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MANAGEMENT'S DISCUSSION AND ANALYSIS
<br />As management of the City of Paris (the City), we offer readers of the City of Paris, Texas' financial statements this narrative
<br />overview and analysis of the financial activities of the City of Paris for the fiscal year ended September 30, 2011. We
<br />encourage readers to consider the information presented here in conjunction with additional information that we have furnished
<br />in our letter of transmittal as well as the City's financial statements.
<br />Financial Highlights of the Primary Government
<br />• The City maintained its tax rate of 0.52 per $100 of valuation. Fiscal year 2010-11 is the third consecutive year at this
<br />rate. The City has lowered its rate four times since the 2003-04 fiscal year when the tax rate was 0.695. For the
<br />upcoming 2011-12 fiscal year, the City will also maintain the 0.52 tax rate. The City has accomplished this 17.5 cent
<br />tax rate reduction by strict review of its operational needs and increases to the taxable value of property within the
<br />City. The City has been able to maintain the current tax rate despite a nationwide weak economy and an 8.5%
<br />decrease in local sales taxes in 2009-10 from which the City has recovered 66.2% in the 2010-11 fiscal year.
<br />• The number of budgeted positions dropped from 369 in fiscal year 2002-03 to 322 in fiscal year 2009-10. This
<br />reduction was also part of an operational review and represents a significant and annually repeating savings to the
<br />City. Two positions were added in fiscal year 2010-11, bringing the total City employees to 324.
<br />• City-wide revenues this year exceeded City-wide expenses by $2,321,372 compared to $2,946,168 last year. The City
<br />has made a concentrated effort to reduce expenses plus seeking new sources of revenue and protecting its existing
<br />revenue sources.
<br />• The assets of the City of Paris exceeded its liabilities at the close of the most recent fiscal year by $85,343,128 (net
<br />assets) an increase of $2,321,372 or 2.79% over the previous year amount of $83,021,756. The most important factor
<br />in this change was the decrease of long-term debt. Of the amount known as net assets, $24,217,521 (unrestricted net
<br />assets) may be used to meet the government's ongoing obligations to citizens and creditors.
<br />• As of the close of the current fiscal year, governmental funds reported combined ending fund balances of $16,759,950
<br />compared to $18,000,218 the previous year. This amounts to a decrease of $1,240,268 or 6.89%. This decrease was
<br />due to primarily to a decrease in the cash and investments of the Capital Projects Fund. Unreserved fund balance is
<br />available for spending at the government's discretion.
<br />• At the end of the fiscal year, unassigned fund balance for the general fund was $12,156,169 or 57.15% of the total
<br />general fund expenditures. The prior year, unassigned fund balance was $11,376,619 or 52.7% of general fund
<br />expenditures. General fund expenditures were essentially unchanged (down 1.4%) while the unreserved fund balance
<br />increased due to increased cash and near cash assets.
<br />• The City of Paris' non-current liabilities decreased by $4,391,853 or 17.97% during the current fiscal year due to the
<br />usual debt payment.
<br />• Total charges for services for the City of Paris were $18,808,783 compared to $18,734,131 the previous year. This
<br />represents less than a one half percent increase. Operating/capital grants & contributions were $2,159,259 compared
<br />to $1,786,730 the previous year. This increase was due to increased private contributions and grant activity. General
<br />revenues were $17,503,660 compared to $17,885,493 the previous year. This decrease was due to lower property
<br />taxes, hotel occupancy taxes, and contribution income. Property taxes were down due to the absorption of a new debt
<br />issue within the existing total tax rate. This shifted revenue from O&M operations to debt service. Hotel taxes were
<br />down due to delinquencies of two hotels. Since the end of the fiscal year, one hotel has completely paid its
<br />delinquency and the other has made payout arrangements on its delinquency.
<br />• Transfers from business-type activities to governmental activities and from governmental activities to business-type
<br />activities occurred during the year in the net amount of $764,880. This included administrative and franchise fees
<br />transferred from business-type activities to governmental activities.
<br />• City-wide liabilities decreased $4,336,032 from $30,743,802 to $26,407,770. This amounted to a 14.10% decrease.
<br />Long-term debt was the single factor most affecting this change.
<br />• City-wide expenses increased $690,144 (1.9%) increasing from $35,460,186 to $36,150,330 with slight increases in
<br />both government activities and business-type activities.
<br />• The ratio of net assets to expenses was 234.12% for the year 2009-10 and 237.33% for the year 2010-11. A decrease
<br />in non-current debt was the major factor in this improvement. Unrestricted net assets changed from $20,174,249 in
<br />2009-10 to $24,217,521 in 2010-11, an increase of 20.04% reflecting the decrease in restrictions for construction
<br />projects.
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