Loading...
HomeMy WebLinkAbout2006 . . . . TOWN OF SOUTH OLD AUDIT REPORTS December 31, 2006 . . . . . . . . I FINANCIAL SECTION I . Independent Auditors' Report... ................. ............. ................................................................................... 1-2 . REQUIRED SUPPLEMENTARY INFORMATION Management's Discussion and Analysis.................................................................... ............... 3-11 . I BASIC FINANCIAL STATEMENTS I Government-Wide Financial Statements Statement of Net Assets ......................................................................................................................... 12 Statement of Activities.................. ............. ................... ................................................ ........................... 13 . . Fund Financial Statements Governmental Fund Financial Statements Balance Sheet and Reconciliation of the Governmental Funds Balance Sheet to The Statement of Net Assets................ ................ ......... ........... ........................ .............. 14-15 Statement of Revenues, Expenditures, and Changes in Fund Balances and Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, And Changes in Fund Balances to the Statement of Activities................................... ............. 16-17 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets............................. ............................ ................................... 18 Notes to Financial Statements................................................................................................................... 19-34 . REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANGEMENT DISCUSSION AND ANALYSIS . Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund.. ...__............... ...... ................................... ........... ............................. ....... Highway Fund....................................................................................................... ....... 35 36 . I OTHER SUPPLEMENTARY INFORMATION COMBINING FUND STATEMENTS: Non-major Governmental Funds Combining Balance Sheet..... .................. ......... ...... ........................ ..... ................ .......... Combining Statement of Revenues, Expenditures, and Changes in Fund Balances.................... 37 38 DISCRETL Y PRESENTED COMPONENT UNITS . Discretely Presented Component Units: Combining Statement of Net Assets....................................................................................................... 39 . Combining Statement of Activities .......................................................................................................... 40 . . CEFi:TIFIED PUBLIC ACCOUNTANTS, BUSINESS ADVISORS AND CONSULTANTS 25 Suffolk Court, Hauppauge, New York 11788 631.434.9500 . Fax 631.434.9518 lVWl'V. avz. com INDEPENDENT AUDITORS' REPORT . Honorable Supervisor and Town Board Town of Southold Southold, New York . We have audited the accompanying financial statements of the govemmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Town of Southold, New York, as of December 31, 2006, and for the year then ended, which collectively comprise the Town's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on these financial statements based on our audit. . Except as discussed in the following paragraph, we conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 opinion. The financial statements supporting the financial activities of the Town of Southold's discretely presented component units with the exception of one, the Fishers Island Ferry District, were not audited as of the report date, nor were we able to satisfy ourselves as to those financial activities by other auditing . procedures. Those financial activities represent approximately 34% of the net assets of the discretely presented component units. The financial statements of the Fishers Island Ferry District were audited by other auditors whose report thereon have been furnished to us and in our opinion, insofar as it relates to the amounts included for that one component unit, is based solely on the reports of the other auditors. In our opinion, except for the effects of such adjustments if any as might have been determined to be . necessary had the unaudited component units financial statements been audited and based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of the Town of Southold, New York, as of December 31,2006, and the results of its operations for the year then ended in conformity with accounting principles generally accepted in the United States of America. . The Management's Discussion and Analysis and the budgetary information are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. . -1- . ALBRECHT, ViGGIANO, ZURECK & COMPANY, P.C. INDEF'ENDENT MEMBEA OF BKR INTERNATIONAL . . Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Town of Southold, New York's basic financial statements. The combining and individual fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements has been subjected to the auditing procedures applied in the audit of the basic financial statements of the Town of Southold, New York, and, in our opinion, is fairly presented in all material respects in relation to the basic financial statements taken as a whole. . /701~..\- V.. 7.....-'-'+-~, P.C V'^"'"-/ ~1 . Hauppauge, New York September 11, 2007 . . . . . . . -2- . . . . . REQUIRED SUPPLEMENTARY INFORMATION Management's Discussion and Analysis . . . . . . . TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 . The following is a discussion and analysis of the Town of Southold's financial performance, providing an overview of the Town's financial activITies for the year ended December 31, 2006. Use this section in conjunction with the Town's basic financial statements. USING THIS ANNUAL REPORT . This annual report consists of a series of financial statements. The Statement of Net Assets and the Statement of Activities provide information about the activities of the Town as a whole and present a longer- term view of the Town's finances. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the Town's operations in more detail than the government-wide statements by providing information about the Town's most significant funds. The remaining statements provide financial information about activities for which the Town acts solely as a trustee agent for the benefit of those outside of the government. . Reportin!! the Town as a Whole The Statement of Net Assets and the Statement of Activities . One of the most important questions asked about the Town's finances is, "Is the Town as a whole better off or worse off as a result of the year's activities?" The Statement of Net Assets and the Statement of Activities report information about the Town as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. The Statement of Activities is significantly different than a typical Statement of Revenues, Expenses, and Changes in Fund Balance. You will notice that expenses are listed in the first column with revenues from that particular program reported to the right. The result is a net (expense)/revenue. The reason for this kind of format is to highlight the relative financial burden of each of the functions on the Town's taxpayers. It also identifies how much each function draws from the general revenues or if it is self-financing through fees and grants. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. . . These two statements report the Town's net assets and their respective changes. You can think of the Town's net assets-the difference between assets and liabilities-as one way to measure the Town's financial health, or financial position. Over time, increases or decreases in the Town's net assets are one indicator of whether its financial health is improving or deteriorating. You will need to consider other non-financial factors, however, such as changes in the Town's property tax base and the condition of the Town's buildings, roads, drainage and other assets to assess the overall health of the Town. In the Statement of Net Assets and the Statement of Activities, we divide the Town into two kinds of activities: . . Governmental activities - The Town's basic services are reported here, including: general government support; public safety; public health; transportation; economic assistance and opportunity; culture and recreation and home and community services. Property taxes, sales taxes, franchise fees, fines, and state and federal grants finance these activities. The Town also charges fees to customers to help it cover the cost of certain services it provides. . . Component units - The Town includes seven separate legal entities in its report (one ferry district, one sanitation district, one mosquito district and four park districts). Although legally separate, these "component units" are important because the Town is financially accountable for them. Complete financial statements of the individual component units can be obtained from their respective administrative offices (Note A). . . -3- . TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 Reoortina the Town's Most Sianificant Funds . Fund Financial Statements . The fund financial statements provide detailed information about the most significant funds-not the Town as a whole. Some funds are required to be established by state law and by bond covenants. However, the Town establishes many other funds to help it control and manage sources of funding and spending related to specific activities. . The Town's basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Town's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the Town's programs. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds in a reconciliation that follows these fund financial statements. The Town as Trustee . Reoortina the Town's Fiduciarv Resoonsibilities . All of the Town's fiduciary activities are reported in a separate Statement of Fiduciary Net Assets. We exclude these activities from the Town's other financial statements because the Town cannot use these assets to finance its operations. The Town is responsible for ensuring that the assets reported in these funds are used for their intended purposes. FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE Our analysis below focuses on the net assets and changes in net assets of the Town's governmental activities. . Condensed Statement of Net Assets Governmental Activities as of December 31, 2006 and 2005 . 2006 2005 Assets Current and other assets $ 23,769,534 $ 26,265,665 Capital assets 100,557,312 90,294,079 Total assets 124,326,846 116,559,744 Liabilities Current and other liabilities 15,552,211 16,289,370 Long-term liabilities 14,773,434 14,916,051 Total liabilities 30,325,645 31,205,421 Net assets Invested in capital assets, net of related debt 92,063,214 81,044,981 Unrestricted 1,937,987 4,309,342 Total net assets $ 94,001,201 $ 85,354,323 . . . -4- . TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 . FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued) Total assets in the Town as of December 31, 2006 were $124.3 million, an increase of 7.8 million. Total liabilities as of December 31, 2006 were $30.3 million, which represents a decrease of $800,000 from December 31, 2005. This results in a net asset balance of $94 million, an increase of $8.6 million. Of the Town's net asset balance $92 million were invested in capital assets, net of related debt; while $1.9 million was unrestricted. . Changes in Net Assets Governmental Activities for the years ended December 31, 2006 and 2005 . . . . . . . . 2006 2005 Program Revenues Charges for services $ 9,231,396 $ 10,723,686 Operating grants and contributions 713,597 859,484 Capital grants and contributions 4,834,716 3,502,247 14,779,709 15,085,417 General Revenues Real property taxes 21,709,445 20,795,041 Other real property tax items 102,986 80,369 Non-property tax items 846,016 628,857 Interest earnings 1,233,122 766,413 State aid - unrestricted 2,610,189 2,527,110 Other 463,671 709,352 26,965,429 25,507,142 Total Revenues 41,745,138 40,592,559 Program Expenses General government support 6,843,661 6,621,408 Public safety 11,421,283 11,342,991 Public health 43,499 43,559 Transportation 7,298,698 6,627,876 Economic assistance and opportunity 1,354,610 1,208,467 Culture and recreation 713,164 356,167 Home and community services 4,912,384 4,961,051 Interest on debt 553,713 501,452 Total Expenses 33,141,012 31,662,971 Increase in Net Assets $ 8,604,126 $ 8,929,588 -5- . TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued) . Net Cost of Services Governmental Activities for the year ended December 31, 2006 . General government support Public safety Public health Transportation Economic assistance and opportunity Culture and recreation Home and community services Interest on debt Total Cost of Services $ 6,843,661 11,421,283 43,499 7,298,698 1,354,610 713,164 4,912,384 553,713 $ 33,141,012 . . . Net Cost of Services Governmental Activities for the year ended December 31, 2006 Total Cost Program Net Cost of Services Revenues of Services General government support $ 6,843,661 $ 319,565 $ 6,524,096 Public safety 11,421,283 674,617 10,746,666 Public health 43,499 10,185 33,314 Transportation 7,298,698 340,659 6,958,039 Economic assistance and opportunity 1,354,610 415,263 939,347 Culture and recreation 713,164 208,376 504,788 Home and community services 4,912,384 12,811,044 (7,898,660) Interest on debt 553,713 553,713 $ 33,141,012 $ 14,779,709 $18,361,303 . . The cost of all governmental activities this year was $33.1 million. The net cost of these services, however, after subsidized by program revenues including charges for services and program grants, was $18.4 million. The Town's change in net assets after general revenues of $27 million was an increase of $8.6 million. . . . -6- . TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 . FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued) $14,000,000 Expenses and Program Revenues Governmental Activities $12,000,000 . $10,000,000 $8,000,000 . $6,000,000 $4,000,000 $2,000,000 . $- . Expenses . Program Revenues General government support Public safety Public health Transportation Economic Culture and assislanceand recreation opportunity Home and Interest on debt community services . . Capital grants ,"d Operating contributions grants and 12% contributions 2% . Other general revenues 6% . State aid - unrestricted 6% . . Real property taxes 52% Revenue by Source Governmental Activities For the year ended December 31, 2006 Real property taxes State aid - unrestricted Charges for services Other general revenues Operating grants and contributions Capital grants and contributions -7- $ 21,709,445 2,610,189 9,231,396 2,645,795 713,597 4,834,716 $ 41,745,138 . . -8- . TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31,2006 CAPITAL ASSET AND DEBT ADMINISTRATION . Capital Assets As of December 31, 2006 the Town had $100.5 million in net capital assets including land, buildings, improvements, machinery and equipment, and infrastructure. The Town's component units had $8.4 million in net capital assets including land, buildings, improvements, machinery and equipment, and sewer mains. . Capital Assets at December 31, Primary aovemment 2006 2005 Land $ 58,341,517 $ 47,772,278 . Construction in progress 220,114 1,608,081 Buildings 8,307,223 4,574,513 Improvements other than buildings 13,618,159 13,498,954 Machinery and equipment 9,916,143 9,522,815 Infrastructure 70,694,655 70,038,525 . Total capital assets 161,097,811 147,015,166 Less accumulated depreciation 60,540,499 56,721,087 Primary government - Total net capital assets $ 100,557,312 $ 90,294,079 Component units . Land $ 2,213,759 $ 2,213,759 Construction in progress 12,947,081 13,174,567 Buildings 3,566,885 3,540,111 Improvements other than buildings 3,220,732 2,575,589 Machinery and equipment 3,320,899 3,200,728 . Infrastructure 2,145,280 2,138,386 Total capital assets 27,414,636 26,843,140 Less accumulated depreciation 6,074,572 5,639,830 Component units - Total net capital assets $ 21,340,064 $ 21,203,310 . . . . -9- . TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 CAPITAL ASSET AND DEBT ADMINISTRATION (continued) . Caoital Assets (continued) . The capital program is a long range financing guide and not a definitive plan. Each appropriation must be authorized by Town Board resolution before being undertaken. Each may be financed by issuance of general obligation bonds, which, at times, are preceded by issuance of bond anticipation notes for various periods of time depending on the probable usefulness of the purpose of expenditure. The following sets forth a summary of the Town's capital program. (Dollars in thousands): Eauioment 2007 . General Fund Highway Fund Special Districts $ 540,467 488,000 305.000 1.333.467 Total Equipment $ Imorovements . General Fund Highway Fund Special Districts $ 2,786,961 300,000 160.000 3.246.961 Total Improvements $ $ 4 580 427 . Total Program Additional information on the Town's capital assets can be found in Note C.3 to the financial statements. Debt Administration . The Town of Southold's credit rating from Moody's Investors Services was A1 as of December 31, 2006. Subsequent tothoa year end the Town's credit rating was upgraded to Aa2. Debt Limit - The Town has the power to contract indebtedness for any Town purpose so long as the principal amount thereof, subject to certain limited exceptions, shall not exceed seven percent of the average full valuation of taxable real estate of the Town, and subject to certain enumerated exclusions and deductions such as water and certain sewer facilities and cash or appropriations for current debt service. . . The constitutional method for determining full valuation is calculated by taking the assessed valuation of taxable real estate as shown upon the latest completed assessment roll and dividing the same by the equalization rate as determined by the State Board of Equalization and Assessment. The State Legislature is required to prescribe the manner by which such ratio shall be determined. Average full valuation is determined by taking the sum of the full valuation of the last completed assessment roll and the four preceding assessment rolls and dividing such sum by five. Percentage of debt contracting power exhausted at December 31,2006 was 3.35%. At December 31, 2006, the Town had approximately $8.5 million in long term general obligation bonds outstanding, of which $8 million was for general Town purposes. Also outstanding at year-end were bond anticipation notes in the amount of $7.7 million of which $6 million was for general Town purposes. . Additional information on the Town's debt activity can be found in Note C.4 to the financial statements. . -10- . TOWN OF SOUTHOlD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES . ProoertvTax . The Town has adopted a budget for the 2006 fiscal year which factors in inflation and other adjustments to revenues and expenditures as well as prior year positive and negative fund balances. The 2006 budget includes. an overall increase in real property tax revenues from the prior year of approximately 4.26% for the general ToWl'l governmental activities. State Aid and local Assistance . The Town receives financial assistance from New York State and from Suffolk County. During 2006, financial assistance included state aid consisting of mortgage tax of $2.6 million, consolidated highway aid of $276 thousand, and community preservation aid of approximately $2.475 million. State aid per capita was $90.4 thousand and County local government assistance was $296.4 thousand. Additionally, if the State should not adopt its budget in a timely manner, municipalities and school districts in the State, including the Town, may be affected by a delay in the payment of state aid. The State is not constitutionally obligated to maintain or continue state aid to the Town. The Town's 2006 budget included similar amounts for this financial assistance. Retirement Svstem . In 2003 the Town of Southold adopted the New York State Early Retirement Incentive Program as authorized by Chapter 69 of the Laws. of 2002. The option to retire early ran through December 31,2002. The eligibility varied based on tier, age and years of service, but all options required that the employees be at least fifty (50) years of age and being vested in the New York State Retirement System. The Town funds it retirement billing currently. . As part of its contractual agreements with the unions, the Town of Southold also offers fully paid health insurance benefits (but not welfare benefits) for the retiree and their present spouse until death of the retiree. CONTACTING THE TOWN'S FINANCIAL MANAGEMENT . This financial report is desi~ned to provide our citizens, taxpayers, customers, and creditors with a general overview of the Town's finances and to show the Town's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Town of Southold, Office of the Town Comptroller, Southold, New York. . . . . -11- . . . . . BASIC FINANCIAL STATEMENTS . . . . . . . TOWN OF SOUTHOLD GOVERNMENT-WIDE FINANCIAL STATEMENT STATEMENT OF NET ASSETS December 31, 2006 . Primary Governmental Component Activities Units ASSETS Current Assets: . Cash and investments $ 19,073,290 $ 1,236.451 Accounts receivable, net of allowances 205,234 15,167 Due from fiduciary funds Due from other governments 2,541,813 Due from primary government 360,178 State and federal aid receivables 801,197 237,056 . Prepaid charges 997,151 39,171 Inventory of material and supplies 2,099 Total Current Assets 23,620,784 1,888,023 Non-Current Assets: Deferred charges, net of accumulated amortization 148,750 . Non-depreciable capital assets 58,561,631 15,160,840 Depreciable capital assets, net of depreciation 41,995,681 6,179,224 Total Non-Current Assets 100,706,062 21,340,064 Total Assets 124,326,846 23,228,087 LIABILITIES . Current Liabilities: Accounts payable and accrued liabilities 1,320,029 369,893 Accrued interest payable 261,058 69,176 Bond anticipation notes payable 7,729,000 2,185,000 Due to other governments 243,292 2.431 Due to fiduciary funds 12,601 . Unearned revenue 5,147,779 366,282 Non-current liabilities due within one year General obligation bonds payable 779,098 200,000 Due to Employees Retirement System 48,804 Claims and judgments payable 50,000 . Estimated liability for landfill closure and postclosure care costs 10,550 Total Current Liabilities 15,552,211 3,242,782 Non-Current Liabilities: General obligation bonds payable 7,715,000 2,655,000 Compensated absences 6.475,661 . Claims and judgments payable 150,000 Estimated liability for landfill closure and postclosure care costs 582,773 Total Non-Current Liabilities 14,773.434 2,805,000 Total Liabilities 30,325,645 6,047,782 . NET ASSETS Investment in capital assets, net of related debt 92,063,214 15,579,033 Unrestricted 1,937,987 1,601,272 Total Net Assets $ 94,001,201 $ 17,180,305 . See notes to the financial statements -12- . TOWN OF SOUTH OLD GOVERNMENT-WIDE FINANCIAL STATEMENT STATEMENT OF ACTIVITIES Year ended December 31, 2006 . Net Expenses (Revenues) and Program Revenues Change in Net Assets Operating Capital Charges for Grants and Grants and Primary Component Function/Program Expenses Services Contributions Contributions Government Units . PRIMARY GOVERNMENT Government Activities: General government support $ 6,843,661 $ 229,092 $ 90,473 $ 6,524,096 Public safety 11,421,283 534,811 139,806 10,746,666 Public health 43,499 10,185 33,314 Transportation 7,298,698 9,484 28,838 $ 302,337 6,958,039 . Economic assistance and opportunity 1,354,610 169,983 245,280 939,347 Culture and recreation 713,164 208,376 504,788 Home and community services 4,912,384 8,079,650 199,015 4,532,379 (7,898,660) Interest on debt 553,713 553,713 Total Primary Government $ 33,141,012 $ 9,231,396 $ 713,597 $ 4,834,716 $ 18,361,303 . COMPONENT UNITS General government support $ 130,910 $ 130,910 Public health 86,977 86,977 Transportation 2,751,284 $ 2,013,785 $ 810,646 (73,147) . Culture and recreation 837,563 837,563 Home and community services 473,074 32,938 440,136 Interest on debt 250,382 250,382 Total Component Units $ 4,530,190 $ 2,046,723 $ 0 $ 810,646 $ 1,672,821 . GENERAL REVENUES Real property taxes 21,709,445 1,949,512 Other real property tax items 102,986 1,124 Non-property tax items 846,016 Interest earnings 1,233,122 155,484 State aid 2,610,189 . Other 463,671 42,684 Total General Revenues 26,965,429 2,148,804 Change in Net Assets 8,604,126 475,983 . Net Assets at Beginning of Year 85,397,075 16,704,322 Net Assets at End of Year $ 94,001,201 $ 17,180,305 . . See notes to financial statements. -13- . . TOWN OF SOUTHOLD BALANCE SHEET GOVERNMENTAL FUNDS December 31,2006 MAJOR GOVERNMENTAL FUNDS Non-Major Capital Governmental . General Highway Projects Funds Totals ASSETS Cash and Investments $ 8,339,472 $ 1,574,794 $ 7,806,802 $ 1,352,222 $ 19,073,290 Accounts Receivable 22,346 60 182,828 205,234 Due from Other Funds 190,208 461,241 234,970 475,547 1,361,966 Due from Trust Funds State and Federal Aid Receivable 110,153 276,337 325,950 88,757 801,197 . Due from other Governments 2,075,955 465,858 2,541,813 Supply Inventory 2,099 2,099 Prepaids 426,200 57,894 53,559 537,653 Total Assets $ 11,166,433 $ 2,370,266 $ 8,833,640 $ 2,152,913 $ 24,523,252 LIABILITIES AND FUND BALANCES LIABILITIES . Accounts Payable $ 701,018 $ 101,474 $ 189,921 $ 320,656 $ 1,313,069 Retained Percentages 6,960 6,960 Bond Anticipation Notes Payable 7,729,000 7,729,000 Due to other Funds 1,205,516 49,290 106,987 173 1,361,966 Due to Trust Funds 12,601 12,601 Due to Other Governments 243,292 243,292 Deferred Revenue 3,619,307 900,180 628,292 5,147,779 . Total Liabilities 5,781,734 1,050,944 8,032,868 949,121 15,814,667 FUND BALANCE Fund Balances - Reserved: Encumbrances 13,284 129,285 142,569 Supply Inventory 2,099 2,099 Prepaids 426,200 25,599 451,799 Insurance Claims 513,329 513,329 . Fund Balance - Unreserved: . 16,900 16,900 Designated - Ensuing Year's Budget 2,185,000 486,500 470,228 3,141,728 Undesignated 2,244,787 686,637 800,772 707,965 4,440,161 Total Fund Equity 5,364,699 1,319,322 800,772 1,203,792 8,708,585 Total Liabilities and Fund Equity $ 11,166,433 $ 2,370,266 $ 8,833,640 $ 2,152,913 $ 24,523,252 . . . . See notes to the financial statements. -14- . . TOWN OF SOUTHOLD RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS December 31. 2006 Total Fund Balances - Governmental Funds $ 8.708.585 . Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets less accumulated depreciation are . included in the Statement of Net Assets: Capital assets - non-depreciable 58.561.631 Capital assets - depreciable 102.536.180 Accumulated depreciation (60.540,499) . 100.557.312 Long-term liabilities applicable to the Town's governmental activities are not due and payable in the current period and accordingly are not . reported in the funds. However these liabilities are included in the Statement of Net Assets: General obligation bonds payable (8,494,098) Due to Employees Retirement System (48,804) Compensated absences (6,475,661 ) . Estimated liability for landfill closure and postclosure care costs (593.323) (15.611,886) Prepaid items included in the Statement of Net Assets 459,498 . Deferred charges. included in the Statement of Net Assets 148,750 Interest payable applicable to the Town's governmental activities are not due and payable in the current period and accordingly are not reported in the funds. However . these liabilities are included in the Statement of Net Assets. (261,058) Net Assets of Governmental Activities $ 94.001,201 . . See notes to financial statements. -15- . TOWN OF SOUTHOLD STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the year ended December 31, 2006 . MAJOR GOVERNMENTAL FUNDS Non-Major . Capital Governmental General Highway Projects Funds Totals REVENUES Real Property Taxes $14,872,736 $4,095,347 $2,741,362 $ 21,709,445 Other Real Property Tax Items 85,808 12,689 4,489 102,986 Non-Property Tax Items 616,670 229,346 846,016 Departmental Income 477,849 2,275,935 2,753,784 . Intergovernmental Charges 316,049 $ 5,824,319 1,809 6,142,177 Use of Money and Property 684,166 140,578 456,713 95,272 1,376,729 licenses and Permits 258,794 9,484 163,780 432,058 Fines and Forfeitures 171,763 171,763 Sale of Property and Compensation for Loss 95,057 7,521 135,662 238,240 Miscellaneous Local Sources 146,260 151,000 6,652 303,912 State Aid 2,725,177 276,337 3,980,074 127,278 7,108,866 . Federal Aid 228,491 325,950 41,163 595,604 Total Revenues 20,678,820 4,541,956 10,738,056 5,822,748 41,781,580 EXPENDITURES Current General Government Support 5,177,745 103,654 5,281,399 Public Safety 7,371,280 869,154 8,240,434 Public Health 32,988 7,104 40,092 . Transportation 452,050 3,028,076 3,480,126 Economic Assistance and Opportunity 949.740 949,740 Home and Community Services 384,983 3,363,781 3,748,764 Culture and Recreation 530,270 530,270 Employee Benefits 5,811,868 515,106 470,377 6,797,351 Capital Outlay 13,324,188 13,324,188 Principal and Interest 1,313,234 283,652 84,531 822,590 2,504,007 . Total Expenditures 22,024,158 3,826,834 13,408,719 5,636,660 44,896,371 Excess (Deficiency) of Revenues Over Expenditures (1,345,338) 715,122 (2,670,663) 186,088 (3,114,791) Other Financing Sources (Uses) BANs Redeemed From Appropriations 1,228,735 1,228,735 Transfers In 2,253,944 159,218 2,413,162 . Transfers Out (1,531,369) (452,648) (429,145) (2,413,162) Total Other Financin9 Sources (Uses) 722,575 (452,848) 1,387,953 (429,145) 1,228,735 Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Other Uses (622,763) 262.474 (1,282,710) (243,057) (1,886,056) Fund Balances at Beginning of Year 6,007,462 1,056,848 2,083,482 1,446,849 10,594,641 . Fund Balances at End of Year $ 5,384,699 $1,319,322 $ 800,772 $1,203,792 $ 8,708,585 . . See notes to the financial statements. -16- . TOWN OF SOUTH OLD RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES . For the year ended December 31, 2006 Net Change in Fund Balance $ (1,886,056) . 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 amount by which capital outlay exceeds depreciation in the current period is: . Capital outlay 15,722,766 Depreciation expense (3,987,397) Loss on dispositions (1,472,136) 10,263,233 . 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: Prepaid charges (61,786) Deferred charges (21,250) . The issuance of long-term debt and increase in obligations under capital leases provides current financial resources to governmental funds, while the repayment of the principal of long term debt and capital leases consumes the current financial resources of governmental funds. . Neither transaction has any effect on net assets. Repayment of bond principal 755,000 Due to Employees Retirement System 45,189 Compensated absences (695,835) Claims and judgments payable 220,000 . Estimated liability for landfill closure and postclosure care costs 19,072 Accrued interest payable (33,441) . Change in Net Assets of Governmental Activities $ 8,604,126 . . See notes to financial statements. -17- . TOWN OF SOUTH OLD STATEMENT OF FIDUCIARY NET ASSETS December 31, 2006 . . Fishers Island Town Ferry District Totals ASSETS Cash and investments $ 9,262,983 $ 56,490 $ 9,319,473 Other receivables 59,504 59,504 . Due from other funds 12,601 12,601 Total Assets $ 9,275,584 $ 115,994 $ 9,391.578 LIABILITIES . Due to other funds $ 8,152,880 $ 115,994 $ 8,268.874 Other liabilities 307 307 Deposits held 1,122,397 1,122,397 Total Liabilities $ 9,275,584 $ 115,994 $ 9,391,578 . . . . . . See notes to financial statements. -18- . . . . . . . . . . . TOWN OF SOUTH OLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Town of Southold (the "Town"), which was established in 1640, is governed by Town Law and other general laws of the State of New York and various local laws. The Town Board is the legislative body responsible for overall operations. The Town Board consists of the Supervisor who is elected for a term of two years and fIVe council members who are elected for terms of four years. The Town Board appoints the Town Attorney, Comptroller and the Commissioner of Public Works whose terms are fixed by Town Law. The Town Clerk, Receiver of Taxes, Superintendent of Highways, Justices and Town Trustees are all elected and serve for four years, respectively. The Town provides a full range of municipal services, including public safety, transportation, home and community services, public works and road maintenance, recreation and parks, and general and administrative services. The financial statements of the Town of Southold have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the government's accounting policies are described below. 1. REPORTING ENTITY The financial reporting entity consists of: (a) the primary government, which is the Town of Southold; (b) organizations for which the primary government is financially accountable; and (c) other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete as set forth in GASB Statement No. 14. The decision to include a potential component unit in the Town of Southold reporting entity is based on several criteria set forth in GASB Statement No. 14 including legal standing, dependency and financial accountability. Based on the application of these criteria, the following is a summary of certain entities considered in determining the Town of Southold's reporting entity. Certain special districts of the Town of Southold provide sanitation, ferry, and park services to residents and businesses within the districts. These special districts are organized under New York State Town law and have separately elected boards. Special districts cannot issue bonded debt without the approval and the backing of the full faith and credit of the Town. Tax levies of the special districts are collected by the Town Receiver of Taxes. As a result of this fiscal dependency, the Town is financially accountable for these special districts. Accordingly, these special districts have been determined to be component units of the Town and are presented discretely in a separate column in the combined financial statements to emphasize that they are legally separate from the primary government. 2. BASIS OF PRESENTATION The Town's basic financial statements include both government-wide (reporting the Town as a whole) and fund financial statements (reporting the Town's major funds). Government-wide Financial Statements The government-wide financial statements reports information on the Town as a whole, except fiduciary activities, with separate columns for the primary governmental activities as well as the discretely presented component units. In the government-wide Statement of Net Assets, the Town's governmental activities are presented on a consolidated basis and are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The Town's net assets are reported in three parts-investments in capital assets, net of related debt; restricted net assets; and unrestricted net assets. -19- . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) . 2. BASIS OF PRESENTATION (continued) . The government-wide Statement of Activities reports both the gross and net cost of each of the Town's functional categories (public safety, transportation, home and community services, etc.), which are otherwise supported by general government revenues (property, sales and use taxes, certain intergovernmental revenues, fines, permits and charges, etc.). The Statement of Activities reduces gross expenses (including depreciation), by related program revenues and operating and capital grants, to produce the net cost of each program. Program revenues include (a) charges for services and (b) operating and capital grants and contributions that are directly associated with the function. Operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital- specific grants. The net costs (by function) are normally covered by general revenue (property, taxes, intergovernmental revenues, interest income, etc). As a general rule the effect of interfund activity has been eliminated in general purpose financial statements. . This government-wide focus is more on the sustainability of the Town as an entity and the change in the Town's net assets resulting from the current year's activities. . Fund Financial Statements The fund financial statements are similar to the financial statements presented in the previous model. The new emphasis is on the major funds in the fund financial statements. Non-major funds are summarized into a single column. . The accounts of the Town are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund balances, revenues, and expenditures, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The various funds are presented by type in the fund financial statements. Accordingly, the Town maintains the following fund types: . . Governmental Funds - Governmental funds are those through which most governmental functions are financed. The acquisition, use and balances of expendable financial resources and the related liabilities are accounted for through governmental funds. The measurement focus of the governmental funds is upon determination of financial position and changes in financial position. Governmental funds are further classified as major and non-major funds. The Town reports the following major governmental funds: General Fund - is the principal operating fund of the Town. This fund is used to account for all financial resources except those required to be accounted for in other funds. . Hiohwav Funds - To account for the maintenance and operation of highways. Capital Proiects Fund - used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by special assessment funds and trust funds). . . -20- . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) . 2. BASIS OF PRESENTATION (continued) Fund Financial Statements (continued) Additionally, the Town reports the following non-major funds: . Special Revenue Funds - are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. Special Revenue Funds include the following: General Fund Part Town - To provide general services outside the Village of Greenport. . Soecial Grant Fund - Segregate and account for projects funded by Community Development revenue. Soecial District Funds - To provide special services to areas that encompass less than the whole town. . Fiduciary Funds - Fiduciary Funds are used to account for assets held by the Town in a trustee or custodial capacity. Agency Fund - is for money (and/or property) received and held in the capacity of trustee, custodian or agent. . Discretely Presented Component Units Certain special districts that have separately elected boards provide transportation, park, mosqu~o control, and sanitation services to residents and businesses within these districts, and follow government fund accounting principles. These districts, which are accounted for as discretely presented component units, are as follows: . The Fishers Island Ferry District, established in 1947 Orient Mosquito District, established in 1916 Fishers Island Garbage and Refuse District, established in 1952 Cutchogue-New Suffolk Park District, established in 1953 OrientcEast Marion Park District, established in 1969 Southold Park District, established in 1907 Mattituck Park District, established in 1941 . Complete financial statements of these component units can be obtained from their respective administrative offices: . Orient Mosquito District 145 Platt Road Orient, NY 11957 Cutchogue-New Suffolk Park District P.O. Box 311 Cutchogue, NY 11935 Southold Park District P.O. Box 959 Southold, NY 11971 Fishers Island Ferry District P.O. Box 1179 Southold, NY 11971 Fishers Island Garbage & Refuse District Fishers Island, NY 06390 Orient-East Marion Park District P.O. Box 12 Orient, NY 11957 Mattituck Park District P.O. Box 1413 Mattituck, NY 11952 . . -21 - . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 . A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3. BASIS OF ACCOUNTINGIMEASUREMENT FOCUS . . . . . . . . . Measurement focus refers to what is being measured whereas the basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements.. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. In the government-wide statements, governmental activities are presented using the economic resources measurement focus and are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. In the funds statements, governmental funds use a current financial resources measurement focus and are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (measurable and available to finance current operations). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The Town considers all revenues available if they are collected within 60 days after the year end. Revenues susceptible to accrual include Suffolk County local assistance at year end on behalf of the Town, franchise fees, and charges for services, intergovernmental revenues and operating transfers. Permits, fees, and other similar revenues are not susceptible to accrual because generally they are not measurable until they are received in cash. In those instances where expenditures are the prime factor in determining eligibility for state and federal grants, revenues are recognized when the expenditure is incurred. In the Capital Projects Fund, long-term debt is recognized as revenue upon receipt of the proceeds. Expenditures are recorded on the accrual basis except that (a) expenditures for prepaid expenses are recognized when incurred; (b) principal and interest on indebtedness are recognized as expenditures when due; (c) compensated absences, such as vacation and sick leave, which vest or accumulate, are charged as expenditures when paid. Encumbrance accounting, under which purchase orders, contracts and other commitments are recorded for budgetary control purposes in order to reserve that portion of the applicable appropriation, is employed in the governmental funds. Appropriations for all governmental funds except the capital projects fund lapse at year-end. However, encumbrances reserved against fund balances are re-appropriated in the ensuing year. Encumbrances are reported as reservations of fund balances since they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded in the period in which the liability is incurred. 4. ASSETS, LIABILITIES AND FUND EQUITY RECEIVABLES Receivables include amounts due from Federal, State, and other governments or enmies for services provided by the Town. Receivables are recorded and revenues recognized as earned or as specific program expenditures are incurred. INVENTORY - MATERIALS AND SUPPLIES Inventory in the general and special revenue funds is valued at cost. Inventory in these funds is accounted for under the consumption method. - 22- . . . . . . . . . . . A. TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4. ASSETS, LIABILITIES AND FUND EQUITY (continued) CAPITAL ASSETS Capital assets purchased or acquired with an original cost of $5,000 or more are reported at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date received. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation on all assets is provided on the straight- line basis over the following estimated useful lives: Buildings Improvements and other Machinery and equipment Infrastructure 1 0-40 years 20 years 5-10 years 20-30 years Infrastructure assets, consisting of certain improvements other than buildings including roads, curbs, sidewalks, bridges, street lighting are capitalized along with other capital assets. In the fund financial statements, capital assets are recorded as capital outlay expenditures in the governmental fund upon acquisition. DEFERRED REVENUE/UNEARNED INCOME Deferred revenues/unearned income are those where asset recognition criteria have been met, but which revenue recognition criteria have not been met. Such amounts include collections in advance, unearned income and amounts that have been deemed to be "measurable" but not "available" to finance current expenses pursuant to generally accepted accounting principles. PREPAlDS Prepaids record payments to venders that benefit future recording periods and are reported on the consumption basis. Prepaids in the General and Special Revenue Funds represent insurance premiums paid for coverage that will benefit the subsequent period and for retirement benefits that will benefit a future period. LONG-TERM OBLIGATIONS The liabilities for long-term obligations consisting of general obligation bonds, compensated absences, due to employee retirement system, judgments, claims and liability for landfill closure and post closure costs are recognized in the government-wide financial statements. In the fund statements, long-term obligations are not reported as liabilities. The debt proceeds are reported as other financing sources and payment of principal and interest reported as expenditures. 5. REVENUES AND EXPENDITURES REAL PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES In Suffolk County, the assessment and lien of real property for taxation is done by the County Department of Assessment. Real property taxes become a lien on December 1 for both school and general taxes. The Town's assessment rolls are used for the levy of real property taxes by the Town and the School Districts, as well as by the County and by Special Districts of the County and the Town. - 23- . TOWN OF SOUTH OLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) . 5. REVENUES AND EXPENDITURES (continued) REAL PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES (continued) . The Town of Southold Receiver of Taxes collects all real property taxes for the Town, Suffolk County, Town Special Districts and School Districts. These taxes are levied on December 1, and are due in two installments, 50% on December 1 and 50% on May 10, payable without penalty to January 10 and May 31, respectively. Penalties are imposed thereafter at the rate of one-twelfth of the rate of interest determined by the State Commissioner of Taxation and Finance, after which taxes are payable to the County Treasurer. The Town retains the total amount of Town, Highway and Town Special Districts levies from the amount collected, and forwards the balance collected to the County which assumes collection responsibility. The Town and Town's Special Districts therefore realize annually the 100% collection of real property taxes. School District property taxes are also levied on December 1, and are also payable in two installments. School property taxes are due in two installments, 50% on December 1 and 50% on May 1 0 payable without penalty to January 10 and May 31, respectively. The County is also responsible for uncollected school taxes. . . INTERFUND TRANSACTIONS Interfund transactions have been eliminated from the government-wide financial statements. In the funds statements interfund transactions include: a) Interfund Revenues . Interfund revenues, quasi-external transactions, in the general fund represent amounts charged for services or facilities provided by the general fund. The amounts paid by the fund receiving the benefrt of the service or facilities are reflected as an expenditure of that fund. b) Transfers . Transfers represent payments to the debt service, general fund and capital projects funds from the other funds for their appropriate share of the debt service, general fund or capital project costs. COMPENSATED ABSENCES . The liability for vested or accumulated vacation or sick leave (compensated absences) is recorded as current and noncurrent obligations in the government-wide statements. The current portion of this debt is estimated based on historical trends. In the fund financial statements only the compensated absence liability payable from expendable available financial resources is incurred. . The amount that is expected to be liquidated with expendable available financial resources is reported as expenditures and a liability in the funds statement in the respective fund that will pay it. 6. EQUITY CLASSIFICATIONS . In the Government-wide Statements, equity is classified as net assets and displayed in three components: a) Invested in capital assets, net of related debt-Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. . -24- . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31,2006 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) . 6. EQUITY CLASSIFICATIONS (continued) b) Restricted net assets-Consists of net assets with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. . c) Unrestricted net assets-All other net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt: . In the Fund Statements, governmental fund equity is classified as fund balance. Fund balance is further classified as reserved and unreserved, with unreserved further split between designated and undesignated. Portions of fund equity are segregated for future use and therefore not available for future appropriation or expenditure. Amounts reserved for encumbrances, inventory, insurance claims and debt service represent portions of fund equity, which are required to be segregated in accordance with state law or GAAP. Designations of fund balances in governmental funds indicate the utilization of these resources in the subsequent year's budget or tentative plans for future use. . B. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY 1. BUDGETARY DATA . Budgets are adopted annually on a basis consistent with generally accepted accounting principles. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. . Budgetary controls for special revenue funds are established in accordance with the applicable grant agreement, which may cover a period other than the Town's fiscal year. Appropriate budgetary adjustments have been made to reflect these grant agreements during the Town's fiscal year. the Town follows the procedures enumerated below in establishing the budgetary data reflected in the financial statements: . a) No later than October 1, the Supervisor submits a tentative budget to the Town Board for the fiscal year commencing the following fiscal year. The tentative budget includes the proposed means of financing for all funds. b) After public hearings are conducted to obtain taxpayer comments, no later than November 20, the Town Board adopts the budget. c) The Town Board must approve all modifications of the budget. However, the Supervisor is authorized to transfer certain budgeted amounts within departments. . In order to show the full legal level of budgetary compliance for the general and certain special revenue funds, detailed individual statements of revenues, expenditures and changes in fund balances - budget and actual, are presented in a separate budget report. . . -25 - . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 B. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (continued) . 2. FUND BALANCES DESIGNATION OF FUND BALANCE . Portions of the unreserved balances at December 31, 2006 were designated for the subsequent year's operating budgets as follows: Fund Total Fund Balance Unreserved Fund Balance Unreserved and Designated for Subsequent Year's Budget Fund Balance Unreserved Undesignated . . Non-Major Funds: Town Outside Village Special Grant East West Fire Protection District Southold Wastewater District Fishers Island Sewer District Solid Waste Management District Total $ 908,193 5,000 19,648 223,779 40,948 6,224 $ 1,203,792 $ 484,599 5,000 6,228 $ 423,594 . $ 495,827 13,420 223,779 40,948 6,224 707,965 $ C. DETAILED NOTES ON ALL FUNDS 1. CASH AND INVESTMENTS . Cash consists of funds deposited in demand accounts, time deposit accounts, and certificates of deposit with maturities of less than three months. . The Town's investments are governed by a formal investment policy. The Town's monies must be deposited in FDIC-insured commercial banks or trust companies located within the state. The Town is authorized to use demand accounts and certificates of deposit. Permissible investments include obligations of the U.S. Treasury, U.S. Agencies and investments made by the Cooperative Liquid Asset Security System (CLASS). . CLASS is a cooperative investment plan consisting of U.S. Treasury Obligations and repurchase agreements relating to treasury obligations. Investments are stated at cost, which approximates market value. CLASS was established as a cooperative investment arrangement organized under the CLASS Municipal Cooperation Agreement made pursuant to New York General Municipal Law, Article 3A and 5-G. . Collateral is required for demand deposits and time deposits accounts at 105% of all deposits not covered by federal deposit insurance. Obligations that may be pledged as collateral include obligations of the United States and its agencies and obligations of the State and its municipalities and school districts. The Town's collateral agreements are based on the Town's available balance. . - 26- . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 C. DETAILED NOTES ON ALL FUNDS (continued) . 1. CASH AND INVESTMENTS (continued) . Custodial Credit Risk - Deposits/Investments - Custodial credit risk for deposits exists when, in the event of the failure of a depository financial institution, a government may be unable to recover deposits, or recover collateral securities that are in possession of an outside agency. Custodial credit risk for investments exists when, in the event of the failure of the counterparty, a government will not be able to recover the value of its investments or collateral securities that are in possession of an outside party. . Governmental Accounting Standards Board Statement No. 40 directs that deposits be disclosed as exposed to custodial credit risk if they are not covered by depository insurance, and the deposits are either: . . Uncollateralized . Collateralized with securities held by the pledging financial institution, or . Collateralized with securities held by the pledging financial institution's trust department or agent but not in the Town's name . At December 31, 2006 the Town's cash book balance was approximately $29,624,000. This amount is inclusive of Fiduciary fund deposits of approximately $9,300,000 but exclusive of petty cash of approximately $2,200. The available bank balance was approximately $32,500,000. Of the bank balance, $1,100,000 was covered by Federal deposit insurance, and approximately $40,706,000 was covered by collateral held by the Town's agent, a third-party financial institution, in the Town's name. 2. INTERFUND RECEIVABLES AND PAYABLES Interfund receivables and payables for the primary government at December 31, 2006 were as follows: . Amount Amount Receivable Pavable General Fund - Town wide $ 190,208 $ 1,171,758 Highway Fund 461,241 49,290 Capital Projects Fund 234,970 140,745 Part Town 115,236 Special Grant 5,000 East-West Fire District 56,488 Southold Wastewater District 2,146 173 Fishers Island Sewer District 9,806 Solid Waste Management District 286.871 $ 1 361 966 $ 1 361 966 . . Interfund receivable and payable balances for the primary government at December 31, 2006 are expected to be paid currently. . . - 27- . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 C. DETAILED NOTES ON ALL FUNDS (continued) . CAPITAL ASSETS 3. Balance Balance Primary government 1/1/06 Additions Deletions 12/31/06 . Capital assets not being depreciated Land $ 47,772,278 $ 10,569,239 $ -0- $ 58,341,517 Construction in progress 1,608,081 18,264 1,406,231 220,114 Total capital assets not being depreciated 49,380,359 10,587,503 1,406,231 58,561,631 Depreciable capital assets . Buildings 4,574,513 3,732,710 8,307,223 Improvements other than buildings 13,498,954 119,205 13,618,159 Machinery and equipment 9,522,815 627,218 233,890 9,916,143 Infrastructure 70,038,525 656,130 70,694,655 Total depreciable capital assets 97,634,807 5,135,263 233,890 102,536,180 . Less accumulated depreciation Buildings 2,068,530 137,736 2,206,266 Improvements other than buildings 3,542,084 390,004 3,932,088 Machinery and equipment 6,041,374 724,481 167,985 6,597,870 . Infrastructure 45,069,099 2,735,176 47,804,275 Total accumulated depreciation $ 56,721,087 $ 3,987,397 $ 167,985 60,540,499 Total net depreciable capital assets 41,995,681 Total net capital assets $100,557,312 . Depreciation expense was charged to governmental functions as follows: General 90vernment support $ 249,268 Public safety 169,011 Transportation 2,949,839 . Economic assistance and opportunity 37,610 Culture and recreation 62,609 Home and community services 519,060 $ 3,987,397 . . . - 28- . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31,2006 C. DETAILED NOTES ON ALL FUNDS (continued) . 3. CAPITAL ASSETS (continued) . Discretely presented component units Capital assets not being depreciated land Construction in progress Total capital assets not being depreciated Depreciable capital assets Buildings Improvements other than buildings Machinery and equipment Infrastructure Total depreciable capital assets Less accumulated depreciation Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accum ulated depreciation Total net depreciable capital assets Total net capital assets . . . . 4. INDEBTEDNESS SHORT TERM DEBT . Balance 1/1/06 $ 2,213,759 13,174,567 $ 15,388,326 3,540,111 2,575,589 3,200,728 2,138,386 11,454,814 1,289,733 1,061,574 2,132,657 1,155,866 $ 5,639,830 $ Additions Balance 12/31/06 Deletions 324,711 324,711 $ $ 2,213,759 12,947,081 15,160,840 552,197 552,197 26,774 645,143 120,171 6,894 798,982 3,566,685 3,220,732 3,320,899 2,145,280 12,253,796 83,842 117,672 151,754 81,474 434,742 1,373,575 1,179,246 2,284,411 1,237,340 6,074,572 6,179,224 $ 21,340,064 Bond Anticipation Notes (BANs) - Bond anticipation notes (BANs) are used as a temporary means of financing capital expenditures in the capital projects fund. State law requires that BANs issued for capital purposes be converted to long-tenn obligations within five years after the original issue date. The notes or renewal thereof may not extend more than two years beyond the original date of issue unless a portion is redeemed within two years and within each 12 month period thereafter. Liabilities for BANs are generally accounted for in the capital projects fund. BANs are expected to be paid from the proceeds of future bond issues after renewal of these notes. These BANs bear interest at various rates from 3.66% to 3.76% and are due at various dates through 2007. . . When BANs are not redeemed with the proceeds of bond issues, but instead paid from budgetary appropriations, the principal amount paid is recorded as an expenditure in the operating fund and a financing source is recorded in the capital projects fund. . -29 - . . . . . . . . . . . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 c. DETAILED NOTES ON ALL FUNDS (continued) 4. INDEBTEDNESS (continued) SHORT TERM DEBT (continued) These notes are summarized as follows: Description Various Purposes Various Purposes New London Wharf Fishers Island Garbage Total Interest Rate 3.66% 3.73% 3.70% 3.76% Amount $ 6,619,000 1,110,000 1,625,000 560.000 $ 9914000 Of the $9,914,000 in bond anticipation notes, $7,729,000 relates to the primary govemment and the remaining $2,185,000 relates to the component units. LONG TERM DEBT Summary of changes in long-term debt transactions for the year ended December 31, 2006 is as follows: Non-current Balance Balance liabilities due Non-current 1/1/06 Increases Reductions 12/31/06 within one year liabilities Primary Government: General obligation bonds $ 9,249,098 $ 755,000 $ 8,494,098 $ 779,098 $ 7,715,000 Due to Employees Retirement System 93,993 45,189 48,804 48,804 .0- Compensated absences 5,779,826 695,835 6,475,661 6,475,661 Claims and judgments 220,000 220,000 -0- .0- Estimated liability for landfill closure and post-closure care costs 612,395 19,072 593,323 10,5SO 582,773 Component Units: General obligation bonds 3,050,000 195,000 2,855,000 200,000 2,655,000 Claims and judgments -0- 200,000 200,000 SO,OOO 150,000 General Obligation Bonds - The Town borrows money in order to acquire land or equipment or construct buildings and improvements. This enables the cost of these capital assets to be bome by the present and future taxpayers receiving the benefrt of the capital assets. These long-term liabilities, which are backed by the full fanh and credit of the Town, bear interest at various rates from 3.14% to 6.375% and have maturity dates in 2009 through 2021. Future principal and interest payments to maturity for both the primary govemment and the component units are as follows: Year Endinq Principal Interest 2007 $ 979,098 $ 376,466 2008 995,000 345,307 2009 1,025,000 312,347 2010 1,000,000 277,956 2011 1,025,000 242,981 2012-2016 4,100,000 765,577 2017-2021 2,225,000 167,650 Totals $ 11 349 098 $ 2.488.284 -30 - ------ ----...---------- . . . . . . . . . . . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 C. DETAILED NOTES ON ALL FUNDS (continued) 4. INDEBTEDNESS (continued) LONG TERM DEBT (continued) Other long-term liabilities for claims and judgments, compensated absences, retirement system and the estimated liability for landfill closure and post closure costs are to be paid by the fund that gave rise to the liability. PRIORYEAR DEFEASANCE OF DEBT In prior years, the Town defeased certain bonds by placing the proceeds of new bonds in an irrevocable trust with an escrow agent to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liability for the defeased bonds are not including in the Town's financial statements. At December 31, 2006, $1,950,000 of these bonds outstanding are considered defeased. 5. RETIREMENT SYSTEM Plan Description The Town of Southold participates in the New York State and Local Employees' Retirement System (ERS) and Local Police and Fire Retirement System (PFRS). This is a cost-sharing multiple- employer retirement system. The System provides retirement benefits as well as death and disability benefits. Obligation of employers and employees to contribute and benefrts to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the System. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the System and for the custody and control of their funds. A publicly available annual report containing financial statements and required supplemental information for the Employees' Retirement System may be obtained by writing to the New York State Retirement System, Governor Smith State Building, Albany, NY 12244. Fundinq Policv The System is noncontributory except for employees who joined the New York State and Local Employees' Retirement System after July 27, 1976 and who have less than ten years of membership and less than ten years of credited service with a retirement system under the provisions of article fourteen or fifteen of the NYSRSSL, who contribute 3% of their salary. Prior to October 1, 2000, all employees who joined the System after July 27, 1976 were required to contribute 3% of their salary. Under the authority of the NYSRSSL, the Comptroller shall certify annually the rates expressed as proportions of payroll of members, which shall be used in computing the contributions required to be made by employers to the pension accumulation fund. The Town is required to contribute at an actuarially determined rate. The actual contributions were equal to the actuarially required amounts and also include additional contributions to fund various early retirement incentives made available to the Town employees. The credits and miscellaneous adjustments represent modification made by the ERS for prior year's contributions. The required contributions, for the Primary government, for the current year and two preceding years were: 2006 2005 2004 ERS $ 1,096,547 $ 1,068,200 $ 992,023 $ $ $ PFRS 741,445 1,016,937 679,079 The Town's contribution to the system was 100% of the contributions required each year. - 31 - . C. . . . . . . . . . . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 DETAILED NOTES ON ALL FUNDS (continued) 6. POST EMPLOYMENT BENEFITS In addition to providing pension benefits, the Town provides health insurance coverage and survivor benefits for retired employees and their survivors. Substantially all of the Town's employees may become eligible for these benefits if they reach normal retirement age while working for the Town. Health care benefits are provided through either a self-funded plan whose premiums are based on the benefits paid during the year or are provided in accordance with New York State Health Insurance Rules and Regulations (administered by the New York State Department of Civil Service) through the New York State Empire Plan (the "Empire Plan") whose premiums are based on the benefits paid throughout the State during the year. The Town recognizes the cost of providing benefits by recording its share of insurance premiums or the actual benefits paid as expenditure in the year paid. The Town's union contracts and ordinances require that it provide its eligible enrollees with benefit coverage under either the self-funded plan or the Empire Plan. Under the provisions of the Empire Plan, premiums are adjusted on a prospective basis for any losses experienced by the Empire Plan. The Town has the option to terminate its participation in the Empire Plan at any time without liability for its respective share of any previously incurred loss. During the 2006 year, $3,261,660 was paid on behalf of 93 retirees and 223 active employees and is recorded as an expenditure in the General Fund. COMPENSATED ABSENCES 7. Town employees are granted vacation and sick leave and earn compensatory absences in varying amounts. In the event of termination or upon retirement, an employee is entitled to payment for accumulated vacation and sick leave and unused compensatory absences at various rates subject to certain maximum limitations. Estimated vacation, sick leave and compensatory absences accumulated by governmental fund type employees have been recorded in the statements of net assets. Payment of vacation time and sick leave is dependent upon many factors; therefore, timing of future payments is not readily determinable. However, management believes that sufficient resources will be made available for the payments of vacation, sick leave and compensatory absences when such payments become due. As of December 31,2006, the value of the accumulated vacation time and sick leave was $6,475,661 for the primary government. D. COMMITMENTS AND CONTINGENCIES Risk Management The Town is self-insured for both medical insurance and general liability insurance. The amount of medical claims outstanding at December 31, 2006 is $161,976. This amount has been reserved against fund balance in the General Fund. In common with other municipalities, the Town receives numerous notices of claims. Prior to 2005, coverage for bodily injury and property damage was previously written on a primary non-self insured retention ("SIR") basis. Insurance market conditions and availability precluded the Town from obtaining coverage in 2005 without an SIR. As a result, in 2006 the Town self-insured for bodily injury and property damage up to a maximum of $50,000 per claim. The $50,000 limitation was the minimum retention amount available to the Town. Claims in excess of $50,000 are covered by excess liability policies providing coverage for $10,000,000 per occurrence and in the aggregate. Although the eventual outcome of these 2006 claims cannot presently be determined, the Town's third party administrator has estimated unsettled claims at December 31, 2006 to be $83,863. These amounts have been reserved against fund balance in the General Fund. The Town is of the opinion that the ultimate settlement of the outstanding claims will not result in a material adverse effect on the Town's financial position. Since 2005, there have been no significant reductions in insurance coverage as compared to the prior year; in addition there were no settlements on excess of insurance coverage over the last three years. The Town is also self-insured for unemployment benefits paid. - 32- . . . . . . . . . . . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31,2006 D. COMMITMENTS AND CONTINGENCIES (continued) Landfill Closure and Post-Closure Care Costs State and federal laws and regulations require the Town to place a final cover on its landfill sites and to perform certain maintenance and monitoring functions at the sites for thirty years after closure. The Town ceased accepting waste at its Cutchogue landfill as of October 8, 1993. The Town entered into a stipulation of settlement with the New York State Department of Environmental Conservation in October of 1994 in which all charges of operational violations at the Cutchogue landfill were dropped. Under the stipulation, the Town agreed to close and place a final cover over the landfill and to pay a civil penalty of $650,000 over seven years. Construction of the final cover commenced in the summer of 2001 and was completed in the fall of 2003. In addition to placement of the final cover on the landfill, state and federal regulations presently require the Town to perform certain maintenance and monitoring functions at the site for up to thirty years. Accordingly, as of December 31,2006 the Town has recorded a liability of $593,323 which represents the provision to be made in future budgets for post-closure landfill costs. Actual costs may vary due to inflation or deflation, changes in technology, or changes in regulations or applicable laws. Actual costs associated with the placement of the final cover totaled $7,681,719. Financing for closure activities was provided through a $2,000,000 grant from the New York State Department of Environmental Conservation with the balance provided with a state subsidized loan through the New York State Environmental Facilities Corporation. Costs associated with post closure care will be covered by charges to future landfill users and future tax revenue. Lease Commitments and Leased Assets The Town leases property and equipment under operating leases. Total rental expenditures on such leases for the year ended December 31,2006 were approximately $191,773. Future obligations over the primary terms of the Town's leases as of December 31,2006 are as follows: 2007 $ 109,824 2008 109,028 2009 107,3480 2010 86,909 2011 and thereafter 563.901 Total $ 977.010 CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED COMPONENT UNITS E. The following represents condensed financial statements for the discretely presented component units as of and for the year ended December 31, 2006: Condensed Statement of Net Assets: Due from Capital Assets Other Current Primary Net 01 Current Long-T enn Net Assets Government Depreciation Uabilities Uabilities Assets Fishers Island Ferry District $ 489,288 $ 182,783 $ 15,672,853 $ 2.367,007 $ 2,700,000 $ 11,277,917 Fishers Island Refuse and Garbage 607,760 59,613 3,146,256 621,736 3,191,893 Cutchogue-New Suffolk Park District 108,649 16,414 123,200 16,414 231,849 Soulhold Park Distnct 43,842 35,659 696,598 37,930 738,169 Orient-East Marion Park. District 5,496 3,475 432,985 14,602 427,354 Mattituck Park District 255,998 52,925 1,242,272 166,858 105,000 1,279,337 Orient Mosquito District 16,812 9,309 25,900 18,235 33,786 $ 1,527,845 $ 360,178 $ 21,340,084 $ 3,242,782 $ 2,805,000 $ 17,180,305 - 33- . TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31,2006 E. CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED COMPONENT UNITS (continued) . Condensed Statement of Activities: . Program General Revenue Net Assets Net Expense Properly Expenses Revenue (Revenue) Tax Other Change 1/1106 12/31106 Fishers Island Feny Distlict $ 3,061,265 $ 2,013,785 $ 1.047,480 $ 400,000 $ 854,443 $ (206,963) $ 11,070.954 $ 11,2n,917 Fishers Island Refuse and Garbage 538.458 32,938 505,520 563.500 70.888 (128,868) 3,063.025 3.191,893 Cutchogue-New Suffolk Pall< Dislricl 160.014 160,014 141.000 917 18,097 249,946 231,849 5ouIhoId Pall< DisIricI 287,960 287.960 315.000 43,691 (70.731) 667,438 738,169 Orient-East Marion PaI1< District 27,063 27,063 27,617 76 (630) 426,724 427,354 Mallilucl< Pall< Distlict 368,453 368.453 426,110 37.511 (95,168) 1,184.169 1.279,337 Orient Mosquno DisIricI 86,m 86,977 76,285 2.412 8,280 42,068 33.786 $ 4,530,190 $ 2,046,723 $ 2,483.467 $ 1,949,512 $ 1,009,938 $ (475,983) $ 16,704,322 $ 17,180,305 F. SUBSEQUENT EVENTS . . . On April 15, 2007, the Town issued Serial Sonds for public improvements in the amount of $14,650,000. These public improvements bonds are allocated as follows: $9,987,900 for open space preservation, $1,200,000 for land acquisition, $3,000,000 for a solid waste management transfer station, $315,000 for a settlement with New York State and $147,100 for equipment. The interest rate on these bonds range from 4% during the initial year to 4.25% for the final 20 years. The bonds final maturity date is 2030. G. NEW PRONOUNCEMENTS . The Governmental Accounting Standards Soard (GASS) approved new accounting standards applicable to 'other post-employment benefits" (OPES's) and "termination benefits", which are non- pension benefits provided after a person leaves employment, including retiree health care. Until now, these benefits have generally been administered by municipalities on a pay-as-you-go basis and have not been reported as a liability on financial statements. . GASS 45 and 47 requires municipalities which adhere to GAAP (Generally Accepted Accounting Principles) to account for OPES and termination liabilities on an accrual basis much like they already account for pension liabilities, generally adopting the actuarial methodologies used for pensions, with adjustments for the different characteristics of OPES and termination benefits and the fact that most municipalities have not set aside any funds against this liability. . Under GASS 45 and 47, based on actuarial valuation, an annual required contribution ("ARC") will be determined for each municipality and then be periodically updated depending on the number of members within the plan. The Town, as well as its component units are required to implement GASS 45 and 47 for the year ended December 31, 2007. . . - 34- . . . . . REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS . . . . . . . . TOWN OF SOUTHOLD GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year ended December 31, 2006 Variance with . Original Final Final Budget Budget Budget Actual Positive/(Negative ) REVENUES Real Property Taxes $14,872,736 $ 14,872,736 $ 14,872,736 Other Real Property Tax Items 68,500 68,500 85,808 $ 17,308 Non-Property Tax Items 616,000 616,000 616,670 670 . Departmental Income 342,100 585,100 477,849 (107,251) Intergovernmental Charges 386,616 297,379 316,049 18,670 Use of Money and Property 460,000 460,000 684,166 224,166 Licenses and Permits 223,100 223,691 258,794 35,103 Fines and Forfeitures 112,000 112,000 171,763 59,763 Sale of Property and Compensation for Loss 74,050 77,505 95,057 17,552 . Miscellaneous Local Sources 47,420 109,669 146,260 36,591 State Aid 2,434,897 2,561,687 2,725,177 163,490 Federal Aid 238,737 228,491 (10,246) Total Revenues 19,637,419 20,223,004 20,678,820 455,816 EXPENDITURES . General Government Support 6,116,403 6,175,733 5,177,745 997,988 Public Safety 7,297,533 7,392,386 7,371,280 21,106 Public Health 33,300 33,300 32,988 312 Transportation 442,710 472,173 452,050 20,123 Economic Assistance and Opportunity 1,030,920 1,022,324 949,740 72,584 Culture and Recreation 395,314 396,830 384,983 11,847 . Home and Community Services 362,224 660,814 530,270 130,544 Employee Benefits 6,257,400 6,690,613 5,811,868 878,745 Debt Service - Principal and Interest 1,559,500 1,434,500 1,313,234 121,266 Total Expenditures 23,495,304 24,278,673 22,024,158 2,254,515 Deficiency of Revenues . Over Expenditures (3,857,885) (4,055,669) (1,345,338) 2,710,331 Other Financing Sources (Uses) Transfers In 6,038,180 6,308,189 2,253,944 (4,054,245) Transfers Out (2,180,295) (2,252,520) (1,531,369) 721,151 Total Other Financing Sources (Uses) 3,857,885 4,055,669 722,575 (3,333,094) . Net Change in Fund Balance $ -0- $ -0- (622,763) $ (622,763) Fund Balance at Beginning of Year 6,007,462 Fund Balance at End of Year $ 5,384,699 . . See notes to the financial statements. -35- ____m__ . TOWN OF SOUTHOLD HIGHWAY FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES . IN FUND BALANCES - BUDGET AND ACTUAL Year ended December 31, 2006 Variance with . Original Final Final Budget REVENUES Budget Budget Actual Positive/(Negative) Real Property Taxes $ 4,095,347 $ 4,095,347 $ 4,095,347 Other Real Property Tax Items 8,500 8,500 12,689 $ 4,189 Use of Money and Property 72,100 72,100 140,578 68,478 . Licenses and Permits 6,500 6,500 9,484 2,984 Sale of Property and Compensation for Loss 7,521 7,521 State Aid 231,332 306,719 276,337 (30,382) Total Revenues 4,413,779 4,489,166 4,541,956 52,790 . EXPENDITURES Transportation 3,485,358 3,551,971 3,028,076 523,895 Employee Benefits 543,162 543,162 515,106 28,056 Debt Service - Principal and Interest 294,785 294,785 283,652 11,133 Total Expenditures 4,323,305 4,389,918 3,826,834 563,084 . Excess (Deficiency) of Revenues Over Expenditures 90,474 99,248 715,122 615,874 Other Financing Uses . Operating Transfers In 355,900 355,900 (355,900) Transfers Out (446,374) (455,148) (452,648) 2,500 Total Other Financing Uses (90,474) (99,248) (452,648) (353,400) Net Change in Fund Balance $ -0- $ -0- 262,474 $ 262,474 . Fund Balance at Beginning of Year 1,056,848 Fund Balance at End of Year $ 1,319,322 . . . See notes to the financial statements. -36- . . . . . OTHER SUPPLEMENTARY INFORMATION . . . . . . . . TOWN OF SOUTHOLD COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS December 31, 2006 East-West Fire Southold Fishers Solid Waste . General Fund Special Protection Wastewater Island Sewer Management Part Town Grant District District District District Totals ASSETS Cash and investments $ 821,446 $ 86,470 $ 225,862 $ 29,959 $ 188,485 $ 1 ,352,222 Accounts receivable, net of allowance 58,401 1,259 123,168 182,828 . Due from other funds 115,236 $ 5,000 56,488 2,146 9,806 286,871 475,547 Due from other governments 9,150 79,607 88,757 Prepaid expenditures 25,599 27,960 53,559 . Total Assets $1,020,682 $ 14,150 $ 142,958 $ 228,008 $ 41,024 $ 706,091 $ 2,152,913 LIABILITIES AND FUND EQUITY LIABILITIES Accounts payable $ 21,800 $ 9,150 $ 12,656 $ 76 $ 276,974 $ 320,656 . Due to other funds $ 173 173 Deferred revenue 90,689 110,654 4,056 422,893 628,292 Total Liabilities 112,489 9,150 123,310 4,229 76 699,867 949,121 . FUND EQUITY Fund balance - reserved: Prepaid expenses 25,599 25,599 Fund balance - unreserved: . Designated - ensuing year's budget 459,000 5,000 6,228 470,228 Undesignated 423,594 13,420 223,779 40,948 6,224 707,965 Total Fund Equity 908,193 5,000 19,648 223,779 40,948 6,224 1,203,792 . Total Liabilities and Fund Equity $1,020,682 $ 14,150 $ 142,958 $ 228,008 $ 41,024 $ 706,091 $ 2,152,913 . . -37- . . TOWN OF SOUTH OLD COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS Year ended December 31, 2006 East-West Fire Southold Fishers Solid Waste General Fund Special Protection Wastewater Island Sewer Management . Part Town Grant District District District District Totals REVENUES Real property taxes $ 492,996 $ 458,043 $ 22,790 $ 1,767,533 $ 2,741,362 Other real property tax items 1,523 604 30 $ 2 2,330 4,489 . Non property tax items 229,346 229,346 Departmental income 656,644 17,060 29,117 1,573,114 2,275,935 Intergovernmental charges 1,809 1,809 Use of money and property 47,074 5,594 9,677 1,689 31,238 95,272 Licenses and permits 7,232 156,548 163,780 . Sale of property and compensation for loss 6,738 128,924 135,662 Miscellaneous local sources 7 $ 5,000 1,645 6,652 State aid 47,671 79,607 127,278 Federal aid 41,163 41,163 Total Revenues 1,489,231 46,163 464,241 49,557 30,808 3,742,748 5,822,748 . EXPENDITURES General government support 103,654 103,654 Public safety 409,449 459,705 869,154 Public health 7,104 7,104 . Home and community services 523,926 41 ,163 22,406 2,776,286 3,363,781 Employee benefits 214,993 255,384 470,377 Debt service - principal and interest 2,435 820,155 822,590 Total Expenditures 1,259,126 41 ,163 459,705 2,435 22,406 3,851,825 5,636,660 . Excess (Deficiency) of Revenues Over Expenditures 230,105 5,000 4,536 47,122 8,402 (109,077) 186,088 Other Financing Uses: Operating transfers out (209,971 ) (219,174) (429,145) . Total Other Financing Uses (209,971 ) (219,174) (429,145) Net Change in Fund Balance 20,134 5,000 4,536 47,122 8,402 (328,251 ) (243,057) . Fund Balances at Beginning of Year 888,059 15,112 176,657 32,546 334,475 1,446,849 Fund Balances at End of Year $ 908,193 $ 5,000 $ 19,648 $ 223,779 $ 40,948 $ 6,224 $ 1,203,792 . -38- . . . . . DISCRETELY PRESENTED COMPONENT UNITS . . . . . . . . TOWN OF SOUTHOLD DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF NET ASSETS December 31, 2006 Fishers Island Cutchogue- South old Orient-East Mattituck Orient Fishers Refuse and New Suffolk Park Marion Park Park Mosquito . Island Ferry Garbage District Park District District District District District District (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Totals ASSETS Current Assets: Cash and investments $ 215,455 $ 591,364 $ 108,649 $ 43,842 $ 5,496 $ 254,833 $ 16,812 $ 1,236,451 . Accounts receivable, net of allowance 11,646 3,371 150 15,167 Due from primary govemment 182,783 59,613 16,414 35,659 3,475 52,925 9,309 360,178 State and federal receivables 237,056 237,056 Prepaid charges 25,131 13,025 1,015 39,171 Total Current Assets 672,071 667,373 125,063 79,501 8,971 308,923 26,121 1,888,023 . Non-Current Assets: Non-depreciable capital assets 10,874,636 2,607,599 101,198 588,847 432,985 555,575 15,160,840 Depreciable capital assets, net of depreciation 4,798,217 538,657 22,002 107,751 686,697 25,900 6,179,224 Total Assets 16,344,924 3,813,629 248,263 776,099 441,956 1,551,195 52,021 23,228,087 . LIABILITIES Current Liabilities: Accounts payable and accrued liabilities 343,215 3,743 11,127 11,808 369,893 Accrued interest payable 67,959 1,217 69,176 . Due to other governments 2,271 160 2,431 Deferred Revenue 130,833 57,993 16,414 35,659 3,475 103,673 18,235 366,282 Bond anticipation notes payable 1,625,000 560,000 2,185,000 Non-current liabilities due within one year General obligation bonds payable 150,000 50,000 200,000 . Claims and judgements payable 50,000 50,000 Total Current Liabilities 2,367,007 621,736 16,414 37,930 14,602 166,858 18,235 3,242,782 Noncurrent Liabilities: General obligation bonds payable 2,550,000 105,000 2,655,000 . Claims and judgements payable 150,000 150,000 Total Liabilities 5,067,007 621,736 16,414 37,930 14,602 271,858 18,235 6,047,782 NET ASSETS Investment in capital assets, net of related debt 11,347,853 2,503,025 640,883 1,087,272 15,579,033 . Unrestricted (69,936) 688,868 231,849 97,286 427,354 192,065 33,786 1,601,272 Total Net Assets $ 11,277,917 $ 3,191,893 $ 231,849 $ 738,169 $ 427,354 $ 1,279,337 $ 33,786 $ 17,180,305 . -39- . . TOWN OF SOUTHOLD DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF ACTIVITIES Year ended December 31, 2006 . Fishers Island Cutchogue- Southold Orient-East Mattituck Orient Fishers Refuse and New Suffolk Park Marion Park Park Mosquito Island Feny Garbage District Park District District District District District District (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Totals . REVENUES Program revenues $ 2,013,785 $ 32,938 $ 2,046,723 Real property taxes 400,000 563,500 $ 141,000 $ 315,000 $ 27,617 $ 426,110 $ 76,285 1,949,512 Other real property tax items 527 35 562 1,124 Interest and earnings 21,506 70,888 917 41,591 41 18,879 1,662 155,484 Federal Aid 810,646 810,646 . Other 21,764 2,100 18,070 750 42,684 Total Revenues 3,268,228 667,326 141,917 358,691 27,693 463,621 78,697 5,006,173 EXPENSES . General government support 130,910 130,910 Public health 86,977 86,977 Transportation 2,751,284 2,751.284 Culture and recreation 160,014 287,960 27,063 362,526 837,563 Home and community services 18,602 454,472 473,074 Interest 160,469 83,986 5,927 250,382 . Total Expenses 3,061,265 538,458 160,014 287,960 27,063 368,453 86,977 4,530,190 . Changes in Net Assets 206,963 128,868 (18,097) 70,731 630 95,168 (8,280) 475,983 Net Assets at Beginning of Year Net Assets at End of Year 11,070,954 $11,277,917 3,063,025 $ 3,191,893 249,946 $ 231,849 667,438 $ 738,169 426,724 $ 427,354 1,184,169 $ 1,279,337 $ 42,066 33,786 16,704,322 $17,180,305 . . . -40-