City of Lexington Financial Overview, Assessed Valuation and Tax Rate History

The City of Lexington, NC provides a full range of general fund services including police and fire protection, sanitation services, the construction and maintenance of streets and infrastructure, recreational activities, cemetery services, and cultural events. In addition, the City owns and operates four utility services: a water treatment and distribution system, a sewer treatment and collection system, an electric distribution system, and a natural gas distribution system. These enterprises serve portions of Davidson County in addition to servicing the City. The City also owns and operates a golf course. The annual budget for the provision of all of these services totals approximately $95.9 million. Of the total budget, the enterprise funds compile over $73 million and are self-supported by the revenues generated by these services. The City's annual budget report as adopted by Lexington City Council may be accessed through the following link to the City's web page http://www.lexingtonnc.net/finance/budgetmenus.aspx.

In accordance with North Carolina law, an annual independent audit of the City's finances is conducted by a CPA firm. The Independent Auditors' Report as well as the City's financial condition is best evidenced in the Comprehensive Annual Financial Report (CAFR), which may be accessed through the following link http://www.lexingtonnc.net/Finance/cafrs.aspx. The Government Finance Officers Association of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its CAFR for the fiscal year ended June 30, 2009, marking the 18th consecutive year the City has received this prestigious award.

Bond Ratings:

• Moody's Investors Service A1
• Standard and Poor's Corporation AA-
• NC Municipal Council 87

Current Tax Rate for Fiscal Year 2010-2011:
$.56 per $100 assessed valuation

Lexington City Council establishes the tax rate as of July 1st when adopting the annual budget. The tax rate supports the general fund services of the City as mentioned above. The rate established is contingent upon growth and revaluations in the property assessed valuation, other general fund revenue source availabilities, and the costs to provide these services. As evidenced by the table "Schedule of Assessed Value and Estimated Actual Value of Taxable Property", the City experienced a steady tax base growth since Fiscal Year 2000. This growth coupled with revaluations of property has boosted the total assessed valuation to approximately $1.4 billion currently. Lexington's top 10 taxpayers are listed on the "Principal Property Taxpayers" table.

The City's tax rate history since 2000 is visible in the table titled "Property Tax Rates Direct and Overlapping Governments." The City's tax rate was once held to extremely low levels due to excessive profits being transferred from the Electric Utility Fund to the General Fund. However, City Council made a conscientious and prudent decision beginning in 1995 to gradually reduce the General Fund's dependency on the Electric Fund transfer by over $2.2 million over a four-year period. This was accomplished by eliminating 31 positions, operational efficiencies spread across departments, and by subsequently increasing the tax rate. This major business shift positioned the Electric Fund to address the future challenges to the NC Municipal Power Agency 1 in the form of wholesale power increases as well as potential deregulation legislation. Since the transition period was complete in 1999, the City has maintained a fairly consistent tax rate even in the face of economic recession.