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2007 Audit ReportSTATE OF NEW MEXICO TOWN OF TAOS AUDIT REPORT JUNE 309 2007 FINANCIAL STATEMENTS SECTION PATTILLO, BROWN & HILL,L.L.P. CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS i... INDEPENDENT AUDITORS' REPORT Bobby F. Duran, Mayor Town Council Town of Taos Taos, New Mexico and Hector H. Balderas New Mexico State Auditor Santa Fe, New Mexico We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, the aggregate remaining fund information, and the budgetary comparison of the General Fund of the Town of Taos, New Mexico as of and for the year ended June 30, 2007, which collectively comprise the Town's basic financial statements as listed in the table of contents. We have also audited the financial statements of each of the Town's nonmajor governmental funds and the budgetary comparisons presented as supplementary information in the accompanying combining and individual fund financial statements, as of and for the year ended June 30, 2007 as listed in the table of contents. These financial statements are the responsibility of the Town of Taos, New Mexico management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the Town of Taos, New Mexico as of June 30, 2007, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each nonmajor governmental fund, of the Town of Taos, New Mexico as of June 30, 2007 and the respective changes in financial position and cash flows where applicable and the respective budgetary comparisons for each nonmajor governmental fund and enterprise funds, for the year ended in conformity with accounting u principles generally accepted in the United States. 4301THE 25 WAY NE ■ ALBUQUERQUE, NM 87109M (505) 266-5904 ■ FAX: (505) 268-6444 ■ www.pbhcpa.com AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 ■ HILLSBORO, TX (254) 582-2583 TEMPLE, TX (254) 791-3460 ■ WACO, TX (254) 772-4901 STATE OF NEW MEXICO TOWN OF TAOS JUNE 30, 2007 TABLE OF CONTENTS (continued) Schedule of Changes in Assets and Liabilities - Agency Funds .................................. 86 Federal Compliance and Findings: Schedule of Expenditures of Federal Awards ................................................ 87 Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with GovernmentalAuditing Standards ..........._...................................................................................................................... -88-89- Independent 88-89=Independent Auditors' Report On Compliance with Requirements Applicable To Each Major Program and Internal Control Over Compliance In Accordance With OMB Circular A-133 ....... ..................................................................................................................... 90-91 Schedule of Findings and Questioned Costs .................................................. 92-97 ExitConference............................................................................... ............................. 98 STATE OF NEW NIEXICO TOWN OF TAOS JUNE 30, 2007 OFFICAL ROSTER Name Title Bobby F. Duran Mayor Rudy Abeyta Council Member Meliton Struck Council Member Darren Cordova Council Member Erlinda S. Gonzales Council Member ADMINISTRATIVE OFFICIALS Tomas Benavidez Town Manager Marietta Fambro Finance Director STATE OF NEW MEXICO TOWN OF TAOS JUNE 30, 2007 TABLE OF CONTENTS Page INTRODUCTORY SECTION Number OfficialRoster................................................................................................................. 1 FINANCIAL STATEMENTS SECTION Independent Auditors' Report .............................................. ................. ...... ..................... 2-3 Basic Financial Statements: Goverument-wide Financial Statements Statementof Net Assets......................................................................................... 4-5 Statementof Activities.............................................................................................. 6-7 Fund Financial Statements y Balance Sheet -Governmental Funds..............._......................................................... g Statement of Revenues, Expenditures and Changes in Fund Balances - GovernmentalFunds............................................................................................... 9 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances- Governmental Funds to the Statement of Activities... .............. 10 Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual GeneralFund.............................................................................................................. 11-14 Statement of Net Assets- Proprietary Funds............................................................ 15 Statement of Revenues, Expenses and Change in Fund Net Assets - ProprietaryFunds.............................................................................. 16 Statement of Cash Flows- Proprietary Funds ............................................. 17 Statement of Fiduciary Assets and Liabilities.......................................................... 18 Notes to the Financial Statements.......................................................... 19-42 SUPPLEMENTARY INFORMATION Nonmajor Governmental Funds.......................................................... 43-45 Combining and Individual Fund Financial Statements: Combining Balance Sheet- Noumajor Governmental Funds ......................... 46-51 Combining Statement of Revenues, Expenditures and Changes in FundBalances...................................................................................................... 52-57 STATE OF NEW MEXICO TOWN OF TAOS JUNE 30, 2007 TABLE OF CONTENTS (continued) Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: FireProtection Fund.................................................................................................... 58 RecreationFund... ...................... .............................................................................. 59 Lodger's Tax Fund... ..... ............. .............................................. ...... .................. 60 Local Government Corrections Fund............................................................................ 61 Law Enforcement Protection Fund............................................................................... 62 CivicCenter Fund......................................................................................................... 63 CommunityGrants Fund............................................................................................... 64 PublicTransportation Fund........................................................................................... 65 Municipal Road Gasoline Tax Fund..... ........ ........................ ............................... 66 %4 Cent Municipal Gross Receipts Tax Fund... ... - ....... ............................................ - 67-- 7--Central CentralCommunications Fund..................................................................................... 68 1989/1999 Gross Receipts Tax Revenue Bond Reserve .............................................. 69 1993 Receipts Tax Revenue.......................................................................................... 70 1995 Gross Receipts Tax Acquisition Retirement .................. 1995 Gross Receipts Tax Acquisition Reserve........................................................... 72 1999 Gas Tax R.B. Retirement..................................................................................... 73 2001 Gross Receipts Tax R.B. Retirement.................................................................. 74 2001 Gross Receipts Tax R.B. Reserve........................................................................ 75 Capital Projects Fund — Individual Fund ............ ............................. ............................. 76 Airport Construction Fund............................................................................................ 77 1994 GRT Revenue Bond Acquisition....................................................................... 78 Domestic Violence Shelter Fund........................................................................ ...... 79 Facilities Improvements Fund...................................................................................... 80 VehicleReplacement Fund.......................................................................................... 81 1999 Gas Construction Fund ... .................................................................................... 82 Statement of Revenues, Expenditures and Changes in Fund Net Assets — Budget and Actual: Waterand Sewer Fund........................................................................................................ 83 Landfill............................................................................................................................... 84 SolidWaste........................................................................................................................ 85 r r In accordance with Government Auditing Standards, we have also issued our reports dated November 27, 2007, on our consideration of the Town of Taos, New Mexico internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of these reports is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. These reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The Town of Taos has not presented the Management's Discussion and Analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not a required part of, the basic financial statements. Our audit was conducted for the purpose of forming opinions on the basic financial statements that collectively comprise the Town of Taos, New Mexico, basic financial statements and for expressing opinions on the combining and individual fund financial statements and budgetary comparisons. The accompanying Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits of State and Local Governments and Non -Profit Organization and the Schedule of Changes in Assets and Liabilities Agency Funds are presented for purposes of additional analysis and are not a required part of the financial statements. The Schedule of Expenditures and Federal Awards and the Schedule of Changes in Assets and Liabilities Agency Funds have been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. Pattillo, Brown, & Hill, L.L.P. Albuquerque, New Mexico November 27, 2007 4301 THE 25 WAY NE ■ ALBUQUERQUE, NM 871099 (505) 266-5904 ■ FAX: (505) 268-6444 ■ w .pbhcpa.com AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 ■ HILLSBORO, TX (254) 582-2583 TEMPLE, TX (254) 791-3460 0 WACO, TX (254) 7724901 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF NET ASSETS JUNE 30, 2007 4 Governmental Business -type Activities Activities Total ASSETS Current assets: Cash and cash equivalents $ 937,351 $ 3,000,408 $ 3,937,759 Investments 7,953,533 1,542,818 9,496,351 Receivables (net of allowances for uncollectible) 1,509,466 847,317 2,356,783 htterfwnl balances 18,242 97,000 115,242 Total current assets 10,418,592 5,487,543 15,906,135 Other assets: - Restricted cash - 1,396,344 1,396,344 Total other assets - 1,396,344 1,396,344 Noncurrent assets: Capital assets not being depreciated Land 5.117,635 262,422 5,380,057 Construction in progress 520,846 2,293,421 2,814,267 Capital assets, being depreciated 84,558,636 26,270,450 110,829,086 Less: accumulated depreciation ( 43,312,627) ( 10,636,099) ( 53,948,726) Total capital assets 46,884,490 18,190,194 65,074,684 Total noncurrent assets 46,884,490 18,190,194 65,074,684 Total assets $ 57,303,082 $ 25,074,081 $ 82,377,163 4 The notes to the financial statements are an integral part of this statement. 5 Governmental Business-type Activities Activities Total LIABILITIES Current liabilities: Bank overdraft. 23,541 - 23,541 Accounts payable 215,355 740,325 955,680 Accrued liabilities 258,651 41,916 .300,567 Court bonds 4,592 - 4,592 Interfund balances - 115,242 115,242 Accrued interest payable 29,454 - 29.454 Current portion long term debt 696,495 146,362 842,857 Total current liabilities 1,228,088 1,043,845 2,271,933 Noncurrent liabilities: Meter deposits - 210,960 210;960 Compensated absences 735,015 75,652 810,667 Landfill closure and post closing liability - 235,575 235,575 Bonds and contracts payable less current portion 2,313,505 3,530,389 5,843,894 Total noncurrent liabilities 3,048,520 4,052,576 7,101,096 Total liabilities 4,276,608 5,096,421 9,373,029 NET ASSETS Invested in capital assets, net of related debt 43,874,490 14,513,443 58,387,933 Restricted for: Capital projects 3,897,684 - 3,897,684 Swinuningpool 7,845 - 7,845 Debt service 825,545 568,925 1,394,470 Unrestricted 4,420,910 4,895,292 9,316,202 Total net assets $ 53,026,474 $ 19,977,660 $ 73,004,134 The notes to the financial statements are an integral part of this statement. 5 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2007 Business -type activities: Water and sewer 3,247,416 2,294,450 - 2,860,705 Solid waste 1.,077,805 1,128,401 - - Landfill 807,736 1,251,843 - _ Total business -type activities 5,132,957 4,674,694 - 2,860,705 Total primm primary government $ 21,222,138 $ 6,112,820 $ 1,016,433 $ 4,609,006 General revenues: Taxes: Property taxes, levied for general purposes State shared Sales Lodgers Francluse Investment earnings Miscellaneous Total generalrevenues, special items, and transfers Change in net assets Net assets, beginning Restatement Net assets, beginning as restated Net assets, ending The notes to the financial statements are an integral part of this statement. 6 Program Revenues Operating Capital Charges for Grants and Giants and Fmrctions/Prograrns Expenses Services Contributions Contributions Primary Government: Govermnental activities: General government $ 5,738,515 $ 611,574 $ 284,015 $ 1,594,502 Public safety 3,901,746 488,748 388,621 - Highway and streets 2,389,589 - 239,721 119,778 Culture and recreation 3,958,587 337,804 104,076 34,021 Interest and fees on long-term debt 100,744 _ _ Total governmental activities 16,089,181 1,438,126 _ 1,016,433 1,748,301 Business -type activities: Water and sewer 3,247,416 2,294,450 - 2,860,705 Solid waste 1.,077,805 1,128,401 - - Landfill 807,736 1,251,843 - _ Total business -type activities 5,132,957 4,674,694 - 2,860,705 Total primm primary government $ 21,222,138 $ 6,112,820 $ 1,016,433 $ 4,609,006 General revenues: Taxes: Property taxes, levied for general purposes State shared Sales Lodgers Francluse Investment earnings Miscellaneous Total generalrevenues, special items, and transfers Change in net assets Net assets, beginning Restatement Net assets, beginning as restated Net assets, ending The notes to the financial statements are an integral part of this statement. 6 7 Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business -type Activities Activities Total $( 3,248,424) $ - $( 3,248,424) ( 3,024,377) - ( 3,024,377) 2,030,090) - ( 2,030,090) ( 3,482,686) - ( 3,482,686) ( 100,744) - ( 100,744) '.. ( 11,886,321) ( 11,886,321) 1,907,739 1.,907,739 '.. - 50,596 50,596 - 444,107 444,107 - 2,402,442 2,402,442 ( 11,886,321) 2,402,442 ( 9,483,879) 542,709 - 542,709 83,104 - 83,104 '.. 10,323,182 478,371 10,801.553 1,094,524 - 1,094,524 369,051 - 369.051 460,876 206,166 667,042 1,138,911 - 1.,138,911 14,012,357 684,537 14,696,894 2,126,036 3,086,979 5,213.015 51,044,868 16, 890,681 67,935,549 ( 144,430) - ( 144,430) 50,900,438 16, 890,681 67,791,119 $ 53,026,474 $ 19,977,660 $ 73,004,134 7 c �� ASSETS Cash Investments Accounts receivable Due from other funds Total assets LIABILITIES AND FUND BALANCES Liabilities: Bank overdrafts Deferred revenue Accounts payable Accrued liabilities Court bonds payable Total liabilities Fund balances: Reserved for: Special revenue -swimming pool Debt service Capital projects Unreserved, undesignated reported in: General fund Capital projects funds Special revenue funds Total fund balances Total liabilities and fund balances STATE OF NEW MEXICO TOWN OF TAOS BALANCESHEET GOVERNMENTAL FUNDS JUNE 30, 2007 7,845 7,845 Nonmaior Total General Capital Governmental Governmental Fund Prgiects #51 Funds Funds 3,491,386 2,393,728 3,890,230 9,775,344 $ 3,865,768 $ 2,420,186 $ 4,132,638 $ 348,706 $ - $ 588,645 $ 937,351 2,665,167 2,233,000 3,055,366 7,953,533 833,653 187,186 488,627 1,509,466 18,242 - 18,242 $ 3,865,768 $ 2,420,186 $ 4,132,638 $ 10,418,592 $ - $ 18,401 $ 5,140 $ 23,541 - - 141,109 141,109 149,524 8,057 57,774 215,355 220,266 - 38,385 258,651 4,592 - - 4,592 374,382 26,458 242,408 643,248 7,845 7,845 - 825,545 825,545 - 2,393,728 1,503,956 3,897,684 3,491,386 - - 3,491,386 - 537,776 537,776 - - 1,015,108 1,015,108 3,491,386 2,393,728 3,890,230 9,775,344 $ 3,865,768 $ 2,420,186 $ 4,132,638 Long term liabilities, including loans payable, are not due and payable in the current period and therefore are not reported in the funds. ( 3,774,469; Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 46,884,490 Recognition of deferred revenue is reflected on the full accrual basis in the statement of net assets. Net assets of governmental activities The notes to the financial statements are an integral part of this statement. 8 141,109 $ 53,026,474 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2007 REVENUES Taxes Licenses and permits Intergovernmental Fines and forfeitures Charges for services State shared gross receipts taxes State shared gasoline taxes Miscellaneous Total revenues EXPENDITURES Current operations: General government Public safety Highways and streets Culture and recreation Debt service: Principal Interest & fiscal charges Capital outlay: Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Debt proceeds Transfers in (out) Total other financing sources (uses) Net change in fund balances Fund balances, beginning of year Restatement Net assets, restated Fund balances, end of year The notes to the financial statements are an integral part of this statement. 9 Capital Nonmajor Total Projects Governmental Governmental General Fund #51 Funds Funds $ 4,803,130 $ 717,584 $ 2,003,733 $ 7,524,447 257,512 - - 257,512 70,550 1,017,603 1,978,992 3,067,145 158,597 - 79,078 237,675 350,218 107,076 457,294 4,688,040 - 4,688,040 58,974 - 58,974 479,943 - 264,136 744,079 10,866,964 1,735,187 4,433,015 17,035,166 4,061,462 106,360 538,139 4,705,961 2,675,892 - 764,524 3,440,416 970,209 970,209 1,952,838 - 1,475,710 3,428,548 598,000 598,000 - - 111,042 111,042 8,437 3,474,493 1,218,713 4,701,643 9,668,838 3,580,853 4,706,128 17,955,819 1,198,126 ( 1,845,666) ( 273,113) ( 920,653) - 954,000 954,000 ( 1,611,951) 983,595 628,356 ( 1,611,951) 1,937,595 628,356 954,000 ( 413,825) 91,929 355,243 33,347 3,905,211 2,417,514 3,534,987 9,857,712 - ( 115,715) - ( 115,71.5) 3,905,211 2,301,799 3,534,987 9,741,997 $ 3,491,386 $ 2,393,728 $ 3,890,230 $ 9,775,344 The notes to the financial statements are an integral part of this statement. 9 STATE OF NEW MEXICO TOWN OF TAOS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2007 Amounts reported for governmental activities in the Statement of Activities are different because: Net change in fund balances - total governmental funds Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets are allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation expense exceeded capital outlay. The issuance of long-term debt (e.g., bonds, teases) provides current financial resources to governmental funds, whitle the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amoritzed in the statement of activities. This amount is to net effect of these differences in. the treatment of long-term debt and related items. Recognition of accounts receivable deferred revenues is reflected on the full accrual basis within the statement of activities. The Town has determined that the receivables are not available, therefore, the revenues have been deferred within the governmental funds. Donations of capital assets increase net assets in the statement of activities, but do not appear in the governmental funds because they are not financial resources. Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Change in net assets of governmental activities The notes to the financial statements are an integral part of this statement. 10 S 33,347 1,318,630 ( 356,000) 141,109 1,038,942 ( 49,992) $ 2,126,036 I L I STATE OF NEW MEXICO TOWN OF TAOS GENERALFUND STATEMENT 'O REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS FOR THE YEAR ENDED JUNE 30, 2007 REVENUES Taxes Licenses and permits Intergovernmental Fines and forfeitures Charges for services Miscellaneous Total revenues EXPENDITURES General Government: Town council Personal services Operating expenses Capital outlay Total town council Executive Personal services Operating expenses Capital outlay Total executive Finance Personal services Operating expenses Capital outlay Total finance Planning and development Personal services Operating expenses Capital outlay Total planning and development Budgeted Amounts Original Final 9,293,969 319,027 65,000 182,233 365,512 395,584 10,621,325 9,427,520 319,027 65,000 182,233 365,512 401,417 10,760,709 179,594 198,445 607,436 607,436 5,000 5,000 792,030 810,881 Variance with Final Budget Actual Positive Amounts (Negative) 9,444,290 $ 16,770 257,512 ( 61,515) 70,550 5,550 158,597 ( 23,636) 350,218 ( 15,294) 538,503 137,086 10,819,670 58,961 196,165 495,618 691,783 2,280 111,818 5,000 119,098 582,583 626,452 519,054 107,398 267,170 252,171 100,740 151,431 5,000 854,753 878,623 619,794 258,829 449,868 440,807 427,752 13,055 383,370 393,501 329,063 64,438 833,238 834,308 756,815 77,493 565,411 535,927 500,414 35,513 228,774 230,285 213,550 16,735 794,185 766,212 713,964 52,248 The notes to the financial statements are an integral part of this statement. (continued) 11 1 r Building and maintenance Personal services STATE OF NEW MEXICO 359,282 352,696 6,586 TOWN OF TAOS 4,481 GENERAL FUND Operating expenses 155,495 STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES 115,723 BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS Total building and maintenance (continued) 505,906 468,419 FOR THE YEAR ENDED JUNE 30, 2007 Airport Communications bureau Personal services 283,299 285,833 253,877 31,956 Operating expenses 203,519 203,519 178,875 24,644 Capital outlay 5,000 5,000 - 5,000 I Total communications bureau 491,818 494,352 432,752 61,600 Fleet maintenance 137,905 131,992 5,913 Personal services 143,685 124,081 107,960 16,121 Operating expenses 80,341 96,745 90,965 5,780 Total fleet maintenance 224,026 220,826 198,925 21,901 Special services 43,559 29,995 13,564 Personal services 421,465 359,401 305,406 53,995 Operating expenses 286,764 286,764 174,364 112,400 '.. Capital outlay _ _ Total general government 5,539,277 Total special services 708,229 646,165 479,770 166,395 Building and maintenance Personal services 340,614 359,282 352,696 6,586 (, Capital outlay 4,481 Operating expenses 155,495 146,624 115,723 30,901 Total building and maintenance 500,590 505,906 468,419 37,487 Airport Personal services 88,848 83,670 82,687 983 Operating expenses 48,482 54,235 49,305 4,930 Capital outlay _ _ _ _ Total airport 137,330 137,905 131,992 5,913 Judicial Personal services 157,503 160,301 157,519 2,782 Operating expenses 45,575 43,559 29,995 13,564 Capital outlay I - 5,833 5,242 591 Total judicial 203,078 209,693 192,756 16,937 Total general government 5,539,277 5,504,871 4,686,970 817,901 i The notes to the financial statements are an integral part of this statement. (continued) 12 r I The notes to the financial statements are an integral part of this statement. (continued) 13 STATE OF NEW MEXICO TOWN OF TAOS GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS (continued) FOR THE YEAR ENDED JUNE 30, 2007 Public safety Police Personal services 1,689,169 1,760,381 1,680,214 80,167 Operating expenses 261,521 261,521 260,803 718 Total police 1,950,690 2,021,902 1,941,017 80,885 Fire Personal services 380,785 384,598 380,788 3,810 Operating expenses 151,745 167,485 166,573 912 Capital outlay 6,000 - Total fire 538,530 552,083 547,361 4,722 Total public safety 2,489,220 2,573,985 2,488,378 85,607 Highways and streets Personal services 593,202 584,185 540,171 44,014 Operating expenses 448,673 492,172 430,038 62,134 Capital outlay - _ _ _ Total highways and streets 1,041,875 1,076,357 970,209 106,148 Culture and recreation Library Personal services 418,465 418,465 408,130 10,335 Operating expenses 127,944 123,944 111,913 12,031 Capital outlay Total library 546,409 542,409 520,043 22,366 Recreation/aquatics Personal services 765,358 752,931 687,939 64,992 Operating expenses 342,398 342,398 312,104 30,294 Total recreationlaquatics 1,107,756 1,095,329 1,000,043 95,286 Total culture and recreation 1,654,165 1,637,738 1,520,086 117,652 Excess (deficiency) of revenues over expenditures ( 103,212) ( 32,242) 1,154,027 1,186,269 The notes to the financial statements are an integral part of this statement. (continued) 13 STATE OF NEW MEXICO TOWN OF TAOS GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS (continued) FOR THE YEAR ENDED JUNE 30, 2007 OTHER FINANCING SOURCES (USES) Transfers out ( 1,596,119) ( 1,791,005) ( 1,611,951) 179,054 Total other financing sources (uses) ( 1,596,119) ( 1,791,005) ( 1,611,951) 179,054 Net change in fund balances $( 1,699,331) $( 1,823,247) $( 457,924) $ 1,365,323 Beginning cash balance $ 464,929 $ 464,929 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in payables Change in receivables Net change in fund balances GAAP basis $( 457,924) ( 21,472) 65,571 $( 413,825) The notes to the financial statements are an integral part of this statement. 14 r STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2007 ASSETS Current assets: Cash and cash equivalents Investments Accounts receivable (net of allowance for uncollectible) Due from other funds Total current assets Restricted assets: Customers meter deposits Debt payments and reserves Landfill improvements, closures and solid waste issues Total restricted assets Capital assets: Non -depreciable assets: Land Construction in progress Depreciable assets: Property, plant and equipment Less accumulated depreciation Total capital assets Total assets LIABILITIES Current Liabilities: Accounts payable Accrued liabilities Due to other funds Current portion long-term debt Total current liabilities Long term liabilities: Utility meter deposits Compensated absences Landfill closure and post closing liability Bonds and loans payable less cwTent portion Total long-term liabilities Total liabilities Net Assets Invested in capital assets, net of related debt Restricted for debt service Unrestricted Total net assets Nonmajor 2,226,098 Water and Solid Total Sewer Landfill Waste Proprietary Fund Fund Fund Funds $ 1,894,400 $ 387,553 $ 718,455 $ 3,000,408 1,393,718 - 149,100 1,542,818 684,973 24,451 137,893 847,317 - 97,000 - 97,000 3,973,091 509,004 1,005,448 5,487,543 210,930 - - 210,930 305,170 263,755 - 568,925 - 616,489 - 616,489 516,100 880,244 - 1,396,344 - 262,422 - 262,422 2,293,421 - - 2,293,421 23,627,838 2,226,098 416,514 26,270,450 ( 9,825,557) ( 467,522) ( 343,020) (10,636,099) 16,095,702 2,020,998 73,494 18,190,194 20,584,893 3,410,246 1,078,942 25,074,081 502,620 48,945 188,760 740,325 25,477 9,293 7,146 41,916 11,027 6,647 97,568 115,242 79,087 67,275 - 146,362 618,211 132,160 293,474 1,043,845 210,960 - - 210,960 53,996 20,573 1,083 75,652 - 235,575 - 235,575 3,089,222 441,167 - 3,530,389 3,354,178 697,315 1,083 4,052,576 3,972,389 829,475 294,557 5,096,421 12,927,393 1,512,556 73,494 14,513,443 305,170 263,755 - 568,925 3,379,941 804,460 710,891 4,895,292 $ 16,612,504 $ 2,580,771 $ 784,385 $ 19,977,660 The notes to the financial statements are an integral part of this statement. 15 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF REVENUES, EXPENSES AND CHANGE IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2007 Operating Revenues: Charges for services Other revenue Total operating revenues Operating Expenses: Personnel services Other Total operating expenses Operating income (loss) Non-operating revenues (expenses): Interest expense Interest income Sales tax Federal grants { Total non-operating revenues (expenses) Change in net assets Net assets, beginning of year Net assets, end of year The notes to the financial statements are an integral part of this statement. 16 Nonmajor Water and Solid Total Sewer Landfill Waste Proprietary Fund Fund Fund Funds $ 2,043,098 $ 1,251,843 $ 1,048,485 $ 4,343,426 251,352 79,916 331,268 2,294,450 1,251, 843 1,128,401 4,674,694 614,946 276,142 104,349 995,437 2,471,813 514,953 973,456 3,960,222 3,086,759 791,095 1,077,805 4,955,659 ( 792,309) 460,748 50,596 ( 280,965) ( 160,657) ( 16,641) - ( 177,298) 170,035 36,131 - 206,166 478,371 - - 478,371 2,860,705 - - 2,860,705 3,348,454 19,490 - 3,367,944 2,556,145 480,238 50,596 3,086,979 14,056,359 2,100,533 733,789 16,890,681 $ 16,612,504 $ 2,580,771 $ 784,385 $ 19,977,660 The notes to the financial statements are an integral part of this statement. 16 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2007 Cash. flows front operating activities Cash received from customers Cash payments to employees for services Cash payments to supplies for goods and services Net cast provided by operating activities Nonmajor (3,427,190) Water and Solid Total Sewer Landfill Waste Proprietary Fund Fund Fund Funds $ 1,873,087 $ 1,241,748 (602,865) (270,768) (1,386,309) (360,107) (116,087) 610,873 Cash flows from noncapital financing activities f Transfers from other funds - 4,019 Transfers to other funds 8,525 - Net cash provided by capital and related activities 8,525 4,019 Cash flows from capital and related financing activities (Acquisition) disposition of capital assets (3,427,190) (16,397) Grant proceeds 2,860,705 (2,604,809) Receipt of tax 478,371 - Principal paid on debt (75,696) (293,201) Interest paid on debt (160,657) (16,641) Net cash provided by capital financing activities (324,467) (326,239) Cash flows from investing activities Interest on investments 170,035 36,131 Net cash provided by capital and related activities 170,035 36,131 $ 1,099,860 $ 4,214,695 (105,908) (979,541) (858,393) (2,604,809) 135,559 630,345 - 4,019 232 8,757 232 12,776 (500,714) Increase (decrease) in accounts payable Net increase (decrease) in cash and cash equivalents (261,994) 324,784 135,791 (3,443,587) 2,860,705 478,371 (368,897) (177,298) L 650,706) 206,166 206,166 198,581 Cash and equivalents beginning of year 4,066,212 943,013 731,764 5,740,989 Cash and equivalents end of year $ 3,804,218 $ 1,267,797 $ 867,555 $ 5,939,570 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income $( 792,309) $ 460,748 $ 50,596 $( 280,965) Adjustments to reconcile operating income to net cash provided (used) in operating activities: Depreciation expense 795,320 111,903 6,096 913,319 Provision for bad debt 32,231 - - 32,231 Decrease (increase) in customer receivable ( 462,078) ( 10,095) ( 28,541) (500,714) Increase (decrease) in accounts payable 290,184 42,943 108,967 442,094 Increase (decrease) in accrued liabilities ( 138) 1,623 344 1,829 Increase (decrease) in customer deposits 8,484 - - 8,484 Increase (decrease) in compensated absences 12,219 3,751 ( 1,903) 14,067 Net cash provided by operating activities $( 116,087) $ 610,873 $ 135,559 $ 630,345 The notes to the financial statements are an integral part of this statement. 17 STATE OF NEW MEXICO TOWN OF TAOS STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCY FUNDS JUNE 30, 2007 ASSETS Cash Investments Total assets LIABILITIES Deposits payable Accounts receivable Due to outside entities Total lin bilities $ 27,787 30,500 $ 58,287 $ 18,680 39,607 $ 58,287 The notes to the financial statements are an integral part of this statement. 18 I STATE OF NEW MEXICO TOWN OF TAOS NOTES TO FINANCIAL STATEMETNS JUNE 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Town of Taos (Town) was incorporated in 1934. The Town operates under a Mayor Council form of government and provides the following services as authorized by its charter: public safety (police and fire), highways and streets, sanitation, health and social services, culture and recreation, planning and zoning, water service, sewer service and general administrative services A. Reporting Entity This summary of significant accounting policies of the Town of Taos is presented to assist in the understanding of the Town of Taos's financial statements. The financial statements and notes are the representation of the Town of Taos's management who are responsible for their integrity and objectivity. The financial statements of the Town have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the government's accounting policies are described below. In evaluating how to define the government, for financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in generally accepted accounting principles (GAAP). The basic (but not the only) criteria for including a potential component unit within the reporting entity is the governing body's ability to exercise oversight responsibility. The most significant manifestation of this ability is financial interdependency. Other manifestations of the ability to exercise oversight responsibility include, but are not limited to, the selection of governing authority, the designation of management, the ability to significantly influence operations, and accountability for fiscal matters. A second criterion used in evaluating potential component units is the scope of public service. Application of this criterion involves considering whether the activity benefits the government and/or its citizens, or whether the activity is conducted within the geographic boundaries of the govermnent and is generally available to its citizens. A third criterion used to evaluate potential component units for inclusion or exclusion from the reporting entity is the existence of special financing relationships, regardless of whether the government is able to exercise oversight responsibilities. • Based upon the application of these criteria, the Town has no component units. 19 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government -Wide And Fund Financial Statements The government -wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfrduciary activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenue, are reported separately from business -like activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenue. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenue includes 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenue are reported instead as general revenue. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year for which they are levied. Sales, franchise, lodgers', cigarette, gas and other similar taxes are recognized as revenue when the underlying exchange takes place. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenue to be available if collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, sales taxes, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenue of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the Town. Taos County, the collecting agent for the Town's property tax, is unable to report the amount of delinquent tax currently due to the Town. fill i 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 Town's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Capital Projects Fund was created to accumulate revenues and other financing sources for the purpose of financing general-purpose capital projects. The Town reports the following major proprietary funds: The Water and Server Fund is used to account for the activities of the Town's water and sewer operations. The 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. The Town reports the following non -major proprietary fund, solid waste fund: The Solid Waste Fund accounts for the provision of solid waste services to the residents of the Town and some residents of the County. All activities necessary to provide such services are accounted for in this fund, including, but not limited to administration, operations, maintenance, financing and related debt service, and billing and collection. Additionally, the Town reports the following fund types: The Fiduciary Fund accounts for resources held for others. Agency funds are custodial in nature (assets equal liabilities), do not present results of operations and are accounted for using the accrual basis of accounting. These funds are used to account for assets that the Town holds for others in an agency capacity. Private -sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the govemment-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private - sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The Town has elected not to follow subsequent private -sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are charges between the Town's water and sewer function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenue reported for the various functions concerned. 21 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation _ (continued) I Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenue includes all taxes. Proprietary funds distinguish operating revenues and expenses from nozoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise funds are charges to customers for sales and services. Operating expenses for the enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenue and expenses. When both restricted and unrestricted resources are available for use, it is the Town's policy to use restricted resources first, and then unrestricted resources as they are needed. K i D. Assets, Liabilities, and Net Assets or Equity Cash and Investments Cash and investments include amounts in demand deposits, certificates of deposit and investments with a maturity date within a year of the date acquired by the Town. Cash in excess of current requirements is invested in the New Mexico State Treasurer's Local Government Pooled Investment Fund. Receivables Accounts receivable of the enterprise fund represents the amounts due from customer utility accounts. The governmental funds report taxes and other fees collected at the Town, County and [ State level as receivables. All trade and tax receivable are shown net of an allowance for uncollectible. Deferred Revenues Within the governmental funds, revenues must be available in order to be recognized. Revenues such as real estate taxes that are not available are recorded as deferred revenues and reflected as a liability with the balance sheet }t Restricted Assets Certain resources of the enterprise funds are set aside for revenue bond and note repayment and replacement reserves and are classified as restricted assets on the balance sheet because the use of these monies is limited by applicable bond covenants and loan documents. In addition, customers meter deposits are classified as restricted assets. 22 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (continued) Capital Assets Capital assets, which include property, plant, equipment, improvements, and water and sewer system, are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. The Town defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of library books at conversion were determined to be fully depreciated. Current year purchases of library books do not warrant capitalization. The Town has retroactively reported all major general infrastructure assets. Interest incurred during the construction phase of capital assets of business type activities is included as part of the capitalized value of the asset constructed. During the year the Town did not capitalize any interest costs. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. Property, improvements, equipment, and water and sewer system are depreciated using the straight-line method over the following useful lives: Assets Years Data Processing Equipment&Software 3-5 Machinery and equipment 5-25 Buildings and improvements 10-50 Infrastructure 10-50 Compensated Absences The Town's employees earn personal leave at a rate of 22 to 27 days per year based on years of service. Employees can carryover unused personal leave each year with a cap of 500 hours. On an appointed day each year employees may sell back -unused personal leave based on the following schedule. Once the employee achieves the 500 hour cap, they can only sell back a total of 136 hours annually; the other 80 hours accrued annually must be used by December 31 or forfeited. At retirement or separation all leave may be sold back at 100% of hourly salary. All personal leave is accrued when incurred in the government -wide and proprietary fund financial statements. 23 Percent of Hours hourly salary 200 to 299 25% 300 to 399 50% 400 to 499 75% 500 and above 100% Once the employee achieves the 500 hour cap, they can only sell back a total of 136 hours annually; the other 80 hours accrued annually must be used by December 31 or forfeited. At retirement or separation all leave may be sold back at 100% of hourly salary. All personal leave is accrued when incurred in the government -wide and proprietary fund financial statements. 23 i. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (Continued) Long-term Obligations In the government -wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net assets. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. Net Assets Y Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used for the acquisition, construction or improvements of those assets, and adding back unspent proceeds. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislations adopted by the Town or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates. 24 ( 2. RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government -wide Statement of Net Assets The governmental fund balance sheet includes reconciliation between fund balance — total governmental funds and net assets — governmental activities as reported in the government -wide statement of net assets. One element of that reconciliation explains, "long-term liabilities, including loans payable, are not due and payable in the current period and therefore are not reported in the funds." The details of this $ 3,774,469 difference are as follows: Bonds, loans and contracts payable - current $ 696,495 Bonds, loans and contracts payable - long-term 2,313,505 Accrued interest payable 29,454 Compensated absences 735,015 Net adjustment to reduce fund balance - total governmental funds to arrive at - net assets - governmental activities $ 3,774,469 Explanation of Certain Differences Between the Governmental Fund Statement of Revenue Expenditures and Changes in Fund Balances and the Government wide Statement of Activities The governmental fund statement of revenue, expenditures and changes in fund balances includes a reconciliation between net changes in fund balances — total governmental fund and changes in net assets of governmental activities as reported in the government -wide statement of activities. One element of that reconciliation explains, "Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of this $1,318,630 difference are as follows: Capital outlay $ 4,701,643 Depreciation expense (3,383,013) Net adjustment to decrease net changes in fund balances total governmental funds to arrive at changes in net assets of government activities $ 1,318,630 Another element of that reconciliation explains that, the issuance of long-term debt provides current financial resources to governmental funds, while repayment of the principal of long-term debt consumes the current financial resources of the governmental funds. Neither transaction, however, has any effect on net assets. The details of this $356,000 difference are as follows: Proceeds from issuance of debt $ 954,000 Principal payments of long-term debt (598,000) Net adjustment to decrease net changes in fund balances total governmental funds to arrive at changes in net assets of government activities $ 356,000 25 2. 3 RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS Explanation of Certain Differences Between the Governmental Fund Statement of Revenue Expenditures and Changes in Fund Balances and the Government -wide Statement of Activities (continued) Another element of that reconciliation states, "The net effect of various miscellaneous transactions involving capital assets is to decrease net assets." The details of this $1,038,942 difference are as follows: Donations of capital assets increase net assets on the statement of activities, but do no appear in the governmental funds because they are not financial resources. $ 1,038,942 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities. $ 1,038,942 Another element of that reconciliation states, "Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds." The details of this $49,992 difference are as follows: Compensated absences - increase $ (60,290) Accrued interest - decrease 10,298 Net adjustment to decrease net changed in fund balances -total governmental funds to arrive at changes in net assets of governmental activities $ (49,992) STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information The Town follows these procedures in establishing the budgetary data reflected in the financial statements: Prior to June 1, the Town Finance Director submits to the Town Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them based on previous year's history. Public hearings are conducted at the Town Hall to obtain taxpayer comments. Prior to July 1, the budget is legally enacted through passage of an ordinance. 2. The Town Finance Director is authorized to transfer budgeted amounts between departments within any fund; however, any revisions that alter the total expenditures of any funds must be approved by the Town Council and New Mexico Department of Finance, Division of Local Governments. The original budget that was adopted in July was amended during the fiscal year in a legally permissible manner. Ki I` P 3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) Budgetary Information (continued) 3. Formal budgetary integration is employed as a management control device during the year for the General Fund and Special Revenue Funds. 4. Encumbrances are not reported in the budgets or financial statements. 5. The level of classifications detail in which expenditures or expenses may not legally exceed appropriations for each budget is in fund total. Appropriations lapse at year end. 6. Budgets for the General and Special Revenue Funds are adopted on a basis not consistent with generally accepted accounting principles. Throughout the year the accounting records are maintained on the non -GAAP basis of cash receipts and disbursements. Accordingly, certain revenues and the related assets are recognized when paid rather than when the obligation is incurred. The financial statements are presented on the modified accrual basis of accounting. Budgetary comparisons presented for General and Special Revenue Funds in this report are on the non -GAAP budgetary basis and actual (cash basis). Deposits The Town invests its funds in accordance with state statues which require that financial institutions pledge collateral consisting of approved federal or state securities whose market value is equal to at least 50% of the deposits in excess of FDIC insurance coverage. In accordance with state statutes, the Town may have deposits only in financial institutions, federal direct obligations, or the New Mexico State Treasurer's Local Government Pooled Investment Plan. As of June 30, 2007 the Town had $7,006,295 in financial institutions and $8,074,749 invested in the New Mexico State Treasurer's Local Government Pooled Investment. 27 3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) Cash, Cash Equivalents Total Cash in Banks $ 6,798,504 $ 34,347 $ 295,692 $ (6,931) Funds Held by the New Mexico Finance Authority: Bank of Albuquerque US Treasury Fund Accounts Loan reserve accounts State Treasurers Office Plus Cash on Hand Total Cash Per Books As Reported in Financial Statements: Equity in Cash: Cash Bank overdrafts Restricted Cash Investments Agency Fund 28 6,530,228 ) 207,791 51,031 8,074,749 1,401 f $ 14,865,200 L. $ 3,937,759 (p (23,541) L? 1,396,344 9,496,351 58,287 $ 14,865,200 I Balance Add Less Balance Per Bank Deposits Outstandine Per Books First Community Bank June 30, 2007 In -Transit Checks Adjustments ( June 30, 2007 [:.. Checking Accounts Water Sewer System Income Fund 2,916,528 33,612 4,881 (5,247) 2,940,012 Clearing Account 198,033 - 196,687 - 1,346 Utility Improvement Fund 9,971 - - - 9,971 Utility Construction Fund 44,770 - - - 44,770 Town Debt Service Fund 338 - _ _ -i 338 Judicial Bond Fund Municipal Cour 4,592 - - - 4,592 Certificate of Deposit 170,500 170,500_.. Certificate of Deposit 250,000 - - - 250,000 Certificate of Deposit 195,500 195,500 Certificate of Deposit 499,000 - - - 499,000 Certificate of Deposit 235,000 - - - 235,000 Centinel Bank Checking Accounts General Fund 824,654 735 - (1,692) 823,697 Water Waste Water Improvement 1,112,687 - 36,276 8 1,076,419 ACH Transfer Account 57,948 - 57,848 - 100 Payroll Clearing Account 95 - - 95 1994 GRT RB Acquisition Fund 787 - 787 1994 GRT RB Reserve Fund 92,754 92,754 HUD Account -Domestic Violence She 2 _ -' 2 Certificate of Deposit 177,500 - 177,500 Peoples Bank Checking Account 7,845 ( 7,845 L Total Cash in Banks $ 6,798,504 $ 34,347 $ 295,692 $ (6,931) Funds Held by the New Mexico Finance Authority: Bank of Albuquerque US Treasury Fund Accounts Loan reserve accounts State Treasurers Office Plus Cash on Hand Total Cash Per Books As Reported in Financial Statements: Equity in Cash: Cash Bank overdrafts Restricted Cash Investments Agency Fund 28 6,530,228 ) 207,791 51,031 8,074,749 1,401 f $ 14,865,200 L. $ 3,937,759 (p (23,541) L? 1,396,344 9,496,351 58,287 $ 14,865,200 I 3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) Federal Home Loan Bank - CUSIP 3133MTQB7, 3.50%, 11/15/07 84,417 Pledged Collateral 173,800 Federal Home Loan Bank - CUSIP 3133MTQB7 3.50%, 11/15/07 173,800 Federal Home Loan Bank - CUSIP 3133MTQB7 3.50%x, 11/15/07 First Federal Farm Credit Bank- CUSIP 31331TMT5, 3.38%, 6/12/08 117,934 Federal Home Loan Bank - CUSIP 31339YV V 1, 3.38%, 7/21/08 Community Centinel Peoples 73,416 Deposit Bank Bank Bank Total FDIC 4,524,232 2,266,427 7,845 6,798,504 Federal Home Loan Bank - CUSIP 3133MTRK6, 4.00%, 11/13/09 (200,000) (200,000) (7,845) (407,845) Total uninsured public funds 4,324,232 2,066,427 - 6,390,659 Collateral pledge: Federal Home Loan Bank of Dallas 8500 Freeport Parkway South,Irving, TX Federal Home Loan Bank - CUSIP 3133XHYN6. 5.13%, 11/28/07 149,836 Federal Home Loan Bank - CUSIP 3133MTQB7, 3.50%, 11/15/07 84,417 Federal Home Loan Bank - CUSIP 3133MTQB7, 3.50%, 11/15/07 173,800 Federal Home Loan Bank - CUSIP 3133MTQB7 3.50%, 11/15/07 173,800 Federal Home Loan Bank - CUSIP 3133MTQB7 3.50%x, 11/15/07 168,834 Federal Farm Credit Bank- CUSIP 31331TMT5, 3.38%, 6/12/08 117,934 Federal Home Loan Bank - CUSIP 31339YV V 1, 3.38%, 7/21/08 196,207 Federal Home Loan Bank - CUSIP 3133X2BZ7, 363%a, 11/14/08 73,416 Federal Home Loan Bank - CUSIP 3133X2BZ7, 363%, 11/14/08 68,521 Federal Home Loan Bank - CUSIP 3133X4ZC8, 3.00%, 4/15/09 708,533 Federal Home Loan Bank - CUSIP 3133X4ZC8, 3.00%, 4/15/09 24,100 Federal Home Loan Bank - CUSIP 3133X8CS9, 3.88%, 08/14/09 740,456 Federal Home Loan Bank - CUSIP 3133MTRK6, 4.00%, 11/13/09 121,689 Texas Independent Bank 350 Phelps Court, Irving, TX Taos Gas Tax Revenue Bonds - CUSIP 875917ALO, 4.5091, 10/01/07 _ 149,988 GNMA 780373 - CUSIP 36225AMW7, 7.00%, 12/15/23 - 93,224 GNMA 80342 - CUSIP 36225CLY0, 6.507,, 11/20/29 - 51,794 Santa Rosa GO - CUSIP 802751CK1, 4.60%,07/01/11 - 105,646 FHLB - CUSIP M31336TDO, 5.49%,12/22/08 - 100,344 FHLB - CUSIP 3133M8AU8, 5.82%, 03/30/09 - 151,509 FHLB - CUSIP M31336TDO, 5.49%,12/22/08 - 150,516 FHLB - CUSIP M31336TDO, 5.49%, 12/22/08 - 100,344 FHLB - CUSIP 3133M8AU8, 5.82%, 03/30/09 - 101,006 FHLB - CUSIP 3133M8AU8, 5.82%,03/30/09 - 252,515 FHLB - CUSIP 3133M86T6, 5.95%, 03/16/09 - 177,078 FHLB - CUSIP 3133M86T6, 5.95%, 03/16/09 - 278,266 FHLB - CUSIP 3133M86T6, 5.95%,03/16/09 354,156 2,801,543 2,066,386 Uninsured and uncollaterahzed $ 1,522,689 $ 41 29 149,836 84,417 173,800 173,800 168,834 117,934 196,207 73,416 68,521 - 708,533a 24,100 740,456 121,689 149,988 93,224 51,794 105,646 100,344 151,509 150,516 100,344 101,006 252,515 177,078 278,266 354,156 4,867,929 S 1,522,730 3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (continued) Custodial Credit Risk Custodial credit risk is the risk that in the event of a bank failure, the Town's deposits may not be returned. The Town does not have a deposit policy for custodial credit risk. As of June 30, 2007, $6,390,659 of the Town's bank balance of $6,798,504 was exposed to custodial credit risk as follows: First Community Centinel Peoples Bank Bank Bank Total Uninsured and uncollateralized $ 1,522,689 $ 41 - $ 1,522,730 Uninsured and collateral held by pledging bank's trust department in the Bank's name 2,801,543 2,066,386 - 4,867,929 Total $ 4,324,232 $ 2,066,427 - $ 6,390,659 Also at June 30, 2007 the Town had $207,791 held in AP US Treasury Notes, in connection with two New Mexico Finance Authority loans. One for wastewater project and the other for the regional landfill construction. The notes, held by the Bank of Albuquerque Trust Services, in the Bank's name, exposes the Town to custodial credit risk as noted above. The Town does not have an investment policy to limit exposure to custodial credit risk or to manage its exposure to fair value losses due to rising interest rates. At June 30, 2007 these investments were: Bank of Albuquerque Y NMFA (Wastewater) Reserves $ 62,254 NMFA (Landfill) Reserves 138,437 NMFA (Landfill) Construction 7,100 Total $ 207,791 Additionally, two debt service accounts are managed by the New Mexico Finance Authority (NMFA), on deposit with the State Treasurer's office, in NMFA's name for the benefit of the Town. These accounts are exposed to custodial credit risk in the amount of $51,031. Public Project Revolving Fund Program $ 9,442 2001A W&S Reserve 15,441 2004 Taos Landfill Reserve 26,148 Total $ 51,031 Investments The Town invests excess cash in the State Treasurer Local Government Investment Pool. The Pool's investments are valued at fair value based on quoted market prices as of the valuation date. The New Mexico State Treasurer Investment Pool is not SEC registered. Section 6-10-10 I, NMSA 1978, empowers the State Treasurer, with the advice and consent of the State Board of Finance, to invest money held in the short-term investment fund in securities that are issued or backed by the United States Government or by its departments or agencies and are either direct obligations of the United States Government or agencies sponsored by the United States Government. The Local Government Investment Pool investments are monitored by the same policies and procedures that apply to all other state investments. The pool does not have unit shares. Per 6-10-10.1 F, NMSA 1978, at the end of each month all interest earned is distributed by the State Treasurer to the contribution entities in amounts directly proportionate to the respective amounts deposited in the fund and the length of time the amounts were invested. Participation in the fund is voluntary. The Pool is AAAm rated with a 24 - day weighted average maturity. 30 4. DETAILED NOTES ON ALL FUNDS Receivables Receivables as of year-end for the Town's individual major funds and nonmajor funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Deferred revenue of $141,109 due to lodgers tax agreed upon procedures is not deemed to be collectible by the Town, see finding 3, page 94. Reserved Fund Balance/Restricted Net Assets Reserved for Capital Projects - Capital Projects Fund, Airport Construction, 1994 GRT Revenue Bond, Enhanced 911, 1999 Gas Construction - The amounts are to be used for capital project expenditures as restricted by the grants and bond issues. The restricted amounts of $3,897,684 are shown as reserved in the government -wide statements. Restricted for Debt Service - All Debt Service Funds - The reserve of $835,843 is to be used for future debt service payments and is restricted by the debt agreement. This amount is restricted in the government -wide statements. Restricted for Debt Services - Proprietary Funds - The reserve of $568,925 represents the amount to be used for future debt service payments as required by the debt agreements. Restricted for Special Revenue - Swimming Pool - This amount of $7,845 is restricted by the donor to be used for the construction and maintenance of the swimming pool. The amount is restricted in the government -wide financial statements. 31 Governmental Funds Proprietary Funds Water Capital Non- and Solid General Projects Major Sewer Waste Landfill Total Receivables: Customer Accounts - 587,444 154,790 24,451 766,685 Property Taxes 31,552 - - - 31,552 Franchise Taxes 72,407 - - - 72,407 Gross Receipts Taxes 712,602 62,736 104,543 41,806 - - 921,687 Gas Taxes 5,539 - 6,506 - - - 12,045 Cigarette Taxes - - 2,114 - - 2,114 Lodgers Taxes - - 247,461 247,461 Motor Vehicle Fees 11,553 - - - 11,553 Other governments - 124,450 128,003 418,623 671,076 Gross receivables 833,653 187,186 488,627 1,047,873 154,790 24,451 2,736,580 Less: allowance for uncollectible - - - 362,900 16,897 - 379,797 Net total receivables $ 833,653 $ 187,186 $ 488,627 $ 684,973 $ 137,893 $ 24,451 $ 2,356,783 Deferred revenue of $141,109 due to lodgers tax agreed upon procedures is not deemed to be collectible by the Town, see finding 3, page 94. Reserved Fund Balance/Restricted Net Assets Reserved for Capital Projects - Capital Projects Fund, Airport Construction, 1994 GRT Revenue Bond, Enhanced 911, 1999 Gas Construction - The amounts are to be used for capital project expenditures as restricted by the grants and bond issues. The restricted amounts of $3,897,684 are shown as reserved in the government -wide statements. Restricted for Debt Service - All Debt Service Funds - The reserve of $835,843 is to be used for future debt service payments and is restricted by the debt agreement. This amount is restricted in the government -wide statements. Restricted for Debt Services - Proprietary Funds - The reserve of $568,925 represents the amount to be used for future debt service payments as required by the debt agreements. Restricted for Special Revenue - Swimming Pool - This amount of $7,845 is restricted by the donor to be used for the construction and maintenance of the swimming pool. The amount is restricted in the government -wide financial statements. 31 4. DETAILED NOTES ON ALL FUNDS (Continued) Capital Assets Capital asset activity for the year ended June 30, 2007 was as follows: Beginning Balance Increases Decreases Governmental Activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets, being depreciated: Land improvements Buildings and improvements Machinery and equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation: Land improvements Buildings and improvements Machinery and equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net Business -type Activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets, being depreciated: Land improvements Buildings and improvements Machinery and equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation: Land improvements Buildings and improvements Machinery and equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Business -type activities capital assets, net I Ending Adjustments Balance $ 2,817,253 $ 2,300,382 $ - $ - $ 5,117,635 831,716 473,278 - (784,148) 520,846 3,648,969 2,773,660 - (784,148) 5,638,481 4,437,329 15,643 - - [[-- 4,452,972 20,338,443 910,454 - 699,472 21,948,369 f 11,307,670 1,631,952 - (113,873) 12,825,749 44,846,393 408,876 - 76,277 45,331,546 �.�. 80,929,835 2,966,925 - 661,876 84,558,636 2,374,999 7,612,089 7,016,811 23,019,272 40,023,171 40,906,664 $ 44,555,633 $ 262,422 49,399 311,821 97,515 3,939,146 7,969,296 13,082,178 25,088,135 245,384 683,378 - (8,400) 966,862 - (85,157) 1,487,389 3,383,013 - (93,557) (416,088) - 755,433 $ 2,357,572 $ - $ (28,715) 2,281,754 _ 2,281,754 38,523 1,123 310 1,161,833 (37,732) (37,732) 37,732 (17,250) 20,482 2,620,383 8'287,O67 7,898,516 24,506,661 43,312,627 41,246,009 $ 46,884,490 $ 262,422 2,293,421 2,555,843 97,515 3,976,878 7,990,569 14,205,488 26,270,450 55,960 7,556 - - 63,516 1,259,497 139,650 - - 1,399,147 4,588,223 319,173 - (17,250) 4,890,146 3,836,350 446,940 - - 4,283,290 9,740,030 913,319 - (17,250) 10,636,099 15,348,105 248,514 - 37,732 15,634,351 $ 15,659,926 $ 2,530,268 $ - $ 37,732 $ 18,(90,194 Governmental activities -capital outlay $4,701,643 Donated land 1,038,942 Governmental activities total increase to capital assets _$5,740,585 32 4. DETAILED NOTES ON ALL FUNDS (Continued) Solid waste fund Capital Assets (continued) General fund Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General fund General government $ 1,011,041 Public safety 438,434 '.. Highways and streets 1,414,098 Culture and recreation 519,440 Total Depreciation Expense - Governmental Activities $ 3,383,013 Business -type Activities: Water and sewer $ 795,320 Solid waste 6,096 Landfill 111,903 Total Depreciation Expense - Business -type Activities $ 913,319 Interfund Receivables Payables and Transfers Operating Transfers: The outstanding balances between funds result mainly from the time lag between the dates the (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. All balances are expected to be repaid within one year. Interfund transfers: Transfers out General Transfers in: Capital Projects $ 983,595 Non -major 628,356 $ 1,611,951 Legally authorized transfers between funds, other than those described above, are recorded as other financing sources and uses in the respective funds. Receivable Fund Payable Fund Amount Landfill Solid waste fund $ 97,000 General fund Water and sewer fund 11,027 General fund Landfill 6,647 General fund Solid waste fund 568 Accrued Liabilities: Accrued liabilities at June 30, 2007, consisted of the following: Government Business -Type Activities Activities Accrued salaries & payroll liabilities $ 257,421 $ 30,764 Sales tax payable 1,230 11,152 Total $ 258,651 $ 41,916 33 4. DETAILED NOTES ON ALL FUNDS (Continued) SHORT TERM DEBT: The Town does not have any short-term debt. LONG TERM DEBT: Description of Governmental Activities Bonds Gross Receipts and Gasoline Tax Revenue Bon Gross Receipts Tax Revenue Refunding Bonds dated July 31, 2001, Series 2001 were issued in the amount of $4,125,000 to provide funds to advance refund the Town's outstanding Series 1993 gross receipts tax refunding and improvement revenue bonds of $1,195,000 and the Town's outstanding Series 1994 gross receipts tax revenue bonds of $3,110,000. Interest is to be paid semi-annually on June 1 and December 1. The bonds are secured by the gross receipts tax revenue of the Town. Gasoline Tax Revenue Bonds, dated March 1, 1999, Series 1999 in the amount of $1,955,000 for the purpose of laying off, opening, constructing, reconstructing, resurfacing, maintaining, acquiring rights of way, repairing and otherwise improving alleys, streets, public roads and bridges or any combination of the foregoing. Interest to be paid semi-annually April 1 and October 1. The bonds are secured by and payable from gasoline tax revenues distributed monthly by the State of New Mexico to the Town. $ 1,930,000 Debt Service requirements for the Governmental Activities Bonds are as follows: Year Original Final Interest Series Issue Maturity Rate Outstanding Revenue Bonds: 2009 625,000 64,548 Series 2001 Gross Receipts Tax $ 4,125,000 39,965 3.5%-5,25% $ 925,000 Series 1999 Gasoline Tax 1,955,000 41,183 3.6%-4.75% 1,005,000 $ 1,930,000 Debt Service requirements for the Governmental Activities Bonds are as follows: Year June 30 Principal Interest 2008 $ 605,000 $ 89,952 2009 625,000 64,548 2010 165,000 32,743 2011 170,000 25,152 2012 180,000 17,247 2013 185,000 8,787 Total $ 1,930,000 $ 238,429 34 4. DETAILED NOTES ON ALL FUNDS (Continued) LONG TERM DEBT: Governmental Activities Loans Pavable: New Mexico Finance Authority Note, dated April 13, 2007 in the amount of $954,000 for the purpose of acquiring land for a public recreation building. Interest is to be paid semi-annually May 1 and November 1. The loan is secured by the gross receipts tax revenue of the Town. Original Final Interest Loans Issue Maturity Rate Outstanding NMFA- Land Loan 954,000 5/1/2017 3.50% 954.000 $ 954,000 Debt Service requirements for the Governmental loan are as follows: Year Ending Governmental Activites June 30, Principal Interest 2008 $ 73,495 $ 27,862 2009 86,833 24,673 2010 89,293 22,437 2011 91,860 20,100 2012 94,540 17,656 2013-2017 517,979 46,804 $ 126,000 $ 954,000 $ 159,532 Governmental Activities Contracts Pavable• The Town has contracts payable to U.S. Department of Agriculture: Future scheduled requirements are: Year Principal Interest Total 2008 $ 18,000 $ $ 18,000 2009 18,000 18,000 2010 18,000 18,000 2011 18,000 18,000 2012 18,000 18,000 2013-2014 36,000 36,000 $ 126,000 $ $ 126,000 35 4. DETAILED NOTES ON ALL FUNDS (Continued) LONG TERM DEBT: Description of Business -Type activities Bonds Water & Sewer and Utility Revenue Bonds: Water and Sewer Revenue Bonds dated March 16, 1993, Series 1993A were issued in the amount of $635,600 to provide funds for financing improvements to the Town's water and sewer utility system. Principal and interest is to be paid annually. The bonds are secured by, and payable exclusively from, the net revenues of the water and sewer utility system. Water and Sewer Revenue Bonds dated March 16, 1993, Series 1993B were issued in the amount of $123,000 to provide funds for financing improvements to the Town's water and sewer utility system. Principal and interest is to be paid annually. The bonds are secured by, and payable exclusively from, the net revenues of the water and sewer utility system. Utility Revenue Bonds dated December 5, 1995, Series 1995A were issued in the amount of $1,315,000 to provide funds for constructing an expansion to the wastewater treatment plant. Interest is to be paid annually on December 5. The bonds are secured by, and payable exclusively from, the net revenues of the water and sewer utility system. Water and Sewer Revenue Bonds dated July 1, 1999, Series 1998A were issued in the amount of $475,000 to provide fund for improving the sewer plant to enable the Town to recover solid biowaste. Principal and interest is to be paid annually. The bonds are secured by, and payable exclusively from, the net revenues of the water and sewer utility system. Series Revenue Bonds: Series 1993A Water & Sewer Series 1993B Water & Sewer Series 1995A Utility Series 1998B Water & Sewer Original Final Interest Issue Maturity Rate Outstanding 635,600 3/16/2033 123,000 3/16/2033 1,315,000 12/5/2035 475,000 1/1/2038 tT 0.05625 547,600 0.055 107,000 0.0513 1,163,000 0.0475 435,000 S 2,252,600 4. DETAILED NOTES ON ALL FUNDS (Continued) LONG TERM DEBT: (continued) Business -Type Activities Notes Payable On May 11, 2001, the Town borrowed $950,391 from the New Mexico Finance Authority for the purpose of expansion of the existing wastewater transmission lines. Principal and interest at 4.34% is to be paid amorally. The term of the loan is 20 years. The note is secured by, and payable exclusively from, the net revenues of the water and sewer utility system. In December 18, 2000, the Town borrowed $250,000 from the Rural Utilities Service for the purpose of expansion of the water system. Principal and interest at 5.00% is to be paid annually. The term of the loan is 40 years. The note is secured by, and payable exclusively from, the net revenues of the I water and sewer utility system. The Town borrowed $1,372,684 from the New Mexico Finance Authority on April 23, 2007 for the construction and equipping of the Solid Waste Landfill Facility. The 10 -year loan requires sen - annual interest payments at a rate of 2.399% and annual principal payments. The note is secured by, and payable exclusively from, the net revenues of the Regional Landfill System. Final Original Loans Issue Series 2000A Water & Sewer $ 250,000 Taos Regional Landfill $ 1,372,684 Series 2001 A Water and Sewer $ 950,391 Final Interest Interest Maturity Rate Outstandine 12/18/2040 5.00% 237,000 5/1/2014 0.790%-3.34% 678,708 7/1/2020 4.16%-5.410% 508,443 S 1,424,151 Bonds and Loan Payable A summary of the terms of revenue bonds and loan outstanding and their corresponding allocations to the business -type activities at June 30, 2007 follows: Year Ending June 30, Principal Interest 2008 $ 146,362 $ 175,523 2009 150,172 171,063 2010 156,336 166,154 2011 160,900 160,565 2012 166,804 154,834 2013-2017 696,352 677,086 2018-2022 556,225 520,162 2023-2026 461,000 384,035 2027-2032 596,000 253,498 2033-2037 490,600 96,317 2038-2040 96,000 9,565 $ 3,676,751 $ 2,768,802 37 4. DETAILED NOTES ON ALL FUNDS (Continued) LONG TERM DEBT: (continued) Changes in Lone -term Liabilities Long-term liability activity for the year ended June 30, 2007, was as follows: Landfill Closure and Post Closure Costs State and Federal laws regulations require the Town to place a final cover on its landfill site when it stops accepting waste and to perfonn certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and post closure care will be paid only near or after the date that the landfill stops accepting waste, the Town reports a portion of these closure and post closure care costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. The $235,575 reported as landfill closure and post closure care liability at June 30, 2007, represents the cumulative amount reported to date based on management's estimates and on the area used by the landfill. Actual costs may differ due to inflation and changes in technology and regulations. The Town is required by state regulations to make annual contributions to a restricted cash account to finance closure and post closure care. The town is in compliance with these requirements, and, as of June 30, 2007, had transferred $616,489. The cumulative contribution is reported as restricted assets on the balance sheet. 38 Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities Revenue Bond $ 2,510,000 - $ 580,000 $ 1,930,000 $ 605,000 Loan and Contracts Payable 144,000 954,000 18,000 1,080,000 91,495 Compensated absences 674,725 714,333 654,043 735,015 _ Governmental activities long-term liabilities $ 3,328,725 $ 1,668,333 $ 1,252,043 $ 3,745,015 $ 696,495 Business -type activities Revenue Bonds $ 2,286,600 $ 34,000 $ 2,252,600 $ 36,000 Loans Payable 1,759,048 334,897 1,424,151 110,362 Compensated Absences 61,585 83,637 69,570 75,652 Business -type activities long-term liabilities $ 4,107,233 $ 83,637 $ 438,467 $ 3,752,403 $ 146,362 Landfill Closure and Post Closure Costs State and Federal laws regulations require the Town to place a final cover on its landfill site when it stops accepting waste and to perfonn certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and post closure care will be paid only near or after the date that the landfill stops accepting waste, the Town reports a portion of these closure and post closure care costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. The $235,575 reported as landfill closure and post closure care liability at June 30, 2007, represents the cumulative amount reported to date based on management's estimates and on the area used by the landfill. Actual costs may differ due to inflation and changes in technology and regulations. The Town is required by state regulations to make annual contributions to a restricted cash account to finance closure and post closure care. The town is in compliance with these requirements, and, as of June 30, 2007, had transferred $616,489. The cumulative contribution is reported as restricted assets on the balance sheet. 38 4. DETAILED NOTES ON ALL FUNDS (Continued) LONGTERM DEBT: (continued) Restricted Assets The balances of the restricted asset accounts are as follows: Enterprise Funds Meter deposits $ 210,930 Debt requirements 568,925 Landfill closure and solid waste reserve 616,489 Total restricted assets $ 1,396,344 POST -EMPLOYMENT BENEFITS: Retirement Plan Substantially all of the Town's full-time employees participate in public employee retirement system authorized under the Public Employees' Retirement Act (Chapter 10, Article 11, NMSA 1978) the Public Employees Retirement Association (PERA) is the administrator of the plan, which is a cost sharing multiple employer defined benefit retirement plan. The plan provides for retirement, 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. That report may be obtained by writing to PERA, P.O. Box 2123, Santa Fe, New Mexico 87504-2123. Funding Policy. Policy plan members are required to contribute a 9.15 percentage of their gross salary. The Town is required to contribute 13.15 to 28.3 percent for regular members, fire and police members. The contribution requirements of plan members and the Town of Taos are established under Chapter 10, Article 11 NMSA 1978. The requirements may be amended by acts of legislature. The Town of Taos's contributions to PERA for the years ending June 30, 2007, 2006 and 2005 were $581,742, $503,150, and $509,634, respectively, equal to the amount of the required contributions for each year. Wt 4. DETAILED NOTES ON ALL FUNDS (Continued) POST -EMPLOYMENT BENEFITS: (Continued) Deferred Compensation Plan The State of New Mexico offers local governments a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all local government employees whose employers have elected participation in the plan, permits participants to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are held in trust by the State ' of New Mexico for the benefit of the participants. Approximately forty-eight employees of the Town participate in the Deferred Compensation Plan. Neither the Town of Taos nor the State of New Mexico makes any contributions to the Deferred Compensation Plan. All contributions withheld from participants by the Town of Taos, have been paid to New Mexico Public Employees' Retirement Association, which administers the plan. _ Retiree Health Care Act Contributions The Retiree Health Care Act (Act) (Chapter 10, Article 7C NMSA 1978) provides comprehensive core group health insurance for persons who have retired from certain public service in New Mexico. The Retiree Health Care Authority (NMRHCA) is the administrator of the plan. The purpose is to provide eligible retirees, their spouses, dependents, and surviving spouses and dependents with health insurance consisting of a plan, or optional plans, of benefits that can be purchased by funds flowing into the Retiree Health Care Fund and by co -payments or out-of-pocket payments of eligible retirees. Monies flow to the Retiree Health Care Fund on a pay-as-you-go basis from eligible employers and eligible retirees. Eligible employers consist of institutions of higher education, school districts, or other entities participating in the Public School Insurance Authority, state agencies, state courts, magistrate courts, municipalities or counties, which are affiliated under or covered by the Educational Retirement Act, Public Employees Retirement Act, Volunteer Firefighters Retirement Act, Judicial Retirement Act, or the Magistrate Retirement Act. 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 Retiree Health Care Act on the person's behalf, unless that person retires on or before the employer's NMRHCA effective date, in which event the time period for contributions becomes the time between the employer's effective date, and the date of retirement; or (2) retirees defined by the Act who retired prior to July 1, 1990 and formers legislators who serve at Least two years. Each participating employer makes contributions to the fund in the amount of 1.3 percent of each participating employee's annual salary. Each employee contributes to the fund an employee contribution equal to .65 percent of the employee's annual salary. Each participating retiree pays a monthly premium for the medical plus basic life plan and an additional five dollars ($5.00) if eligible participant retired prior to the employer's NMRHCA effective date or is a former legislature.' Participants may also enroll in optional plan coverage. 40 i 4. DETAILED NOTES ON ALL FUNDS (Continued) POST -EMPLOYMENT BENEFITS: (Continued) Retiree Health Care Act Contributions (continued) Contributions from participating employers and employees become the property of the Retiree Health Care Fund and are not refundable under any circumstances, including termination of employment or termination of the participating employer's operation or participation in the Retiree Health Care Act. The employer, employee and retiree contributions are required to be remitted to the Retiree Health l Care Authority on a monthly basis. The Retiree Health Care Authority issues a separate, publicly available audited financial report that includes post employment benefit expenditures of premiums and claims paid, participant contributions (employer, employee and retiree), and net expenditures for the fiscal year. The report also includes the approximate number of retirees participating in the plan. That report may be obtained by writing to the Retiree Health Care Authority, 4308 Carlisle NE, Suite 104, Albuquerque, New Mexico 87107. For the fiscal year ended June 30, 2007, the Town of Taos remitted $66,225 in employer contributions and $33,113 in employee contributions to the Retiree Health Care Authority. GASB 45, Accounting & Financial Reporting by Employers for post employment Benefits, will be implemented in FYE 08. The impact of this GASB on the Town of Taos is unknown. Risk Management The Town is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Town has obtained insurance through the Self Insurance Fund operating as a common risk management and insurance program. The Town pays an annual premium to the New Mexico Self Insurers Fund for its general insurance coverage and all risk of loss is transferred. Restatement The restatement to the Governmental Activities for $28,715 were due to duplicated capital assets from the schedule in the prior year, which have been removed. The restatement to the Capital Projects fund for $115,715 was due to an understatement of accounts payable due to errors recording voided checks at year end. Deficit Fund Equity The Public Transportation Fund has a deficit fund balance of $616 as of June 30, 2007. It is anticipated that the deficit will be funded by future increases in revenue or transfers from the General Fund. 41 4. DETAILED NOTES ON ALL FUNDS (Continued) Joint Powers Agreements The Town has entered into a joint powers agreement on July 6, 1998, with the County of Taos, Town of Questa, and Village of Taos Ski Valley to provide an enhanced 911 -response system. The Town is responsible for all operations. The agreement is to provide an answering point for information regarding needed emergency services. The estimated annual cost is $480,000 with the Town providing $272,596. The Town contributed $256,854 during the current year. The audit responsibility lies with the Town. The agreement has no termination date. An agreement between the Town, County of Taos, Village of Questa, Village of Red River and Village of Taos Ski Valley was entered into on November 2, 2000 to establish the Taos Regional Landfill Board. The Town of Taos was designated as fiscal agent and administrator of the regional landfill. The parties to the agreement pay a tipping fee based on their percentage of usage and these fees should be adjusted to meet the operations, maintenance and financing requirements. Expenditures reported by the Town were $522,228 during 2007. The audit responsibility lies with the Town. Thi agreement is for 50 years. Contingencies The Town, as Fiscal Agent for the Taos Regional Landfill Board, is party to litigation with Enviroworks, LLC. The lawsuit asserts claims for breach of contract, equitable adjustment, negligent misrepresentation, and breach of implied warranty of correctness of plans and specifications related to the construction of Cell 1B at the Taos landfill. The lawsuit is in the early stages of discovery and no opinion can be expressed as to the outcome of this lawsuit. The Town intends to resist the claim vigorously. The Town is currently in mediation. The Town and the Taos Pueblo entered into an agreement dated December 16, 1983 that called for the Town to receive and treat sewage from the Pueblo for a 40 year period. Two major issues have been disputed by both parties over the years. The Town has acknowledged that the Pueblo contributed money in excess of what was due for its participation in the 1995 expansion of the Town's treatment plant. The Pueblo has disputed the sewer service fees charged by the Town. The Town has made an offer to pay the Pueblo a settlement, no longer bill the Pueblo for any disputed past due amounts and for the parties to negotiate a new sewer rate to settle these issues. The parties are still in negotiations. The Town has fully reserved the past due sewer charges owed by the Pueblo. f" L 42 SUPPLEMENTARY INFORMATION I i NON -MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS FIRE PROTECTION FUND — To account for the operations and maintenance of the fire department. Financing is provided by an allotment from the State of New Mexico Fire Marshal's Office. State Statue Section 59A-53-2, NMSA, 1978 compilation, requires the allotment be used only to operate fire departments. RECREATION FUND — To account for establishing and maintaining recreational programs in the Town. Financing is provided by program revenue and by a 1 -cent tax on cigarette sales, which is collected and distributed by the State of New Mexico. State Statute Section 7-12-15, NMSA, 1978 compilation requires this tax be used in the above manner. LODGER'S TAX FUND — To account for the operations of tourist facilities or for half of advertising, promoting and publicizing such facilities and tourist attractions. Financing is provided by one and a half percent of a five percent tax on lodging gross receipts within the Town of Taos. State Statute Section 4-6-41 provides for this tax to be imposed by the Town. Additionally, revenues received pursuant to the Lodger's Tax Act (Section 3-38-15, NMSA 1978). Monies in the Lodger's Tax Fund may be used to build; operate, and maintain tourism related facilities. LOCAL GOVERNMENTAL CORRECTIONS FUND — The local government corrections fee fund is used to account for the collection of a mandatory correction fee for violations of any municipal ordinance. Funds Collected can only be used for jailer training, construction planning, construction, operation and maintenance of a municipal jail, and for paying for costs of housing. Authority is NMSA 1978 Section 35-14- 11B(1). LAW ENFORCEMENT PROTECTION FUND — The law enforcement protection fund is created to account for revenues received pursuant to the law enforcement protection fund (Section 29-13-7,NMSA 1978). Amounts distributed form this fund may only be expended for the following purpose: (1) the repair and purchase of law enforcement apparatus and equipment that meet nationally recognized standards; (2) expenses associated with advanced law enforcement planning and training; (3) complying with match or contribution requirements of federal funds for criminal justice programs; (4) no more than fifty percent (50%) of the replacement salaries of municipal and county law enforcement personnel while attending a specified advanced law enforcement planning and training.. CIVIC CENTER FUND —This fund is created to account for that portion of lodger's tax receipts allocated for Civic Center operations and promotional expenditures, as well as the revenues earned from Civic Center operations, including rentals, catering fees, and related charges for services. Authority is Town council resolution. COMMUNITY GRANTS FUND — This fund receives various small grants for various community purposes. Each grant is authorized by the granting agency. The fund is authorized by Town Council resolution. PUBLIC TRANSPORTATION FUND — The public transportation fund is created to account for the portion of Lodger's Tax receipts allocated for the purpose of providing transportation to the public. 43 MUNICIPAL ROAD GASOLINE TAX FUND — The Municipal Road Gasoline Tax is used to account for a 1 G 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. '/4 CENT MUNICIPAL GROSS RECEIPTS TAX FUND — This fund receives the proceeds form a supplemental municipal gross receipts tax, a portion of which is pledged toward payment of principal and interest on Series 1988 Gross Receipts Tax Revenue Bonds. - After required debt service transfers have been made, the remaining income of this fund is restricted for capital improvement purposes. NMSA 1978 Chapter 7, Article 20E-1 to 22. CENTRAL COMMUNICATIONS FUND — To account for money collected by the Town from three t other government entities to share centralized dispatch services throughout the County of Taos. Funding is authorized by ajoint power agreement as authorized by Sections 11-1-1 through 11-1-7 NMSA 1978 l " SWIMMING POOL FUND — The fund was established to account for the contributions given to the Town for the purpose of building a swimming pool. DEBT SERVICE FUNDS 1989 GASOLINE TAX REVENUE BOND — This fund shall be credited with transfers for the General State Shared Gasoline Tax Income Fund for the purpose of accumulating monies for payment of principal and interest on Series 1989 Gasoline Tax Revenue Bonds. 1993 RECEIPTS TAX REVENUE — This fund was created to account for tax revenue earmarked for the debt repayment. I" 1995 GROSS RECEIPTS TAX ACQUISITION RETIREMENT — This fund was created with transfers from the Ya cent Gross Receipts Tax Acquisition Improvement Fund for the purpose of accumulating monies for the payment of principal and interest on Series 1995 Gross Receipts Tax Revenue Bonds. 1995 GROSS RECEIPTS TAX ACQUISITION RESERVE — This fund was created to guarantee'" payment of principal and interest on Series 1995 Gross Tax Receipts Tax Revenue Funds. 1999 GASOLINE TAX RESERVE BOND — This fund was created with transfers from the Gas Tax Fund for the purpose of accumulating monies for the payment of principal and interest on Series 1999 Gas Tax Revenue Bonds. 2001 GROSS RECEIPTS TAX REVENUE BOND RETIREMENT — This fund was created with transfers from Gross Receipts Tax revenues for the purpose of accumulating monies for payment of principal and interest on Series 2001 Gross Receipts Tax Revenue Bonds. 2001 GROSS RECEIPTS TAX REVENUE BOND RESERVE — To accumulate monies for the payment l u of interest and principal becoming due each year on outstanding revenue bond. 44 CAPITAL PROJECTS FUNDS Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds. AIRPORT CONSTRUCTION — This fund is created to receive proceeds from federal and state grants for the purpose of financing improvements to the Taos Municipal Airport. 1994 GROSS RECEIPTS TAX REVENUE BOND ACQUISITION — This fund is created to receive the 1994 Gross Receipts Tax Bond proceeds for the purpose of construction affordable housing. ENHANCED 911 FUND — This fund is created to receive grants and transfers for the purpose of expanding benefits of the basic 911 emergency telephone number to achieve faster response time. DOMESTIC VIOLENCE SHELTER — This fund is created to receive the appropriations and grants for the purpose of constructing the Domestic Violence Shelter Home. FACILITIES IMPROVEMENTS — This fund is created to receive transfers from other funds for the purpose of improving facilities of the Town. VEHICLE REPLACEMENT — This fund is created to receive transfers from other funds for the purpose of purchasing vehicles for the Town of Taos. Authorization is a resolution of the Town Council. 1999 GAS CONSTRUCTION — This fund was created to receive the bond proceeds and to account for the capital outlay associated with the bond issue. 45 STATE OF NEW MEXICO TOWN OF TAOS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2007 ASSETS Cash Investments Accounts receivable Total assets LIABILITIES AND FUND BALANCES Liabilities: Bank overdrafts Deferred revenue Accounts payable Accrued liabilities Total liabilities Fund balances: Fund balances: Reserved for swimming pool Reserved for debt service Reserved for capital projects Unreserved and undesignated Total fund balances Total liabilities and fund balances Fire Protection 183,220 $ 221,929 3,001 3,001 218,928 218,928 $ 221,929 Revenue 141,109 20,019 161,128 70,867 138,842 70,867 138,842 $ 70,867 $ 299,970 The notes to the financial statements are an integral part of this statement. 46 Local Lodgers Government Law Recreation Tax Correction Enforcement Fund #22 Fund #23 & 24 Fund #25 Fund #26 $ 20,753 $ 21,759 $ 77,905 $ 1,158,- 48,000 30,750 22,000 - 2,114 247,461 1.J $ 70;867 $ 299,970 $ 99,905 $ 1,158 141,109 20,019 161,128 70,867 138,842 70,867 138,842 $ 70,867 $ 299,970 The notes to the financial statements are an integral part of this statement. 46 l 4,285 319` 4,285 319 �J 95,620 839 95,620 839 $ 99,905 $ 1,158 1, 1.J Special Revenue $ $ $ 5,140 $ $ $ $ 6,408 5,264 4,593 156 11,657 14 11,128 15,586 18,065 5,278 20,861 15,742 7,845 77,954 180,202 ( 616) 6,506 83,614 142,352 - 77,954 180,202 ( 616) 6,506 83,614 142,352 7,845 $ 96,019 $ 185,480 $ 20,245 $ 6,506 $ 83,614 $ 158,094 $ 7,845 (Continued) 47 Municipal 1/4 Cent Civic Community Public Road Municipal Central Swimming Center Grants Transportation Gas Tax Gross Receipts Communication Pool Fund #27 Fund #30 Fund #29 Fund #31 Fund #32 Fund #34 Fund #39 $ 59,019 $ 20,480 $ - $ $ $ 58,094 $ 7,845 37,000 165,000 - 100,000 - - - 20,245 6,506 83,614 - - $ 96,019 $ 185,480 $ 20,245 $ 6,506 $ 83,614 $ 158,094 $ 7,845. $ $ $ 5,140 $ $ $ $ 6,408 5,264 4,593 156 11,657 14 11,128 15,586 18,065 5,278 20,861 15,742 7,845 77,954 180,202 ( 616) 6,506 83,614 142,352 - 77,954 180,202 ( 616) 6,506 83,614 142,352 7,845 $ 96,019 $ 185,480 $ 20,245 $ 6,506 $ 83,614 $ 158,094 $ 7,845 (Continued) 47 Fund balances: Fund balances: Reserved for swimming pool Reserved for debt service Reserved for capital projects Unreserved and undesignated Total fund balances Total liabilities and fund balances 7,845 [a - 195,500 9,442 19,221 170,500 1,015,108 - - 1,022,953 195,500 9,442 19,221 170,500 $ 1,251,632 $ 195,500 $ 9,442 $ 19,221 $ 170,500 L The notes to the financial statements are an integral part of this statement. 48 STATE OF NEW MEXICO TOWN OF TAOS COMBINING BALANCE SHEET (. NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2007 E Special � Revenue Debt Service 1989 1993 1995 Gross 1995 Gross Gas Tax Receipts Tax Receipts Tax Receipts Tax Reserve Revenue Acquisition Acquisition ASSETS Total Fund #46 Fund #47 Retirement #41 Reserve #45 Cash $ 305,722 $ - $ 9,442 $ 19,221 $ -V- Investments 585,970 195,500 - - 170,500 Accounts receivable 359,940 - _ _ Total assets $ 1,251,632 $ 195,500 $ 9,442 $ 19,221 $ 170,500 LIABILITIES AND FUND BALANCES Liabilities: --• Bank overdrafts $ 5,140 $ - $ _ $ - $ Deferred revenue 141,109 _ -` Accounts payable 44,045 - _ Accrued liabilities 38,385 - _ Total liabilities 228,679 - - Fund balances: Fund balances: Reserved for swimming pool Reserved for debt service Reserved for capital projects Unreserved and undesignated Total fund balances Total liabilities and fund balances 7,845 [a - 195,500 9,442 19,221 170,500 1,015,108 - - 1,022,953 195,500 9,442 19,221 170,500 $ 1,251,632 $ 195,500 $ 9,442 $ 19,221 $ 170,500 L The notes to the financial statements are an integral part of this statement. 48 527 17,068 413,287 825,545 - _ - - - 98,219 947,192 527 17,068 413,287 825,545 98,219 947,192 $ 527 $ 17,068 $ 413,287 $ 825,545 $ 98,219 $ 947,192 (Continued) 49 Debt Service Capital Projects 1999 2001 Gross 2001 Gross 1994 GRT Gas Tax Receipts Tax Receipts Tax Airport Revenue R. B. R. B. R. B. Construction Bond Retirement #43 Retirement #40 Reserve #49 Total Fund #52 Acquisition #56 $ 527 $ 17,068 $ 787 $ 47,045 $ 78,219 $ 92,754 - 412,500 778,500 20,000 854,438 $ 527 $ 17,068 $ 413,287 $ 825,545 $ 98,219 $ 947,192 527 17,068 413,287 825,545 - _ - - - 98,219 947,192 527 17,068 413,287 825,545 98,219 947,192 $ 527 $ 17,068 $ 413,287 $ 825,545 $ 98,219 $ 947,192 (Continued) 49 STATE OF NEW MEXICO rt;Y T' TOWN OF TAOS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2007 i' Capital Projects Domestic' 1999 Enhanced Violence Facilities Vehicle Gas 911 Shelter Improvements Replacement Construction ASSETS Fund #53 Fund #28 Fund # 50 Fund #54 Fund #59 Cash $ 25,309 $ 2 $ 8,771 $ 22,447 $ 8,376 Investments - - 80,000 308,000 428,458 Accounts receivable - 128,687 Total assets $ 25,309 $ 2 $ 217,458 $ 330,447 $ 436,834 LIABILITIES AND FUND BALANCES Liabilities: Bank overdrafts $ $ $ $ $ Deferred revenue Accounts payable 6,195 3,934 3,600-' Accrued liabilities Total liabilities 6,195 3,934 3,600 Fund balances: Fund balances: Reserved for swimming pool - Reserved for debt service _ Reserved for capital projects 25,309 2 - - 433,234 Unreserved and undesignated - - 211,263 326,513 - �.:.. Total fund balances 25,309 2 211,263 326,513 433,234 Total liabilities and fund balances $ 25,309 $ 2 $ 217,458 $ 330,447 $ 436,834 The notes to the financial statements are an integral part of this statement. 50 .. Capital Projects Total Nonmajor Governmental Funds $ 235,878 $ 588,645 1,690,896 3,055,366 128,687 488,627 $ 2,055,461 $ 4,132,638 $ $ 5,140 - 141,109 13,729 57,774 38,385 13,729 242,408 7,845 - 825,545 1,503,956 1,503,956 537,776 1,552,884 2,041,732 3,890,230 $ 2,055,461 $ 4,132,638 (Continued) 51 STATE OF NEW MEXICO r' TOWN OF TAOS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES {. NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2007 REVENUES Taxes Intergovernmental Fines and forfeitures Charges for services Miscellaneous Total revenues EXPENDITURES Current operations: General government Public safety Culture and recreation Debt service: Principal Interest Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in (out) Total other financing sources (uses) Net change in fund balances Fund balances, beginning of year Fund balances, end of year F The notes to the financial statements are an integral part of this statement. 52 t is t Special Revenue Local Fire Lodgers Government Law Protection Recreation Tax Corrections Enforcement Fund #21 Fund #22 Fund #23 & 24 Fund #25 Fund #26 $ $ 18,704 $ 953,415 $ - $ _ 175,960 - - - 32,000.1 46,634 - - 11,022 3,497 - 175,960 29,726 956,912 46,634 32,000 r_. 132,513 - - 38,714 32,001 - 32,466 415,305 - - 68,725 201,238 32,466 415,305 38,714 32,001 ( 25,278) ( 2,740) 541,607 7,920 ( 1) '1 ( 18,012) - ( 603,469) 20,000 r'. ( 18,012) - ( 603,469) 20,000' ( 43,290) ( 2,740) ( 61,862) 27,920 ( 1) 262,218 73,607 200,704 67,700 840._ ( $ 218,928 $ 70,867 $ 138,842 $ 95,620 $ 839 The notes to the financial statements are an integral part of this statement. 52 t 1_ 73,900 - Special Revenue - 487,396 _ 455,514 55,388 517,037 Municipal 1/4 Cent - Civic Community Public Road Municipal Central Swimming Center Grants Transportation Gas Tax Gross Receipts Communication Pool Fund #27 Fund #30 Fund #29 Fund #31 Tax Fund #32 Fund #34 Fund #39 234,638) 74,871 956,743 ( 187,214) $ - $ - $ $ 74,871 $ 956,743 $ - $ 272,596 151,843 239,721 - - 300,182 - 32,444 - 272,596 - 107,076 - _ 63 10,379 85,382 275 - 42,678 - - - 30 56,970 7,815 107,351 184,287 282,399 74,871 956,743 300,182 30 � 73,900 - - - 487,396 _ 455,514 55,388 517,037 - 55,174 -- 455,514 184,462 517,037 487,396 ( 348,163) ( 175) ( 234,638) 74,871 956,743 ( 187,214) 30 388,241 75,012 231,228 ( 74,808) ( 946,364) 272,596 388,241 75,012 231,228 ( 74,808) ( 946,364) 272,596 - 40,078 74,837 ( 3,410) 63 10,379 85,382 30 37,876 105,365 2,794 6,443 73,235 56,970 7,815 j $ 77,954 I_ $ 180,202 $( 616) $ 6,506 $ 83,614 $ 142,352 $ 7,845 i (Continued) 53 STATE OF NEW MEXICO TOWN OF TAOS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2007 Special Revenue 1989 1993 Gas Tax Receipts Tax Reserve Revenue Total Fund #46 Fund #47 �bt Service 1995 Gross Receipts Tax Acquisition Retirement #41 I a 1995 Gross ( Receipts Tax Acquisition Reserve #45 REVENUES Taxes $ 2,003,733 $ - $ g g Intergovernmental 899,706 - Fines and forfeitures 79,078 - - Charges for services 107,076 - Miscellaneous 57,502 10,267 7,296 Total revenues 3,147,095 10,267 7,296 EXPENDITURES Current operations: General government _ _ Public safety 764,524 Culture and recreation 1,475,710 Debt service: _ Principal Interest _ Capital outlay 123,899 Total expenditures 2,364,133 - Excess (deficiency) of revenues over expenditures 782,962 10,267 7,296 Other financing sources (uses): Transfers in (out) ( 655,576) ( 10,267) 9,104 7,296 ( 7,296) Total other financing sources (uses) ( 655,576) ( 10,267) 9,104 7,296 ( 7,296) Net change in fund balances 127,386 - 9,104 7,296 - Fund balances, beginning of year 895,567 195,500 338 11,925 170,500 Fund balances, end of year $ 1,022,953 $ 195,500 $ 9,442 $ 19,221 $ 170,500 The notes to the financial statements are an integral part of this statement. 54 55 Debt Service Capital Projects 1999 2001 Gross 2001 Gross 1994 GRT Gas Tax Receipts Tax Receipts Tax Airport Revenue R. B. R. B. R. B. Construction Bond Retirement #43 Retirement #40 Reserve #49 Total Fund #52 Acquisition #56 254,761 21,484 39,047 - 139,126 21,484 39,047 254,761 139,126 - 214,575 13,666 145,000 435,000 580,000 50,312 60,730 111,042 - - - 34,553 646 195,312 495,730 691,042 249,128 14,312 ( 195,312) ( 495,730) 21,484 ( 651,995) 5,633 124,814 166,095 500,697 ( 20,697) 644,932 10,000 _ ` 166,095 500,697 ( 20,697) 644,932 10,000 _ ( 29,217) 4,967 787 ( 7,063) 15,633 124,814 29,744 12,101 412,500 832,608 82,586 822,378 $ 527 $ 17,068 $ 413,287 $ 825,545 $ 98,219 1 947,192 (Continued) 55 STATE OF NEW MEXICO TOWN OF TAOS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2007 REVENUES Taxes Intergovernmental Fines and forfeitures Charges for services Miscellaneous Total revenues EXPENDITURES Current operations: General government Public safety Culture and recreation Debt service: Principal Interest Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in (out) Total other financing sources (uses) Net change in fund balances Fund balances, beginning of year Fund balances, end of year The notes to the financial statements are an integral part of this statement, 56 Capital Projects �...' : Domestic 1999 Enhanced Violence Facilities Vehicle Gas €) 911 Shelter Improvements Replacement Construction Fund #53 Fund #28 Fund # 50 Fund #54 Fund #59 150,002 554,745 119_,778 L - 3,99724,464 150,002 558,742 144,242 150,000 154,874 1,425 3,599 - 18,000 755,453 87,434 216,728 150,000 928,327 88,859 220,327 2 ( 369,585) ( 88,859) ( 76,085) i - - 429,000 200,000 - 429,000 200,000 2 59,415 111,141 ( 76,085)"!! 25,309 151,848 215,372 509,319 $ 25,309 $ 2 $ 211,263 $ 326,513 $ 433,234 , The notes to the financial statements are an integral part of this statement, 56 Capital Projects Nonmajor Governmental Total Funds $ $ 2,003,733 1,079,286 1,978,992 - 79,078 - 107,076 167,587 264,136 1,246,873 4,433,015 538,139 538,139 - 764,524 - 1,475,710 18,000 598,000 - 111,042 1,094,814 1,218,713 1,650,953 4,706,128 ( 404,080) ( 273,113) 639,000 628,356 639,000 628,356 234,920 355,243 1,806,812 3,534,987 $ 2,041,732 $ 3,890,230 57 STATE OF NEW MEXICO I'lll TOWN OF TAOS f -'- FIRE PROTECTION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Intergovernmental Miscellaneous Total revenues EXPENDITURES Operating expenses Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash and investments balance RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis The notes to the financial statements are an integral part of this statement. 58 $( 216,946)_` 175,960 ( 2,304) w $( 43,290) i' I_. Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 175,960 $ 175,960 $ $( 175,960) 175,960 175,960 ( 175,960) 176,608 176,608 130,209 46,399 .� 243,559 243,559 68,725 174,834 420,167 420,167 198,934 I_. 221,233 �.. ( 244,207) ( 244,207) ( 198,934) 45,273 ( 18,012) ( 18,012) ( 18,012) - ( 18,012) ( 18,012) ( 18,012) -�� $( 262,219) $( 262,219) $( 216,946) $ 45,273 $ 439,492 $ 439,492 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis The notes to the financial statements are an integral part of this statement. 58 $( 216,946)_` 175,960 ( 2,304) w $( 43,290) i' I_. STATE OF NEW MEXICO TOWN OF TAOS RECREATION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 22,158 $ 22,158 $ 18,185 $( 3,973) Miscellaneous 13,151 13,151 11,022 ( 2,129) Total revenues 35,309 35,309 29,207 ( 6,102) EXPENDITURES Operating expenses 32,344 69,289 32,964 36,325 y Total expenditures 32,344 69,289 32,964 36,325 Excess (deficiency) of revenues over expenditures 2,965 ( 33,980) ( 3,757) 30,223 Net change in fund balances $ 2,965 $( 33,980) $( 3,757) $ 30,223 Beginning cash balance $ 23,892 $ 23,892 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis $( 3,757) 519 498 $( 2,740) The notes to the financial statements are an integral part of this statement. 59 STATE OF NEW MEXICO TOWN OF TAOS LODGER'S TAX FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Taxes Miscellaneous Total revenues EXPENDITURES Operating expenses Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash and investment balance ( 603,469) ( 603,469) ( 603,469) ( 603,469) ( 603,469) ( 603,469) - $( 100,920) $( 104,416) $( 85,549) $ 18,867 $ 138,058 $ 138,058 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Change in deferred revenue Change in payables Net change in fund balances GAAP basis $( 85,549) 156,351 ( 141,109) 8,445 $( 61,862) The notes to the financial statements are an integral part of this statement. 60 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 954,284 $ 954,284 $ 938,173 $( 16,111) - 3,497 3,497 954,284 954,284 941,670 ( 12,614) 451,735 455,231 423,750 31,481 451,735 455,231 423,750 31,481 502,549 499,053 517,920 18,867 ( 603,469) ( 603,469) ( 603,469) ( 603,469) ( 603,469) ( 603,469) - $( 100,920) $( 104,416) $( 85,549) $ 18,867 $ 138,058 $ 138,058 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Change in deferred revenue Change in payables Net change in fund balances GAAP basis $( 85,549) 156,351 ( 141,109) 8,445 $( 61,862) The notes to the financial statements are an integral part of this statement. 60 STATE OF NEW MEXICO TOWN OF TAOS LOCAL GOVERNMENT CORRECTIONS FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Fines and forfeits Total revenues EXPENDITURES Operating expenses Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash balance Budgeted Amounts Original Final Variance with Final Budget Actual Positive Amounts (Negative) $ 55,485 $ 55,485 $ 46,634 $( 8,851) 55,485 55,485 46,634 ( 8,851) 125,000 125,000 36,747 88,253 125,000 125,000 36,747 88,253 ( 69,515) ( 69,515) 9,887 79,402 30,000 30,000 20,000 ( 10,000) 30,000 30,000 20,000 ( 10,000) $( 39,515) $( 39,515) $ 29,887 $ 69,402 $ 48,018 $ 48,018 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in payables Net change in fund balances GAAP basis The notes to the financial statements are an integral part of this statement. 61 $ 29,887 ( 1,967) $ 27,920 STATE OF NEW MEXICO TOWN OF TAOS LAW ENFORCEMENT PROTECTION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Intergovernmental Total revenues EXPENDITURES Operating expenses Total expenditures Excess (deficiency) of revenues over expenditures Net change in fund balances Beginning cash balance Variance with Budeeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 32,000 $ 32,000 $ 32,000 $ 32,000 32,000 32,000 32,000 32,000 31,966 34 32,000 32,000 31,966 34 - - 34 34 $ $ $ 34 $ 34 $ 1,124 $ 1,124 RECONCILIATION TO GAAP BASIS Net increase(decrease)in fund balances budget basis Change in payables Net change in fund balances GAAP basis The notes to the financial statements are an integral part of this statement. 62 STATE OF NEW MEXICO TOWN OF TAOS CIVIC CENTER FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (N G on- AAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Charges for services Miscellaneous Total revenues EXPENDITURES Operating expenses Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances 380,027 380,027 388,241 ( Variance with Budgeted Amounts 388,241 ( Final Budget $( 37,143) $( 37,143) $ Actual Positive Original Final Amounts (Negative) $ 100,052 $ 100,052 $ 107,076 $ 7,024 - - 275 275 100,052 100,052 107,351 7,299 513,222 517,222 453,483 631739 4,000 - _ - 517,222 517,222 453,483 63,739 ( 417,170) ( 417,170) ( 346,132) ( 71,038) 380,027 380,027 388,241 ( 8,214) 380,027 380,027 388,241 ( 8,214) $( 37,143) $( 37,143) $ 42,109 $( 79,252) Beginning cash balance $ 16,910 $ 16,910 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in payables Net change in fund balances GAAP basis l The notes to the financial statements are an integral part of this statement. 63 $ 42,109 ( 2,031) $ 40,078 STATE OF NEW MEXICO TOWN OF TAOS COMMUNITY GRANTS FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Intergovernmental Miscellaneous Total revenues EXPENDITURES Operating expenses Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash and investments balance Budgeted Amounts Original Final Variance with Final Budget Actual Positive Amounts (Negative) $ 433,368 $ 466,716 $ 189,225 $( 277,491) 50,219 58,674 32,444 ( 26,230) 483,587 525,390 221,669 ( 303,721) 411,132 471,969 189,387 282,582 194,186 182,681 55,174 127,507 605,318 654,650 244,561 410,089 ( 121,731) ( 129,260) ( 22,892) 106,368 71,012 75,012 75,012 71,012 75,012 75,012 - $( 50,719) $( 54,248) $ 52,120 $ 106,368 $ 133,360 $ 133,360 RECONCILIATION TO GAAP BASIS Net increase (decrease)in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis The notes to the financial statements are an integral part of this statement. 64 $ 52,120 ( 37,383) 60,100 $ 74,837 STATE OF NEW MEXICO TOWN OF TAOS PUBLIC TRANSPORTATION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Intergovernmental Miscellaneous Total revenues EXPENDITURES Operating expenses Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures i OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances 223,442 223,442 $ 1,921 Beginning cash balance $ 5,778 RECONCILIATION TO GAAP BASIS Net increase (decrease)in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis 239,442 231,228 ( 8,214) 239,442 231,228 ( 8,214) $ 15,136 $( 10,918) $( 26,054) $ 5,778 The notes to the financial statements are an integral part of this statement. I $( 10,918) 4,257 3,251 $( 3,410) Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 333,434 $ 333,434 $ 235,464 $( 97,970) 45,355 45,355 42,678 ( 2,677) 378,789 378,789 278,142 ( 100,647) 554,570 557,355 520,288 37,067 45,740 45,740 - 45,740 600,310 603,095 520,288 82,807 ( 221,521) ( 224,306) ( 242,146) ( 17,840) 223,442 223,442 $ 1,921 Beginning cash balance $ 5,778 RECONCILIATION TO GAAP BASIS Net increase (decrease)in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis 239,442 231,228 ( 8,214) 239,442 231,228 ( 8,214) $ 15,136 $( 10,918) $( 26,054) $ 5,778 The notes to the financial statements are an integral part of this statement. I $( 10,918) 4,257 3,251 $( 3,410) STATE OF NEW MEXICO TOWN OF TAOS MUNICIPAL ROAD GASOLINE TAX FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Taxes Total revenues OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash and receivables balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 76,596 $ 76,596 $ 74,808 $( 1,788) 76,596 76,596 74,808 ( 1,788) F, ( 76,596) ( 76,596) $ 6,443 RECONCILIATION TO GAAP BASIS Net increase (decrease)in fund balances budget basis Change in receivables Net change in fund balances GAAP basis ( 76,596) ( 76,596) $ 6,443 The notes to the financial statements are an integral part of this statement. ( 74,808) 1,788 y ( 74,808) 1,788 1 $ $ �I $ 63 $ 633 STATE OF NEW MEXICO TOWN OF TAOS 1/4 CENT MUNICIPAL GROSS RECEIPTS TAX FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Taxes Total revenues OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash and receivables balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 922,996 $ 946,364 $ 946,364 $ 922,996 946,364 946,364 ( 922,996) ( 922,996) $ 73,235 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Net change in fund balances GAAP basis ( 946,364) ( 946,364) ( 946,364) ( 946,364) $ 73,235 10,379 $ 10,379 The notes to the financial statements are an integral part of this statement. 67 STATE OF NEW MEXICO TOWN OF TAOS CENTRAL COMMUNICATIONS FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Intergovernmental Total revenues EXPENDITURES Operating expenses Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash balance r Variance with ° E sr Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 299,996 $ 299,996 $ 300,182 $ 186 [ g 299,996 299,996 300,182 186 540,330 548,996 486,841 18,000 18,000 - 558,330 566,996 486,841 ( 258,334) ( 267,000) ( 186,659) 272,596 272,596 272,596 62,155 18,000 80,155 rr � 80,341 E 272,596 272,596 272,596 - $ 14,262 $ 5,596 $ 85,937 $ 80,341 $ 8,091 $ 8,091 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in payables Net change in fund balances GAAP basis The notes to the financial statements are an integral part of this statement. 68 $ 85,937 ( 555) $ 85,382 STATE OF NEW MEXICO TOWN OF TAOS 1989/1999 GROSS RECEIPTS TAX REVENUE BOND RESERVE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES i Miscellaneous Total revenues OTHER FINANCING SOURCES (USES) Transfers out Total other financing sources (uses) Net change in fund balances Beginning cash balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 4,887 $ 10,267 $ 10,267 $ 4,887 10,267 10,267 ( 4,887) ( 10,267) ( 4,887) ( 10,267) The notes to the financial statements are an integral part of this statement. ( 10,267) ( 10,267) a STATE OF NEW MEXICO TOWN OF TAOS 1993 RECEIPTS TAX REVENUE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 Variance with The notes to the financial statements are an integral part of this statement. 70 Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) EXPENDITURES Miscellaneous $ _ $ 228 $ _ $ 228 Principal retirement 6,681 6,681 Interest and fiscal charges 2,533 2,533 Total expenditures 9,442 9,442 OTHER FINANCING SOURCES (USES) Transfers in (out) 9,104 9,104 Total other financing sources (uses) 9,104 9,104 Net change in fund balances $ $( 338) $ 9,104 $( 9,442) Beginning cash balance $ 338 $ 338 The notes to the financial statements are an integral part of this statement. 70 STATE OF NEW MEXICO TOWN OF TAOS 1995 GROSS RECEIPTS TAX R.B. RETIREMENT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 EXPENDITURES Miscellaneous Principal retirement Interest and fiscal charges Total expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash balance Budgeted Amounts Original Final Variance with Final Budget Actual Positive Amounts (Negative) The notes to the financial statements are an integral part of this statement. 71 140,000 140,000 140,000 66,890 66,890 66,890 206,890 206,890 - 206,890 211,262 211,262 7,296 ( 203,966) 211,262 211,262 7,296 ( 203,966) $ 4,372 $ 4,372 $ 7,296 $( 2,924) $ 11,925 $ 11,925 The notes to the financial statements are an integral part of this statement. 71 STATE OF NEW MEXICO TOWN OF TAOS 1995 GROSS RECEIPTS TAX ACQUISITION RESERVE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Miscellaneous Total revenues OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash and investments balance Budgeted Amounts Original Final Variance with Final Budget Actual Positive Amounts (Negative) $ 4,262 $ 7,296 $ 7,296 $ 4,262 7,296 7,296 ( 6,381) ( 7,296) ( 6,381) ( 7,296) $( 2,119) $ - $ 170,500 $ 170,500 The notes to the financial statements are an integral part of this statement. 72 ( 7,296) ( 7,296) STATE OF NEW MEXICO TOWN OF TAOS 1999 GAS TAX R.B. RETIREMENT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 EXPENDITURES Principal retirement Interest and fiscal charges Total expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash balance Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 145,000 $ 145,000 $ 145,000 $ 53,753 53,753 50,312 3,441 198,753 198,753 195,312 3,441 176,006 198,006 166,095 ( 31,911) 176,006 198,006 166,095 ( 31,911) $( 22,747) $( 747) $( 29,217) $ 29,744 $ 29,744 The notes to the financial statements are an integral part of this statement. 73 STATE OF NEW MEXICO TOWN OF TAOS 2001 GROSS RECEIPTS TAX R.B. RETIREMENT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 EXPENDITURES Principal retirement Interest and fiscal charges Total expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash balance 488,250 500,697 500,697 488,250 500,697 500,697 $( 7,480) $ 4,967 $ 4,967 $ $( 5,089) $( 5,089) The notes to the financial statements are an integral part of this statement. 74 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 435,000 $ 435,000 $ 435,000 $ 60,730 60,730 60,730 495,730 495,730 495,730 488,250 500,697 500,697 488,250 500,697 500,697 $( 7,480) $ 4,967 $ 4,967 $ $( 5,089) $( 5,089) The notes to the financial statements are an integral part of this statement. 74 STATE OF NEW MEXICO TOWN OF TAOS 2001 GROSS RECEIPTS TAX R.B. RESERVE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts i (Negative) REVENUES Miscellaneous $ 8,250 $ 20,697 $ 21,484 $ 787 Total revenues 8,250 20,697 21,484 I 787 OTHER FINANCING SOURCES (USES) Transfers in (out) ( 8,250) ( 20,697) ( 20,697) Total other financing sources (uses) ( 8,250) ( 20,697) ( 20,697) Net change in fund balances $ - $ - $ 787 $ 787 Beginning cash balance $ 17,190 $ 17,190 The notes to the financial statements are an integral part of this statement. 75 STATE OF NEW MEXICO TOWN OF TAOS CAPITAL PROJECTS FUND - INDIVIDUAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JANE 30, 2007 REVENUES Intergovernmental Taxes Miscellaneous Total revenues EXPENDITURES Operating expenses Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Debt proceeds Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash, investments and receivables balance RECONCILIATION TO GAAP BASIS $ 2,609,071 $ 2,609,071 Net increase(decrease)in fund balances budget basis $( 223,831) Change in receivables 132,260 Change in payables 183,500 Net change in fund balances GAAP basis $ 91,929 The notes to the financial statements are an integral part of this statement. 76 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 1,783,939 $ 1,854,856 $ 893,154 $( 961,702) 689,331 689,331 709,773 20,442 3,629,500 3,629,500 - ( 3,629,500) 6,102,770 6,173,687 1,602,927 ( 4,570,760) 93,688 182,424 106,360 76,064 8,441,192 9,891,604 3,657,993 6,233,611 8,534,880 10,074,028 3,764,353 6,309,675 ( 2,432,110) ( 3,900,341) ( 2,161,426) 1,738,915 - - 954,000 954,000 634,996 668,595 983,595 315,000 634,996 668,595 1,937,595 1,269,000 $( 1,797,114) $( 3,231,746) $( 223,831) $ 3,007,915 $ 2,609,071 $ 2,609,071 Net increase(decrease)in fund balances budget basis $( 223,831) Change in receivables 132,260 Change in payables 183,500 Net change in fund balances GAAP basis $ 91,929 The notes to the financial statements are an integral part of this statement. 76 cc _ I i STATE OF NEW MEXICO TOWN OF TAOS AIRPORT CONSTRUCTION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Intergovernmental Total revenues EXPENDITURES Operating expenses Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash and investments balances 10,000 10,000 10,000 10,000 10,000 10,000 - $( 145,175) $( 145,191) % 499) $ 144,692 $ 98,718 $ 98,718 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis $( 499) ( 505) 16,637 $ 15,633 The notes to the financial statements are an integral part of this statement. 77 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 707,848 $ 710,801 $ 255,266 $( 455,535) 707,848 710,801 255,266 ( 455,535) 463,922 463,922 231,212 232,710 399,101 402,070 34,553 367,517 863,023 865,992 265,765 600,227 ( 155,175) L_155,191) ( 10,499) 144,692 10,000 10,000 10,000 10,000 10,000 10,000 - $( 145,175) $( 145,191) % 499) $ 144,692 $ 98,718 $ 98,718 RECONCILIATION TO GAAP BASIS Net increase (decrease) in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis $( 499) ( 505) 16,637 $ 15,633 The notes to the financial statements are an integral part of this statement. 77 STATE OF NEW MEXICO TOWN OF TAOS 1994 GRT REVENUE BOND ACQUISITION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Miscellaneous Total revenues EXPENDITURES Operating expense Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Net change in fund balances Beginning cash and investments balance Budgeted Amounts Original Final Variance with Final Budget Actual Positive Amounts (Negative) $ 101,388 $ 101,388 $ 139,126 $ 37,738 101,388 101,388 139,126 37,738 112,895 112,895 13,666 99,229 152,111 152,111 646 151465 -- 265,006 265,006 14,312 250,694 ( 163,618) ( 163,618) 124,814 288,432 $(--L63,618) $( 163,618) $ 124,814 $ 288,432 $ 822,378 $ 822,378 The notes to the financial statements are an integral part of this statement. In STATE OF NEW MEXICO TOWN OF TAOS DOMESTIC VIOLENCE SHELTER FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 '.. Variance with Budeeted Amounts Final Budget - Actual Positive Original Final Amounts (Negative) REVENUES Intergovernmental $ 150,000 $ 150,000 $ 150,002 $ 2 Total revenues 150,000 150,000 150,002 2 EXPENDITURES Operating expenses 150,000 150,000 150,000 Total expenditures 150,000 150,000 150,000 i Excess (deficiency) of revenues over expenditures 2 2 Net change in fund balances $ $ $ 2 $ 2 (. Beginning cash balance The notes to the financial statements are an integral part of this statement. 79 STATE OF NEW MEXICO TOWN OF TAOS FACILITIES IMPROVEMENTS FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Intergovernmental Miscellaneous Total revenues EXPENDITURES Operating expenses Capital outlay Debt service Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Net change in fund balances Beginning cash, investments and receivables balance $ 376,234 $ 376,234 RECONCILIATION TO GAAP BASIS Net increase (decrease)in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis The notes to the financial statements are an integral part of this statement. ER $( 162,463)y 3,687 218,191 $ 59,415 ti l__ Variance with. Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) �Tl $ 2,000,000 $ 2,000,000 $ 551,058 $( 1,448,942) ('! 500 12,329 3,997 ( 8,332) 2,000,500 2,012,329 555,055 ( 1,457,274) j 306,173 309,299 373,065 ( 63,766) . 2,132,959 2,166,566 755,453 1,411,113 - - 18,000 ( 18,000) 2,439,132 2,475,865 1,146,518 1,329,347 JI1 ( 438,632) ( 463,536) ( 591,463) ( 127,927) '. 399,000 429,000 429,000 - 399,000 429,000 429,000 - $( 39,632) $( 34,536) $( 162,463) $( 127,927) $ 376,234 $ 376,234 RECONCILIATION TO GAAP BASIS Net increase (decrease)in fund balances budget basis Change in receivables Change in payables Net change in fund balances GAAP basis The notes to the financial statements are an integral part of this statement. ER $( 162,463)y 3,687 218,191 $ 59,415 ti l__ i_ I STATE OF NEW MEXICO TOWN OF TAOS VEHICLE REPLACEMENT FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Miscellaneous Total revenues EXPENDITURES Operating expense Capital outlay Total expenditures OTHER FINANCING SOURCES (USES) Transfers in (out) Total other financing sources (uses) Excess (deficiency) of revenues over expenditures Net change in fund balances Beginning cash and investments balances Variance with Budeeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 5,000 $ 5,000 $ $( 5,000) 5,000 5,000 - ( 5,000) 2,000 6,193 1,425 4,768 105,000 222,000 83,743 138;257 107,000 228,193 85,168 143,025 200,000 200,000 200,000 200,000 200,000 200,000 98,000 ( 23,193) 114,832 138,025 $ 98,000 $( 23,193) $ 114,832 $ 138,025 $ 215,615 $ 215,615 RECONCILIATION TO GAAP BASIS Net increase (decrease)in fund balances budget basis Change in payables Net change in fund balances GAAP basis $ 114,832 ( 3,691) $ 111,141 The notes to the financial statements are an integral part of this statement. 81 STATE OF NEW MEXICO TOWN OF TAOS 1999 GAS CONSTRUCTION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET (Non -GAAP Basis) and ACTUAL on BUDGETARY BASIS YEAR ENDED JUNE 30, 2007 REVENUES Intergovernmental Miscellaneous Total revenues EXPENDITURES Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Net change in fund balances Beginning cash and investments balance RECONCILIATION TO GAAP BASIS Net increase(decrease)in fund balances budget basis Change in payables Net change in fund balances GAAP basis $( 72,486) ( 3,599) $( 76,085) i ii t:e The notes to the financial statements are an integral part of this statement. 82 Variance with Budgeted Amounts Final Budget Actual Positive Original FinalAmounts (Negative) C. rt' $ 1,133,009 $ 1,287,411 $ 119,778 $( 1,167,633) 14,976 14,976 24,464 9,488 1,147,985 1,302,387 144,242 ( 1,158,145) 1,504,977 1,770,163 216,728 1,553;435 1,504,977 1,770,163 216,728 ( 1,553,435 ( 356,992) ( 467,776) ( 72,486) 395,290 $( 356,992) $( 467,776) $( 72,486) $ 395,290 $ 509,319 $ 509,319 RECONCILIATION TO GAAP BASIS Net increase(decrease)in fund balances budget basis Change in payables Net change in fund balances GAAP basis $( 72,486) ( 3,599) $( 76,085) i ii t:e The notes to the financial statements are an integral part of this statement. 82 Operating Expenses: Personnel services Capital outlay Other Total operating expenses Operating income (loss) Non-operating income (deductions): Interest expense Interest income Sales tax Federal and state grants Total non-operating income (deductions) Other financing sources (uses): Transfers in (out) from other funds Total other financing sources (uses) Non -budgeted items: Bad debt Depreciation Total other financing sources (uses) Net income (loss) 597,488 STATE OF NEW MEXICO 614,946 6,840,953 TOWN OF TAOS - 1,760,955 WATER AND SEWER FUND 1,644,262 STATEMENT OF REVENUES, EXPENSES AND CHANGE IN FUND NET ASSETS 8,835,048 BUDGET and ACTUAL ( 7,086,810) FOR THE YEAR ENDED JUNE 30, 2007 35,242 ( 164,133) Variance with ( 160,657) Budgeted Amounts Final Budget 170,035 Actual Postive 478,371 Original Final Amounts (Negative) 2,860, 705 Operating Revenues: 5,790,094 Charges for services $ 1,925,194 $ 1,986,890 $ 2,043,098 $ 56,208 Other revenue 187,392 187,392 251,352 63,960 Total operating revenues 2,112,586 2,174,282 2,294,450 120,168 Operating Expenses: Personnel services Capital outlay Other Total operating expenses Operating income (loss) Non-operating income (deductions): Interest expense Interest income Sales tax Federal and state grants Total non-operating income (deductions) Other financing sources (uses): Transfers in (out) from other funds Total other financing sources (uses) Non -budgeted items: Bad debt Depreciation Total other financing sources (uses) Net income (loss) 597,488 605,355 614,946 6,840,953 6,300,526 - 1,760,955 1,929,167 1,644,262 9,199,396 8,835,048 2,259,208 ( 7,086,810) ( 6,660,766) 35,242 ( 164,133) ( 164,323) ( 160,657) 107,450 114,052 170,035 488,796 488,796 478,371 5,357,981 5,378,231 2,860, 705 5,790,094 5,816,756 3,348,454 100,000 - 100,000 ( 32,231) ( 795,320) ( 827,551) ( 9,591) 6,300,526 284,905 6,575,840 6,696,008 3,666 55,983 ( 10,425) ( 2,517,526) ( 2,468,302) ( 100,000) ( 100,000) ( 32,231) ( 795,320) ( 827,551) $( 1,296,716) $( 744,010) $ 2,556,145 $ 3,300,155 The notes to the financial statements are an integral part of this statement. 83 STATE OF NEW MEXICO TOWN OF TAOS LANDFILL STATEMENT OF REVENUES, EXPENSES AND CHANGE IN FUND NET ASSETS BUDGET and ACTUAL FOR THE YEAR ENDED JUNE 30, 2007 F" Variance with Budgeted Amounts Final Budget Actual Postive Original Final Amounts (Negative) Operating Revenues: [ Charges for services $ 1,111,651 $ 1,111,651 $ 1,251,843 $ 140,192 Total operating revenues 1,111,651 1,111,651 1,251,843 140,192 Operating Expenses: Personnel services 262,975 285,293 276,142 9,151 Capital outlay 539,311 539,311 - 539,311 Other 428,806 427,234 403,050 24,184 Total operating expenses 1,231,092 1,251,838 679,192 572,646 Operating income (loss) ( 119,441) ( 140,187) 572,651 712,838 Non-operating income (deductions): Interest expense ( 16,880) ( 16,880) ( 16,641) 239 Interest income 15,000 15,000 36,131 21,131 Federal grants 366,073 366,073 ( 366,073) I±! Total non-operating income (deductions) 364,193 364,193 19,490 ( 344,703) Other financing sources (uses): Transfers in (out) from other funds - - - _ Total other financing sources (uses) Non -budgeted items: i Depreciation ( 111,903) ( 111,903) (' Total other financing sources (uses) - ( 111,903) ( 111,903) Net income $ 244,752 (loss) $ 224,006 $ 480,238 $ 256,232 The notes to the financial statements are an integral part of this statement. C 84 STATE OF NEW MEXICO TOWN OF TAOS SOLID WASTE FUND STATEMENT OF REVENUES, EXPENSES AND CHANGE IN FUND NET ASSETS BUDGET and ACTUAL FOR THE YEAR ENDED JUNE 30, 2007 Operating Revenues: Charges for services Other revenue Total operating revenues Operating Expenses: Personnel services Capital outlay Other Total operating expenses Operating income (loss) Non -budgeted items: Bad debt Depreciation Total other financing sources (uses) Net income (loss) ( 6,096) ( 6,096) ( 6,096) ( 6,096) $( 271,836) $( 271,836) $ 50,596 $( 35,790) The notes to the financial statements are an integral part of this statement. 85 Variance with Budgeted Amounts Final Budget Actual Postive Original Final Amounts (Negative) $ 907,274 $ 907,274 $ 1,048,485 $ 141,211 71,710 71,710 79,916 8,206 978,984 978,984 1,128,401 149,417 116,471 106,518 104,349 2,169 105,000 105,000 - 105,000 1,029,349 1,039,302 967,360 71,942 1,250, 820 1,250, 820 1,071,709 179.111 ( 271,836) ( 271,836) 56,692 ( 29,694) ( 6,096) ( 6,096) ( 6,096) ( 6,096) $( 271,836) $( 271,836) $ 50,596 $( 35,790) The notes to the financial statements are an integral part of this statement. 85 STATE OF NEW MEXICO TOWN OF TAOS SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND JUNE 30, 2007 Balance Balance June 30, June 30, 2006 Receipts Disbursements 2007 ASSETS Cash $ 27,917 $ 35,831 Investments 30,500 Total assets $ 58,417 $ 35,831 LIABILITTCS Deposits payable $ 20,380 $ 21,350 Accounts payable 2,373 - Due to outside entities 35,664 16,151 Total liabilities $ 58,417 $ 37,501 m $ 35,961 $ 27,787 - 30,500 $ 23,050 12,208 $ 35,258 18,680 39,607 $ 58,287 STATE OF NEW MEXICO TOWN OF TAOS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDING JUNE 30, 2007 Federal Award Program CFDA Number Grant ID Number Amount U.S. Department of Justice Federal Expenditures Enforcement Assistance 16.580 $ 287,113 $ 52,249 COPS Grant 2003 16.710 2003-SH-WX-0149 117,294 15,979 COPS Technology Grant 2005 16.710 123,330 9,242 Subtotal U.S. Department of Justice 527,737 77,470 Office of Juvenile Justice and Delinquency Prevention: Juvenile 16.540 125,100 22,802 U.S. Department of Housing & Urban Development Pass Through the State of New Mexico, Department of Finance & Administration: Community Against Violence 14.235 NM02B001003 450,000 150,000 CDBG - CAV Expansion 14.235 05 -C -NR -I -3G-42 500,000 500,000 EDI Special Project 14.xxx B -04 -SP -NM -0478 1,590,560 1,149,096 Subtotal U.S. Department of Housing & Urban Development 2,540,560 1,799,096 U.S. Department of Transportation Federal Aviation Administration (FAA) Ramp Reconstruction - FAA 20.106 3-35-0041-015-2004 481,892 1,279 Airport PAP[ - FAA 20.106 3-35-0041-116-2006 167,436 32,544 Land Runway 22 - FAA 20.106 3-35-0041-018-2007 150,000 2,373 Airport EIS - FAA 20.106 3-35-0041-014-2003 355,300 208,085 Subtotal Federal Aviation Administration 1,154,628 244,281 Total Federal Financial Awards Expenditures $ 4,348,025 $ 2,143,649 Note A - Significant Accounting Policies: The accompanying schedule of expenditures of federal awards is prepared on the modified accrual basis of accounting. 87 r FEDERAL COMPLIANCE AND FINDINGS PATTILLO, BROWN & HILL,L.L-P. CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Bobby Duran, Mayor Town Council Town of Taos Taos, New Mexico and r' Hector H. Balderas New Mexico State Auditor Santa Fe, New Mexico We have audited the financial statements of the governmental activities, the business -type activities, each major fund, the aggregated remaining fund information, and the budgetary comparisons of the Town of Taos as of and for the year ended June 30, 2007, and have issued our report thereon, dated November 27, 2007. We !' have also audited the financial statements of each of the Town's nonmajor governmental funds, the combining and individual fund financial statements and budgetary comparisons. We conducted our audit in accordance [ ' with auditing standards generally accepted in the United States of America, and the standards applicable to ( s financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Town of Taos, New Mexico's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town of Taos, New Mexico's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Town of Taos, New Mexico's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiency, that adversely affects the Town of Taos, New Mexico's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted principles such that there is more than a remote likelihood that a misstatement of the Town of Taos, New Mexico's financial statements that is more than. 4301 THE 25 WAY NE ■ ALBUQUERQUE, NM 87109 IN (505) 266-5904 s FAX: (505) 268-6444 e www.pbhcpa.com AFFILIATE OFFICES: WACO, TX (254) 7724901 ■ BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583 ■ TEMPLE, TX (254) 791-3460 88 inconsequential will not be prevented or detected by the Town of Taos, New Mexico's internal control. We consider the deficiencies described in the accompanying schedule of findings and questioned costs to be significant deficiencies in internal control over financial reporting of findings 2007-1 to 2007-3. A material weakness is a significant deficiency, or combination of significant deficiency, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Town of Taos, New Mexico's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that none of the significant deficiencies described above is a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Town of Taos's basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance, or other matters that are required to be reported under 1 Governmental Auditing Standards, which are described in the accompanying schedule of findings and questioned costs as items 2007-1 to 2007-3. Town of Taos, New Mexico's response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit Town of Taos, New Mexico's responses and, accordingly, we express no opinion on them. This report is intended solely for the information and use of management, the Town, the Office of State Auditor, and federal awarding agencies and pass-through entities, the Office of the State Auditor, the New Mexico Legislature, and the New Mexico Department of Finance and Administration and should not be used by anyone other than these specified parties. / ® Pattillo, Brown & Hill, L.L.P. Albuquerque, New Mexico November 27, 2007 4301 THE 25 WAY NE ■ ALBUQUERQUE, NM 87109 ■ (505) 266-5904 ■ FAX: (505) 268-6444 IN www.pbhcpa.com AFFILIATE OFFICES: WACO, TX (254) 772-4901 ■ BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583 s TEMPLE, TX (254) 791-3460 on • kM PATTILLO, BROWN & HILL,L.L.n. CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Bobby Duran, Mayor Town Council Town of Taos Taos, New Mexico and Hector H. Balderas New Mexico State Auditor Santa Fe, New Mexico Compliance We have audited the compliance of the Town of Taos, New Mexico, with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2007. The Town of Taos, New Mexico's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws,; regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the Town of Taos, New Mexico's management. Our responsibility is to express an opinion on the Town of Taos, New Mexico's compliance based on Our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of I compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Town of Taos, New Mexico's compliance with those requirements and performing such other procedures, as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the Town of Taos, New Mexico's compliance with those requirements. In our opinion, the Town of Taos, New Mexico, complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2007. 4301 THE 25 WAY NE ■ ALBUQUERQUE, NM 87109 ■ (505) 266-5904 ■ FAX: (505) 268-6444 ■ www.pbhcpa.com-` AFFILIATE OFFICES: WACO, TX (254) 772-4901 s BROWNSV ILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583 s TEMPLE, TX (254) 791-3460 90 Internal Control Over Compliance The management of the Town of Taos, New Mexico, is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the Town of Taos, New Mexico's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Town of Taos, New Mexico's control over compliance. A control deficiency in an entity's internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect non compliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a federal program such that there is more than .a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity's internal control. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the management, Town Council, and federal awarding agencies and pass-through entities, the Office of the State Auditor, the New Mexico Legislature, and the New Mexico Department of Finance and Administration and is not intended to be and should not be used by anyone other than these specified parties. Pattillo, Brown & Hill, L.L.P. Albuquerque, New Mexico November 27, 2007 4301 THE 25 WAY NE ■ ALBUQUERQUE, NM 87109 ■ (505) 266-5904 ■ FAX: (505) 268-6444 ■ www.pbhcpa.com AFFILIATE OFFICES: WACO, TX (254) 772-4901 0 BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583 ■ TEMPLE, TX (254) 791-3460 91 A. STATE OF NEW MEXICO TOWN OF TAOS SCHEDULE OF FINDINGS AND QUESTIONED COSTS` JUNE 30, 2007 Summary of Audit Results 1. The auditors' report expresses an unqualified opinion on the financial statements of the Town of Taos. I- 2. Two significant deficiencies in internal control were disclosed during the audit but were not ; considered material weaknesses. 3. No instances of noncompliance material to the financial statements were disclosed during the audit. l 4. There were no significant deficiencies disclosed during the audit of the major federal awards programs reported in the Report on Compliance with Requirements Applicable to Each Major I Program and Internal Control Over Compliance in Accordance with OMB Circular A-133. 5. The auditors' report on compliance for the major federal awards programs for the Town of Taos C expresses an unqualified opinion. 6. There were no audit findings relative to the major federal awards programs for the Town of Taos to i be reported in Part C of this schedule. l 7. The programs tested as major programs included: U.S. Department of Housing & Urban Development- Community Against Violence CDGB-CAV Expansion, EDI Special Project 8. The threshold for distinguishing Types A and B programs was $300,000. 9. The Town of Taos did not qualify as a low risk auditee. Findings — Financial Statements Audit Prior Year 2006-1 Late Submission of Audit Report- resolved 2006-2 Professional Service Contracts- resolved 2006-3 Procurement Code Violation- resolved 2006-4 Bank Reconciliations - repeat 2006-5 Anti -Donation Clause- resolved 2006-6 Travel and Per Diem- repeat 2006-7 Cash Disbursement Policy- resolved Current Year 2007-1 Bank reconciliations 2007-2 Travel and Per Diem 2007-3 Lodgers Tax 92 STATE OF NEW MEXICO TOWN OF TAOS r SCHEDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2007 CURRENT YEAR FINDINGS AND RECOMMENDATIONS 2007-1 Bank Reconciliations Condition: The Town's clearing bank accounts were not reconciled to the general ledger. Criteria: NMSA 6-10-2 discusses the duty of public officials to balance public money at the close of each business day. Good accounting practices also require bank reconciliation are prepared at least monthly. Effect: The Town's clearing accounts are not reconciled to the general ledger causing large adjustments to the general ledger to balance cash. Cause: Finance department turnover caused the workload in the department to increase due to training new employees. Reconciliations were not prepared and payroll transactions postings were supplicated. Instead of preparing an adjusting entry to correct the general ledger the reconciler removed the duplicate transactions from the reconciliation there by balancing the reconciliation. Recommendation: The Town should review the general ledger history and prepare adjusting entries for the duplicate transactions. ` Response: Management agrees with the recommendation, and will resolve in the current fiscal year. 2007-2 Travel and Per Diem Condition: One travel reimbursement reviewed, (cost based on actual expenses) did not have supporting documentation for actual expenses reimbursed of $901.90. i Criteria: Travel and Per Diem, NMAC 2.42.2.9 requires submission of receipts for actual meals and lodging expenses incurred. The Town's policy requires submittal of receipts within 10 days after the return travel date. Effect: The reimbursement without receipts or an affidavit can cause an overpayment and or misuse of public money. Cause: The finance department requested on numerous occasions receipts for the travel reimbursement. Payment was made without proper documentation. Recommendation: The finance department should not pay travel reimbursement requests without all documentation required. Under certain circumstances where the loss of receipts would create a hardship, an affidavit from the office or employee attesting to the expenses may be substituted for actual receipts. Response: Management agrees with recommendation. 93 STATE OF NEW MEXICO TOWN OF TAOS SCHEDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2007 CURRENT YEAR FINDINGS AND RECOMMENDATIONS 2007-3 Lodgers Tax Condition: On October 5, 2007 the Town's attorney entered into an agreement with a Lodge for $11,250 in settlement of past due lodgers tax for the years 2002-2005. Per the lodgers tax audit the amount due for 2002-2005 was $128,967. Criteria: The Lodgers Tax act, Sections 3-38-13 through 3-38-24 NMSA, in conjunction with the Ordinance imposing the local tax, Ordinance No. 627, Section 19-55 of the Town of Taos Municipal Code, as amended by Ordinance 83-6, 91-6, 92-4 and 97-32 impose collection of lodgers tax on gross rental income. In addition the New Mexico' Constitution, Article IV, section 32, prohibits the Town from extinguishing the amount due except by receipt of payment in full or by proper proceedings in court. Effect: By the Town not enforcing their policy and following State Constitution the Town is potentially not collecting funds that are due, which could be utilized for promoting and publicizing such facilities and tourist attractions. Cause: Several lodging facilities were reducing lodging revenue by the value of complimentary meals and beverages in order to arrive at the amount of revenue subject to the Town's lodgers tax, despite the fact that occupants are paying lodgers' tax on the full room charge. The above described deductions are only allowable when there is affirmative approval from the Town pursuant to Taos Municipal Code, Section 4.12.030. No such approvals were found by the auditor of the lodgers tax for 2002-2005. Recommendation: The Town should consult with legal council to collect deficiencies based upon the unapproved deductions for complimentary meals and beverages. The Town should clarity its lodgers' tax ordinance to specifically address what constitutes amounts received that are subject to lodgers tax. The Town should hold an educational forum to inform all lodgers' of their responsibilities. Response: Management response as follows: From: Renee Barela-Gutierrez (Electronic Signature: RBG 11/30/07 11:30am ) You asked me to provide a legal opinion regarding whether a negotiation by the Town of a settlement on past -due lodger's tax violates Article IV Section 32 of the New Mexico Constitution. M STATE OF NEW MEXICO TOWN OF TAOS SCHEDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2007 CURRENT YEAR FINDINGS AND RECOMMENDATIONS continued Response: (continued) Relevant Facts The Town of Taos has entered into negotiations with various lodgers to negotiate a reasonable settlement of past due lodgers tax. This tax was identified as owed when an audit was conducted of the lodgers and the auditor determined that the lodgers had underreported the tax owed to the Town. The lodgers raised an issue regarding the exact amount due and the Town agreed that the total liability was not clearly identified; therefore the debt amount was in dispute. The Town then entered into negotiations with the affected lodgers to negotiate a reasonable settlement and the Town accepted as payment in full, an amount less than the amount identified by the lodgers tax auditor. The recent audit of the Town of Taos has proposed that this action by the Town is a violation of Article IV Section 32 of the New Mexico Constitution. This memo addresses that proposal. Relevant Law Article IV Section 32 of the New Mexico Constitution, as amended 1958, states: No obligation or liability of any person, association or corporation held or owned by or owing to the state, or any municipal corporation therein, shall ever be exchanged, transferred, remitted, released, postponed or in any way diminished by the legislature, nor shall any such obligation or liability be extinguished except by the payment thereof into the proper treasury, or by proper proceeding in court. Position Statement Article IV Section 32 of the New Mexico Constitution (hereafter Section 32) is being construed to state that a municipality cannot extinguish a debt or liability except by payment in full or proceeding in court. I respectfully disagree, and assert that Section 32 is applicable only to legislative action not municipality action. This position is supported by opinions issued by the Supreme Court of New Mexico as herein indicated. Legal Analysis Article 4 of the Constitution is entitled "Legislative Department'. Section 32 discusses "Obligations and Liabilities" of the Leeislative Department. (Emphasis added). Because Section 32 is located under the section of the Constitution that discusses the Legislature and legislative activities, the intent of Section 32 is that it be applicable to actions of the Legislative Department, not to actions of the municipality. If this provision was meant to be applied to actions of the municipality, it would be found in Article X, County and Municipal Corporations, or some other applicable provision. Referring to Section 32 and editing for the purpose of interpretation, Section 32 would read as follows: No obligation or liability... held or owned by or owing to ... any municipal corporation therein, shall ever be exchanged... by the legislature... 95 STATE OF NEW MEXICO TOWN OF TAOS SCHEDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2007 CURRENT YEAR FINDINGS AND RECOMMENDATIONS (continued) Response: (continued) It becomes clear that the actor in the section is the legislature, not the municipality. Thus the prohibition is on the legislature not the municipality. This position is further supported by a general review of opinions issued by the New Mexico Supreme Court where it has addressed [' the validity of Section 32. In the case of Hotels of Distinction West, Inc. v. City of Albuquerque, (107 N.M. 257, 755 [ P.2d 595) 1988, Plaintiff was seeking to have a development agreement entered into by the City of Albuquerque for a convention center hotel, declared unconstitutional based on Section 32. In that case, the court clarified that Section 32 is applicable to legislative action, not to municipality action. The court found that Section 32 was inapplicable to the actions of the City of Albuquerque because the Legislature was not the body taking action or proposing to take action. The court stated: Insofar as may be applicable, that section provides that the payment of any debt owed or owing by any party to a municipality cannot be delayed or postponed by the legislature. It is apparent on its face that the asserted constitutional prohibition has no bearing whatever on this matter. No action by the legislature has occurred with respect to this project, and none is i necessary or anticipated,. (Pinpoint citation omitted.) This analysis can be applied to the instant situation. The Town of Taos has entered into a contract for the settlement of a debt; the Legislature has not taken action, legislative action is not necessary, nor is legislative action anticipated. Therefore, in the instant case, as in the cited case, Section 32 is inapplicable. It is impossible to violate a section of the Constitution that does not apply. Other cases and situations where the court has addressed Section32 in similar manner, ie referring to Section 32 as specifically being applicable to legislative action are as follows: • State of New Mexico, ex rel., Public Employees Retirement Association v. Lougacre, (133 N.M. 20, 59 P.3d 500) 2002 Although the adverb "ever" does not in any way speak to the attributes of those obligations or liabilities the release of which by the legislature is forbidden by Article IV, Section 32... (Citation omitted, emphasis added.) • State of New Mexico, ex ret., Public Employees Retirement Association v. Longacre, [ (133 N.M. 20, 59 P.3d 500) 2002 €_ Under our interpretation of Article IV, Section 32, clearly the legislature may "eliminate or reduce a tax... " (Citation omitted, emphasis added.) M STATE OF NEW MEXICO TOWN OF TAOS j SCHEDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2007 CURRENT YEAR FINDINGS AND RECOMMENDATIONS (continued) Response: (continued) • See Generally: Gutierrez v. Gutierrez, (99 N.M. 333, 657 P.2d 1182) 1983, discussing constitutionality of Section 32 as applied to accepting payment by the State of less than the full amount of an undisputed legal obligation as a satisfaction. (Emphasis added.) Conclusion Section 32 of Article N of the New Mexico Constitution applies to the Legislative Department. The plain language of Section 32 prohibits the Legislature acting to extinguish a debt owed by a municipality through any method other than payment or court proceeding, (i.e. through enacting a statute). The language does not identify the municipality as the actor. Additionally, relevant case law agrees with this interpretation, Section 32 is a prohibition on the Legislative Department acting, not the municipality. Action by the Legislature to extinguish a debt owed to a municipality would be a violation -of Section 32. Nothing in Section 32 or relevant case law interpreting Section 32 prohibits the municipality from entering into a contract for settlement on a debt without court action. Therefore, the negotiation by the Town of Taos and resulting payment and settlement of the lodgers tax claim is not a violation of Article N of Section 32 of the New Mexico Constitution. M OF NEW MEXICO ( TOWN OF TAOS EXIT CONFERNCE JUNE 30, 2007 EXIT CONFERENCE An exit conference was held on November 27, 2007, by Cindy James, CPA of Pattillo, Brown & Hill, L.L.P. with Darren Cordova, Council Member, Tomas Benavidez, Town Manager and Marietta Fambro, Finance Director, of the Town of Taos. The audit was discussed. PREPARATION OF FINANCIAL STATEMENTS The financial statements presented in this report have been prepared by the auditors, Pattillo, Brown and Hill, L.L.C., Certified Public Accountants; however the financial statements are the responsibility of the management. N