF NEW MEXICO Statement A-2 Town of Taos Page 3 of 3 Vehicle Replacement 1994 Gross Receipts Tax Revenue Bond Acquisition 1999 Gasoline Tax Acquisition Total Nonmajor Governmental Funds Revenues Taxes Gross receipts -$ -$ -$ 1,005,317$ Gasoline and motor vehicle taxes - - - 81,355 Other - - - 937,874 Intergovernmental income Federal operating grants - - - 149,549 Federal capital grants 30,149 - - 882,839 State operating grants - - - 903,967 State capital grants 30,353 - 547,354 1,656,580 Charges for services - - 7,500 456,231 Licenses and fees - - - 37,032 Interest income - 1,209 509 5,987 Miscellaneous - 4,000 - 83,217 Total revenues 60,502 5,209 555,363 6,199,948 Expenditures Current General government 6,183 - - 1,628,479 Public safety - - - 211,032 Public works - 122,332 - 445,632 Culture and recreation - - - 485,761 Health and welfare - - - 646,369 Capital outlay 149,384 - 975,649 3,041,592 Debt service Principal - - - 557,159 Interest - - - 331,313 Bond issuance costs - - - 32,712 Total expenditures 155,567 122,332 975,649 7,380,049 Excess (deficiency) of revenues over expenditures (95,065) (117,123) (420,286) (1,180,101) Other financing sources (uses) Transfers in - - 35,000 3,414,664 Transfers out - - (38,051) (1,770,697) Total other financing sources (uses)- - (3,051) 1,643,967 Net change in fund balances (95,065) (117,123) (423,337) 463,866 Fund balances - beginning of year 203,028 773,445 632,215 3,067,660 Fund balances - end of year 107,963$ 656,322$ 208,878$ 3,531,526$ The accompanying notes are an integral part of these financial statements Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Capital Projects For the Year Ended June 30, 2010 81 STATE OF NEW MEXICO Statement B-1 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants 178,836 236,430 236,430 - State capital grants - - - - Charges for services - - - - Licenses and fees - - - - Interest income - - - - Miscellaneous - - - - Total revenues 178,836 236,430 236,430 - Expenditures Current General government - - - - Public safety 392,115 449,709 71,350 378,359 Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay 95,000 95,000 37,770 57,230 Debt service Principal - - - - Interest - - - - Total expenditures 487,115 544,709 109,120 435,589 Excess (deficiency) of revenues over expenditures (308,279) (308,279) 127,310 435,589 Other financing sources (uses) Designated cash (budgeted increase in cash)308,279 308,279 - (308,279) Transfers in - - - - Transfers out - - - - Total other financing sources (uses)308,279 308,279 - (308,279) Net change in fund balance - - 127,310 127,310 Fund balance - beginning of year - - 308,279 308,279 Fund balance - end of year -$ -$ 435,589$ 435,589$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Fire Protection Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 82 STATE OF NEW MEXICO Statement B-2 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other 19,250 19,250 15,757 (3,493) Intergovernmental income - Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services 12,179 12,179 15,494 3,315 Licenses and fees - - - - Interest income - - - - Miscellaneous - - - - Total revenues 31,429 31,429 31,251 (178) Expenditures Current General government - - - - Public safety - - - - Public works - - - - Culture and recreation 76,895 76,895 76,880 15 Health and welfare - - - - Capital outlay - - - - Debt service Principal - - - - Interest - - - - Total expenditures 76,895 76,895 76,880 15 Excess (deficiency) of revenues over expenditures (45,466) (45,466) (45,629) (163) Other financing sources (uses) Designated cash (budgeted increase in cash)45,466 45,466 - (45,466) Transfers in - - - - Transfers out - - - - Total other financing sources (uses)45,466 45,466 - (45,466) Net change in fund balance - - (45,629) (45,629) Fund balance - beginning of year - - 87,106 87,106 Fund balance - end of year -$ -$ 41,477$ 41,477$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Recreation Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 83 STATE OF NEW MEXICO Statement B-3 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other 887,574 856,657 922,117 65,460 Intergovernmental income - Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services 19,200 19,200 36,552 17,352 Licenses and fees - - - - Interest income - - - - Miscellaneous 4,350 4,350 16,141 11,791 Total revenues 911,124 880,207 974,810 94,603 Expenditures Current General government 676,102 728,187 638,066 90,121 Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay 10,000 4,406 4,405 1 Debt service Principal - - - - Interest - - - - Total expenditures 686,102 732,593 642,471 90,122 Excess (deficiency) of revenues over expenditures 225,022 147,614 332,339 184,725 Other financing sources (uses) Designated cash (budgeted increase in cash)35,908 35,908 - (35,908) Transfers in 613,982 660,473 660,473 - Transfers out (874,912) (843,995) (777,283) 66,712 Total other financing sources (uses)(225,022) (147,614) (116,810) 30,804 Net change in fund balance - - 215,529 215,529 Fund balance - beginning of year - - 76,035 76,035 Fund balance - end of year -$ -$ 291,564$ 291,564$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Lodger's Tax Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 84 STATE OF NEW MEXICO Statement B-4 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services - - - - Licenses and fees 52,140 52,140 36,532 (15,608) Interest income - - - - Miscellaneous - - - - Total revenues 52,140 52,140 36,532 (15,608) Expenditures Current General government - - - - Public safety 94,000 131,000 103,166 27,834 Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay - - - - Debt service Principal - - - - Interest - - - - Total expenditures 94,000 131,000 103,166 27,834 Excess (deficiency) of revenues over expenditures (41,860) (78,860) (66,634) 12,226 Other financing sources (uses) Designated cash (budgeted increase in cash)7,860 7,860 - (7,860) Transfers in 34,000 71,000 86,000 15,000 Transfers out - - - - Total other financing sources (uses)41,860 78,860 86,000 7,140 Net change in fund balance - - 19,366 19,366 Fund balance - beginning of year - - 2,828 2,828 Fund balance - end of year -$ -$ 22,194$ 22,194$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Local Government Correction Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 85 STATE OF NEW MEXICO Statement B-5 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants 32,000 32,000 - (32,000) State capital grants - - - - Charges for services - - - - Licenses and fees - - - - Interest income - - - - Miscellaneous - - - - Total revenues 32,000 32,000 - (32,000) Expenditures Current General government - - - - Public safety 32,000 37,209 36,516 693 Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay - - - - Debt service Principal - - - - Interest - - - - Total expenditures 32,000 37,209 36,516 693 Excess (deficiency) of revenues over expenditures - (5,209) (36,516) (31,307) Other financing sources (uses) Designated cash (budgeted increase in cash)- 5,209 - (5,209) Transfers in - - - - Transfers out - - - - Total other financing sources (uses)- 5,209 - (5,209) Net change in fund balance - - (36,516) (36,516) Fund balance - beginning of year - - 37,029 37,029 Fund balance - end of year -$ -$ 513$ 513$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Law Enforcement Protection Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 86 STATE OF NEW MEXICO Statement B-6 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services 64,645 47,200 47,518 318 Licenses and fees 200 200 500 300 Interest income - - - - Miscellaneous 200 200 300 100 Total revenues 65,045 47,600 48,318 718 Expenditures Current General government - - - - Public safety - - - - Public works - - - - Culture and recreation 490,498 455,793 408,881 46,912 Health and welfare - - - - Capital outlay - - - - Debt service Principal - - - - Interest - - - - Total expenditures 490,498 455,793 408,881 46,912 Excess (deficiency) of revenues over expenditures (425,453) (408,193) (360,563) 47,630 Other financing sources (uses) Designated cash (budgeted increase in cash)16,119 17,119 - (17,119) Transfers in 409,334 391,074 385,482 (5,592) Transfers out - - - - Total other financing sources (uses)425,453 408,193 385,482 (22,711) Net change in fund balance - - 24,919 24,919 Fund balance - beginning of year - - 33,372 33,372 Fund balance - end of year -$ -$ 58,291$ 58,291$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Civic Center Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 87 STATE OF NEW MEXICO Statement B-7 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants 150,000 150,000 149,549 (451) Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services - - - - Licenses and fees - - - - Interest income - - - - Miscellaneous - - - - Total revenues 150,000 150,000 149,549 (451) Expenditures Current General government - - - - Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare 150,000 150,000 150,000 - Capital outlay - - - - Debt service Principal - - - - Interest - - - - Total expenditures 150,000 150,000 150,000 - Excess (deficiency) of revenues over expenditures - - (451) (451) Other financing sources (uses) Designated cash (budgeted increase in cash)- - - - Transfers in - - - - Transfers out - - - - Total other financing sources (uses)- - - - Net change in fund balance - - (451) (451) Fund balance - beginning of year - - 452 452 Fund balance - end of year -$ -$ 1$ 1$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Domestic Violence Shelter Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 88 STATE OF NEW MEXICO Statement B-8 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants 327,552 329,382 300,976 (28,406) State capital grants - - - - Charges for services 55,000 55,000 54,575 (425) Licenses and fees - - - - Interest income - - - - Miscellaneous - - 1,380 1,380 Total revenues 382,552 384,382 356,931 (27,451) Expenditures Current General government - - - - Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare 508,832 497,740 496,369 1,371 Capital outlay 40,213 42,706 42,707 (1) Debt service Principal - - - - Interest - - - - Total expenditures 549,045 540,446 539,076 1,370 Excess (deficiency) of revenues over expenditures (166,493) (156,064) (182,145) (26,081) Other financing sources (uses) Designated cash (budgeted increase in cash)(7,150) (48,431) - 48,431 Transfers in 173,643 204,495 181,375 (23,120) Transfers out - - - - Total other financing sources (uses)166,493 156,064 181,375 25,311 Net change in fund balance - - (770) (770) Fund balance - beginning of year - - 3,729 3,729 Fund balance - end of year -$ -$ 2,959$ 2,959$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Public Transportation Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 89 STATE OF NEW MEXICO Statement B-9 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants 481,445 657,221 346,941 - State capital grants - - - - Charges for services - - - - Licenses and fees - - - - Interest income - - - - Miscellaneous - - 47 47 Total revenues 481,445 657,221 346,988 47 Expenditures Current General government 689,888 889,360 436,486 452,874 Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay 78,460 64,764 - 64,764 Debt service Principal - - - - Interest - - - - Total expenditures 768,348 954,124 436,486 517,638 Excess (deficiency) of revenues over expenditures (286,903) (296,903) (89,498) 517,685 Other financing sources (uses) Designated cash (budgeted increase in cash)241,903 241,903 - (241,903) Transfers in 45,000 55,000 - (55,000) Transfers out - - - - Total other financing sources (uses)286,903 296,903 - (296,903) Net change in fund balance - - (89,498) 220,782 Fund balance - beginning of year - - 299,912 299,912 Fund balance - end of year -$ -$ 210,414$ 520,694$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Community Grants Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 90 STATE OF NEW MEXICO Statement B-10 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle 56,226 88,605 81,355 (7,250) Other - - - - Intergovernmental income - Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services - - - - Licenses and fees - - - - Interest income - - - - Miscellaneous - - - - Total revenues 56,226 88,605 81,355 (7,250) Expenditures Current General government - - - - Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay - - - - Debt service Principal - - - - Interest - - - - Total expenditures - - - - Excess (deficiency) of revenues over expenditures 56,226 88,605 81,355 (7,250) Other financing sources (uses) Designated cash (budgeted increase in cash)- - - - Transfers in - - - - Transfers out (56,226) (88,605) (76,774) 11,831 Total other financing sources (uses)(56,226) (88,605) (76,774) 11,831 Net change in fund balance - - 4,581 4,581 Fund balance - beginning of year - - 3,737 3,737 Fund balance - end of year -$ -$ 8,318$ 8,318$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Municipal Road Gasoline Tax Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 91 STATE OF NEW MEXICO Statement B-11 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts 954,698 911,770 1,005,317 93,547 Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income - Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services - - - - Licenses and fees - - - - Interest income - - - - Miscellaneous - - - - Total revenues 954,698 911,770 1,005,317 93,547 Expenditures Current General government - - - - Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay - - - - Debt service Principal - - - - Interest - - - - Total expenditures - - - - Excess (deficiency) of revenues over expenditures 954,698 911,770 1,005,317 93,547 Other financing sources (uses) Designated cash (budgeted increase in cash)- - - - Transfers in - - - - Transfers out (954,698) (911,770) (869,878) 41,892 Total other financing sources (uses)(954,698) (911,770) (869,878) 41,892 Net change in fund balance - - 135,439 135,439 Fund balance - beginning of year - - 70,102 70,102 Fund balance - end of year -$ -$ 205,541$ 205,541$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos 1/4 Cent Municipal Gross Receipts Tax Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 92 STATE OF NEW MEXICO Statement B-12 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services 329,611 315,963 294,592 (21,371) Licenses and fees - - - - Interest income - - - - Miscellaneous - - - - Total revenues 329,611 315,963 294,592 (21,371) Expenditures Current General government 605,575 578,279 545,266 33,013 Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay - - - - Debt service Principal - - - - Interest - - - - Total expenditures 605,575 578,279 545,266 33,013 Excess (deficiency) of revenues over expenditures (275,964) (262,316) (250,674) 11,642 Other financing sources (uses) Designated cash (budgeted increase in cash)3,368 3,368 - (3,368) Transfers in 272,596 258,948 258,948 - Transfers out - - - - Total other financing sources (uses)275,964 262,316 258,948 (3,368) Net change in fund balance - - 8,274 8,274 Fund balance - beginning of year - - 184,086 184,086 Fund balance - end of year -$ -$ 192,360$ 192,360$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Communications Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 93 STATE OF NEW MEXICO Statement B-13 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services - - - - Licenses and fees - - - - Interest income - - 823 823 Miscellaneous - - - - Total revenues - - 823 823 Expenditures Current General government - - - - Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay - - - - Debt service Principal 105,065 75,874 49,866 26,008 Interest 65,602 51,865 24,105 27,760 Total expenditures 170,667 127,739 73,971 53,768 Excess (deficiency) of revenues over expenditures (170,667) (127,739) (73,148) 54,591 Other financing sources (uses) Designated cash (budgeted increase in cash)(333) (333) - 333 Transfers in 171,000 128,072 105,860 (22,212) Transfers out - - - - Total other financing sources (uses)170,667 127,739 105,860 (21,879) Net change in fund balance - - 32,712 32,712 Fund balance - beginning of year - - 73 73 Fund balance - end of year -$ -$ 32,785$ 32,785$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos 2001 Gross Receipts Tax Revenue Bond Retirement Debt Service Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 94 STATE OF NEW MEXICO Statement B-14 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income - Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services - - - - Licenses and fees - - - - Interest income - - - - Miscellaneous - - - - Total revenues - - - - Expenditures Current General government - - - - Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay - - - - Debt service Principal 235,000 235,000 235,000 - Interest 255,825 255,825 255,825 - Total expenditures 490,825 490,825 490,825 - Excess (deficiency) of revenues over expenditures (490,825) (490,825) (490,825) - Other financing sources (uses) Designated cash (budgeted increase in cash)- - - - Transfers in 490,825 490,825 490,825 - Transfers out - - - - Total other financing sources (uses)490,825 490,825 490,825 - Net change in fund balance - - - - Fund balance - beginning of year - - 230 230 Fund balance - end of year -$ -$ 230$ 230$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos 2008 Gross Receipts Tax Revenue Bond Retirement Debt Service Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 95 STATE OF NEW MEXICO Statement B-15 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services - - - - Licenses and fees - - - - Interest income - - - - Miscellaneous - - - - Total revenues - - - - Expenditures Current General government 750 750 500 250 Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay - - - - Debt service Principal 165,000 165,000 165,000 - Interest 32,743 32,743 28,947 3,796 Total expenditures 198,493 198,493 194,447 4,046 Excess (deficiency) of revenues over expenditures (198,493) (198,493) (194,447) 4,046 Other financing sources (uses) Designated cash (budgeted increase in cash)21,739 (52,352) - 52,352 Transfers in 176,754 250,845 237,259 (13,586) Transfers out - - - - Total other financing sources (uses)198,493 198,493 237,259 38,766 Net change in fund balance - - 42,812 42,812 Fund balance - beginning of year - - 26,614 26,614 Fund balance - end of year -$ -$ 69,426$ 69,426$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos 1999 Gasoline Tax Revenue Bond Retirement Debt Service Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 96 STATE OF NEW MEXICO Statement B-16 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services - - - - Licenses and fees - - - - Interest income 3,840 3,840 3,374 (466) Miscellaneous - - - - Total revenues 3,840 3,840 3,374 (466) Expenditures Current General government - - - - Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay - - - - Debt service Principal - - - - Interest - - - - Total expenditures - - - - Excess (deficiency) of revenues over expenditures 3,840 3,840 3,374 (466) Other financing sources (uses) Designated cash (budgeted increase in cash)- - - - Transfers in - - - - Transfers out (3,840) (3,840) (3,374) 466 Total other financing sources (uses)(3,840) (3,840) (3,374) 466 Net change in fund balance - - - - Fund balance - beginning of year - - 195,500 195,500 Fund balance - end of year -$ -$ 195,500$ 195,500$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos 1999 Gasoline Tax Revenue Bond Reserve Debt Service Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 97 STATE OF NEW MEXICO Statement B-17 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services - - - - Licenses and fees - - - - Interest income - - 72 72 Miscellaneous - - - - Total revenues - - 72 72 Expenditures Current General government 1,945 1,945 1,978 (33) Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay - - - - Debt service Principal 89,721 89,721 89,293 428 Interest 22,048 22,048 22,436 (388) Total expenditures 113,714 113,714 113,707 7 Excess (deficiency) of revenues over expenditures (113,714) (113,714) (113,635) 79 Other financing sources (uses) Designated cash (budgeted increase in cash)3,214 3,214 - (3,214) Transfers in 110,500 110,500 110,838 338 Transfers out - - (337) (337) Total other financing sources (uses)113,714 113,714 110,501 (3,213) Net change in fund balance - - (3,134) (3,134) Fund balance - beginning of year - - 24,791 24,791 Fund balance - end of year -$ -$ 21,657$ 21,657$ Town of Taos 2007 NMFA Land Purchase Debt Service Fund The accompanying notes are an integral part of these financial statements Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 Budgeted Amounts 98 STATE OF NEW MEXICO Statement B-18 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants - 27,000 19,620 (7,380) State capital grants 1,011,182 1,011,182 1,000,181 (11,001) Charges for services - - - - Licenses and fees - - - - Interest income - - - - Miscellaneous - 22,350 61,349 38,999 Total revenues 1,011,182 1,060,532 1,081,150 20,618 Expenditures Current General government - - - - Public safety - - - - Public works 300,543 259,824 128,392 131,432 Culture and recreation - - - - Health and welfare - - - - Capital outlay 1,035,114 1,093,183 1,099,770 (6,587) Debt service Principal 18,000 18,000 18,000 - Interest - - - - Total expenditures 1,353,657 1,371,007 1,246,162 124,845 Excess (deficiency) of revenues over expenditures (342,475) (310,475) (165,012) 145,463 Other financing sources (uses) Designated cash (budgeted increase in cash)80,871 (548,129) - 548,129 Transfers in 261,604 887,354 846,604 (40,750) Transfers out - (28,750) (5,000) 23,750 Total other financing sources (uses)342,475 310,475 841,604 531,129 Net change in fund balance - - 676,592 676,592 Fund balance - beginning of year - - 81,665 81,665 Fund balance - end of year -$ -$ 758,257$ 758,257$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Facilities Improvements Capital Projects Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 99 STATE OF NEW MEXICO Statement B-19 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants 1,270,941 1,350,233 852,690 (497,543) State operating grants - - - - State capital grants 179,669 181,781 78,692 (103,089) Charges for services - - - - Licenses and fees - - - - Interest income - - - - Miscellaneous - - - - Total revenues 1,450,610 1,532,014 931,382 (600,632) Expenditures Current General government - - - - Public safety - - - - Public works 688,847 726,500 194,908 531,592 Culture and recreation - - - - Health and welfare - - - - Capital outlay 815,183 858,992 731,907 127,085 Debt service Principal - - - - Interest - - - - Total expenditures 1,504,030 1,585,492 926,815 658,677 Excess (deficiency) of revenues over expenditures (53,420) (53,478) 4,567 58,045 Other financing sources (uses) Designated cash (budgeted increase in cash)37,420 37,478 - (37,478) Transfers in 16,000 16,000 16,000 - Transfers out - - - - Total other financing sources (uses)53,420 53,478 16,000 (37,478) Net change in fund balance - - 20,567 20,567 Fund balance - beginning of year - - (1,877) (1,877) Fund balance - end of year -$ -$ 18,690$ 18,690$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Airport Construction Capital Projects Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 100 STATE OF NEW MEXICO Statement B-20 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants - - - - Charges for services - - - - Licenses and fees - - - - Interest income - - - - Miscellaneous - - - - Total revenues - - - - Expenditures Current General government - - - - Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay - - - - Debt service Principal - - - - Interest - - - - Total expenditures - - - - Excess (deficiency) of revenues over expenditures - - - - Other financing sources (uses) Designated cash (budgeted increase in cash)- - - - Transfers in - - - - Transfers out - - - - Total other financing sources (uses)- - - - Net change in fund balance - - - - Fund balance - beginning of year - - 25,309 25,309 Fund balance - end of year -$ -$ 25,309$ 25,309$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Enhanced 911 Capital Projects Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 101 STATE OF NEW MEXICO Statement B-21 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants 30,153 30,153 30,149 - State operating grants - - - - State capital grants 31,792 31,792 30,353 - Charges for services - - - - Licenses and fees - - - - Interest income - - - - Miscellaneous - - - - Total revenues 61,945 61,945 60,502 - Expenditures Current General government - 4,624 6,183 (1,559) Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay 169,945 165,321 149,384 15,937 Debt service Principal - - - - Interest - - - - Total expenditures 169,945 169,945 155,567 14,378 Excess (deficiency) of revenues over expenditures (108,000) (108,000) (95,065) 14,378 Other financing sources (uses) Designated cash (budgeted increase in cash)108,000 108,000 - (108,000) Transfers in - - - - Transfers out - - - - Total other financing sources (uses)108,000 108,000 - (108,000) Net change in fund balance - - (95,065) (93,622) Fund balance - beginning of year - - 203,028 203,028 Fund balance - end of year -$ -$ 107,963$ 109,406$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Vehicle Replacement Capital Projects Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 102 STATE OF NEW MEXICO Statement B-22 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants 15,000 15,000 - (15,000) Charges for services - - - - Licenses and fees - - - - Interest income 12,258 12,258 1,209 (11,049) Miscellaneous - - 4,000 4,000 Total revenues 27,258 27,258 5,209 (22,049) Expenditures Current General government - - - - Public safety - - - - Public works 216,240 222,740 122,332 100,408 Culture and recreation - - - - Health and welfare - - - - Capital outlay 129,109 129,109 - 129,109 Debt service Principal - - - - Interest - - - - Total expenditures 345,349 351,849 122,332 229,517 Excess (deficiency) of revenues over expenditures (318,091) (324,591) (117,123) 207,468 Other financing sources (uses) Designated cash (budgeted increase in cash)318,091 324,591 - (324,591) Transfers in - - - - Transfers out - - - - Total other financing sources (uses)318,091 324,591 - (324,591) Net change in fund balance - - (117,123) (117,123) Fund balance - beginning of year - - 773,445 773,445 Fund balance - end of year -$ -$ 656,322$ 656,322$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos 1994 Gross Receipts Tax Revenue Bond Acquisition Capital Projects Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 103 STATE OF NEW MEXICO Statement B-23 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts - - - - Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants - - - - State operating grants - - - - State capital grants 2,041,959 2,041,959 547,354 - Charges for services - 7,000 7,500 500 Licenses and fees - - - - Interest income - - 509 509 Miscellaneous 5,887 5,887 - (5,887) Total revenues 2,047,846 2,054,846 555,363 (4,878) Expenditures Current General government - - - - Public safety - - - - Public works - - - - Culture and recreation - - - - Health and welfare - - - - Capital outlay 2,711,522 2,694,087 975,649 1,718,438 Debt service Principal - - - - Interest - - - - Total expenditures 2,711,522 2,694,087 975,649 1,718,438 Excess (deficiency) of revenues over expenditures (663,676) (639,241) (420,286) 1,713,560 Other financing sources (uses) Designated cash (budgeted increase in cash)628,676 628,676 - (628,676) Transfers in 35,000 35,000 35,000 - Transfers out - (24,435) (38,051) (13,616) Total other financing sources (uses)663,676 639,241 (3,051) (642,292) Net change in fund balance - - (423,337) 1,071,268 Fund balance - beginning of year - - 632,215 632,215 Fund balance - end of year -$ -$ 208,878$ 1,703,483$ The accompanying notes are an integral part of these financial statements Town of Taos 1999 Gasoline Tax Acquisition Capital Projects Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 Budgeted Amounts 104 STATE OF NEW MEXICO Statement B-24 Variances Actual Favorable (Unfavorable) Original Final (GAAP Basis)Final to Actual Revenues Taxes Property taxes -$ -$ -$ -$ Gross receipts 716,024 683,828 753,987 70,159 Gasoline and motor vehicle - - - - Other - - - - Intergovernmental income Federal operating grants - - - - Federal capital grants 507,500 507,500 412,737 (94,763) State operating grants - - - - State capital grants 933,531 941,531 308,550 (632,981) Charges for services - - - - Licenses and fees - - - - Interest income - - 2,570 2,570 Miscellaneous - - - - Total revenues 2,157,055 2,132,859 1,477,844 (655,015) Expenditures Current General government - - - - Public safety - - - - Public works 119,297 168,137 43,712 124,425 Culture and recreation - - - - Health and welfare - - - - Capital outlay 5,688,674 4,952,015 2,265,860 2,686,155 Debt service Principal - - - - Interest - - - - Total expenditures 5,807,971 5,120,152 2,309,572 2,810,580 Excess (deficiency) of revenues over expenditures (3,650,916) (2,987,293) (831,728) 2,155,565 Other financing sources (uses) Designated cash (budgeted increase in cash)2,154,647 1,910,788 - (1,910,788) Transfers in 182,373 211,123 164,457 (46,666) Transfers out (686,104) (1,134,618) (1,090,748) 43,870 Proceeds from issuance of bonds 2,000,000 2,000,000 2,213,469 213,469 Total other financing sources (uses)3,650,916 2,987,293 1,287,178 (1,913,584) Net change in fund balance - - 455,450 241,981 Fund balance - beginning of year - - 2,146,858 2,146,858 Fund balance - end of year -$ -$ 2,602,308$ 2,388,839$ The accompanying notes are an integral part of these financial statements Budgeted Amounts Town of Taos Capital Projects Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual For the Year Ended June 30, 2010 105 STATE OF NEW MEXICO Statement B-25 Budget (Non-GAAP Budgetary Basis) and Actual Variances Budget Amounts Favorable Original Final Actual (Unfavorable) Operating revenues: Charges for services 2,202,388$ 2,202,388$ 2,094,498$ (107,890)$ Total operating revenues 2,202,388 2,202,388 2,094,498 (107,890) Operating expenses: Personnel services 679,145 669,140 658,611 10,529 Contractual services 1,052,637 1,160,668 1,209,435 (48,767) Supplies 80,770 88,513 86,049 2,464 Maintenance and materials 102,900 101,466 85,961 15,505 Utilities 335,550 326,534 296,395 30,139 Equipment 5,722,325 11,658,711 (1) 11,658,712 Depreciation - - 1,027,085 (1,027,085) Miscellaneous 543,291 171,259 40,774 130,485 Total operating expenses 8,516,618 14,176,291 3,404,309 10,771,982 Operating income (loss) (6,314,230) (11,973,903) (1,309,811) 10,664,092 Non-operating revenues (expenses): Gross receipts taxes 477,349 477,349 544,611 67,262 Interest expense (168,283) (167,911) (148,259) 19,652 Interest income 64,020 64,020 25,336 (38,684) Government contributions 4,457,700 8,947,941 1,283,005 (7,664,936) Miscellaneous income 730,000 1,734,189 4,311 (1,729,878) Total non-operating revenues (expenses)5,560,786 11,055,588 1,709,004 (9,346,584) Transfers - 33,350 76,930 43,580 Change in net assets (753,444)$ (884,965)$ 476,123 1,361,088$ Total net assets, beginning of year 16,713,956 Total net assets, end of year 17,190,079$ The accompanying notes are an integral part of these financial statements For the Year Ended June 30, 2010 Town of Taos Statement of Revenues, Expenses and Changes in Net Assets Water and Sewer Fund 106 STATE OF NEW MEXICO Statement B-26 Budget (Non-GAAP Budgetary Basis) and Actual Variances Budget Amounts Favorable Original Final Actual (Unfavorable) Operating revenues: Charges for services 1,176,407$ 1,176,407$ 1,179,800$ 3,393$ Total operating revenues 1,176,407 1,176,407 1,179,800 3,393 Operating expenses: Personnel services 134,399 89,406 85,887 3,519 Contractual services 729,950 793,383 793,380 3 Supplies 6,090 7,690 7,691 (1) Maintenance and materials 26,800 23,290 23,288 2 Utilities 291,770 243,684 243,367 317 Equipment 8,000 248,000 - 248,000 Depreciation - - 2,647 (2,647) Miscellaneous 1,600 176 179 (3) Total operating expenses 1,198,609 1,405,629 1,156,439 249,190 Operating income (loss) (22,202) (229,222) 23,361 252,583 Non-operating revenues (expenses): Gross receipts taxes - - - - Interest expense - - - - Interest income - - - - Government contributions - - - - Miscellaneous income 15,286 15,286 24,765 9,479 Total non-operating revenues (expenses)15,286 15,286 24,765 9,479 Transfers - - - - Change in net assets (6,916)$ (213,936)$ 48,126 262,062$ Total net assets, beginning of year 1,064,427 Total net assets, end of year 1,112,553$ The accompanying notes are an integral part of these financial statements For the Year Ended June 30, 2010 Town of Taos Statement of Revenues, Expenses and Changes in Net Assets Solid Waste Fund 107 STATE OF NEW MEXICO Statement B-27 Budget (Non-GAAP Budgetary Basis) and Actual Variances Budget Amounts Favorable Original Final Actual (Unfavorable) Operating revenues: Charges for services 1,651,943$ 1,226,524$ 1,029,633$ (196,891)$ Total operating revenues 1,651,943 1,226,524 1,029,633 (196,891) Operating expenses: Personnel services 350,557 347,894 325,291 22,603 Contractual services 336,344 305,314 388,390 (83,076) Supplies 12,100 7,537 6,593 944 Maintenance and materials 118,921 138,687 136,437 2,250 Utilities 8,123 8,123 6,710 1,413 Equipment 766,647 766,647 - 766,647 Depreciation - - 150,221 (150,221) Miscellaneous 168,272 163,716 3,291 160,425 Total operating expenses 1,760,964 1,737,918 1,016,933 720,985 Operating income (loss) (109,021) (511,394) 12,700 524,094 Non-operating revenues (expenses): Gross receipts taxes - - - - Interest expense (32,413) (33,969) (33,334) 635 Interest income 5,000 5,000 4,038 (962) Government contributions 366,073 366,073 - (366,073) Miscellaneous income - - 91,192 91,192 Total non-operating revenues (expenses)338,660 337,104 61,896 (275,208) Transfers - 150,000 - (150,000) Change in net assets 229,639$ (24,290)$ 74,596 98,886$ Total net assets, beginning of year 3,159,685 Total net assets, end of year 3,234,281$ The accompanying notes are an integral part of these financial statements For the Year Ended June 30, 2010 Town of Taos Statement of Revenues, Expenses and Changes in Net Assets Taos Regional Landfill Fund 108 SUPPORTING SCHEDULES 109 STATE OF NEW MEXICO Schedule I Town of Taos Schedule of Deposit and Investment Accounts For the Year Ended June 30, 2010 Account Bank Deposits Outstanding Book Bank Name/Account Name Type Balance in Transit Checks Balance First Community Bank Clearing Account Checking 350,817$ 376,540$ 727,230$ 127$ Judicial Bond Fund Municipal Court Checking 2,499 - 827 1,672 Utility Construction Fund Checking 39,530 - - 39,530 Water & Sewer System Income Fund Checking 3,221,824 55,104 51,454 3,225,474 Certificate of Deposit - Investment CD 170,500 - - 170,500 Certificate of Deposit - Investment CD 195,500 - - 195,500 Total First Community Bank 3,980,670 431,644 779,511 3,632,803 Centinel Bank General Fund Checking 1,322,147 105,329 326,363 1,101,113 Water/Wastewater Improvement Fund Checking 129,859 - 67,364 62,495 Payroll Clearing Checking 11 - - 11 1994 GRT Revenue Bond Acquisition Fund Checking 27,853 - 19,500 8,353 HUD Account - Domestic Violence Shelter Checking 11,215 - 11,213 2 ACH Transfer Account Checking 48,725 - 48,626 99 Total Centinel Bank 1,539,810 105,329 473,066 1,172,073 Bank of Albuquerque - Investments 2001A Water & Sewer Revenue Bond Retirement U.S. Treasury Mutual Fund 61,837 - - 61,837 2004 Taos Regional Landfill Revenue Bond Reserve U.S. Treasury Mutual Fund 137,509 - - 137,509 2008A Taos Regional Landfill Debt Service U.S. Treasury Mutual Fund 100,175 - - 100,175 2004 Taos Regional Landfill Acquisition U.S. Treasury Mutual Fund 142,052 - - 142,052 Total Bank of Albuquerque 441,573 - - 441,573 New Mexico Finance Authority - Investments 2007 NMFA Land Purchase State Treasurer Debt Service 21,451 - - 21,451 2001A Water & Sewer Revenue Bond Retirement State Treasurer Debt Service 11,925 - - 11,925 2004 Taos Regional Landfill Revenue Bond Reserve State Treasurer Debt Service 20,599 - - 20,599 2008A Taos Regional Landfill Debt Service State Treasurer Debt Service 21,020 - - 21,020 2010 Phase II Wastewater Treatment Plant Rehab State Treasurer Debt Service 557,483 - - 557,483 2010 Phase I Multi-phased Rec. Park State Treasurer Debt Service 1,957,972 - - 1,957,972 Total New Mexico Finance Authority 2,590,450 - - 2,590,450 Total 8,552,503$536,973$ 1,252,577$7,836,899 New Mexico State Treasurer Local Government Investment Pool 4,790,089 Add: petty cash 1,500 Total deposits and investments 12,628,488$ Deposits and investments per financial statements: Cash and cash equivalents - Exhibit A-1 4,250,420$ Investments - Exhibit A-1 5,093,589 Restricted cash and cash equivalents - Exhibit A-1 3,216,485 Fiduciary funds cash and cash equivalents and investments - Exhibit E-1 67,994 Total deposits and investments 12,628,488$ See accompanying independent auditors' report 110 STATE OF NEW MEXICO Schedule II Description of Type of Fair Market Name of Pledged Pledged CUSIP Value at Location Depository Collateral Collateral Maturity Number June 30, 2010 of Safekeeper First Community Bank GNR2009-84 Loan 10/15/2020 38374XD77 241,630$ Federal Home Loan Bank, Dallas, TX See accompanying independent auditors' report June 30, 2010 Town of Taos Schedule of Collateral Pledged by Depository for Public Funds 111 (This page intentionally left blank) 112 STATE OF NEW MEXICO Schedule III Balance Balance June 30, 2009 Additions Deletions June 30, 2010 Assets Cash 863$ $ 28,114 $ 23,483 5,494$ Investments 68,500 - 6,000 62,500 Total assets 69,363$ 28,114$ 29,483$ 67,994$ Liabilities Deposits payable 68,260$ 7,780$ 9,310$ 66,730$ Due to other entities 1,103 14,334 14,173 1,264 Total liabilities 69,363$ 22,114$ 23,483$ 67,994$ Town of Taos Schedule of Changes in Fiduciary Assets and Liabilities - Agency Funds For the Year Ended June 30, 2010 See accompanying independent auditors' report 113 Agreement The Town Participates with Party Responsible for Operation Description Salazar Property and Sports Facilities Taos Municipal Schools Board of Education Taos Municipal School District Develop, manage and maintain a multi-purpose athletic facility on the Salazar Property Public Restroom Facility County of Taos County of Taos Designing, constructing, operating, and maintaining a public restroom facility Enhanced 911-Response System County of Taos, Town of Questa, Village of Taos Ski Valley Town of Taos Provide an answering point for information regarding needed emergency services Taos Regional Landfill Board County of Taos, Village of Questa, Village of Red River, Village of Taos Ski Valley Town of Taos Establish the Taos Regional Landfill Board See accompanying independent auditors' report June 30, 2010 STATE OF NEW MEXICO Town of Taos Schedule of Joint Powers Agreements 114 Schedule IV Period Cost to Town Town Contributions Audit Responsibility 40 Years from 2009, with option to renew $2,140,012 for Phase I; unknown for other phases None to date Taos Municipal School District November 20, 2007 to January 31, 2028 Indeterminate Indeterminate County of Taos July 6, 1998 until terminated Estimated $219,494 per year $243,694 Town of Taos 50 years from November 2, 2000 Dependent on landfill expenses $900,867 during 2009 Town of Taos 115 (This page intentionally left blank) 116 COMPLIANCE SECTION 117 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 Hector Balderas New Mexico State Auditor The Un ited States Office of Management and Budget and The Town Council Town of Taos Taos, New Mexico We have audited the financial statements of the governmental activities, the business-type activities, each major fund, the budgetary comparison for the General Fund and the aggregate remaining fund information of the Town of Taos (“the Town”), New Mexico, as of and for the year ended June 30, 2010, which collectively comprise the Town’s basic financial statements as listed in the table of contents, and have issued our report thereon dated November 22, 2010. We also have audited the financial statements of each of the Town’s nonmajor governmental funds and budgetary comparisons for the proprietary funds, Capital Pr ojects Fund, and the remaining nonmajor governmental funds pr esented as supplementary information in the accompanying combining and individual fund financial statements as of and for the year ended June 30, 2010 as listed in the table of contents. 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 Un ited States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Town’s internal control over financial reporting as a basis for designing our auditing pr ocedures 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’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Town’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 was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses. A deficiency in internal control exists wh en 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 and correct misstatements on a timely basis. A material we akness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and questioned costs as items FS 2007-01, FS 2009-03, and FS 2010-01, to be material weaknesses. 118 Compliance and Other Matters As part of obtaining reasonable assurance about wh ether the Town’s 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 wh ich 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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. The Town’s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the Town’s responses and, accordingly, we express no opinion on them. This report is intended solely for the information and use of the audit committee management, others within the organization, Town Commission, the Office of the State Auditor, New Mexico Legislature, the New Mexico Department of Finance and Administration, federal awarding agencies and pass-through entities and is not intended to be and sh ould not be used by anyone other than these specified parties. Accounting & Consulting Group, LLP Albuquerque, New Mexico November 22, 2010 119 (This page intentionally left blank) 120 FEDERAL FINANCIAL ASSISTANCE 121 REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Hector Balderas New Mexico State Auditor The Un ited States Office of Management and Budget and The Town Council Town of Taos Taos, New Mexico Compliance We have audited the compliance of Town of Taos, New Mexico (“the Town”)with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of the Town’s major federal programs for the year ended June 30, 2010. The Town’s major federal pr ogr ams are identified in the summary of auditors’ 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’s management. Our responsibility is to express an opinion on the Town ’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the Un ited 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 wh ether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal pr ogram occurred. An audit includes examining, on a test basis, evidence about the Town’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 of the Town’s compliance with those requirements. In our opinion, the Town complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal pr ograms for the year ended June 30, 2010. However, the results of our auditing pr ocedures disclosed instances of noncompliance with those requirements, wh ich are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as items FA 2009-01 and FA 2010-01. Internal Control Over Compliance The management of the Town is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts and grants applicable to federal pr ogr ams. In planning and performing our audit, we considered the Town’s internal control over compliance with the requirements that could have a direct and material effect on a major federal pr ogram to determine our auditing pr ocedures for the purpose of expressing our opinion on compliance, and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accor dingly, we do not express an opinion on the effectiveness of the Town’s internal control over compliance. 122 A deficiency in internal control over compliance exists wh en the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with type of compliance requirement of a federal pr ogram will not be prevented, or detected and corrected, on timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not indentify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies as described in the accompanying schedule of findings and questioned costs as items FA 2009-01 and FA 2010-01. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiency, in internal control over compliance with a type of compliance requirement that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. The Town’s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the Town’s responses and, accordingly, we express no opinion on the responses. This report is intended solely for the infor mation and use of management, others within the Town, the audit committee, the State Auditor, the Town Council, the New Mexico Legislature, the New Mexico Department of Finance and Administration, and applicable federal grantors, and is not intended to be and should not be used by anyone other than these parties. Accounting & Consulting Group, LLP Albuquerque, NM November 22, 2010 123 STATE OF NEW MEXICO Schedule V Town of Taos (Page 1 of 2) Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2010 CFDA Number Expenditures 16.580 $ 66,101 Recovery Act Jag Program- ARRA 16.804 2009-SB-B9-0068 30,353 Total U.S. Department of Justice 96,454 14.235 150,451 14.228 07-C-NR-I-06-G-56 430,000 Total U.S. Department of Housing & Urban Development 580,451 Federal Aviation Administration (FAA) 20.106 295,831 Airport Improvements Program - Equipment (1)20.106 179,778 Airport Improvements Program - EIS (1)20.106 375,015 Federal Transportation Administration (FTA) Federal Assistance (1)20.500 32,750 Federal Transportation Administration (FTA) Federal Assistance-ARRA (1)20.507 412,625 Total U.S. Department of Transportation 1,295,999 10.766 36,324 Mexico Environment Department 66.458 CWSRF 15 1,433,573 $ 3,442,801 (1) Denotes Major Federal Financial Assistance Program Total Federal Financial Assistance See accompanying independent auditors' report RUS - Police Equipment U.S. Department of Agriculture 2005-DD-BX-1109 U.S. Department of Housing & Urban Development Passed Through the Airport Improvements Program - PAPI (1) Enforcement Assistance Funding Source/Grant or Contact Name Federal Grantors Number U.S. Department of Justice 3-35-0041-016-2006 U.S. Department of Transportation U.S. Environmental Protection Agency Passed Through the State of New EPA- Clean Water State Revolving Fund- ARRA (1) State of New Mexico, Department of Finance & Administration 3-35-0041-019-2008 3-35-0041-017-2007 NM-03-0041 Community Development Block Grant - Sustainable Building Ordinance (1) Community Against Violence NM02B601005 124 STATE OF NEW MEXICO Schedule V Town of Taos (Page 2 of 2) Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2010 Notes to Schedule of Expenditures of Federal Awards Reconciliation of Schedule of Expenditures of Federal Awards to Financial Statements: 3,442,801$ 21,642,367 25,085,168$ 1. Basis of Presentation Total expenditures The accompanying Schedule of Expenditures of Federal Awards (Schedule)includes the federal grant activity of the Town of Taos and is presented on the modified accrual basis of accounting,which is the same basis as was used to prepare the governmental fund financial statements,except for the proprietary funds.The information in this Schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations . The Town did not provide any federal awards to subrecipients during the year. Total expenditures funded by other sources 2. Subrecipients Total federal awards expended per Schedule of Expenditures of Federal Awards 125 STATE OF NEW MEXICO Schedule VI Town of Taos Page 1 of 6 Schedule of Findings and Questioned Costs For the Year Ended June 30, 2010 Section I – Summary of Audit Results Financial Statements: 1.Type of auditors’ report issued Un qualified 2.Internal control over financial reporting: a.Material weaknesses identified?Yes b.Significant deficiencies identified not considered to be material weaknesses?No c.Noncompliance material to the financial statements noted?No Federal Awards: 1.Internal control over major programs: a.Material weaknesses identified?No b.Significant deficiencies identified not considered to be material weaknesses?Yes 2.Type of auditors’ report issued on compliance for major programs Un qualified 3.Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A-133?Yes 4.Identification of major programs: CFDA Number Federal Program 14.228 Community Development Block Grant 20.106 Airport Improvements Program 20.500 and 20.507 FTA- Federal Assistance Program 66.458 EPA- Clean Water State Revolving Fund 5.Dollar threshold used to distinguish between type A and type B programs:$300,000 6.Auditee qualified as a low-risk auditee under the requirements set forth by OMB Circular A-133 section 530?No 126 STATE OF NEW MEXICO Schedule VI Town of Taos Page 2 of 6 Schedule of Findings and Questioned Costs For the Year Ended June 30, 2010 Section II –Prior Year Audit Findings Prior Year Audit Findings Financial Statement Findings Disposition 2007-01 Bank Reconciliations Repeated and Revised 2009-01 Stale Dated Checks Resolved 2009-02 Travel and Per Diem Resolved 2009-03 Preparation of Financial Statements Repeated 2009-04 Expenditures in Excess of Budget Resolved 2009-05 Gross Pay is not Correct Resolved 2009-06 Salary/Fringe Benefits Not Appropriately Authorized Resolved 2009-07 Lodger’s Tax Resolved Federal Awards Findings 2009-01 Davis-Bacon Repeated Section III – Financial Statement Findings and Questioned Costs FS 2007-01 Bank Reconciliations and Recording of Cash Condition: The Town did not pr epare a bank reconciliation for the ACH transfer account or the payroll clearing account. In addition, the Town did not record $2,590,450 of restricted cash fr om New Mexico Finance Authority statements on the Town’s 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 that bank reconciliations are prepared and reviewed at least monthly. Effect: Before the adjustments were made, the Town’s cash per the trial balance was understated by $2,541,824. Cause: The Town was unaware of the need to reconcile all bank accounts even when there is no activity. Also, the Town did not record cash in NMFA statements. Auditors’ Recommendation: We recommend that the Town prepare monthly bank reconciliations for the accounts mentioned above and that the bank reconciliations are reviewed for accuracy by Management. Agency’s Response: The Town’s Finance Department has started and will continue to prepare manual bank reconciliations. The Finance Department will work with the software company to upgrade the system to allow these accounts to be entered into the Town’s general ledger and ensure that the pr eparation occurs monthly and reviewed by Management for accuracy. 127 STATE OF NEW MEXICO Schedule VI Town of Taos Page 3 of 6 Schedule of Findings and Questioned Costs For the Year Ended June 30, 2010 FS 2009-03 Preparation of Financial Statements Condition: The Town does not have adequate internal controls in place to prepare its financial statements and related disclosures. Criteria: According to the American Institute of Certified Public Accountants’ Statement on Auditing Standards No. 112, a system of internal control over financial reporting does not stop at the general ledger. Well designed systems include controls over financial statement preparation, including footnote disclosures. Effect: Wh en sufficient controls over the preparation of financial statements and related disclosures are not designed, implemented and operating effectively, an entity’s ability to prevent, detect, and correct misstatements in its financial statements is limited. Cause: The Town’s personnel did not have the time and have not been adequately trained in understanding the elements of external financial reporting, including the preparation of financial statements and related footnote disclosures. Auditors’ Recommendation: We recommend Town management and personnel receive training on understanding the requirements of external financial reporting. The training should include, but not be limited to: Selection of appropriate accounting policies: Governmental Accounting Standards Board (GASB) Generally Accepted Accounting Pr inciples (specifically as applied to governmental units) Financial Accounting Standards Board (FASB) Un derstanding the financial reporting entity Government-wide financial statements Fund financial statements Notes to the financial statements Required supplementary information Management’s discussion and analysis Supplementary information required by the Office of the State Auditor In addition, we recommend that the Town develop and implement policies and pr ocedures designed to pr event or detect possible misstatements in its financial statements and related footnote disclosures. Agency’s Response:The Town has started implementing a plan of action detailing the training for staff, wh ich has included the pr eparation of the MD&A for the first time, participating and planning the New Mexico Government Finance Officers Association’s annual conference with topics associated to financial statements and internal controls, adopting tools, policies and pr ocedures to detect possible misstatements in its financial statements and related foot note disclosures. 128 STATE OF NEW MEXICO Schedule VI Town of Taos Page 4 of 6 Schedule of Findings and Questioned Costs For the Year Ended June 30, 2010 FS 2010-01 Design Deficiencies in Internal Control over Financial Reporting Condition: The Town’s internal control structure is inadequate. The Town does not have a comprehensive documented internal control system over financial information. The Town does not maintain pr oper oversight or monitoring in regards to the Town ’s accounting activities and has not taken the pr oper measures to monitor and mitigate the risk for fraud, misappropriation of assets, or misstatement of financial statements. During our audit, we noted the following internal control deficiencies: Periodically, capital asset listings are routed to the appropriate managers to determine wh ether the assets still physically exist, but have limited success on the completion. Purchase orders, (including unused forms) are not pre-numbered. Changes to the vendor master file are not periodically reviewed for reasonableness. The payroll syst em master file change log is not reviewed, showing all changes made to payroll information, to ensure it reflects accurate and complete information. A current pur chasing manual defines restrictions on pur chases of goods or services from governing bod y members, employees, or other suppliers that would create a conflict of interest. Although this exists in the Town ’s personnel policy, it does not have wr itten acknowledgement by employees, governing board, or management. Management does not have internal controls in place to ensure all debt covenants have been reviewed and the Town is in compliance with all requirements of each debt instrument Management has not established practices for the identification of risks affecting the entity as well as appropriate fraud risk assessment and monitoring processes. Management does not monitor controls over financial reporting through ongoing monitoring, independent evaluations, and remediation of identified deficiencies. Criteria: NMAC 6.20.2.11 states: A.Every Town shall establish and maintain an internal control structure to pr ovide management with reasonable assurance that assets are safe-guarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with GAAP, and that state and federal programs are managed in compliance with applicable laws and regulations. The internal control structure shall include wr itten administrative controls (rules, pr ocedures and practices, and policies that affect the or ganization) and accounting controls (activity cycles, financial statement captions, accounting applications including computer systems) that are in accordance with GAAP. B.Each Town shall develop, establish and maintain a structure of internal accounting controls and wr itten procedures to provide for segregation of duties, a system of authorization and recording procedures, and sound accounting practices in performance of duties and functions. The duties to be segregated are the authorization to execute a transaction, recording the transaction, and custody of assets involved in the transaction. (1) Town management must en sure that pr otection of the public trust is a major focus wh en gr anting the authorization to execute business of the Town . (2) Employees handling significant amounts of cash must be adequately bonded. Access to assets is permitted only in accordance with Town authorization. (3) Receipts, checks or warrants, purchase orders, and vouchers shall be sequentially pre-numbered. (4) The Town shall have proper safeguards to pr otect unused checks and other pr e-numbered for ms, undeposited cash and other receipts, and facsimile signature plates. (5) Transactions are to be recorded as necessary to permit pr eparation of financial statements in conformity with GAAP. In addition, the Town shall establish any other cr iteria applicable to such statements to maintain accountability for assets. (6) The Town shall conduct independent checks on performance and pr oper valuation of recorded amounts, such as clerical ch ecks, reconciliations, comparison of assets with recorded accountability, computer-pr ogr ammed controls, management review of reports that summarize the detail of account balances, and user review of computer generated reports. 129 STATE OF NEW MEXICO Schedule VI Town of Taos Page 5 of 6 Schedule of Findings and Questioned Costs For the Year Ended June 30, 2010 FS 2010-01 Design Deficiencies in Internal Control over Financial Reporting (Continued) C.An internal control structure is required to demonstrate the Town’s ability to record, pr ocess, summarize and report financial data consistent with the following financial statement assertions: (1) rights and ownership; (2) existence and occurrence; (3) valuation and allocations; (4) completeness; and, (5) presentation and disclosure. D.The internal control structure shall demonstrate that the Town identifies applicable laws and regulations, and that pr ocedures are designed to provide reasonable assurance that the Town complies with those laws and regulations. Internal control procedures shall be established, implemented and documented through Town correspondence, manuals, training, and other additional methods. Appropriate internal control procedures shall be adopted by the Council within a Town to safeguard its assets, ch eck the accuracy and reliability of its accounting data, pr omote operational effi ciency, and encourage adherence to pr escribed managerial policies. The internal control structure shall address all Town transactions. The SAS No. 112 Appendix lists the following circumstances as possible control deficiency, significant deficiency, or material weakness, “inadequate documentation of the components of internal control.” SAS 112 paragraph 19 states that ineffective oversight of the agency’s financial reporting and internal control by those charged with governance should be regarded as at least a significant deficiency and a strong indicator of a material weakness in internal control. Effect: Because certain internal controls have weaknesses in design, key controls are not in place to properly safeguard assets and pr event or detect material misstatements due to errors or fraud. Cause: The Town has not performed a for malized and documented risk assessment pr ocess for those key controls in place to prevent and detect errors or fraud. Auditors’ Recommendations: The Town should ensure that a comprehensive internal control structure over financial information is designed, documented, and implemented. Management should follow and ensure that all staff follows the Town’s documented internal control procedures. The Town Council is charged with governance and sh ould provide effective oversight of the internal control and financial reporting process. Agency’s Response: Management agrees with the auditors’ recommendations and will prepare a for malized and documented internal control procedures in association with existing pr actices that are currently followed with the Town’s accounting manual and subsequent policies and pr ocedures. FINDINGS – FEDERAL AWARDS FA 2009-01 –Davis-Bacon Federal program information: Funding agency:Community Development Block Grant Title: CDBG CFDA number: 14.228 Award period: July 1, 2009 to June 30, 2010 Condition: The Town did not review payroll reports submitted for prevailing wages with Davis-Bacon in accordance with the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement. Criteria: The Town is required to submit certified payroll and use Davis-Bacon wages in accordance with U.S. Office of Management and Budget (OMB) Circular A-133. Effect: Non-compliance with the reporting requirement of U.S. Office of Management and Budget (OMB) Circular A-133 may affect the Town’s federal award future funding. 130 STATE OF NEW MEXICO Schedule VI Town of Taos Page 6 of 6 Schedule of Findings and Questioned Costs For the Year Ended June 30, 2010 FA 2009-01 –Davis-Bacon (Continued) Questioned Costs: None Cause: The Town did not review the contractor submitted payroll reports for wages in compliance with Davis- Bacon. Although the Town did review the certified payrolls at the latter part of the project to ensure compliance with this requirement, the internal controls over compliance were absent during the beginning of the fiscal year. Auditors’ Recommendation: The Town must ensure that they follow the Davis-Bacon Act for all future federal award funding. Agency’s Response: Management agrees with the auditors’ recommendation and will follow the compliance supplements for all future federally awarded funds per the grant agreements along with the Town’s created checklist, wh ich describes the proper steps and requirements in following the Davis-Bacon Act. FA 2010-01 Excluded Parties List Federal program information: Funding agency:All major programs Title: All major programs CFDA number: All major programs Award period: July 1, 2009 to June 30, 2010 Condition: During our review of procurement for all major pr ogr ams tested, it was noted that the Town does not reference the Excluded Parties List System, for contracts of goods or services in wh ich more than $25,000 is expended. Criteria: The OMB A-133 Compliance Supplement Part 3-Compliance Requirements I- Procurement Suspension and Debarment stipulates non-federal en tities are pr oh ibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred. “Covered Transactions” include those procurement contracts for goods and services awarded under a nonprocurement transaction that is expected to equal or exceed $25,000 or meet other certain specified criteria. Effect:The Town could be contracting with vendors for services or goods that are included on the suspension and debarment listing which could potentially decrease federal funding received since this is considered non-compliance. Questioned Costs: None Cause: The Town was unaware the Excluded Parties List System website existed. Auditors’ Recommendation: We recommend that the Town implement procedures to ensure all vendors for services and goods over $25,000 be verified that they do not exist on the suspension and debarment listing. Agency’s Response: Management agrees with the auditors’ recommendation and will follow the compliance of supplement Part-3-Compliance Requirements I – Procurement Suspension and Debarment. The Finance Department will also create a checklist, wh ich describes the proper steps and requirements to follow wh en federal funding is involved to meet this compliance supplement. 131 (This page intentionally left blank) 132 STATE OF NEW MEXICO Town of Taos Other Disclosures For the Year Ended June 30, 2010 OTHER DISCLOSURES Exit Conference An exit conference was held on November 22, 2010. In attendance were the following: Representing the Town of Taos: Darren Cordova Mayor Daniel Miera Town Manager Marietta Fambro Finance Director Allen Ferguson Town Attorney Representing Accounting & Consulting Group, LLP: Robert Cordova, CPA Audit Manager Ra y Roberts, CPA Managing Partner Auditor Prepared Financial Statements Although it would be preferred and desirable for the Town t o prepare its own financial statements, the Town’s personnel did not have the time to prepare them. Accounting & Consulting Group, LLP prepared the financial statements of the Town of Taos from the original books and records provided to them by the management of the Town. Management is responsible for the financial statements. 133