Fort Walton Beach — Annual Comprehensive Financial Report, September 30, 2022 — reading text

13,514 6,495 2,568 714 16,082 7,209 Net Position Net Investment in Capital Assets 28,661 28,034 13,423 14,024 42,084 42,058 Restricted 12,376 8,999 621 633 12,997 9,632 Unrestricted 8,071 8,280 15,699 15,562 23,770 23,842 Total Net Position $49,108 $45,313 $29,743 $30,219 $78,851 $75,532 7 By far, the largest portion of the City’s assets, $42.1 million or 53.4%, reflects its investment in capital assets (e.g., land, infrastructure, buildings, machinery, and equipment) less any related debt still outstanding that was used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City reports the investment in its capital assets net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s net position of $13.0 million, or 16.5%, represents resources that are subject to external restrictions on how they may be used. The remaining balance of $23.8 million is unrestricted and may be used to meet the government’s ongoing obligations to citizens and creditors. Reported in Table 2 are the key elements of the changes in net position for the current year. Table 2 Statement of Changes in Net Position Governmental Activities Business-Type Activities Total Activities 2022 2021 2022 2021 2022 2021 Revenues Program Revenue: Charges for Services $6,218,093 $6,052,951 $17,806,191 $17,273,977 $24,024,284 $23,326,928 Operating Grants & Contributions 1,460,346 2,348,391 - - 1,460,346 2,348,391 Capital Grants & Contributions 125,832 186,874 46,063 89,963 171,895 276,837 General Revenue: Property Taxes 7.025.573 6,608,861 - - 7.025.573 6,608,861 Other Taxes 10,695,470 10,157,965 - - 10,695,470 10,157,965 Tax Increments for Redevelopment 2,404,122 2,320,213 - - 2,404,122 2,320,213 Other Revenue (Losses) 2,355,131 4,824,606 (872,436) 398,083 1,482,695 5,222,689 Total Revenues 30,284,567 32,499,861 16,979,818 17,762,023 47,264,385 50,261,884 Expenses Primary Government General Government 4,318,011 4,222,810 - - 4,318,011 4,222,810 Public Safety 14,020,586 13,746,451 - - 14,020,586 13,746,451 Physical Environment 531,268 547,701 - - 531,268 547,701 Transportation 1,401,797 1,253,402 - - 1,401,797 1,253,402 Economic Environment 1,194,625 1,131,722 - - 1,194,625 1,131,722 Culture & Recreation 6,103,857 5,990,714 - - 6,103,857 5,990,714 Debt Service Interest 716,930 700,924 - - 716.930 700,924 Business-Type Expenses Utilities - - 10,480,961 10,574,909 10,480,961 10,574,909 Sanitation - - 4,142,106 3,996,753 4,142,106 3,996,753 Other - - 1,035,826 1,040,698 1,035,826 1,040,698 Total Expenses 28,287,074 27,593,724 15,658,893 15,612,360 43,945,967 43,206,084 Increase in Net Position 1,997,493 4,906,137 1,320,925 2,149,663 3,318,418 7,055,800 before Transfers Transfers 1,797,083 1,759,782 (1,797,083) (1,759,782) - - Increase/(Decrease) in Net Position 3,794,576 6,665,919 (476,158) 389,881 3,318,418 7,055,800 Net Position – Beginning 45,312,883 38,646,964 30,218,672 29,828,791 75,531,555 68,475,755 Net Position – Ending $49,107,459 $45,312,883 $29,742,514 30,218,672 $78,849,973 $75,531,555 Current Year Impacts – Governmental Activities Governmental activities increased the City’s net position by $3.8 million for the fiscal year ended September 30, 2022. Key elements of this change are as follows:  Total revenues decreased by $2.2 million, or 6.8%, which is primary attributable to investment losses of $1.9 million as the result of market performance for the City’s fixed income investments during fiscal year 2022. Additional information on the City’s investments can be found in Notes 3 and 4 to the financial statements. 8  Total expenses increased $693,350, or 2.5%. This is primarily attributable to increases in payroll and related employee benefit costs. In addition, the City experienced increases in costs for fuel, electricity, and other supplies as the result of economic inflation.  Operating grants and contributions decreased $888,045, or 3.8%. This is primarily due to nonrecurring CARES Act grant funding of $702,459 being recognized in fiscal year 2021. Chart 1 Expense and Revenue - Governmental Activities (In millions) Debt Service Interest Culture and Recreation Economic Environment Transportation Physical Environment Public Safety General Government 0 5 10 15 Millions Revenues Expenses Chart 2 Revenues by Source - Governmental Activities Franchise Fees , Municipal Revenue $2,355,837 Sharing , $1,374,067 Other Revenue , - Tax Increments for $1,374,773 Redevelopment , $2,404,122 Charges for Services , $6,218,093 Other Taxes , $4,294,415 Operating Grants & Contributions , $1,460,346 Sales Tax , $6,401,055 Property Taxes , Capital Grants & $7,025,573 Contributions , $125,832 Franchise Fees Other Revenue Charges for Services Operating Grants & Contributions Capital Grants & Contributions Property Taxes Sales Tax Other Taxes Tax Increments for Redevelopment Municipal Revenue Sharing 9 Current Year Impacts – Business-Type Activities Business-type activities decreased the City’s net position by $476,158 for the fiscal year ended September 30, 2022. Key elements of this change are as follows:  Other revenues decreased by $1.3 million, which is primarily attributable to investment losses of $876,524 as the result of market performance for the City’s fixed income investments during fiscal year 2022. Additional information on the City’s investments can be found in Notes 3 and 4 to the financial statements.  Total expenses for the business-type activities increased by $46,533, or 0.3%, primarily due to an increase in payroll and related employee benefit costs. Chart 3 Expenses and Program Revenue - Business-Type Activities (In millions) $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- Utilities Sanitation Stormwater Expenses Revenues Chart 4 Revenues by Source - Business Type Activities Capital Grants, Miscellaneous $46,063 Income, $(872,436) Charges for Services, $17,806,191 Charges for Services Capital Grants Miscellaneous Income 10 FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of available resources. Such information is useful in assessing the City’s financing requirements. Unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of September 30, 2022, the City’s governmental funds have combined ending fund balances of $37.3 million, an increase of $544,044 from the prior year. Approximately 79.7% of this amount,