CITY OF FAYETTEVILLE, GEORGIA MANAGEMENT’S DISCUSSION AND ANALYSIS

JULY 31, 2012

This management discussion and analysis of the City of Fayetteville, Georgia’s financial performance provides an overall review of the City’s financial activities for the fiscal year ended July 31, 2012. It is designed to give the reader an objective and easily readable analysis of the City’s financial performance. The primary intent of this discussion and analysis is to look at the City’s financial performance as a whole; readers should also review the letter of transmittal, notes to the basic financial statements, and the financial statements to enhance their understanding of the City’s financial performance.

Financial Highlights

Key financial highlights for FY2012 are as follows:

In total, combined net assets decreased ($655,934) which represents a (.77%) decrease over FY 2011. This decrease can primarily be attributed to the reduction of capital grants received by the City for infrastructure improvements and projects.

 Combined tax revenues accounted for $8,700,953 or 81% of all revenues from governmental activities. Service specific revenues in the form of charges for services, operating grants and contributions, and capital grants and contributions accounted for $2,030,646 or 19% of total revenues of $10,740,852 from governmental activities.

 The City had $10,750,300 in expenses related to governmental activities; $2,030,646 of these expenses were offset by charges for services, grants, and contributions. General revenues (primarily taxes) of $8,710,206 provided for these services along with $9,448 of fund balance covering the difference.

 Total Water and Sewer Fund revenues for fiscal year 2012 were $5,548,060. Total expenses for fiscal year 2012 were $6,193,419. Capital contributions were recorded in the amount of $37,644, including but not limited to donated property and sewer proportionate share. The change in net assets after depreciation and non-operating revenues and/or expenses was ($607,715) for the fiscal year end.

 Revenues from the General Fund were $9,642,409 for fiscal year 2012, an increase of approximately 4.8% over the prior fiscal year, due to an increase in local option sales tax and insurance premium tax. General Fund expenditures totaled $9,015,964 for the fiscal year ending July 31, 2012, a decrease of (1.7%) over last fiscal year.

Overview of the Financial Statements

This comprehensive annual financial report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the City of Fayetteville as a financial whole, or as an entire operating entity.