Fy2006 Cafr

City of Santa Cruz, California
Santa Cruz Coastline
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Fiscal Year Ended June 30, 2006
Cover by Natalia Duarte

City of Santa Cruz
State of California
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2006
Prepared by
Sandra Benoit
Cheryl Fyfe
Kathryn Mintz Tori Hannah Charlene Pringle

Ray Galindo Raymond Chin Shelley Horrow
Ralph Reader Kim Wigley Natalia Duarte
City of Santa Cruz
For the year ended June 30, 2006
Table of Contents
Page
INTRODUCTORY SECTION
Transmittal Letter ................................................................................................................................................... i

Map of Santa Cruz...............................................................................................................................................vii
Organization Chart ........................................................................................................................................... viii
Directory of City Officials of the City of Santa Cruz....................................................................................... ix
FINANCIAL SECTION
Independent Auditors’ Report........................................................................................................................... 1
Management’s Discussion and Analysis ......................................................................................................... 3
Basic Financial Statements:
Government-Wide Financial Statements:

Statement of Net Assets..........................................................................................................................20
Statement of Activities and Changes in Net Assets ...........................................................................22
Fund Financial Statements:

Government Fund Financial Statements:
Balance Sheet .....................................................................................................................................28
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Assets................................................................29
Statement of Revenues, Expenditures and Changes in Fund Balances ....................................30
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances to the Government-Wide
Statement of Activities and Changes in Net Assets ..............................................................31
Proprietary Fund Financial Statements:

Statement of Net Assets ...................................................................................................................34
Statement of Revenues, Expenses and Changes in Net Assets ..................................................38
Statement of Cash Flows..................................................................................................................40
Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Assets .................................................................................................46
Statement of Changes in Fiduciary Net Assets.............................................................................47
Index to Notes to Basic Financial Statements ............................................................................................49
Notes to Basic Financial Statements ............................................................................................................51

City of Santa Cruz
Table of Contents, Continued
Page
FINANCIAL SECTION, Continued
Required Supplementary Information:
Budgetary Information....................................................................................................................................94
Budgetary Comparison Schedule – General Fund ...............................................................................98
Reconciliation of Net Changes in Fund Balances – Budgetary to GAAP Basis:
General Fund .......................................................................................................................................99
Budgetary Comparison Schedule – Redevelopment Agency ............................................................100
Redevelopment Agency .....................................................................................................................101
Defined Benefit Pension Plan .........................................................................................................................103
Supplementary Information:
Non-Major Governmental Funds:

Combining Balance Sheet.........................................................................................................................108
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................110
Schedule of Budget and Actual Revenues – General Fund .................................................................112
Schedule of Budget and Actual Expenditures and Other Financing Uses for
Legally Adopted Appropriations by Department – General Fund .............................................114
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:
Police Special Revenue Fund.............................................................................................................116
State Highway Special Revenue Fund .............................................................................................117
Traffic Impact Fee Fund .....................................................................................................................118
Parks and Recreation Fund................................................................................................................119
Housing and Community Development Fund...............................................................................120
Transportation Development Act.....................................................................................................121
General Obligation Bond Debt Service ............................................................................................122
General Capital Improvement Projects............................................................................................123
Non-Major Governmental Funds .....................................................................................................124
Internal Service Funds:

Combining Statement of Net Assets.......................................................................................................126
Combining Statement of Activities and Changes in Net Assets.........................................................127
Combining Statement of Cash Flows .....................................................................................................128
City of Santa Cruz
Table of Contents, Continued
Page
FINANCIAL SECTION, Continued
Private-Purpose Trust Funds:

Combining Statement of Fiduciary Net Assets .....................................................................................130
Combining Statement of Changes in Fiduciary ....................................................................................131
Agency Funds:
Combining Statement of Fiduciary Net Assets .....................................................................................134
Combining Statement of Changes in Assets and Liabilities................................................................135
STATISTICAL SECTION (Unaudited)
Net Assets by Component..................................................................................................................................... 139

Changes in Net Assets ........................................................................................................................................... 140
Fund Balances of Governmental Funds .............................................................................................................. 142
Changes in Fund Balances of Governmental Funds ......................................................................................... 145
Governmental Activities Tax Revenue by Source ............................................................................................. 146
General Governmental Tax Revenue by Source ................................................................................................ 148
Assessed Value of Taxable Property.................................................................................................................... 149
Direct and Overlapping Property Tax Rates ...................................................................................................... 150
Principal Property Tax Owners ............................................................................................................................ 151
Property Tax Levies and Collections ................................................................................................................... 153
Ratios of Outstanding Debt by Type .................................................................................................................. 154
Ratios of General Bonded Debt Outstanding ..................................................................................................... 156
Computation of Direct and Overlapping Debt .................................................................................................. 157
Legal Debt Margin Information ........................................................................................................................... 158
Pledged-Revenue Coverage.................................................................................................................................. 160
Demographics and Economic Statistics............................................................................................................... 162
Principal Employers............................................................................................................................................... 163
Full-Time City Government Employees by Function/Program ..................................................................... 164
Operating Indicators by Function/Program ...................................................................................................... 165
Capital Asset Statistics by Function/Program ................................................................................................... 166
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809 Center Street, Room 8, Santa Cruz, CA 95060 831 420-5052 Fax: 831 420-5051 www.ci.santa-cruz.ca.us
October 27, 2006
To the Honorable Mayor, Members of the City Council and Citizens of the
City of Santa Cruz, California:
In accordance with the City Charter, the Comprehensive Annual Financial Report of the City of Santa Cruz
for the fiscal year ended June 30, 2006 is submitted for your information and review. Various financing
covenants and regulations associated with restricted funding sources also require the City of Santa Cruz,
California (City) to publish a complete set of financial statements presented in conformance with generally
accepted accounting principles (GAAP) and audited by a firm of licensed certified public accountants.
Pursuant to the requirements noted above, we hereby issue the Comprehensive Annual Financial Report of
the City of Santa Cruz, California for the fiscal year ended June 30, 2006.
This report consists of management's representations concerning the finances of the City of Santa Cruz.
Consequently, management assumes full responsibility for the completeness and reliability of all the
information presented in this report. To provide a reasonable basis for making these representations,
management of the City of Santa Cruz has established a comprehensive internal control framework that is
designed both to protect the government's assets from loss, theft or misuse and to compile sufficient reliable
information for the preparation of the City of Santa Cruz's financial statements in conformity with GAAP.
Because the cost of internal controls should not outweigh their benefits, the City of Santa Cruz's
comprehensive framework of internal controls has been designed to provide reasonable, rather than
absolute, assurance that the financial statements will be free from material misstatement. As management,
we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all
material respects.
Caporicci & Larson, a firm of licensed certified public accountants, has audited the City of Santa Cruz's
financial statements. The goal of the independent audit was to provide reasonable assurance that the
financial statements of the City of Santa Cruz for the fiscal year ended June 30, 2006, are free of material
misstatement. The independent audit involved examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements; assessing the accounting principles used and
significant estimates made by management; and evaluating the overall financial presentation. The
independent auditor concluded, based on the audit, that there was a reasonable basis for rendering an
unqualified opinion that the City of Santa Cruz’s financial statements for the fiscal year ended June 30, 2006,
are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first
component of the financial section of this report.
i
The independent audit of the financial statements of the City of Santa Cruz was part of a broader, federally
mandated "Single Audit" designed to meet the needs of federal grantor agencies. The standards governing
Single Audit engagements require the independent auditor to report not only on the fair presentation of the
financial statements, but also on the audited government's internal controls and compliance with legal
requirements, with special emphasis on internal controls and legal requirements involving the
administration of federal awards. These reports are available in the City of Santa Cruz’s separately issued
Single Audit Report.
GAAP require that management provide a narrative introduction, overview, and analysis to accompany the
basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of
transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Santa
Cruz's MD&A can be found immediately following the report of the independent auditors.
Profile of the Government
The City of Santa Cruz, incorporated in 1866, is located on the northern part of the Monterey Bay
approximately 74 miles south of San Francisco and 30 miles from San Jose. The City of Santa Cruz was first
founded in 1769 by the Spanish explorer Don Gaspar de Portola, who, along with Father Junipero Serra,
began land based settlement in the area. Santa Cruz is the county seat for the County of Santa Cruz, and is
a charter city which operates under the provisions of a voter-approved charter. The City has an area of 12
square miles and an estimated population of 56,925 as of January 2006. Santa Cruz is the home to the
University of California, Santa Cruz (UCSC) which first opened in 1965 and has a current enrollment of
over 15,000 students. UCSC has received worldwide recognition in the past few years for its high quality
academic programs and sponsored research programs such as the California Institute for Quantitative
Biomedical Research (QB3), the Center for Information Technology Research in the Interest of Society
(CITRIS), and the Laboratory for Adaptive Optics. The major industries include agriculture, tourism,
manufacturing, food processing, and technology.
Like other cities in California, the City of Santa Cruz has limited ability to set tax rates. The State
Constitution establishes a maximum rate for property tax and limits the growth of assessed value. Prop 13
sets the limit for increases of the property tax rate to 2% per year, but upon sale, full value becomes the
assessed value. The property tax collected is allocated among the jurisdictions in the City's tax rate areas
based on criteria established by the state legislature. The rates and tax base of two of the City's other major
general revenues , sales and use tax and motor vehicle in lieu fees (VLF), are also controlled by the
legislature.
Changes to existing local taxes and any new taxes require voter approval. Taxes used for general purposes
are subject to approval by a simple majority of voters while taxes levied for specific purposes require a two-
thirds majority of voters. Assessments must be approved by a two-thirds vote with voting rights
apportioned based on the amount of the assessment. In addition, fees for facilities and services are subject
to requirements that they not be set at levels that exceed the reasonable costs of providing services. As a
result, fund balances generated by differences between fee revenue and related expense are retained and
designated for services and facilities that benefit fee payers.
The City of Santa Cruz has operated under the council-manager form of government since its incorporation
in 1866. Policy-making and legislative authority are vested in a seven member governing council consisting
of the Mayor and six Council Members. The City Council is responsible, among other things, for passing
ordinances, adopting the budget, approving nominees to commissions, and hiring the City Manager, City
Clerk and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of
the City Council, for overseeing the day-to-day operations of the City and for appointing the heads of the
various departments. The council is elected on a non-partisan basis. Council Members serve four-year
staggered terms, with either three or four Council Members elected every two years. The Mayor is selected
by a majority of the City Council and serves a one year term. The Mayor and Council Members are elected
at large and all are subject to two term limits.
ii
The City of Santa Cruz provides a broad range of services including police and fire protection, construction
and maintenance of streets, parks, flood control and other infrastructure, a wharf facility, recreational and
cultural activities including a performing arts center and human services programs. It also operates
municipal utilities for water, wastewater, storm water, refuse collection, recycling and landfill disposal in
addition to self supporting enterprise operations for parking facilities and a golf course. The water utility
provides water service beyond the municipal boundaries and has a total service population of
approximately 90,000. Certain infrastructure construction and community development activities are
provided through a legally separate redevelopment agency. The Council sits as the agency's board and it
functions, in essence, as a department of the City. Therefore, the City of Santa Cruz Redevelopment
Agency has been included as an integral part of the City of Santa Cruz’s financial statements.
Many major public services delivered within the City's boundaries, including education, and public
transportation are provided by other agencies. The City of Santa Cruz is not financially accountable for the
operations of the franchisees or these government agencies.
As required by the City Charter, an annual budget is adopted by the City Council no later than the first
regular meeting in July for the fiscal year beginning July first. As part of the budget process, all City
departments submit budget requests for the next fiscal year. These requests are reviewed, and a final City
Manager recommended budget showing estimated revenues and expenditures of the City is prepared. This
proposed budget is transmitted to the City Council and made available to the public for review. Study
sessions and a public hearing are conducted before final adoption of the budget by the City Council.
The City Manager is authorized to approve appropriation transfers within any department up to a specified
amount; however, any new appropriation or appropriation transfer between departments requires approval
by the City Council. Several supplemental appropriations were necessary during the year and are reflected
in the budget amounts in the financial statements. Expenditures may not legally exceed appropriations at
the department level.
The Council reviews budget results at the mid-year review and at budget adoption. Redevelopment
budgets are adopted annually along with an annual report. The ongoing review and long range planning
focus for financial management provides numerous opportunities to identify and respond to changes in
revenues and expenditures and in community priorities.
Factors Affecting Financial Condition
We think that the information presented in the financial statements is best understood when it is considered
from the broader perspective of the context within which the City of Santa Cruz operates.
Economic Conditions and Outlook
The City of Santa Cruz’s economic growth began to slow during the FY 2002 fiscal year and declined
significantly through FY 2004. Tax revenues have begun to show positive growth in FY 2005 and FY 2006.
However, significant labor cost increases and a continued sluggish economy have resulted in projecting a
potential budget deficit for FY 2007. The local economy is linked to a large degree to the economy of the
nearby Silicon Valley region, whose growth continues to lag.
Over the last four year period, ending with fiscal year 2006, there has been substantial growth in assessed
value of real property. The assessed value is approximately $5.7 billion which is an increase of $500.0 or
9.6% over FY 2005. Property Tax revenues are up $5.9 million or 36% over the previous year.
iii
An important event affecting City revenues took place in August 2005. At a special election called by the
City Council, voters approved, by a 58% majority, continuation of a franchise tax on municipal utilities.
This tax was previously charged as a type of fee which had been deemed invalid in recent court cases
without voter approval.
Another significant event that took place in recent years was the approval of a ¼ cent transactions and use
tax by the voters. On October 8, 2003, the California Governor approved SB 566 which authorized cities to
seek voter approval to levy a transactions and use tax in multiples of 0.25%. City Council authorized
submitting Measure F, the ¼ cent sales tax measure, to the voters in March, 2003. This is a five-year general
tax which was approved by a 69% majority and is effective July 1, 2006. In November 2006, the voters
approved Measure H, making the Measure F ¼ cent sales tax permanent and approving an additional ¼
cent sales tax to become effective April 1, 2007.
Historical Trend Information
Property Tax
The historical trend for property tax has been very positive showing substantial growth given the assessed
value of property is approximately $5.7 billion with growth in this year of 9.6%. Property Tax revenues are
up $5.9 million or 36% over the previous year.
City of Santa Cruz

Property Tax
25.0 22.4
20.0
15.6 15.8 16.5
14.9
$ Millions
15.0 13.3
12.2
Series1
10.0
5.0
-
FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06
Fiscal Year
iv
Sales & Use Tax, Local Transactions and Use Tax and Supplemental Property Tax In-Lieu of Sales Tax
In the 2005 and 2006 fiscal years revenues have begun to trend significantly upward. Sales tax increased
$.3 million in FY 06 over FY 05. Sales tax in 1997 was $10.3 million and it was not until Fiscal Year 2005 that
the City again reached that level for sales tax. Sluggish sales tax in the years between 1997 and 2005 was a
result of many things, including, a downturn in the economy of the Silicon Valley, decline of the technology
sector within the City, relocation of a number of businesses outside the City, and the September 11 tragedy
which significantly reduced the tourist trade.
City of Santa Cruz, Sales Tax Trends
14.0
11.4 11.7
12.0
9.8
10.0 8.9 9.1 9.1
8.3
$ Millions
8.0
Series1
6.0
4.0
2.0
-
FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06
Fiscal Year
Transient Occupancy Tax

Transient Occupancy Tax declined after 2001 for many of the reasons cited and consistent with the decline
in sales and use tax. However, the transient occupancy tax has not recovered and based on the forecast for
growth in hotel rooms, occupancy, and room rates this revenue has remained basically flat. The slight
increase in recent years can be attributed to a small increase in room rates.
City of Santa Cruz,

Transient Occupancy Tax Trends
4.5
3.9
4.0 3.5 3.4
3.5 3.1 3.0 3.1
2.9
3.0
$ Millions
2.5
Series1
2.0
1.5
1.0
0.5
-
FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06
Fiscal Year
v
Utility Users Tax
The utility users tax is the third largest revenue source for the City, coming after property tax and sales tax.
The utility users tax is comprised of a tax on eight utilities; electric, wired telecom, wireless telecom, natural
gas, cable, water, wastewater, and refuse (the last three being municipal utilities). Modest increases over
the last four years can be attributed to a number of factors. Generally speaking, there have been declines in
electric and wired telecom while wireless telecom, gas, and cable have increased. The most significant
factor for the rise in overall revenues point to the water, wastewater, and refuse municipal utilities and the
increase tax revenues due to recent customer rate increases.
City of Santa Cruz,

Utility User Tax Trends
8.4 8.3
8.2
8.2 8.1
8.0
7.8
$ Millions
7.6 7.6 7.6

7.6
Series1
7.4 7.2
7.2
7.0
6.8
6.6
FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06
Fiscal Year
Risk management. The City of Santa Cruz uses a program of self-insurance for workers’ compensation and
general liability claims, and employs a professional risk manager, supplemented by a professional claim
administration firm, to minimize losses. The City is self-insured for workers' compensation up to $500,000
per occurrence. Santa Cruz participates in a multi-agency joint powers authority to provide excess
insurance coverage for liability coverage. The joint powers authority and the City rely on estimates
prepared by professional actuaries to set aside funds adequate to meet potential future losses. Excess
coverage purchased through the joint powers authority covers claims in excess of $1,000,000 for general
liability claims. As reflected in the financial statements, the Risk Management internal service fund had
deficit net assets as of June 30, 2006 of $4.3 million due to accrued claims liabilities. A deficit balance of $4.8
million related to workers’ compensation activities was offset by surplus balances of $0.4 million related to
group health insurance activities and a surplus of 0.2 million related to liability insurance activities,
resulting in a total net asset deficit balance of $4.3 million.
Significant contributing factors to rising workers’ compensation costs and claims liabilities include both an
increased benefit structure resulting from recent State legislation, and cost increases in the excess insurance
market that are being passed along to public agencies. At the same time, the self-insured retention per
occurrence has increased from $250,000 to $500,000.
Health care costs. The City contracts with CalPERS for employee health care coverage. Under this
program, employer premiums increased 10% for fiscal year 2006. A similar or even greater increase is
projected for fiscal year 2007. In addition, public agencies have been told by CalPERS to expect additional
increases in future years.
vi
State budget. California faced budget deficits in previous years. This imbalance created a number of
noteworthy changes in state/local finance law.
• The “Triple Flip”
In FY 04, the State of California issued State Deficit Reduction bonds under Proposition 57. Wall
Street wanted a dedicated revenue stream. The State of California then devised a method to secure
the dedicated revenue stream called the “Triple Flip”.
1. The State would take 25% of the local government 1% sales tax (Cities and Counties). This is to
continue for nine (9) years, beginning in FY 2004-05.
2. In January (6 months into the fiscal year), the State would require the Counties to take property
tax which was earmarked for schools and pay back the first 6 months of the sales tax takeaway
to the local governments, the State will then have the counties pay the estimated next 6 months
in May. The difference between the estimated and actual sales tax in one year will be corrected
in the next year payments.
3. Then the State, using State General Fund monies, would pay back the schools.
The Sales Tax taken by the State in FY 06 was $2.0 million and it was repaid by the County in the
form of “Property Tax in Lieu of Sales Tax. Santa Cruz County pays the City in December and April
our estimated 6 month payments.
• VLF-Property Tax Swap for FY 2006 was $3,7 million. In 1999, the state began reducing the vehicle
license fee (VLF) rate charged to vehicle owners – and backfilling city and county revenue losses
from this tax reduction with state subventions. The FY 2005 state budget package permanently
replaced the VLF backfill by shifting an equal amount of K-14 property taxes to cities and counties.
Increased state aid offsets K-14 school district revenue losses.
• FY 2004-05 Property Tax Shift. The FY 2004-05 state budget package included a $1.3 billion shift of
property taxes (called ERAF III) from noneducational local agencies (cities, counties, special
districts, and redevelopment agencies) to K-14 school districts. Unlike the two permanent property
tax shifts enacted in the 1990’s, this tax shift sunsets in FY 2006-07.
• Proposition 1A. In 2004, state voters amended the State Constitution to prohibit the state from
permanently reallocating the property tax in any county noneducation local agencies to K-14 school
districts. Also, this measure generally requires a two-thirds vote of the Legislature to change the
distribution of property taxes amount noneducation local agencies.
Cash management and policies
Cash temporarily idle during the year was invested in obligations of the U.S. Treasury and agencies of the
federal government, and the State Treasurer's, Local Agency Investment Pool (LAIF). Maturities of the
investments range from one day to five years, with an average maturity of 342 days. The average yield on
investments not held by fiscal agents was 3.68%. Investment income includes appreciation in the fair value
of investments. Increases in fair value during the current year, however, do not necessarily represent
trends that will continue; nor is it always possible to realize such amounts. It is the City’s policy to hold
investments to maturity; therefore, gains and losses due to temporary market value fluctuations are rarely
realized.
vii
Major Initiatives
The City of Santa Cruz operates four municipal utilities, including water, wastewater, storm water, and
refuse collection/landfill operations. The Water Department has not made any major capital improvements
for the past 10 to 15 years while a new water supply project was being developed. Now, in order to address
the pressing needs of an aging infrastructure and the need for a new water supply, the Water Department
has embarked upon an ambitious program of capital improvements that will span the next 4 years and will
cost approximately $53 million, to be financed partially through the issuance of new debt. Major
distribution and supply projects are planned, including a desalination plant.
The National Marine Sanctuary Program (NMSP), an agency of the National Oceanic and Atmospheric
Administration (NOAA), and the City of Santa Cruz are partnering to design and construct the Monterey
Bay National Marine Sanctuary Education Center. The Education Center in the City of Santa Cruz will
function as the Monterey Bay National Marine Sanctuary’s premier visitor center. The site was chosen after
the NMSP studied 23 locations along California’s Central Coast, settling on the City’s ¾-acre “Fun Spot”
property in the Santa Cruz beach area, visited by an estimated 3 million people per year. Formal design
will commence in FY 2007.
The City will continue to use Development Impact fees to enhance and upgrade park facilities. These fees
will also be used for improvements to the greenbelt. During these tough economic times the Parks and
Recreation Department will continue to seek grants and bond monies to renovate and upgrade outdated
facilities. The development of Depot Park and the Multi Modal Station is an example of a successful
partnership between numerous agencies.
Awards
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Santa Cruz for its
comprehensive annual financial report for the fiscal year ended June 30, 2004. This was the 23rd
consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of
Achievement, the City published an easily readable and efficiently organized financial report. This report
must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate
of Achievement is valid for one year only.
Due to staff turnover, the City was unable to prepare the FY 2005 Comprehensive Annual Financial Report
(CAFR) in the timeframe required to present the CAFR for the award for that year.
We believe that our current comprehensive annual financial report (CAFR) to meets the Certificate of
Achievement Program’s requirements.
Acknowledgements
The Finance Department takes great pride in the preparation of this report. The professionalism,
commitment and effort of the entire staff of the Finance Department have made this presentation possible.
We would like to express our appreciation to all the members of the other departments who assisted and
contributed to the preparation of this report. We also want to thank the partners and staff of our auditors
for their assistance and support. We wish to also express our sincere thanks to the City Manager, the
Mayor and the City Council Members for their unfailing support for maintaining the highest standards of
professionalism in the management of the City of Santa Cruz's financial operations.
Respectfully submitted,
Sandra Benoit
Director of Finance
viii
ix
x
DIRECTORY OF CITY OFFICIALS
CITY OF SANTA CRUZ
Mayor Cynthia Mathews
Vice Mayor Emily Reilly Councilmember Mike Rotkin
Councilmember Ryan Coonerty Councilmember Tim Fitzmaurice
Councilmember Ed Porter Councilmember Tony Madrigal
City Manager, Richard C. Wilson
Assistant City Manager .....................................................................Martín Bernal
Chief of Fire ......................................................................................Ron Oliver
Chief of Police...................................................................................Howard Skerry
City Attorney .....................................................................................John G. Barisone
City Clerk ..........................................................................................Lesile Cook
Director of Finance............................................................................Sandra Benoit
Director of Human Resources ...........................................................Adela Gonzalez
Director of Libraries ..........................................................................Anne M. Turner
Director of Parks and Recreation ......................................................Dannettee E. Shoemaker
Director of Planning and Community Development.........................Greg Larson
Director of Public Works and City Engineer ....................................Mark Dettle
Director of Redevelopment Agency..................................................Ceil Cirillo
Director of Water Department...........................................................Bill Kocher
xi
xii
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council

of the City of Santa Cruz
Santa Cruz, California
We have audited the accompanying financial statements of the governmental activities, the business-
type activities, each major fund, and the aggregate remaining fund information of the City of Santa
Cruz, California (City), as of and for the year ended June 30, 2006, which collectively comprise the
City’s basic financial statements as listed in the table of contents. These financial statements are the
responsibility of the City’s management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in the United States
and the standards applicable to financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the United States. 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 basic financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the basic financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City as of June 30, 2006, and the respective
changes in financial position and cash flows, where applicable, thereof for the year then ended in
conformity with generally accepted accounting principles in the United States.
As described in Note 1 to the basic financial statements, the City adopted the Governmental
Accounting Standards Board Statement No. 42, Accounting and Financial Reporting for Impairment of
Capital Assets and Insurance Recoveries, No. 44, Economic Condition Reporting: The Statistical Section (an
amendment of NCGA Statement 1), No. 46, Net Assets Restricted by Enabling Legislation, and No. 47,
Accounting for Termination Benefits.
In accordance with Government Auditing Standards, we have also issued our report dated October 27,
2006 on our consideration of the City’s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grants. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and compliance
and the results of that testing, and not to provide an opinion on the internal control over financial
reporting or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards and should be read in conjunction with this report in considering the
results of our audit.
To the Honorable Mayor and Members of the City Council
of the City of Arcadia
Arcadia, California
Page 2
The accompanying Required Supplementary Information, such as Management’s Discussion and

Analysis, budgetary comparison information and other information as listed in the table of contents, is
not a required part of the basic financial statements but is supplementary information required by the
Governmental Accounting Standards Board. We have applied certain limited procedures, which
consisted principally of inquiries of management regarding the methods of measurement and
presentation of the Required Supplementary Information. However, we did not audit the information
and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the City’s basic financial statements. The accompanying Supplementary
Information is presented for purpose of additional analysis and is not a required part of the basic
financial statements. The Supplementary Information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole. The Introductory and Statistical
Sections have not been subjected to the auditing procedures applied in the audit of the basic financial
statements and, accordingly, we express no opinion on them.
Irvine, California
October 27, 2006
2
MANAGEMENT’S DISCUSSION AND ANALYSIS
3
Management's Discussion and Analysis
As management of the City of Santa Cruz we offer readers of the City’s financial statements this narrative
overview and analysis of the financial activities of the City of Santa Cruz for the fiscal year ended June 30,
2006. We encourage readers to consider the information presented here in conjunction with additional
information that we have furnished in our letter of transmittal, which can be found on page i of this report.
Financial Highlights – Primary Government (in $ millions)
• Government-Wide Highlights:
Net Assets - The assets of the City of Santa Cruz exceeded its liabilities at the close of the fiscal year
by $416.6. Of total Net Assets, $98.0 or 23.5% was reported as unrestricted net assets and may be used
to meet the government’s ongoing obligations to citizens and creditors. Restricted net assets of $12.1
may be used for the City’s ongoing obligations related to programs with external restrictions. The
remaining $306.5 represents the City’s investment in capital assets, less any related outstanding debt
used to acquire those assets.
Changes in Net Assets - The City’s total net assets increased by $11.0 or 2.7% in fiscal year 2006. The
increase in Net Assets represents the degree to which revenues exceed expenses.
• Fund Highlights:
Governmental Funds – Governmental funds include general, special revenue, debt service, and capital
projects funds. As of the close of fiscal year 2006, the City’s governmental funds, including the
Redevelopment Agency Fund, reported a combined ending fund balance of $46.9, which is an
increase of $3.1 from the prior year. Approximately 67% of this amount, or $31.4, represents the
unreserved fund balance available for appropriation. 52.3% of the unreserved fund balance, or $16.4,
has been designated for various purposes.
General Fund – Total fund balance of the General Fund on June 30, 2006 was $22.8, an increase of $2.8
or 13.8% from the prior year. 81% of the total fund balance, or $18.5, was unreserved. Of the
unreserved fund balance, $7.1, or approximately 38.5%, is designated for various purposes. The
designations include $5.3 for the city public trust, and varying amounts for other activities. The
remaining unreserved balance of $11.4, or 61.5% of unreserved fund balance, is undesignated.
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements.
The City’s basic financial statements comprise three components: 1) government-wide financial statements,
2) fund financial statements, and 3) notes to the financial statements. This report also contains other
supplementary information in addition to the basic financial statements themselves.
Government-wide Financial Statements. The government-wide financial statements are designed to provide
readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. They
are comprised of the statement of net assets and statement of activities and changes in net assets.
The statement of net assets presents information on all of the City’s assets and liabilities, with the difference
between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful
indicator of whether the financial position of the City is improving or deteriorating.
4
The statement of activities and changes in net assets presents information showing how the City's net assets
changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and
expenses are reported in this statement for some items that will only result in cash flows in future fiscal
periods (e.g., interest expense due but unpaid).
Both of the above government-wide financial statements distinguish functions of the City that are
principally supported by taxes and intergovernmental revenues (governmental activities) from other
functions that are intended to recover all or a significant portion of their costs through user fees and charges
(business-type activities). The governmental activities of the City include general government, public safety,
public works, parks and recreation, library, transit, social services and community and economic
development. The business-type activities of the City include the four municipal utilities: water,
wastewater, storm water, and refuse and landfill operation; and also the self-supporting golf course and
parking enterprises.
Blended Component Units – Component units are legally separate entities that meet certain criteria and
would be misleading if their data were not included in this report. This report includes two separate legal
entities in this category; The City of Santa Cruz Redevelopment Agency, and The Santa Cruz Public
Improvement Financing Corporation. In this report all component units are blended with the primary
government because the governing boards are substantively the same as the primary government, and the
component units serve the primary government exclusively.
The government-wide financial statements can be found on pages 22-23 of this report.
Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over
resources that have been segregated for specific activities or objectives. The City, like other state and local
governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All of the funds of the City can be divided into three categories: governmental funds,
proprietary funds, and fiduciary funds.
The fund financial statements provide detail information about each of the City’s most significant funds,
called major funds. The concept of major funds, and the determination of which are major funds, was
established by GASB 34 and replaces the concept of combining like funds and presenting them in total.
Instead, each major fund is presented individually, with all nonmajor funds summarized and presented in a
single column. Individual fund data on the nonmajor funds is presented in the form of combining
statements and schedules on pages 107 through 111 of this report.
Governmental funds. Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements. However, unlike the government-wide
financial statements, governmental fund statements focus on near-term inflows and outflows of spendable
resources, as well as on balances of spendable resources available at the end of the fiscal year. Such
information may be useful in evaluating a government’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing so,
readers may better understand the long-term impact of the government’s near-term financing decisions.
Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures,
and changes in fund balances provide a reconciliation to facilitate this comparison between governmental
funds and governmental activities.
5
The City has nine governmental funds, of which two are considered major funds for presentation purposes.
Each major fund is presented separately in the governmental fund balance sheet and in the governmental
fund statement of revenues, expenditures, and changes in fund balances for the City’s two major funds –
the General Fund and the Redevelopment Agency Fund. Data from the other seven governmental funds
are combined into a single, aggregated presentation. The basic governmental fund financial statements can
be found on pages 28 through 31 of this report. Individual fund data for each of these non-major
governmental funds is provided in the form of combining statements on pages 108 through 109 of this
report.
Proprietary Funds – The City maintains two different types of proprietary funds – enterprise funds and
internal service funds. Enterprise funds are used to report the same functions presented as business-type
activities in the government-wide financial statements. The City uses enterprise funds to account for the
four municipal utilities; water, wastewater, storm water, and refuse and landfill operation; and also the self-
supporting golf and parking enterprises. Internal service funds are used to accumulate and allocate costs
internally among the City’s various functions. The City uses internal service funds to account for its
equipment operations and maintenance, stores inventory, telecommunications, and risk management
activities. Because these services predominantly benefit governmental rather than business-type functions,
they have been included within governmental activities in the governmental-wide financial statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only
in more detail. The fund financial statements for the proprietary funds provide separate information for the
four municipal utilities; water, wastewater, storm water, and refuse and landfill operation; and also the self-
supporting golf course and parking enterprises. Conversely, the internal service funds are combined into a
single aggregated column in the proprietary fund statements. Individual fund data for the internal service
funds is provided in the form of combining statements on pages 127 - 129 of this report.
The basic proprietary fund financial statements can be found on page 34 - 43 of this report.
Fiduciary Funds – Fiduciary funds are used to account for resources held for the benefit of parties outside
the government. Fiduciary funds are not reflected in the government-wide financial statements because the
resources of those funds are not available to support the City’s own programs.
Notes to the Financial Statements. The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes to
the financial statements can be found on pages 49 - 96 of this report.
Other Information. In addition to the basic financial statements and accompanying notes, this report also
presents certain required supplementary information concerning the City of Santa Cruz’s progress in funding
its obligation to provide pension benefits to its employees, as well as providing a budgetary comparison
schedule for the General Fund and the Redevelopment Agency Fund. Required supplementary
information can be found on pages 92 - 96 of this report.
Additional budgetary schedules for the General Fund and the combining statements referred to earlier in
connection with nonmajor governmental funds and internal service funds are presented immediately
following the required supplementary information. Combining and individual statements and schedules
can be found on pages XX-XX of this report.
6
Government-Wide Financial Analysis (in $ millions)
Net Assets. As noted earlier, net assets may serve over time as a useful indicator of a government’s
financial position. In the case of the City of Santa Cruz, combined net assets (governmental and business-
type activities) totaled $416.6 at the close of the fiscal year ending June 30, 2006.
By far the largest portion of the City’s net assets $306.5 or 73.6% reflects its investment in capital assets
(e.g., land, streets, bridges, water and sewer lines, buildings, machinery, and equipment), less any related
debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide
services to citizens; consequently, these assets are not available for future spending. Although the City’s
investment in its capital assets is reported net of related debt, it should be noted that the resources needed
to repay this debt must be provided from other sources, since the capital assets themselves cannot be used
to liquidate these liabilities.
An additional portion of the City’s net assets $12.1 or 2.9% represents resources that are subject to external
restrictions on how they may be used. The remaining $98.0 or 23.5% of the City’s net assets, are
“unrestricted,” and may be used to meet the government’s ongoing obligations to citizens and creditors.
City of Santa Cruz's Net Assets

(amounts expressed in $ millions)
Governmental Business-Type
Activities Activities Total
2006 2005 2006 2005 2006 2005
Current assets $ 53.3 $ 45.7 $ 56.4 $ 55.7 $ 109.7 $ 101.4
Noncurrent assets 6.8 8.6 33.3 21.6 40.1 30.2
Capital assets 154.7 151.8 249.9 248.3 404.6 400.1
Total assets 214.8 206.1 339.6 325.6 554.4 531.7
Current liabilities 11.9 9.0 11.5 10.3 23.4 19.3

Noncurrent liabilities 29.1 29.3 85.3 77.4 114.4 106.7
Total liabilities 41.0 38.3 96.8 87.7 137.8 126.0
Net assets:
Invested in capital assets,
net of related debt 142.2 139.0 164.3 180.0 306.5 319.0
Restricted 12.1 10.1 - 0.7 12.1 10.8
Unrestricted 19.4 18.7 78.5 57.1 97.9 75.8
Total net assets $ 173.8 $ 167.8 $ 242.8 $ 237.8 $ 416.6 $ 405.6
Changes in Net Assets. The City’s net assets increased by $11.0 or 2.7%, from the prior fiscal year. The
City’s expenses cover a range of services. Further analysis is provided within the governmental and
business-type activity sections.
7
City of Santa Cruz Changes in Net Assets
2006 2005 2006 2005 2006 2005
Revenues:
Program revenues:
Charges for services $ 24.7 $ 22.2 $ 51.2 $ 48.2 $ 75.9 $ 70.4
Operating grants and contributions 2.1 2.8 - 0.4 2.1 3.2
Capital grants and contributions 2.5 5.1 2.5 6.4 5.0 11.5
Total program revenues 29.3 30.1 53.7 55.0 83.0 85.1
General revenues:
Property taxes 22.4 16.5 - - 22.4 16.5
Sales and use taxes 11.7 11.4 - - 11.7 11.4
Franchise taxes 2.1 3.5 - - 2.1 3.5
Transient occupancy taxes 3.4 3.0 - - 3.4 3.0
Utility users taxes 8.3 8.1 - - 8.3 8.1
Admissions taxes 1.7 1.6 - - 1.7 1.6
Other taxes 2.4 2.1 - - 2.4 2.1
Total taxes 52.0 46.2 - - 52.0 46.2
Unrestricted grants and contributions 1.1 4.6 - - 1.1 4.6
Unrestricted investment earnings 1.4 0.8 2.1 1.5 3.5 2.3
Gain (loss) on sale of assets - - 0.1 - 0.1 -
Miscellaneous 0.5 0.7 0.5 0.1 1.0 0.8
Total revenues 84.3 82.4 56.4 56.6 140.7 139.0
Expenses:
General government 9.8 9.9 - - 9.8 9.9
Public safety 27.2 27.2 - - 27.2 27.2
Parks and recreation 11.7 11.9 - - 11.7 11.9
Library 9.2 8.9 - - 9.2 8.9
Public works 9.0 7.8 - - 9.0 7.8
Transit 0.6 0.6 - - 0.6 0.6
Community and economic development 7.4 7.8 - - 7.4 7.8
Social services 2.6 1.7 - - 2.6 1.7
Interest and charges on long term debt 0.9 1.1 - - 0.9 1.1
Water - - 15.2 14.6 15.2 14.6
Wastewater - - 16.2 15.5 16.2 15.5
Refuse - - 12.7 14.6 12.7 14.6
Parking - - 3.0 2.6 3.0 2.6
Storm water - - 1.9 2.1 1.9 2.1
Golf course - - 2.3 1.8 2.3 1.8
Total expenses 78.4 76.9 51.3 51.2 129.7 128.1
Increase (decrease) in net assets before
transfers 5.9 5.5 5.1 5.4 11.0 10.9
Transfers 0.1 0.1 (0.1) (0.1) - -
Change in net assets 6.0 5.6 5.0 5.3 11.0 10.9
Net assets, beginning of year 167.8 162.2 237.8 232.5 405.6 394.7
Prior period adjustment (Note 15) - - - - - -
Net assets, beginning of year (as restated) 167.8 162.2 237.8 232.5 405.6 394.7
Net assets - end of year $ 173.8 $ 167.8 $ 242.8 $ 237.8 $ 416.6 $ 405.6
8
Governmental Activities. Governmental activities increased the City’s net assets by $6.0. A comparison of
the cost of services by function for the City’s governmental activities is shown below, along with the
revenues used to cover the net expenses of the governmental activities.
Governmental Activities
2006 2005
Expenses net of program revenues:
General government $ (5.1) $ (6.1)
Public safety (23.7) (23.1)
Parks and recreation (8.2) (8.7)
Library (0.7) (0.8)
Public works (2.9) 0.9
Transit 0.9 -
Community and economic development (5.9) (6.2)
Social services (2.6) (1.7)
Interest and fiscal charges on long-term debt (0.9) (1.0)
Total expenses net of program revenues -
governmental activities (49.1) (46.7)
General revenues and transfers:

General revenues:
Property taxes 22.4 16.5
Sales and use taxes 11.7 11.4
Franchise taxes 2.1 3.5
Transient occupancy taxes 3.4 3.0
Utility users taxes 8.3 8.1
Admission taxes 1.7 1.6
Other taxes 2.4 2.1
Total taxes 52.0 46.2
Unrestricted grants and contributions 1.1 4.6
Unrestricted investment earnings 1.4 0.8
Gain on sale of assets 0.0 0.0
Miscellaneous 0.5 0.6
Transfers 0.1 0.1
Total general revenues and transfers 55.1 52.3
Change in governmental activities net assets $ 6.0 $ 5.6
Governmental Expenses. Total governmental activity expenses were $78.4 in fiscal year 2006. The largest
expenses were incurred for public safety, parks and recreation, and general government. These expenses
do not include capital outlays, which are now reflected in the City’s capital assets.
Governmental Revenues. Per GASB 34, program revenues are derived directly from the program itself or
from parties outside the reporting government’s taxpayers or citizenry. They reduce the net cost of the
function to be financed from the government’s general revenues. Total program revenues from
governmental activities were $29.3 in fiscal year 2006. Governmental program revenues derive primarily
from charges for services, which include licenses and permits, planning fees, developer fees, recreation
charges, traffic and other fines and forfeitures, charges to the Library Joint Powers Authority for personnel
services provided, and several other revenues. Program revenues under the operating grants and
contributions category include revenues restricted for specific purposes, such as gasoline tax and other
federal, state and local grants. Program revenues in the capital grants and contributions category also include
federal, state and local grants, but are restricted specifically to be used for capital projects or acquisitions.
9
General revenues are all other revenues not categorized as program revenues, and include all taxes,
unrestricted grants, contributions and investment earnings, gains on sales of capital assets, and other
miscellaneous revenues. Total general revenues from governmental activities were $55.1 in fiscal year 2006.
Taxes of $52.0 comprised 94.4% of the City’s general revenues for fiscal year 2006. The largest single source
of general revenues received during fiscal year 2006 was $22.4 of property taxes, or 40.8% of general
revenues, followed by $11.7 of sales and use taxes, or 21.3% of general revenues. The largest sources of
other taxes are, utility user’s taxes, transient occupancy, franchise and admissions taxes.
EXPENSES & REVENUES

GOVERNMENTAL ACTIVITIES, FY 2006
30
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10
REVENUES BY SOURSE
GOVERNMENTAL ACTIVITIES FT 2006
2%
10% Admission Tax
Utility User Tax 3%
Other Taxes
4%
Transient 30%
Occupancy Tax Charges for
3% Services
Franchise Tax
14% 3%
Sales & Use Operating
Tax Grants
28%
Property Tax 3%
Capital Grants
Business Type Activities. Net assets for business-type activities were $242.8, an increase of $5.0 from the
prior fiscal year. Total program revenues for business-type activities were $53.7. The largest program
revenues were charges for services of $51.2. Other program revenues included capital grants and
contributions of $2.5. Total expenses for the business-type activities were $51.3 during fiscal year 2006.
EXPENSES & REVENUES

BUSINESS ACTIVITIES, FY 2006
25
20
$ Millions
15
10
0
Water Waste Water Refuse Parking Storm Water Golf Course
Revenues Expense
11
REVENUES BY SOURSE
BUSINESS ACTIVITIES FT 2006
3%
6% General
Capital Grants Revenues
2%
Operating
Grants
89%
Charges for
Services
Financial Analysis of Individual Funds (in $ millions)
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements.
Governmental Funds - The focus of the City’s governmental funds is to provide information on near-term
inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s
financing requirements. In particular, unreserved fund balance may serve as a useful measure of a
government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund
balances of $46.9 which is an increase of $3.1 or 7.1% over the previous year. Approximately $31.4 of the
fund balance is unreserved fund balance, which is available for spending at the government’s discretion.
Unreserved fund balance increased by $2.2 or 7.6% over the previous year. It should, however, be noted
that 52.3% of the unreserved fund balance, or $16.4, has been designated for various purposes, such as debt
service, capital projects, public art, police programs and the City Public Trust, leaving $15.0 unreserved and
undesignated. The remainder of fund balance $15.5 is reserved to indicate that it is not available for
spending because it has already been legally committed.
General Fund – Total fund balance of the General Fund on June 30, 2006 was $22.8, an increase of $2.8 or
13.8% over the prior year. Approximately 81% of this amount, or $18.5, was unreserved. Of the unreserved
fund balance, $7.1, or 38.5% has been designated for specific uses. The designations include $5.3 for the City
Public Trust, and $1.4 for Accrued Compensated Absences (such as, vacations), and varying amounts for
other activities, such as unemployment insurance, housing, parks and recreation programs, and equipment
and facilities maintenance. The remaining unreserved balance of $11.4, or 61.6% of unreserved fund
balance, is undesignated and represents an increase of $2.6 or 30.1% over the previous year.
As a measure of the general fund’s liquidity, it may be useful to compare unreserved fund balance, the
undesignated portion of the unreserved fund balance, ant the total fund balance to total fund expenditures.
Unreserved fund balance ($18.5) represents 28.5% of total general fund expenditures ($65.0), including
transfers out. Unreserved and undesignated fund balance ($11.4) represents 17.5% of total expenditures,
and total fund balance ($22.8) represents 35% of total fund expenditures ($65.0). The 17.5% percent of total
expenditures that is represented by the undesignated, unreserved fund balance ($11.4) exceeds the City
Council’s targeted minimum reserve level of 10% of the operating budget for the General Fund.
12
Redevelopment Agency Fund – The City of Santa Cruz Redevelopment Agency is responsible for
redevelopment of areas identified under the Community Redevelopment Law as being blighted. The
Agency’s operations are funded primarily by the issuance of debt, which is expected to be repaid out of
property tax increment revenue generated by increases in property assessed values in the redevelopment
areas.
At the end of fiscal year 2006, the total fund balance of the Redevelopment Agency Fund was $14.3, a
decrease of $.1 from the prior year, or .9%. Of that amount, $6.3 is reserved to indicate that it is not
available for spending because it has already been legally committed. The remainder of the unreserved
fund balance of $ 8.0 is designated for either debt service or capital projects and represents an increase of
$1.5 or 22.5% over the previous year.
The Redevelopment Agency Fund had revenues of $10.9, including $10.3 of property tax increment
revenue. Expenditures in this fund amounted to $14.2 which is an increase of $5.6 over the previous year
due to increases in capital expenditures within the project areas.
Proprietary Funds. The City’s proprietary funds provide the same type of information found in the
government-wide financial statements, but in more detail. They include both enterprise funds and internal
service funds. For the government-wide financial statements, the internal service funds are consolidated
with governmental activities, and the enterprise funds comprise the business-type activities.
As discussed in the business-type activities section previously, the City’s net assets increased by $5.0 as a
result of operations in the enterprise funds.
Net assets ($3.3 negative) in the internal service funds increased by $1.8 over prior year ($5.2 negative). The
increases are due to decreases in expenditures in risk management and increases in charges to departments
for risk management.
General Fund Budgetary Highlights.
The final amended general fund budget, including transfers out and advances, totaled $66.3 and included
amendments to the original budget resulting in a $519K increase in operating expenditure appropriations.
The principal amendments can be summarized as follows:
Operating Appropriations Increases.
Significant Appropriations Increases:

• Minimum Wage Study, $28,000
• Public Opinion Survey - Measure F, $36,000
• Consultant - Community Design Background, $20,300
• Consulting Services - Special District Establishment (Beach
Area), $45,000
• State Operating Grants - Cal Trans Agreement (Revenue
receipt), $130,000
• August 30 Special Election, $74,828
• State Grant - Route 1/17 Police Officer, $42,000
• Electronic Records Management System, $156,907
These appropriations were offset by additional estimated revenue of $2.6, mostly due to increases in taxes
of $1.9 and increase in intergovernmental revenues of $0.6
13
Capital Assets and Debt Administration (in $ millions)
Capital Assets. The City’s investment in capital assets for its governmental and business- type activities as
of June 30, 2006, amounts to $404.6, net of accumulated depreciation of $258.7. This investment in capital
assets includes land, land improvements, infrastructure, buildings, machinery and equipment, lease
improvements, software, and construction in progress. Infrastructure assets are items that are normally
immovable and of value only to the City such as roads, bridges, streets and sidewalks, drainage systems,
lighting systems and similar items. The total additions to the City’s investment in capital assets for the
current fiscal year, after restatements and deletions, were $4.6, net of accumulated depreciation.
Major capital asset additions during the current fiscal included the following:
1. RDA Land Purchase – Salz Tannery, $6,3

2. Water System Improvements, $7.5
3. Bike Path, $.1
4. Vehicles and heavy equipment – General Fund, $.3
5. Sewer Improvements, $.7
6. Sewer Vehicles (trucks), $.6
7. Recycling Center Improvements, $1.1
8. Refuse Trucks, $1.2
9. Storm Drain Improvements, $.3
10. Golf Course Improvements, $2.9
Changes in capital assets from the prior year (as restated) are shown in the following table. Additional
information on the City’s capital assets can be found in Note 5 on pages XX-XX of this report.
Capital Assets
(net of depreciation)
Governmental Activities Business-Type Activities
June 30 June 30 Total
2006 2005 2006 2005 2006 2005
Land $ 50.5 $ 44.2 $ 11.9 $ 11.9 $ 62.4 $ 56.1
Construction in progress 5.1 2.5 10.4 13.4 15.5 15.9
Land improvements 4.0 4.2 3.3 1.0 7.3 5.2
Infrastructure 65.0 69.4 106.6 101.5 171.6 170.9
Buildings 26.5 27.2 107.9 110.7 134.4 137.9
Machinery and equipment 3.0 3.3 9.5 9.4 12.5 12.7
Lease improvements 0.4 0.5 0.1 0.1 0.5 0.6
Software 0.2 0.4 0.2 0.3 0.4 0.7
Totals $ 154.7 $ 151.7 $ 249.9 $ 248.3 $ 404.6 $ 400.0
Debt Administration (in millions)
Long Term Debt - At the end of the current fiscal year, the City had $127.7 in long term debt outstanding
compared to $116.7 last year, an increase of $11.0 or 9.4%. Increases to claims and judgments payable,
landfill closure costs, lease obligations, and tax allocation bonds were offset by decreases in a variety of
other bonds, notes, loans, and leases payable. The debt associated with governmental activities increased
by $2.3 or 6.7% from $33.7 to $36.0. Business-type activity debt was increased by $8.7 or 10.5% from $83.0 to
$91.7. Major increase in debt during the year included the issuance of Water Revenue Bonds.
14
The City currently has $7.1 in outstanding general obligation debt. This debt was approved by voters in
November 1998 and authorized an ad valorem tax override for acquisition of open space property,
improvements to fire stations, acquisition of a fire administrative headquarters building, and construction
of a community park. This tax override is currently assessed at $9 per $100,000 of assessed value. The
largest single debt obligation of the City is a note payable to the State of California for the construction of
secondary treatment improvements at the City's wastewater treatment plant. As of June 30, 2006 the
outstanding balance on this note was $37.8. The chart below illustrates the changes in bonds, notes, loans
and leases payable for the year ending June 30, 2006.
Bonds, Notes, Loans and Leases Payable

Governmental Activities Business-Type Activities
June 30 June 30 Total
2006 2005 2006 2005 2006 2005
Certificates of participation $ 4.2 $ 4.4 $ 20.9 $ 28.7 $ 25.1 $ 33.1
Revenue bonds payable - - 23.3 4.7 23.3 4.7
General obligation bonds 7.1 7.2 - - 7.1 7.2
Notes payable 4.2 1.3 37.8 40.2 42.0 41.5
Notes payable-County-RDA - - - - - -
Tax allocation bonds payable 5.1 5.2 - - 5.1 5.2
Capital lease obligations 1.2 1.8 3.1 3.1 4.3 4.9
Other long-term liabilities 1.0 1.0 - - 1.0 1.0
Totals $ 22.8 $ 20.9 $ 85.1 $ 76.7 $ 107.9 $ 97.6
The City of Santa Cruz also has significant liabilities for claims and judgments, compensated absences
(accrued vacation pay), and landfill closure and postclosure costs. The amounts and changes of these
liabilities are shown below.
Claims and Judgments, Compensated Absences, and Landfill Closure Costs Payable
June 30 June 30, 2006
Increase Percent Due in less Due in more
2006 2005 (Decrease) Change than one year than one year
Claims and Judgements $ 11.0 $ 10.5 $ 0.5 4.8% $ 3.0 $ 8.0
Compensated absences 2.9 2.9 - 0.0% 1.9 1.0
Closure and post closure landfill costs 5.8 5.4 0.4 7.4% - 5.8
Totals $ 8.7 $ 8.3 $ 0.4 4.8% $ 1.9 $ 6.8
Additional information on the City of Santa Cruz’s long term debt can be found in Note 6 to the financial
statements.
Economic Climate
The City of Santa Cruz, and Santa Cruz County for that matter, is closely tied to the regional economy of
the nine-county San Francisco Bay Area and to Silicon Valley in particular. Fiscal Year 2006 showed signs
of recovery at the national level, along with the Bay Area and Silicon Valley. Local private employers
include a diverse array of manufacturing, business services, retail, hotel and food services, and
biotechnology companies. In addition to the local private employers, the local economy also benefits from
the University of California Santa Cruz. The University is a major employer, and has potential spin-off
benefits from federal and state funded scientific research ventures including biomedical research,
technology research, and adaptive optics.
15
The state, and the bay area in particular, experienced modest growth in jobs, personal income, and tourism
in 2006 and the economy is expected to continue to improve during 2006, albeit modestly. However, the
bay area regional economic opportunities and challenges including continued job growth, housing prices,
interest rates, state and national economic issues will, of course, moderate the rate of improvement.
Requests for Information
This financial report is designed to provide a general overview of the City’s finances for all of its citizens,
taxpayers, customers, investors and creditors. Questions concerning any of the information provided in
this report or requests for additional information should be addressed to the City of Santa Cruz, Finance
Department, 809 Center Street, Room 8, Santa Cruz, CA 95060.
16
BASIC FINANCIAL STATEMENTS
17
18
GOVERNMENT-WIDE FINANCIAL STATEMENTS
19
City of Santa Cruz
Statement of Net Assets
June 30, 2006
Primary Government
ASSETS
Current assets:
Cash and cash equivalents $ 41,279,889 $ 45,636,664 $ 86,916,553
Restricted cash and cash equivalents 2,963,869 2,765,752 5,729,621
Interest receivable 682,729 950,933 1,633,662
Taxes receivable 3,936,698 - 3,936,698
Accounts receivable - net 959,308 5,130,015 6,089,323
Due from other governments 1,389,967 676,898 2,066,865
Notes receivable - due within one year 220,401 25,962 246,363
Loans receivable - due within one year 87,376 - 87,376
Intergovernmental receivable - due within one year - 1,120,316 1,120,316
Prepaid items 216,801 94,570 311,371
Inventories 249,288 - 249,288
Deposits 1,351,477 30,000 1,381,477
Total current assets 53,337,803 56,431,110 109,768,913
Noncurrent assets:
Restricted investments 339,768 13,984,480 14,324,248
Notes receivable - due in more than one year 4,853,840 401,058 5,254,898
Loans receivable - due in more than one year 1,213,636 - 1,213,636
Intergovernmental receivable - due in more than one year - 16,660,168 16,660,168
Deferred charges 294,093 2,250,124 2,544,217
Long-term internal balances (25,130) 25,130 -
Capital assets:
Land 50,452,567 11,931,526 62,384,093
Land improvements 5,393,352 3,956,018 9,349,370
Infrastructure 167,322,095 180,436,253 347,758,348
Buildings 35,421,568 160,134,334 195,555,902
Machinery and equipment 10,279,605 20,026,950 30,306,555
Lease improvements 724,114 70,000 794,114
Software 1,056,070 555,258 1,611,328
Construction in progress 5,108,592 10,436,904 15,545,496
Total capital assets 275,757,963 387,547,243 663,305,206
Less accumulated depreciation (121,022,337) (137,683,979) (258,706,316)
Total capital assets, net 154,735,626 249,863,264 404,598,890
Total noncurrent assets 161,411,833 283,184,224 444,596,057
Total assets 214,749,636 339,615,334 554,364,970
See accompanying Notes to Basic Financial Statements.

20
City of Santa Cruz
Statement of Net Assets, Continued
June 30, 2005
Primary Government
LIABILITIES
Current liabilities:
Accounts payable and other current liabilities $ 3,767,770 $ 3,651,379 $ 7,419,149
Intergovernmental payable 52 - 52
Interest payable 243,029 1,378,739 1,621,768
Deferred revenue 823,128 56,451 879,579
Deposits payable 134,221 41,611 175,832
Claims and judgments payable - due within one year 3,039,471 - 3,039,471
Compensated absences payable - due within one year 1,405,557 501,062 1,906,619
Bonds, notes, loans and leases payable - due within one year 1,119,055 5,857,679 6,976,734
Total current liabilities 10,532,283 11,486,921 22,019,204
Noncurrent liabilities:
Claims and judgments payable - due in more than one year 7,967,819 - 7,967,819
Compensated absences payable - due in more than one year 702,778 250,532 953,310
Bonds, notes, loans and leases payable - due in more than one year 21,768,918 79,290,887 101,059,805
Landfill closure costs - 5,751,407 5,751,407
Total noncurrent liabilities 30,439,515 85,292,826 115,732,341
Total liabilities 40,971,798 96,779,747 137,751,545
NET ASSETS
Invested in capital assets, net of related debt 142,469,186 164,275,405 306,744,591

Restricted for:
Capital projects 4,256,664 - 4,256,664
Debt service 4,361,282 - 4,361,282
Public safety 82,648 - 82,648
Parks and recreation 92,338 - 92,338
Community and economic development 3,339,305 - 3,339,305
Unrestricted 19,176,415 78,560,182 97,736,597
Total net assets $ 173,777,838 $ 242,835,587 $ 416,613,425
Assets - Liab.& Net Assets $ - $ - $ -
Bal. Sheet Net Assets - IS Net Assets $ - $ - $ -

21
City of Santa Cruz
Statement of Activities and Changes in Net Assets
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total
Primary government:
Governmental activities:
General government $ 9,755,194 $ 4,662,211 $ - $ - $ 4,662,211
Public safety 27,227,214 3,041,137 239,005 206,123 3,486,265
Parks and recreation 11,715,023 3,191,193 81,133 194,513 3,466,839
Library 9,179,637 8,478,112 - - 8,478,112
Public works 9,047,430 4,253,232 1,284,078 624,214 6,161,524
Transit 624,214 66,643 - 1,474,715 1,541,358
Community and economic development 8,285,308 996,327 521,321 - 1,517,648
Social services 1,693,267 - - - -
Interest and fiscal charges
on long-term debt 883,866 - - - -
Total governmental activities 78,411,153 24,688,855 2,125,537 2,499,565 29,313,957
Business-type activities:
Water 15,204,565 19,480,617 - 460,731 19,941,348
Wastewater 16,192,904 13,079,711 - 1,456,986 14,536,697
Refuse 12,700,841 13,525,848 11,000 - 13,536,848
Parking 2,960,225 2,654,549 - 25,015 2,679,564
Storm water 1,925,661 869,490 - 535,628 1,405,118
Golf course 2,325,920 1,608,752 4,704 2,075 1,615,531
Total business-type activities 51,310,116 51,218,967 15,704 2,480,435 53,715,106
Total primary government $ 129,721,269 $ 75,907,822 $ 2,141,241 $ 4,980,000 $ 83,029,063
General Revenues:
Taxes:
Property taxes
Sales and use taxes
Franchise taxes
Transient occupancy taxes
Utility users taxes
Admission taxes
Other taxes
Total taxes
Unrestricted grants and contributions
Unrestricted investment earnings
Gain on sale of assets
Miscellaneous
Transfers
Total general revenues and transfers
Change in net assets
Net assets - beginning of year
Net assets - end of year
22
Net (Expense) Revenue
and Changes in Net Assets
$ (5,092,983) $ - $ (5,092,983)
(23,740,949) - (23,740,949)
(8,248,184) - (8,248,184)
(701,525) - (701,525)
(2,885,906) - (2,885,906)
917,144 - 917,144
(6,767,660) - (6,767,660)
(1,693,267) - (1,693,267)
(883,866) - (883,866)
(49,097,196) - (49,097,196)
- 4,736,783 4,736,783
- (1,656,207) (1,656,207)
- 836,007 836,007
- (280,661) (280,661)
- (520,543) (520,543)
- (710,389) (710,389)
- 2,404,990 2,404,990
(49,097,196) 2,404,990 (46,692,206)
22,384,981 - 22,384,981
11,738,917 - 11,738,917
2,136,686 - 2,136,686
3,385,148 - 3,385,148
8,304,371 - 8,304,371
1,715,133 - 1,715,133
2,303,363 - 2,303,363
51,968,599 - 51,968,599
1,121,274 - 1,121,274
1,380,087 2,079,379 3,459,466
24,318 91,920 116,238
487,841 508,500 996,341
67,517 (67,517) -
55,049,636 2,612,282 57,661,918
5,952,440 5,017,272 10,969,712
167,825,398 237,818,315 405,643,713
$ 173,777,838 $ 242,835,587 $ 416,613,425
23
24
FUND FINANCIAL STATEMENTS
25
26
Governmental Fund Financial Statements
General Fund - The General Fund is used to account for sources and uses of financial resources traditionally
associated with governments, and which are not required to be accounted for in another fund.
Redevelopment Agency Fund - The Redevelopment Agency fund is used to account for all the activities of the
City of Santa Cruz Redevelopment Agency. This includes the accumulation of resources for and the payment
of interest and principal on debt issued to finance redevelopment activities, and general redevelopment
operations.
Other Governmental Funds - Other Governmental funds is the aggregate of all the non-major governmental
funds.
27
City of Santa Cruz
Balance Sheet
Governmental Funds
June 30, 2006
Major Funds Other Total

General Redevelopment Governmental Governmental
Fund Agency Funds Funds
ASSETS
Cash and cash equivalents $ 19,778,125 $ 7,503,391 $ 7,456,718 $ 34,738,234
Interest receivable 146,611 126,321 351,641 624,573
Taxes receivable 3,006,225 314,939 615,534 3,936,698
Accounts receivable - net 796,486 - 131,128 927,614
Due from other governments 276,046 - 1,113,921 1,389,967
Due from other funds 80,237 - - 80,237
Prepaid items 205,218 - 1,844 207,062
Restricted assets:
Cash and cash equivalents - 2,958,834 5,035 2,963,869
Investments - 62,249 277,519 339,768
Total restricted assets - 3,021,083 282,554 3,303,637
Deposits 202,050 - - 202,050
Notes receivable - net 330,775 3,714,571 1,028,895 5,074,241
Loans receivable - net - - 1,301,012 1,301,012
Advances to other funds 957,838 96,501 - 1,054,339
Inventory of land held for resale - net - 120,000 - 120,000
Total assets $ 25,779,611 $ 14,896,806 $ 12,283,247 $ 52,959,664
LIABILITIES AND FUND BALANCES

Liabilities:
Accounts payable and other current liabilities $ 2,641,189 $ 146,069 $ 515,464 $ 3,302,722
Due to other funds - - 68,559 68,559
Intergovernmental payable - - 52 52
Deferred revenue 204,645 - 1,299,235 1,503,880
Deposits payable 131,085 2,984 - 134,069
Advances from other funds - 449,468 630,001 1,079,469
Total liabilities 2,976,919 598,521 2,513,311 6,088,751
Fund Balances:
Reserved 4,327,113 6,339,360 4,809,176 15,475,649
Unreserved, designated: 7,120,993 7,958,925 1,336,867 16,416,785
Unreserved, undesignated, reported in:
General fund 11,354,586 - - 11,354,586
Special revenue funds - - 3,341,962 3,341,962
Capital projects funds - - 281,931 281,931
Total fund balances 22,802,692 14,298,285 9,769,936 46,870,913
Total liabilities and fund balances $ 25,779,611 $ 14,896,806 $ 12,283,247 $ 52,959,664

28
City of Santa Cruz
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Assets
June 30, 2006
Total Fund Balances - All Governmental Funds $ 46,870,913
Amounts reported for Governmental Activities in the Statement of Net Assets were
different because:
Capital assets used in governmental activities are not current financial resources. Government-
Therefore, they are not reported in the governmental funds. Except for the internal Wide Statement Internal Service
service funds reported below, the capital assets are adjusted as follows: of Net Assets Funds
Non-depreciable $ 55,561,159 $ - 55,561,159
Depreciable, net 99,174,467 (273,255) 98,901,212
Total capital assets $ 154,735,626 $ (273,255) 154,462,371
Interest payable on long-term debt does not require current financial resources.
Therefore, interest payable is not reported as a liability in the governmental funds. (243,029)
Internal Service Funds are used by management to charge the costs of certain activities,
such as insurance and equipment management, to individual funds. The assets and
liabilities of the Internal Service Funds are included in governmental activities in the
statement of net assets.
Equipment Operations Fund 486,525
Stores Services Fund 226,658
Telecommunications Fund 217,555
Risk Management Fund (4,256,330)
Total internal service funds (3,325,592)
Other long-term assets are not available to pay for current-period expenditures and,
therefore, are deferred in the funds. 680,752
Noncurrent liabilities were not due and payable in the current period. Therefore, they Government-
are not reported in the governmental funds. Except for the internal service funds Wide Statement Internal Service
reported above, the long-term liabilities are adjusted as follows. of Net Assets Funds
Compensated absences payable - due within one year $ (1,405,557) $ - (1,405,557)
Compensated absences payable - due in more than one year (702,778) 13,602 (689,176)
Bonds, notes, loans and leases payable - due within one year (1,119,055) 21,036 (1,098,019)
Bonds, notes, loans and leases payable - due in more than one year (21,768,918) - (21,768,918)
Total long-term liabilities $ (24,996,308) $ 34,638 (24,961,670)
Certain transactions related to debt issuance and refunding are reported as expenditures
and other financing sources/uses in the governmental funds. For the statement of net
assets, the net amount of these transactions is capitalized as deferred charges, and will
be amortized as an adjustment to interest expense over the remaining life of the debt. 294,093
Net Assets of Governmental Activities $ 173,777,838

29
City of Santa Cruz
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
Major Funds
Other Total
General Redevelopment Governmental Governmental
Fund Agency Funds Funds
REVENUES:
Taxes $ 39,495,863 $ 10,323,206 $ 2,216,660 $ 52,035,729
Licenses and permits 615,448 - - 615,448
Intergovernmental 1,073,997 - 4,622,240 5,696,237
Charges for services 19,062,464 - 284,999 19,347,463
Fines and forfeitures 1,962,697 - 2,538 1,965,235
Use of money and property 2,541,909 471,523 220,727 3,234,159
Other revenues 216,721 147,053 686,151 1,049,925
Total revenues 64,969,099 10,941,782 8,033,315 83,944,196
EXPENDITURES:
General government 9,666,858 - - 9,666,858
Public safety 26,837,330 - 101,299 26,938,629
Parks and recreation 9,402,529 - - 9,402,529
Library 9,250,499 - - 9,250,499
Public works 3,565,397 - 593,519 4,158,916
Transit - - 624,214 624,214
Community and economic development 1,000,492 6,978,325 457,651 8,436,468
Social services 1,566,695 - 126,572 1,693,267
Capital outlay 765,851 6,282,979 4,872,959 11,921,789
Debt service:
Principal 204,928 513,612 431,237 1,149,777
Interest and fiscal charges 48,264 409,555 463,698 921,517
Bond issuance costs - - - -
Total expenditures 62,308,843 14,184,471 7,671,149 84,164,463
REVENUES OVER (UNDER) EXPENDITURES 2,660,256 (3,242,689) 362,166 (220,267)
OTHER FINANCING SOURCES (USES):

Proceeds from asset disposition 25,256 - - 25,256
Proceeds from long-term debt issued - 3,100,000 100,000 3,200,000
Transfers in 99,894 - 761,363 861,257
Transfers out (19,509) - (738,661) (758,170)
Total other financing sources (uses) 105,641 3,100,000 122,702 3,328,343
Net change in fund balances 2,765,897 (142,689) 484,868 3,108,076
FUND BALANCES:
Beginning of year 20,036,795 14,440,974 9,285,068 43,762,837
End of year $ 22,802,692 $ 14,298,285 $ 9,769,936 $ 46,870,913

30
City of Santa Cruz
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets
Net Change in Fund Balances - All Governmental Funds $ 3,108,076
Amounts reported for governmental activities in the Statement of Activities and Changes in Net Assets were different
because:
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. This is the amount
by which depreciation exceeded capital outlays in the current period, excluding the internal service funds, which
are reported below. 3,063,302
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and capital
contributions) is to increase net assets. (938)
Revenues considered "unavailable" at the end of the previous fiscal year were collected during the current year and
are reported as revenues in the governmental funds. These revenues were previously included in the statement of
activities. (17,811)
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. 16,306
Certain costs related to issuing new debt and refunding existing debt are reported as expenditures and financing
uses in the governmental funds, but are capitalized in the statement of net assets, and will be amortized over the
remaining life of the debt. (11,311)
Proceeds of long-term debt and payments to refunding bond escrow agents are reported as financing sources/uses
in governmental funds. In the statement of net assets, however, issuing or refinancing debt affects noncurrent
liabilities. (3,163,916)
Repayment of principal is an expenditure in governmental funds, but reduces noncurrent liabilities in the
statement of net assets. 1,149,777
Debt service principal payments are reclassified as "Community and economic development" expense in the
Government-Wide Statement of Activities. 84,323
Accrued but unpaid and accreted interest on long-term debt is reported in the statement of activities, but does not
require the use of current financial resources. Therefore, it is not reported as an expenditure in the governmental
funds. (120,310)
Internal service funds are used by management to charge the costs of certain activities, such as insurance and
equipment management, to individual funds. The net revenue of the internal service funds is reported with
governmental activities. 1,844,942
Change in Net Assets of Governmental Activities $ 5,952,440

31
32
Proprietary Fund Financial Statements
Water - Accounts for the activities of the City's water utility, which provides water delivery services to the
residents of the City and some residents of the County.
Wastewater - Accounts for the activities of the City's wastewater utility, which provides wastewater
collection and treatment services to the residents of the City and some residents of the County.
Refuse - Accounts for the activities of the City's refuse utility, which provides refuse pick-up services,
recycling services, and a sanitary landfill for residents of the City.
Parking - Accounts for the activities of the Downtown Parking District, which provides parking facilities in
the downtown area.
Storm Water - Accounts for storm water utility fees on properties within the City limits. These fees provide
funding for flood control improvements associated with the U.S. Army Corps of Engineers San Lorenzo River
Flood Control project, storm water pollution prevention programs, and measures to comply with the U.S.
Environmental Protection Agency Non-Point Pollution Discharge Emissions Standards Program (NPDES).
Golf Course - Accounts for the activities of the Delaveaga Golf Course, which provides recreational facilities
to the public.
Internal Service Funds - These funds are used to provide goods and services by one department or agency to
other departments or agencies of the City on a cost reimbursement basis.
33
City of Santa Cruz
Statement of Net Assets
Proprietary Funds
June 30, 2006
Major Funds
Water Wastewater Refuse Parking

ASSETS
Current assets:
Cash and cash equivalents $ 25,506,424 $ 8,146,550 $ 7,601,120 $ 2,544,649
Restricted cash and cash equivalents 146,152 378,311 1,948,584 20,273
Accounts receivable - net 3,517,726 825,433 653,056 33,375
Due from other governments - 375,793 11,000 12,751
Notes receivable - due within one year - 25,962 - -
Intergovernmental receivable - due within one year - 1,120,316 - -
Prepaid items 32,366 17,619 35,503 3,495
Inventories - - - -
Deposits - - - 30,000
Total current assets 29,522,622 11,398,482 10,323,116 2,671,472
Noncurrent assets:
Restricted investments 12,000,000 - 1,058,100 491,129
Notes receivable - due in more than one year 401,058 - - -
Intergovernmental receivable - due in more than one year - 16,160,263 - -
Advances to other funds 21,630 100,001 - -
Deferred charges 446,203 284,213 330,974 212,239
Capital assets:
Land 3,654,410 1,371,330 98,575 4,979,102
Land improvements 71,900 910,270 - 280,701
Infrastructure 54,010,317 51,085,388 19,746,219 805,464
Buildings 9,117,940 126,672,607 2,709,094 20,398,375
Machinery and equipment 5,832,199 3,623,937 9,768,770 163,866
Lease improvements - 70,000 - -
Software 249,431 196,557 99,336 9,934
Construction in progress 7,024,800 429,186 2,318,333 333,757
Less accumulated depreciation (34,614,606) (65,267,707) (18,012,630) (6,734,606)
Total capital assets (net of accumulated depreciation) 45,346,391 119,091,568 16,727,697 20,236,593
Total noncurrent assets 58,215,282 135,636,045 18,116,771 20,939,961
Total assets 87,737,904 147,034,527 28,439,887 23,611,433

34
Major Funds Governmental
Activities
Internal
Storm Water Golf Course Total Service Funds
$ 1,837,921 $ - $ 45,636,664 $ 6,541,655

329 272,103 2,765,752 -
20,299 1,400 950,933 58,156
37,057 63,368 5,130,015 31,694
269,754 7,600 676,898 -
- - 25,962 -
- - 1,120,316 -
190 5,397 94,570 9,739
- - - 129,288
- - 30,000 1,149,427
2,165,550 349,868 56,431,110 7,919,959
- 435,251 13,984,480 -
- - 401,058 -
499,905 - 16,660,168 -
439,293 - 560,924 -
832,867 143,628 2,250,124 -
8,822 1,819,287 11,931,526 -

242,277 2,450,870 3,956,018 -
54,554,503 234,362 180,436,253 -
- 1,236,318 160,134,334 -
6,421 631,757 20,026,950 1,148,847
- - 70,000 -
- - 555,258 336,296
330,828 - 10,436,904 -
(11,663,944) (1,390,486) (137,683,979) (1,211,888)
43,478,907 4,982,108 249,863,264 273,255
45,250,972 5,560,987 283,720,018 273,255
47,416,522 5,910,855 340,151,128 8,193,214
(Continued)
35
City of Santa Cruz
Statement of Net Assets, Continued
Proprietary Funds
June 30, 2006
Major Funds

LIABILITIES
Accounts payable and other current liabilities $ 2,000,966 $ 611,800 $ 676,657 $ 162,415
Due to other funds - - - -
Interest payable 127,576 972,787 134,092 50,408
Deferred revenue 622 - 37,440 -
Deposits payable 20,449 47 253 20,862
Claims and judgments payable - - - -
Compensated absences payable 218,955 114,023 141,729 8,070
Bonds, notes, loans and leases payable
due in less than one year 393,767 2,599,040 2,266,230 201,337
Total current liabilities 2,762,335 4,297,697 3,256,401 443,092
Advances from other funds - - - 96,501
Compensated absences payable 109,478 57,012 70,864 4,035
due in more than one year 12,846,733 38,850,560 11,489,100 6,145,000
Landfill closure costs - - 5,751,407 -
Total noncurrent liabilities 12,956,211 38,907,572 17,311,371 6,245,536
Total liabilities 15,718,546 43,205,269 20,567,772 6,688,628
NET ASSETS
Invested in capital assets, net of related debt 32,105,891 77,641,968 2,972,367 13,890,256
Unrestricted 39,913,467 26,187,290 4,899,748 3,032,549
Total net assets $ 72,019,358 $ 103,829,258 $ 7,872,115 $ 16,922,805

36
Activities
Internal
$ 86,774 $ 112,767 $ 3,651,379 $ 465,048

- - - 11,678
59,962 33,914 1,378,739 -
- 18,389 56,451 -
- - 41,611 152
- - - 3,039,471
1,331 16,954 501,062 -
160,000 237,305 5,857,679 21,036

308,067 419,329 11,486,921 3,537,385
- 439,293 535,794 -
- - - 7,967,819
666 8,477 250,532 13,602
5,940,000 4,019,494 79,290,887 -

- - 5,751,407 -
5,940,666 4,467,264 85,828,620 7,981,421
6,248,733 4,886,593 97,315,541 11,518,806
37,378,907 286,016 164,275,405 252,219

3,788,882 738,246 78,560,182 (3,577,811)
$ 41,167,789 $ 1,024,262 $ 242,835,587 $ (3,325,592)
(Concluded)
37
City of Santa Cruz
Statement of Revenues, Expenses and Changes in Net Assets
Proprietary Funds
Major Funds
OPERATING REVENUES:
Charges for services $ 19,480,617 $ 13,079,711 $ 13,525,848 $ 2,654,549

Use of property 6,450 - - 147,015
Other revenues 221,100 2,070 46,471 49,971
Total operating revenues 19,708,167 13,081,781 13,572,319 2,851,535
OPERATING EXPENSES:
Personnel services 6,671,445 4,302,400 5,532,163 918,508

Services, supplies, and other charges 6,734,037 6,384,713 4,692,936 1,230,474
Depreciation and amortization 1,649,079 4,267,555 1,896,004 489,528
Total operating expenses 15,054,561 14,954,668 12,121,103 2,638,510
Operating income (loss) 4,653,606 (1,872,887) 1,451,216 213,025
NONOPERATING REVENUES (EXPENSES):
Intergovernmental - 283,786 11,000 25,015

Investment earnings 855,653 681,315 270,588 71,143
Interest expense and fiscal charges (147,572) (1,232,551) (542,932) (311,805)
Debt issuance costs (2,432) (5,685) (36,806) (9,910)
Gain (loss) on sale of capital assets 15,515 5,775 69,035 1,595
Total nonoperating revenues (expenses) 721,164 (267,360) (229,115) (223,962)
Income (loss) before contributions and transfers 5,374,770 (2,140,247) 1,222,101 (10,937)
Capital contributions 460,731 1,173,200 - -

Transfers out (31,638) (7,541) (14,908) (6,388)
Total contributions and transfers 429,093 1,165,659 (14,908) (6,388)
Change in net assets 5,803,863 (974,588) 1,207,193 (17,325)
NET ASSETS:
End of year $ 72,019,358 $ 103,829,258 $ 7,872,115 $ 16,922,805

38
Activities
Internal
$ 869,490 $ 1,608,752 $ 51,218,967 $ 9,204,143

- 920 154,385 -
- 188,888 508,500 121,266
869,490 1,798,560 51,881,852 9,325,409
89,463 854,481 18,368,460 1,291,931

244,176 1,062,891 20,349,227 6,225,352
1,317,062 172,066 9,791,294 85,599
1,650,701 2,089,438 48,508,981 7,602,882
(781,211) (290,878) 3,372,871 1,722,527
535,628 4,704 860,133 -

26,507 19,788 1,924,994 161,413
(265,614) (226,001) (2,726,475) (3,428)
(9,346) (10,481) (74,660) -
- - 91,920 -
287,175 (211,990) 75,912 157,985
(494,036) (502,868) 3,448,783 1,880,512
- 2,075 1,636,006 -
(6,360) (682) (67,517) (35,570)
(6,360) 1,393 1,568,489 (35,570)
(500,396) (501,475) 5,017,272 1,844,942
41,668,185 1,525,737 237,818,315 (5,170,534)
$ 41,167,789 $ 1,024,262 $ 242,835,587 $ (3,325,592)
39
City of Santa Cruz
Combining Statement of Cash Flows
Proprietary Funds
Major Funds

CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and users $ 18,710,565 $ 12,828,339 $ 13,509,946 $ 2,616,476
Cash received from interfund services provided 566,367 23,025 - 29,391
Cash payments to suppliers for goods and services (7,531,499) (8,011,836) (6,565,783) (1,541,637)
Cash payments to employees for services (6,632,478) (4,314,881) (5,516,543) (931,127)
Cash payments for interfund services used 1,536,566 1,221,360 2,369,403 36,851
Cash payments to other governments 95,015 93,927 90,090 25,061
Cash received from (payments to) others 195,184 (15,549) 10,968 193,491
Net cash provided (used) by operating activities 6,939,720 1,824,385 3,898,081 428,506
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Transfers out (31,638) (7,541) (14,908) (6,388)
Advances from other funds - - - (61,356)
Receipts from other governments - 1,125,242 - 21,215
Net cash provided (used) by noncapital financing activities (31,638) 1,117,701 (14,908) (46,529)
CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES:
Capital contributions 460,731 1,173,200 - -
Purchase and construction of capital assets (4,922,609) (1,657,655) (4,215,642) (30,536)
Principal paid on capital debt 11,875,132 (2,500,949) (1,188,742) (177,980)
Interest paid on capital debt (29,683) (1,311,537) (595,632) (322,955)
Proceeds from sales of capital assets 15,515 5,775 69,035 1,595
Net cash provided (used) by capital and
related financing activities 7,399,086 (4,291,166) (5,930,981) (529,876)
CASH FLOWS FROM INVESTING ACTIVITIES:

Advances to other funds 7,927 11,121 - -
Proceeds from sales and maturities of investments - 404,491 19,664 2,826
Purchase of investments (12,000,000) - - -
Interest receivables - - - -
Investment income received 748,891 708,894 280,732 69,976
Net cash provided (used) by investing activities (11,243,182) 1,124,506 300,396 72,802
Net increase (decrease) in cash and cash equivalents 3,063,986 (224,574) (1,747,412) (75,097)
CASH AND CASH EQUIVALENTS:

End of year $ 25,652,576 $ 8,524,861 $ 9,549,704 $ 2,564,922

40
Activities
Internal
$ 867,710 $ 1,625,908 $ 50,158,944 $ 204,346

- - 618,783 9,023,533
(283,948) (1,298,926) (25,233,629) (5,995,108)
(93,308) (852,507) (18,340,844) (1,038,872)
64,800 146,982 5,375,962 121,266
9,148 1,266 314,507 -
(190) 184,411 568,315 -
564,212 (192,866) 13,462,038 2,315,165
(6,360) (682) (67,517) (35,570)

- 439,293 377,937 -
652,516 28,333 1,827,306 -
646,156 466,944 2,137,726 (35,570)
- 2,075 1,636,006 -
(317,860) (227,623) (11,371,925) -
(574,292) (141,104) 7,292,065 (54,005)
(298,588) (237,940) (2,796,335) (3,428)
- - 91,920 -
(1,190,740) (604,592) (5,148,269) (57,433)
(439,293) - (420,245) -
454,671 5,525 887,177 -
- - (12,000,000) -
- - - (25,813)
21,672 27,299 1,857,464 161,413
37,050 32,824 (9,675,604) 135,600
56,678 (297,690) 775,891 2,357,762
1,781,572 569,793 47,626,525 4,183,893

$ 1,838,250 $ 272,103 $ 48,402,416 $ 6,541,655
(Continued)
41
City of Santa Cruz
Combining Statement of Cash Flows, Continued
Proprietary Funds
Major Funds

RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income (loss) $ 4,653,606 $ (1,872,887) $ 1,451,216 $ 213,025
Adjustments to reconcile operating income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 1,649,079 4,267,555 1,896,004 489,528
Estimated closure/postclosure costs - - 300,433 -
Changes in assets and liabilities:
Accounts receivable (212,494) (274,710) (31,539) (8,792)
Prepaid items 28,427 19,455 30,591 2,818
Inventories 278,330 - - -
Deposits - - - (30,000)
Notes and loans receivable - 46,316 - -
Accounts payable and other current liabilities 555,789 (311,836) 286,213 (219,251)
Due to/from other funds (32,366) (17,619) (35,503) (3,495)
Deferred revenue - - 15,384 -
Deposits payable 8,809 47 253 110
Compensated absences payable 10,540 (31,936) (14,971) (15,437)
Total adjustments 2,286,114 3,697,272 2,446,865 215,481
Net cash provided (used) by operating activities $ 6,939,720 $ 1,824,385 $ 3,898,081 $ 428,506
42
Activities
Internal
$ (781,211) $ (290,878) $ 3,372,871 $ 1,722,527
1,317,062 172,066 9,791,294 85,599

- - 300,433 -
(1,780) (1,233) (530,548) 20,386

144 5,470 86,905 (4,591)
- - 278,330 (19,340)
- - (30,000) 81,781
- - 46,316 -
34,176 (87,787) 257,304 172,394
(190) (5,397) (94,570) 3,198
- 18,389 33,773 -
- - 9,219 152
- - - 287,835
(3,989) (3,496) (59,289) (34,776)
1,345,423 98,012 10,089,167 592,638
$ 564,212 $ (192,866) $ 13,462,038 $ 2,315,165
(Concluded)
43
44
Fiduciary Fund Financial Statements
Private - Purpose Trust Funds:
Private-purpose trust funds are used to report the trust arrangements under which the principal and
income benefit the Library Joint Powers Authority.
Agency Funds:
Agency funds are used to account for resources held by the City in a custodial capacity. These funds
account for the receipt, temporary investment, and remittance of fiduciary resources to individuals,
private organizations, or other governments.
45
City of Santa Cruz
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2006
Private-
Purpose Agency
Trust Funds Funds
ASSETS
Cash and cash equivalents $ 518,986 $ 1,486,630

Investments - 89,494
Receivables:
Interest receivable 4,983 14,260
Taxes receivable - 563,684
Accounts receivable - 527,368
Due from other governments - 16,467
Total assets $ 523,969 $ 2,697,903
LIABILITIES
Accounts payable and other current liabilities $ - $ 774,450

Due to other governments - 1,110,680
Deferred revenue - 15,024
Deposits payable - 517,771
Payable to bondholders - 279,978
Total liabilities - $ 2,697,903
NET ASSETS
Held in trust for library programs $ 523,969

46
City of Santa Cruz
Statement of Changes in Fiduciary Net Assets
Fiduciary Funds
Private-
Purpose
Trust Funds
ADDITIONS:
Investment earnings $ 15,435
Total additions 15,435
DEDUCTIONS:
Library programs 12,055
Total deductions 12,055
Change in net assets 3,380
NET ASSETS:
Beginning of year 520,589
End of year $ 523,969

47
48
City of Santa Cruz
Index to Notes to the Basic Financial Statements
Page
Note 1 - Summary of Significant Accounting Policies..................................................................................51
A. Reporting Entity..............................................................................................................................51
B. Basis of Accounting and Measurement Focus............................................................................51
C. Use of Restricted/Unrestricted Net Assets.................................................................................54
D. Cash, Cash Equivalents and Investments ...................................................................................54
E. Restricted Cash and Investments with Fiscal Agents................................................................54
F. Prepaid Items ..................................................................................................................................54
G. Inventories .......................................................................................................................................55
H. Interfund Transactions...................................................................................................................55
I. Capital Assets..................................................................................................................................55
J. Interest Payable...............................................................................................................................56
K. Deferred Revenue ...........................................................................................................................56
L. Compensated Absences .................................................................................................................56
M. Bond Premiums, Discounts, and Issuance Costs .......................................................................57
N. Long-Term Debt..............................................................................................................................57
O. Net Assets ........................................................................................................................................57
P. Fund Balances – Reservations and Designations .......................................................................57
Q. Property Taxes ................................................................................................................................58
R. Use of Estimates..............................................................................................................................58
S. Implementation of New Governmental Accounting Standard Board Pronouncements .....58
Note 2 - Cash Deposits and Investments .........................................................................................................59
A. Cash Deposits..................................................................................................................................60
B. Investments .....................................................................................................................................60
C. Risk Disclosures ..............................................................................................................................62
Note 3 – Receivables ............................................................................................................................................64
Note 4 – Interfund Balances and Transactions ...............................................................................................66
A. Government-Wide Financial Statements ....................................................................................66

B. Fund Financial Statements ............................................................................................................66
Note 5 – Capital Assets ........................................................................................................................................68
A. Government-Wide Financial Statements ....................................................................................68

B. Fund Financial Statements ............................................................................................................71
49
City of Santa Cruz
Index to Notes to the Basic Financial Statements, Continued
Page
Note 6 – Long-Term Debt....................................................................................................................................71
A. Governmental Activities Long-Term Debt .................................................................................71

B. Proprietary Fund Obligations .......................................................................................................77
C. Defeased Debt .................................................................................................................................83
Note 7 – Risk Management and Self Insurance..............................................................................................83
Note 8 – Landfill Closure and Postclosure Costs ...........................................................................................86
Note 9 – Retirement Plans...................................................................................................................................87
A. Pension Plan ....................................................................................................................................87
Note 10 – Post-Employment Retirement Benefits ..........................................................................................88
Note 11 – Commitments and Contingencies ...................................................................................................88
Note 12 – Operating Leases ................................................................................................................................90
Note 13 – Reserved and Designated Fund Balances ......................................................................................91
Note 14 – Deficit Net Assets ...............................................................................................................................92
Note 15 – Subsequent Events .............................................................................................................................92
50
City of Santa Cruz
Notes to Basic Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Santa Cruz, California (City) have been prepared in conformity
with generally accepted accounting principles (GAAP) as applied to governmental agencies. 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 City’s accounting
policies are described below.
A. Reporting Entity
The City was incorporated as a town in 1866 under the laws of the State of California. It became a City in
1876. The City is a charter city administered under a council/manager form of government.
The financial statements present the City and its component units (legally separate entities for which the
City is considered to be financially accountable). Component units include those entities for which the
City may have governing authority or is in a relationship of financial benefit or burden. Component
units also include entities that are fiscally dependent upon the City. The financial activities of these
entities are integrally related to those of the City and, therefore, blended with those of the City. Blending
involves aggregating/merging component unit data and data from the City at the combined financial
statement level.
Based on the above criteria, the accompanying financial statements include the financial activities of the
following entities as blended component units. Separate financial statements of these entities can be
obtained from the Finance Department of the City.
City of Santa Cruz Redevelopment Agency - The City of Santa Cruz Redevelopment Agency (Agency) was
formed in 1956 to improve social, physical and economic conditions of the City by constructing a series
of commercial, residential and public buildings in the downtown area. The City's Council members are
the Agency's Directors and have full accountability for the Agency's fiscal matters.
Santa Cruz Public Improvement Financing Corporation - The Santa Cruz Public Improvement Financing
Corporation (Corporation) is a non-profit benefit corporation organized and operated under the laws of
the State of California. The primary purpose of the Corporation is to serve as a financing vehicle for the
City. The City Council has final responsibility for the operations of the Corporation.
B. Basis of Accounting and Measurement Focus
The accounts of the City 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 equity, revenues, and expenditures or expenses, as
appropriate. Governmental resources are allocated to and accounted for in individual funds based
upon the purposes for which they are to be spent and the means by which spending activities are
controlled.
Government - Wide Financial Statements
The City’s Government-Wide Financial Statements include a Statement of Net Assets and a Statement of
Activities and Changes in Net Assets. These statements present summaries of governmental and
business-type activities for the City accompanied by a total column. Fiduciary activities of the City are
not included in these statements.
51
City of Santa Cruz
Notes to Basic Financial Statements, Continued
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

B. Basis of Accounting and Measurement Focus, Continued
Government - Wide Financial Statements, Continued
These basic financial statements are presented on an “economic resources” measurement focus and the
accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets,
as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of
Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of
accounting, revenues are recognized in the period in which they are earned while expenses are
recognized in the period in which the liability is incurred.
Certain types of transactions are reported as program revenues for the City in three categories:
¾ Charges for services

¾ Operating grants and contributions
¾ Capital grants and contributions
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund
activities, payables and receivables. All internal balances in the Statement of Net Assets have been
eliminated except those representing balances between the governmental activities and the business-
type activities, which are presented as internal balances and eliminated in the total primary
government column. In the Statement of Activities and Changes in Net Assets, internal service fund
transactions have been eliminated; however, those transactions between governmental and business-
type activities have not been eliminated. The following interfund activities have been eliminated:
¾ Due to/from other funds

¾ Advances to/from other funds
¾ Transfers in/out
For its business type activities, the City applies all applicable GASB pronouncements currently in effect,
as well as Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting
Principles Board (APB) Opinions, and Accounting Research Bulletins (ARB) of the Committee on
Accounting Procedure that do not conflict with or contradict GASB pronouncements.
Governmental Fund Financial Statements
Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues,
Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds
aggregated. An accompanying schedule is presented to reconcile and explain the differences in net
assets as presented in these statements to the net assets presented in the Government-Wide Financial
Statements. The City has presented all major funds that met the applicable criteria.
All governmental funds are accounted for on a spending or "current financial resources" measurement
focus and the modified accrual basis of accounting. Accordingly, only current assets and current
liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in
Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures
and other financing uses) in net current assets. Under the modified accrual basis of accounting,
revenues are recognized in the accounting period in which they become both measurable and available
to finance expenditures of the current period.
52
City of Santa Cruz
Governmental Fund Financial Statements, Continued
Revenues are recorded when received in cash, except for that revenues subject to accrual (generally 60
days after year-end) are recognized when due. The primary revenue sources, which have been treated as
susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues and other
taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred.
Deferred revenues arise when potential revenues do not meet both the “measurable” and “available”
criteria for recognition in the current period. Deferred revenues also arise when the government receives
resources before it has a legal claim to them, as when grant monies are received prior to incurring
qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met or when
the government has a legal claim to the resources, the deferred revenue is removed from the Balance
Sheet and revenue is recognized.
The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is
provided to explain the differences created by the integrated approach of GASB Statement No. 34.
Proprietary Fund Financial Statements
Proprietary Fund Financial Statements include a Statement of Net Assets, a Statement of Revenues,
Expenses and Changes in Net Assets, and a Statement of Cash Flows for each major proprietary fund.
A separate column representing internal service funds is also presented in these statements. However,
internal service balances and activities have been combined with the governmental activities in the
Government-Wide Financial Statements.
Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual
basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included
on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Net Assets
presents increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of
accounting, revenues are recognized in the period in which they are earned while expenses are
recognized in the period in which the liability is incurred. In these funds, receivables have been
recorded as revenue and provisions have been made for uncollectible amounts. In accordance with
GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Government
Entities that Use Proprietary Fund Accounting, the City applies all GASB pronouncements currently in
effect as well as FASB Statements and Interpretations, APB Opinions and ARB of the Committee on
Accounting Procedure that do not conflict with or contradict GASB pronouncements.
Operating revenues in the proprietary funds are those revenues that are generated from the primary
operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses
are those expenses that are essential to the primary operations of the fund. All other expenses are
reported as nonoperating expenses.
53
City of Santa Cruz
Fiduciary Fund Financial Statements
Fiduciary Fund Financial Statements include a Statement of Net Assets and a Statement of Changes in
Fiduciary Net Assets. The City's fiduciary funds represent agency funds and private-purpose trust
funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of
results of operations. The agency funds are accounted for using the accrual basis of accounting. The
private-purpose trust funds are used to account for resources legally held in trust for special purposes.
C. Use of Restricted/Unrestricted Net Assets
When an expense is incurred for purposes for which both restricted and unrestricted net assets are
available, the City’s policy is to apply restricted net assets first.
D. Cash, Cash Equivalents and Investments
Cash and cash equivalents are considered to be amounts in demand deposits, and short-term
investments with original maturity of three months or less from the date of acquisition. For purposes of
both the balance sheet and statements of cash flows, cash and cash equivalents includes not only
currency on hand, but deposits in the City’s cash and investment pool. These deposits have the same
characteristics for the participating funds as demand deposit accounts, in that the funds may deposit
additional cash at any time and also effectively withdraw cash at any time without prior notice or
penalty. Cash and cash equivalents also include restricted cash and money market funds held by fiscal
agents.
Investments include unpooled investments in securities having original maturities greater than three
months. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain
Investments and for External Investment Pools, both these investments and investments included in the
City’s cash and investment pool are stated at fair value, which is based on a quoted market price. This
includes all investments except the City’s investment in the California Local Agency Investment Fund
(LAIF). LAIF determines fair value on its investment portfolio based on market quotations for those
securities where market quotations are readily available and based on amortized cost or best estimate
for those securities where market value is not readily available. The City valued its investments in LAIF
as of June 30, 2006, by multiplying its account balance with LAIF times a fair value factor determined by
LAIF (.998185821). This fair value factor was determined by dividing the total aggregate fair value for
all LAIF participants by total aggregate amortized cost.
E. Restricted Cash and Investments with Fiscal Agents
Certain restricted cash and investments are held by fiscal agents for the redemption of bonded debt and
for acquisition and construction of capital projects.
F. Prepaid Items
Certain payments applicable to future accounting periods are recorded as prepaid items. Prepaid items
do not reflect current appropriable resources and, thus, an equivalent portion of fund balance is
reserved.
54
City of Santa Cruz
G. Inventories
Inventories consist of material and supplies which are stated at cost using the first-in, first-out method.
Inventories are recognized as expenditures when consumed rather than when purchased.
H. Interfund Transactions
Activity between funds that is representative of lending/borrowing arrangements outstanding at the

end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current portion of
interfund loans) or “advances to/from other funds” (i.e., the long-term portion of interfund loans).
Any residual balances outstanding between the governmental activities and business-type activities are
reported in the Government-Wide Financial Statements as “internal balances.”
I. Capital Assets
Capital assets are defined by the City as assets having an estimated useful life in excess of one year, and
an initial, individual cost in excess of the capitalization thresholds described below:
Infrastructure $ 25,000
Land improvements 10,000
Buildings and lease improvements 10,000
Machinery and equipment 5,000
Software (if qualified) 5,000
All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not
available. Donated fixed assets are valued at their estimated fair market value on the date donated.
Assets acquired under capital leases are capitalized in accordance with generally accepted accounting
principles. Major outlays for capital assets and improvements are capitalized as projects are
constructed. Interest accrued during capital assets construction, if any, is capitalized for the business-
type activities and proprietary funds as part of the asset cost. The costs of normal maintenance and
repairs that do not add to the value of the asset or materially extend the asset’s useful life are not
capitalized. Capital assets are reported in the applicable governmental or business-type activities in the
Government-Wide Financial Statements.
Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows:
Land improvements 20 years

Buildings and lease improvements 15-50 years
Water tanks and water mains 30-50 years
Underground sewer lines 50 years
Other infrastructure 5-100 years
Machinery and equipment 5-20 years
Software ( if qualified) 5 years
55
City of Santa Cruz
I. Capital Assets, Continued
Assets are grouped by asset type into one of the following accounts – land, land improvements,
infrastructure assets (e.g. roads, bridges, sidewalks, and similar items), buildings (and improvements),
machinery and equipment, lease improvements, software, and construction in progress.
For all infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement
No. 34 for infrastructure reporting. Estimated historical costs were developed in one of three ways: (1)
historical records; (2) standard unit costs appropriate for the construction/acquisition date; or (3)
present cost indexed by a reciprocal factor of the price increase from the construction/acquisition date
to the current date. The accumulated depreciation, defined as the total depreciation from the date of
construction/acquisition to the current date on a straight line, unrecovered cost method was computed
using industry accepted life expectancies for each infrastructure subsystem. The book value was then
computed by deducting the accumulated depreciation from the estimated historical cost.
J. Interest Payable
In the Government-Wide Financial Statements, interest payable on long-term debt is recognized as the
liability is incurred for governmental fund types and proprietary fund types.
In the Fund Financial Statements, propriety fund types recognize the interest payable when the liability
is incurred.
K. Deferred Revenue
In the Government-Wide Financial Statements, deferred revenue is recognized for transactions for
which revenue has not yet been earned. Typical transactions recorded as deferred revenues in the
Government-Wide Financial Statements are long-term assessments, long-term loans receivable, and
prepaid charges for services.
In the Fund Financial Statements, deferred revenue is recorded when transactions have not yet met the
revenue recognition criteria based on the modified accrual basis of accounting. The City records
deferred revenue for transactions for which revenues have not been earned, or for which funds are not
available to meet current financial obligations. Typical transactions for which deferred revenue is
recorded are grants received but not yet earned or available, interest on interfund advances receivable,
long-term assessments and loans receivable.
L. Compensated Absences
The City has accumulated unpaid regular vacation leave (for all departments) which is accounted for in
accordance with GAAP. The maximum accumulation of vacation leave is limited to the total number of
hours accruable during two years. Employees are paid 100% of their accumulated vacation pay when
they terminate their employment for any reason. Employees are allowed a partial payoff of accumulated
sick leave up to a certain maximum amount.
56
City of Santa Cruz
M. Bond Premiums, Discounts, and Issuance Costs
For governmental type activities, bond premiums and discounts, as well as issuance costs, are
recognized during the current period. Bond proceeds are reported as other financing sources net of the
applicable premium or discount. Issuance costs, whether or not withheld from the actual net proceeds
received, are reported as debt service expenditures.
For business type activities, bond premiums and discounts, as well as issuance costs, are deferred and
amortized over the life of the bonds using a straight-line method. Bonds payable are reported net of the
applicable bond premium or discount. Issuance costs and costs in excess of net assets acquired are
reported as other assets in the accompanying financial statements.
N. Long-Term Debt
Government-Wide Financial Statements - Long-term debt and other long-term obligations are reported as
liabilities in the appropriate activities.
Fund Financial Statements - With the exception of advances from other funds, the governmental fund
financial statements do not present long-term liabilities. However, the long term debt is shown in the
Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets.
O. Net Assets
In the Government-Wide Financial Statements, net assets are classified in the following categories:
Invested in Capital Assets, net of Related Debt – This amount consists of capital assets net of accumulated
depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or
improvement of the assets.
Restricted Net Assets – This amount is restricted by external creditors, grantors, contributors, laws or
regulations of other governments.
Unrestricted Net Assets – This amount is all net assets that do not meet the definition of “invested in
capital assets, net of related debt” or “restricted net assets.”
P. Fund Balances - Reservations and Designations
In the Fund Financial Statements, governmental funds report reservations of fund balances for amounts
that are not available for appropriation or are legally restricted by outside parties for use for a specific
purpose. Designations of fund balances represent tentative management plans that are subject to
change.
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City of Santa Cruz
Q. Property Taxes
Assessed property values are determined annually by the County Assessor as of March 1, and become a
lien on real property at July 1. Taxes are due November 1 and February 1 and are delinquent if not paid
by December 10 and April 10, respectively. The County bills and collects property taxes and remits them
to the City under the State authorized method of apportioning taxes whereby all local agencies, including
cities, receive from the county their respective shares of the amount of ad valorem taxes collected.
Property tax revenues are recognized when levied provided the measurement and availability criteria
have been met.
R. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions. These estimates and assumptions affect the
reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In
addition, estimates affect the reported amount of expenses. Actual results could differ from these
estimates and assumptions.
S. Implementation of New Governmental Accounting Standards Board (GASB) Pronouncements
The City adopted new accounting standards in order to conform to the following Governmental
Accounting Standards Board Statements:
• GASB Statement No. 42 Accounting and Financial Reporting for Impairment of Capital Assets and for
Insurance Recoveries establishes accounting and financial reporting standards for impairment of
capital assets. A capital asset is considered impaired when its service utility has declined
significantly and unexpectedly. This Statement also clarifies and establishes accounting
requirements for insurance recoveries.
• GASB Statement No. 44 Economic Condition Reporting: The Statistical Section (an amendment of
NCGA Statement 1) guides the preparation of the statistical section. The statistical section
presents detailed information, typically in ten-year trends, that assists users in utilizing the basic
financial statements, notes to basic financial statements, and required supplementary
information to assess the economic condition of a government.
• GASB Statement No. 46 Net Assets Restricted by Enabling Legislation addresses selected issues and
amends GASB Statement No. 34, Basic Financial Statements and Management's Discussion and
Analysis for State and Local Governments. The Statement enhances the usefulness and
comparability of net asset information and clarifies the meaning of legal enforceability. The
Statement also specified accounting and financial reporting requirements for restricted net
assets.
• GASB Statement No. 47 Accounting for Termination Benefits provides accounting guidance for
state and local governmental employers regarding benefits (such as early-retirement incentives
and severance benefits) provided to employees that are terminated. The Statement requires
recognition of the cost of involuntary termination benefits in the period in which a government
becomes obligated to provide benefits to terminated employees.
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City of Santa Cruz
2. CASH DEPOSITS AND INVESTMENTS
The following is a summary of cash, cash equivalents, and investments, including restricted cash and
investments with fiscal agents at June 30, 2006:
Government-Wide Statement of Net Assets Statement of

Governmental Business-Type Fiduciary
Activities Activities Total Net Assets Total
Unrestricted assets:
Cash and cash equivalents $ 41,279,889 $ 45,636,664 $ 86,916,553 $ 2,005,616 $ 88,922,169
Investments - - - 89,494 89,494
Total unrestricted assets 41,279,889 45,636,664 86,916,553 2,095,110 89,011,663
Restricted assets:
Cash and cash equivalents 2,963,869 2,765,752 5,729,621 - 5,729,621
Investments with fiscal agents 339,768 13,984,480 14,324,248 - 14,324,248
Total restricted assets 3,303,637 16,750,232 20,053,869 - 20,053,869
Grand Total $ 44,583,526 $ 62,386,896 $ 106,970,422 $ 2,095,110 $ 109,065,532
The City pools its available cash for investment purposes. Investment income from this pool is allocated to
each fund based on its proportionate share of the pool. Cash and investments not pooled include bond
proceeds held by fiscal agents, and other amounts required to be segregated by bond indentures or other
regulations. Investment income from cash and investments with fiscal agents is credited directly to the
related fund.
Cash, cash equivalents, and investments consisted of the following at June 30, 2006:
Cash and cash equivalents:

Pooled cash deposits $ 1,418,548
Outstanding checks (2,794,655)
Other deposits and cash held by City 45,301
Certificates of deposit 596,000
Money market mutual funds available for debt service 6,018
Federal securities 52,090,817
State local agency investment fund 37,560,140
Total cash and cash equivalents 88,922,169
Restricted cash and cash equivalents:

Pooled cash deposits 573,732
Other cash deposits 74,481
Money market mutual funds held by fiscal agents 1,825,806
State local agency investment fund 3,255,602
Total restricted cash and cash equivalents 5,729,621
Investments:
Federal securities 89,494
Federal securities held by fiscal agents 2,324,248
Investment contracts held by fiscal agents 12,000,000
Total investments 14,413,742
Total cash, cash equivalents, and investments $ 109,065,532
59
City of Santa Cruz
2. CASH DEPOSITS AND INVESTMENTS, Continued
A. Cash Deposits
At June 30, 2006, the carrying amounts of the City’s cash deposits were ($681,319), net of outstanding
checks in the amount of $2,794,655. Bank balances before reconciling items were $1,306,277. The total
bank balance was collateralized or insured with securities held by the pledging financial institutions in
the City’s name as discussed below.
The California Government Code requires California banks and savings and loan associations to secure
the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in
this manner shall have the effect of perfecting a security interest in such collateral superior to those of a
general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.
The market value of pledged securities must equal at least 110% of the City's cash deposits. California
law also allows institutions to secure city deposits by pledging first trust deed mortgage notes having a
value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash
deposits, which are fully insured up to $100,000 by the Federal Deposit Insurance Corporation.
B. Investments
The investments made by the City treasurer are limited to those allowable under State statutes as
incorporated into the City’s Investment Policy, dated May 31, 2006, which is more conservative than
that allowed by State statute.
The scope of the investment policy includes all activities of the City and the following reporting entities:
¾ City of Santa Cruz

¾ City of Santa Cruz Redevelopment Agency
¾ Santa Cruz Public Improvement Financing Corporation
Under provisions of this policy, the City is authorized to invest in the following types of investments:
¾ Money Market accounts deposited with a nationally or state-chartered bank.

¾ Bonds issued by the City. Purchases of this type shall not exceed five years to maturity.
¾ U.S. Treasury bills, notes, bonds, or certificates of indebtedness, or those securities backed by the
full faith and credit of the U.S. Government with maturities not exceeding five years.
¾ Obligations, participations, or other instruments of, or issued by, a Federal Agency or a United
States Government-Sponsored Enterprise with maturities not to exceed five years.
¾ Bankers’ acceptances with a term not to exceed 180 days maturity and 40 percent of the City’s
portfolio.
¾ Nonnegotiable and nontransferable certificates of deposit issued by a nationally or state-
chartered bank, state or federal association, or by a state-licensed branch of a foreign bank.
Purchases of these certificates of deposit may not exceed 30% of the City’s portfolio, and
purchases in a single issuer in this category shall not exceed 5% of the fair value of the portfolio.
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City of Santa Cruz
B. Investments, Continued
¾ State of California Local Agency Investment Fund as long as the total amount of City and
Agency combined funds invested does not exceed the limit set by LAIF.
¾ Shares of beneficial interest issued by diversified management companies investing in
authorized securities and obligations (e.g., money market mutual funds).
¾ Repurchase agreements with primary dealers of the Federal Reserve with specific terms and
conditions. The market value of securities that underlie a repurchase agreement shall be valued
at 102% or greater of the funds borrowed against those securities and shall be valued daily by
the third party custodial agent. Securities that can be pledged for collateral consist only of
investments permitted within this policy with a maximum maturity of five years. Purchases
shall not exceed 90 days to maturity and 15% of the fair value of the portfolio.
Bond proceeds held by fiscal agents to be used only for specific capital outlay, payments of certain long-
term debt and maintaining required reserves are invested in accordance with the requirements and
restrictions of the City’s investment policy and as permitted by specific State statutes, applicable City
ordinance or resolution, and bond indenture requirements.
The City is a participant in LAIF, which is regulated by California Government Code Section 16429
under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June
30, 2006, included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities:
Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics
(coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that
have embedded forwards or options.
Asset-Backed Securities: generally mortgage-backed securities that entitle their purchasers to receive a
share of the cash flows from a pool of assets such as principal and interest repayments from a pool
of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables.
As of June 30, 2006, the City had $40,815,742 invested in LAIF accounts, which had invested 2.567% of
the pool investments in structured notes and asset-backed securities. The City’s share of structured
notes and asset-backed securities due to its holdings in LAIF amounted to approximately .960% of
investments at June 30, 2006.
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City of Santa Cruz
C. Risk Disclosures
Interest Rate Risk - In accordance with its investment policy, the City manages its exposure to declines in
fair values by limiting the weighted average maturity of its investment portfolio to two and-one half (2
½) years or less. The City is in 100% compliance with this provision of the investment policy. At June
30, 2006, the City had the following investment maturities:
Investment Type Fair Value Maturity (Days)
U.S. Treasuries $ 8,211,931 290

U.S. Agencies 45,610,035 443
U.S. Treasury Money Market Mutual Funds 1,831,824 1
Certificates of Deposit 596,000 1,545
Local Agency Investment Fund 40,815,742 152
Guaranteed Investment Contract 12,000,000 640
Total Fair Value $ 109,065,532
Portfolio Weighted Average Maturity (Days) 342

Portfolio Weighted Average Maturity (Years) 0.94
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations. Investments in callable bonds
are investments that, although having clearly defined maturities, allow for the issuer to redeem or call
such bonds earlier than their respective maturity dates. The investor must then replace the called
bonds with investments that may have lower yield than the original bonds. As a result, the fair value of
the callable bonds is highly sensitive to changes in interest rates. As of June 30, 2006, the City held
$2,000,000 in callable securities, which amounted to approximately 2% of investments at June 30, 2006.
The investment policy limits the purchase of callable U.S. Agency instruments to discreet calls and
those that pay 100% of the principal at the redemption date. In addition, purchases of callable U.S.
Agency instruments are not to exceed 30% of the value of the portfolio. The City is in compliance with
these provisions of the investment policy.
Credit Risk - State law limits investments in commercial paper and corporate bonds to the top two
ratings issued by nationally recognized statistical rating organizations. The City’s investments are
rated as follows:
Standard
Moody's & Poor's
U.S. Agencies
Federal Farm Credit Bank Aaa AAA
Federal Home Loan Bank Aaa AAA
Federal Home Loan Mortgage Corporation Aaa AAA
Federal National Mortgage Association Aaa AAA
U.S. Treasury Money Market Mutual Funds
Blackrock Provident - Treasury Trust Fund Not Rated AAAm
Fidelity - Treasury Portfolio Aaa AAA
Goldman Sachs - Financial Square Treasury Obligations Aaa AAAm
Goldman Sachs - Treasury Instruments Aaa AAAm
Guaranteed Investment Contract
Trinity Plus Funding Company Aaa AAA
External Pool
State of California - Local Agency Investment Fund Not Rated Not Rated
62
City of Santa Cruz
C. Risk Disclosures, Continued
The City’s investment policy requires that the management company of mutual funds must have
attained the highest ranking or the highest letter and numerical rating provided by not less than two
nationally recognized statistical rating organizations. The investment in Blackrock Provident U.S.
Treasury Money Market Mutual Fund is rated by only one nationally recognized statistical rating
organization. Blackrock Provident U.S. Treasury Money Market Mutual Fund is approved by the
National Association of Investors Corporation.
Concentration of Credit Risk - The City’s investment policy states that not more than 25% of the portfolio
shall be invested in any one entity or any one instrument to protect the City from concentration of
credit risk, with the following exceptions: U.S. Treasury Obligations and the external investment pool
(State of California – Local Agency Investment Fund). In addition, purchases of mutual funds must not
exceed 20% of the value of the portfolio. Purchases in a single mutual fund may not exceed 10% of the
value of the portfolio. The City is in compliance with these provisions of the investment policy.
The following chart presents investments in any one issuer (other than U.S. Treasury securities and
external investment pools) that represent 5% or more of total investments at June 30, 2006:
Percentage of
Investment Type Amount Invested Investments
Federal Farm Credit Bank $ 7,337,037 6.69%
Federal Home Loan Bank 13,656,534 12.44%
Federal Home Loan Mortgage Corporation 11,495,765 10.47%
Federal National Mortgage Association 13,120,699 11.95%
Guaranteed Investment Contract 12,000,000 10.93%
Total $ 57,610,035 52.48%
The following chart presents the City’s investments in money market mutual funds by issuer at June 30,
2006:
U.S. Treasury Money Market Percentage of

Mutual Funds Amount Invested Investments
Blackrock Provident - Treasury Trust Fund $ 75,501 0.07%
Fidelity - Treasury Portfolio 108,175 0.10%
Goldman Sachs - Treasury Only 429,292 0.39%
Goldman Sachs - Financial Square Treasury Obligations 1,218,856 1.11%
Total $ 1,831,824 1.67%
Custodial Credit Risk - For an investment, this is the risk that, in the event of the failure of the
counterparty, the government will not be able to recover the value of its investments or collateral
securities that are in the possession of an outside party. Of the City’s total cash and investment balance
at June 30, 2006, $14,324,248 is held by fiscal agents, not in the name of the City, and invested as follows:
$12,000,000 in a guaranteed investment contract and $2,324,248 in federal agency securities.
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City of Santa Cruz
3. RECEIVABLES
Government-Wide Statements
The following is a summary of receivables net of allowances for uncollectible amounts at June 30, 2006:
Government-Wide Statement of Net Assets Statement of

Governmental Business-Type Fiduciary
Activities Activities Total Net Assets Total
Interest receivable $ 682,729 $ 950,933 $ 1,633,662 $ 19,243 $ 1,652,905

Taxes receivable 3,936,698 - 3,936,698 563,684 4,500,382
Accounts receivable, net 959,308 5,130,015 6,089,323 527,368 6,616,691
Due from other governments 1,389,967 676,898 2,066,865 16,467 2,083,332
Notes receivable 5,074,241 427,020 5,501,261 - 5,501,261
Loans receivable 1,301,012 - 1,301,012 - 1,301,012
Intergovernmental receivable - 17,780,484 17,780,484 - 17,780,484
Total $ 13,343,955 $ 24,965,350 $ 38,309,305 $ 1,126,762 $ 39,436,067
Fund Financial Statements
At June 30, 2006, the Fund Financial Statements show the following notes, loans and intergovernmental
receivables:
Notes Receivable - in the General Fund of $330,775 (net of an allowance for uncollectible amounts of
$368,899) consist of a note from Neary Lagoon Partners in the amount of $78,800; a promissory note from
Santa Cruz Shaffer Road Investors for housing developments in the amount of $134,575; a loan to the River
Street Shelter for repairs in the amount of $16,500; a loan to First Night Santa Cruz for $20,000; Harvey West
Assessment District notes in the amount of $91,915; employee computer loans in the amount of $17,784;
various notes for housing improvement activities in the Housing In-Lieu program of $270,099; and $70,000 in
loans to two borrowers participating in the Accessory Dwelling Unit Loan Program. Some notes are secured
by a deed of trust. The employee computer loan program provides two-year loans to employees with a
simple interest rate of 5%, payable through payroll deductions.
The Redevelopment Agency Fund notes receivable balance of $3,714,571 (net of an allowance of $303,548)
represents loans for low/moderate income housing projects. There are two types of loan repayment for these
notes: due upon sale or transfer and lump sum payment at maturity. Interest rates range from 0% to 7%.
The notes are all secured by a deed of trust.
The $26,824 note receivable in the Public Works special revenue fund pertains to traffic impact fees owed to
the City by an individual (“promissor”) who renovated residential property for commercial purposes. Any
default results in the forfeiture of building permits issued to the promissor.
Notes receivable in the Parks and Recreation special revenue fund of $368,848 pertain to a promissory note
for housing developments – development impact fees. There is no interest on this promissory note. Loan
repayment is deferred to a future date when monthly repayment will begin. The note is secured by a
personal guarantee from Santa Cruz Shaffer Road Investors, LP, a California limited partnership.
64
City of Santa Cruz
3. RECEIVABLES, Continued
Fund Financial Statements, Continued
The notes receivable in the Housing and Community Development special revenue fund of $633,223 (net of
an allowance of $1,344,517) consist of loans for buildings damaged in the 1989 earthquake. There are two
types of loan repayments: monthly repayment and deferred to a future date when monthly repayment will
begin. The interest rate on these notes is 3%. The notes are all secured by a deed of trust.
Notes receivable in the enterprise funds are made up of three notes totaling $427,020. $25,962 is due from the
County of Santa Cruz for its share of improvements to the City's wastewater treatment plant with annual
payments scheduled through the year 2006 at an interest rate of 6.3%. This note is unsecured. The
remaining two notes, both due from Neary Lagoon Partners, total $401,058 for water system connection fees
pertaining to a low-moderate income housing project. These notes do not bear interest, and repayment is
deferred until 2019.
Loans Receivable - in other governmental funds of $1,301,012 (net of an allowance of $5,200,318) consist of
loans for rehabilitation of low/moderate income housing. The loans are made with Federal funds from the
Department of Housing and Urban Development (HUD). The City administers these funds for HUD. There
are four types of loan repayment schedules: monthly installments, due upon sale or transfer, deferred to a
future date when monthly repayment will begin, and no repayment if the property remains in use for
low/moderate income housing for a specified time period. Interest rates range from 0% to 7%. The loans are
all secured by a deed of trust on the property being rehabilitated.
Intergovernmental Receivables - in the enterprise funds total $17,780,484 and are comprised of various
amounts due from local, state, and federal governmental agencies. $499,905 of the total pertains to
reimbursements resulting from various construction and improvement projects. The remaining $17,280,579
($1,120,316 due within one year and $16,160,263 due in more than one year) is owed by the County of Santa
Cruz for its share of a State Water Resources Board loan for wastewater treatment plant upgrades.
Payments of interest and principal from the County of Santa Cruz are due in annual installments of
$1,604,172, at an interest rate of 2.8%, with the final payment due August 1, 2018.
Allowance for uncollectible notes and loans - When considerable uncertainty exists as to the collectibility of
a note (as determined by management) due to the terms of the loan or other factors, it is offset by an
allowance for uncollectible notes.
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City of Santa Cruz
4. INTERFUND BALANCES AND TRANSACTIONS
A. Government-Wide Financial Statements
Long-Term Internal Balances
At June 30, 2006, the City had the following long-term internal balances:
Internal Balances
Payable
Business-Type
Activities
Internal Balances Receivable
Governmental Activities $ 25,130
This balance consists of the net amount of long-term advances between the Redevelopment Agency
Fund and the Water, Wastewater and Parking enterprise funds. The advances are due to fund various
projects.
Transfers
The City had the following transfers for the year ending June 30, 2006:
Transfers In
Governmental
Activities
Transfers Out
Business-Type Activities $ 67,517
Transfers are made from the enterprise funds to the General Capital Improvement capital projects fund
to finance a share of project expenses or debt service costs for projects from which those funds receive
benefit.
B. Funds Financial Statements
The City had the following due to/from other funds as of June 30, 2006:
Due from Other Funds

Due to Other Funds
General
Fund Total
General Fund $ - $ -
Non-Major Governmental Funds 68,559 68,559
Internal Service Funds 11,678 11,678
Total $ 80,237 $ 80,237
66
City of Santa Cruz
4. INTERFUND BALANCES AND TRANSACTIONS
B. Funds Financial Statements, Continued
The outstanding balances between funds result mainly from a timing difference between when interest
revenues are earned and when they are received for amounts which are transferred from the earning
fund to the General Fund.
Long-Term Advances
The City had the following long-term advances as of June 30, 2006:
Advances to Other Funds

Advances from Other Funds
Redevelopment Water Wastewater Storm Water

General Agency Enterprise Enterprise Enterprise
Fund Fund Fund Fund Fund Total
Redevelopment Agency Fund $ 427,838 $ - $ 21,630 $ - $ - $ 449,468
Other Governmental Funds 530,000 - - 100,001 - 630,001
Parking Enterprise Fund - 96,501 - - - 96,501
Golf Course Enterprise Fund - - - - 439,293 439,293
Total $ 957,838 $ 96,501 $ 21,630 $ 100,001 $ 439,293 $ 1,615,263
Long-term advances were made 1) from the General Fund and the Water enterprise fund to the
Redevelopment Agency Fund to finance redevelopment projects, 2) from the General Fund to the
Housing and Community Development special revenue fund as a deposit for matching grant funds, 3)
from the Wastewater enterprise fund to the General Capital Improvement capital projects fund to
finance a project at the City’s corporation yard, and 4) from the Redevelopment Agency Fund to the
Parking enterprise fund to finance two parking capital improvements projects. 5) from the Storm Water
Enterprise Fund to the Golf Course Enterprise Fund to cover current financial need.
Transfers In/Out
The City had the following transfers for the year ending June 30, 2006:
Transfers In
Non-Major
General Governmental
Fund Funds Total
General Fund $ - $ 19,509 $ 19,509
Other Governmental Funds 64,324 674,337 738,661
Transfers Out
Enterprise Funds:
Water - 31,638 31,638
Wastewater - 7,541 7,541
Refuse - 14,908 14,908
Parking - 6,388 6,388
Storm Water - 6,360 6,360
Golf Course - 682 682
Internal Service Funds 35,570 - 35,570
Total $ 99,894 $ 761,363 $ 861,257
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City of Santa Cruz
4. INTERFUND BALANCES AND TRANSACTIONS, Continued
B. Funds Financial Statements, Continued
Transfers In/Out, Continued
Transfers are used to 1) move interest revenues from the earning fund to the General Fund, 2) move
revenues from the General Fund and other funds to the General Capital Improvement capital projects
fund for financing various capital projects, and 3) to move unrestricted tax revenues from the General
Capital Improvement capital projects fund to the General Fund as an operating subsidy.
5. CAPITAL ASSETS
A. Government-Wide Financial Statements
At June 30, 2006 the City’s capital assets consisted of the following:
Capital Assets:
Capital assets, not being depreciated:
Land $ 50,452,567 $ 11,931,526 $ 62,384,093
Construction in progress 5,108,592 10,436,904 15,545,496
Subtotal, capital assets, not being depreciated 55,561,159 22,368,430 77,929,589
Capital assets, being depreciated:

Land improvements 5,393,352 3,956,018 9,349,370
Infrastructure 167,322,095 180,436,253 347,758,348
Buildings 35,421,568 160,134,334 195,555,902
Machinery and equipment 10,279,605 20,026,950 30,306,555
Lease improvements 724,114 70,000 794,114
Software 1,056,070 555,258 1,611,328
Subtotal, capital assets, being depreciated 220,196,804 365,178,813 585,375,617
Total capital assets 275,757,963 387,547,243 663,305,206
Less accumulated depreciation:

Land improvements (1,394,671) (675,258) (2,069,929)
Infrastructure (102,361,142) (73,818,113) (176,179,255)
Buildings (8,950,969) (52,271,065) (61,222,034)
Machinery and equipment (7,210,260) (10,573,668) (17,783,928)
Lease improvements (296,913) (11,434) (308,347)
Software (808,382) (334,441) (1,142,823)
Total accumulated depreciation (121,022,337) (137,683,979) (258,706,316)

Total capital assets, net $ 154,735,626 $ 249,863,264 $ 404,598,890
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City of Santa Cruz
5. CAPITAL ASSETS, Continued
A. Government-Wide Financial Statements, Continued
The following is a summary of capital assets for governmental activities:
Balance Balance
July 1, 2005 Additions Deletions June 30, 2006
Governmental Activities:

Land $ 44,188,313 $ 6,264,254 $ - $ 50,452,567
Construction in progress 2,519,948 3,089,359 (500,715) 5,108,592
Subtotal, capital assets,

not being depreciated 46,708,261 9,353,613 (500,715) 55,561,159

Land improvements 5,290,639 102,713 - 5,393,352
Infrastructure 167,207,541 114,554 - 167,322,095
Buildings 35,421,568 - - 35,421,568
Machinery and equipment 10,156,196 485,231 (361,822) 10,279,605
Lease improvements 724,114 - - 724,114
Software 1,056,070 - - 1,056,070
Subtotal, capital assets,

being depreciated 219,856,128 702,498 (361,822) 220,196,804
Total capital assets 266,564,389 10,056,111 (862,537) 275,757,963

Land improvements (1,110,161) (284,510) - (1,394,671)
Infrastructure (97,782,746) (4,578,396) - (102,361,142)
Buildings (8,183,899) (767,070) - (8,950,969)
Machinery and equipment (6,841,294) (729,850) 360,884 (7,210,260)
Lease improvements (222,999) (73,914) - (296,913)
Software (664,427) (143,955) - (808,382)
Total accumulated depreciation (114,805,526) (6,577,695) 360,884 (121,022,337)
Total capital assets, net $ 151,758,863 $ 3,478,416 $ (501,653) $ 154,735,626
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City of Santa Cruz
A. Government-Wide Financial Statements, Continued
Depreciation expense of the governmental activities for the year ended June 30, 2006 was $6,577,695 and
was distributed among City departments as follows:
General government:
City Council $ 6,780
City Clerk 10,156
Human Resources 23,758
Finance 202,924
Non-Departmental 157,877
Internal service funds 85,599
Total general government 487,094
Public safety:
Police 386,069
Fire 270,115
Total public safety 656,184
Parks and Recreation 2,105,325
Library 26,800
Public Works 3,214,844
Planning and Community Development 12,734
Redevelopment 74,714
Total depreciation expense $ 6,577,695
The following is a summary of capital assets for business-type activities:
Balance Balance
Business-type Activities:
Land $ 11,891,526 $ 40,000 $ - $ 11,931,526
Construction in process 13,362,141 2,462,038 (5,387,275) 10,436,904
Subtotal, capital assets, not being depreciated 25,253,667 2,502,038 (5,387,275) 22,368,430
Land improvements 1,510,635 2,445,383 - 3,956,018
Infrastructure 171,294,779 9,177,694 (36,220) 180,436,253
Buildings 159,491,728 642,606 - 160,134,334
Machinery and equipment 19,382,706 2,147,939 (1,503,695) 20,026,950
Lease improvements 70,000 - - 70,000
Software 555,258 - - 555,258
Subtotal, capital assets, being depreciated 352,305,106 14,413,622 (1,539,915) 365,178,813
Total capital assets 377,558,773 16,915,660 (6,927,190) 387,547,243
Land improvements (502,764) (172,494) (675,258)
Infrastructure (69,781,307) (4,073,032) 36,226 (73,818,113)
Buildings (48,757,886) (3,513,179) - (52,271,065)
Machinery and equipment (10,002,160) (1,918,739) 1,347,231 (10,573,668)
Lease improvements (8,634) (2,800) - (11,434)
Software (223,389) (111,052) - (334,441)
Total accumulated depreciation (129,276,140) (9,791,296) 1,383,457 (137,683,979)
Total capital assets, net $ 248,282,633 $ 7,124,364 $ (5,543,733) $ 249,863,264
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City of Santa Cruz
B. Funds Financial Statements
Business-type activities depreciation expense for the year ended June 30, 2006 is as follows:
Water $ 1,649,080
Wastewater 4,267,556
Refuse 1,896,004
Parking 489,528
Storm Water 1,317,062
Golf Course 172,066
Total depreciation expense $ 9,791,296
The funds financial statements do not present general government capital assets consequently, they are
shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide
Statement of Net Assets.
6. LONG-TERM DEBT
A. Governmental Activities Long-Term Debt
Classification
Amount Amount
Balance Accreted Balance Due Within Due in More
July 1, 2005 Interest Additions Retirements June 30, 2006 One Year Than One Year
Compensated absences $ 2,098,095 $ - $ 10,240 $ - $ 2,108,335 $ 1,405,557 $ 702,778

Claims and judgments 10,719,455 - 456,172 (168,337) 11,007,290 3,039,471 7,967,819
Certificates of participation 4,377,108 - - (137,985) 4,239,123 142,984 4,096,139
General obligation bonds 7,183,381 120,310 - (177,616) 7,126,075 185,577 6,940,498
Notes payable 1,334,942 - 3,100,000 (229,916) 4,205,026 292,463 3,912,563
Tax allocation bonds payable 5,245,000 - - (120,000) 5,125,000 120,000 5,005,000
Capital lease obligations 1,766,635 - - (518,722) 1,247,913 282,285 965,628
Other long-term liabilities 1,029,804 - 18,900 (103,868) 944,836 95,746 849,090
Total $ 33,754,420 $ 120,310 $ 3,585,312 $ (1,456,444) $ 36,003,598 $ 5,564,083 $ 30,439,515
Compensated absences and Claims and judgments
As shown in the table above, the total amount outstanding at June 30, 2006 was $2,108,335 for
compensated absences and $11,007,290 for claims and judgments. In prior years, compensated absences
have been liquidated by the general fund. Claims and judgments are paid by the separate internal
service funds for each liability.
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City of Santa Cruz
6. LONG-TERM DEBT, Continued
A. Governmental Activities Long-Term Debt, Continued
Certificates of Participation
Certificates of Participation payable at June 30, 2006, are comprised of the following individual issues:
Redevelopment Agency certificates of participation are part of the $2,080,000 Golf and Redevelopment
Agency Certificates described under enterprise debt. The outstanding balance relating to the Agency at
June 30, 2006 was $229,123. The Agency amount due within one year is $52,984 and amount due in more
than one year is $176,139. For more information refer to the City of Santa Cruz Redevelopment Agency
Basic Financial Statements.
The City issued certificates in April 2001, in the amount of $4,415,000, to be used for the Civic Center
Improvement Project. The certificates provide funds to finance the acquisition, construction and
improvement of the project. The obligation of the City to make the lease payments does not constitute a
debt of the City or the State of California or of any political subdivision thereof within the meaning of
any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which
the City or the State or any political subdivision thereof is obligated to levy or pledge any form of
taxation. Annual payments are $75,000 - $270,000. The certificates bear interest at 4.6% - 5% and are
payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2001. Principal is
payable annually on April 1 through the year 2031. The balance outstanding at June 30, 2006 was
$4,010,000. The amount due within one year is $90,000 and amount due in more than one year is
$3,920,000.
The annual debt service requirements on the certificates of participation at June 30, 2006, were as
follows:
For the Year
Ending
June 30, Principal Interest Total
2007 $ 142,984 $ 204,707 $ 347,691
2008 150,849 198,448 349,297
2009 153,713 191,844 345,557
2010 161,577 185,052 346,629
2011 105,000 177,835 282,835
2012-2016 600,000 812,125 1,412,125
2017-2021 750,000 658,315 1,408,315
2022-2026 955,000 452,750 1,407,750
2027-2031 1,220,000 189,250 1,409,250
Total $ 4,239,123 $ 3,070,326 $ 7,309,449
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City of Santa Cruz
General Obligation Bonds
In March 1999, the City issued $6,998,473 in general obligation bonds. The proceeds were used to
upgrade fire stations, acquire open space property, and construct a community park and a fire
administration facility. Annual payments ranging from $142,625 to $354,010 began September 1, 2000,
and continue through September 1, 2029; interest ranges from 3.5% to 8.0%. The bonds are subject to
early redemption at the option of the City beginning in 2008.
The bonds are secured by and will be paid with annual ad valorem tax levies on all property subject to
taxation within the City. The bonds were issued in two series. Series A consisted of $4,500,000 of
general obligation bonds, and Series B consisted of $2,498,473 of general obligation bonds - capital
appreciation bonds. During fiscal year ended June 30, 2006, $177,616 principal payments were made on
the bonds. The balance outstanding of Series A bonds at June 30, 2006 was $4,110,000. The carrying
value of the Series B bonds was increased to $3,016,075 in order to reflect the accreted interest due at
June 30, 2006. The total balance outstanding at June 30, 2006 was $7,126,075.
The annual debt service requirements on the general obligation bonds at June 30, 2006, were as follows:
For the Year

Ending
2007 $ 185,577 $ 229,873 $ 415,450
2008 193,004 233,546 426,550
2009 199,781 237,617 437,398
2010 205,937 241,998 447,935
2011 208,582 244,570 453,152
2012-2016 1,115,553 1,291,607 2,407,160
2017-2021 1,266,608 1,396,378 2,662,986
2022-2026 1,455,681 1,480,569 2,936,250
2027-2030 1,358,082 1,205,417 2,563,499
Sub-total 6,188,805 6,561,575 12,750,380
Accreted Interest 937,270 - 937,270

Total $ 7,126,075 $ 6,561,575 $ 13,687,650
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City of Santa Cruz
Notes Payable
In July 2001, the Redevelopment Agency received HELP Loan funds, from the State of California, to be
used to finance the acquisition, development, demolition of existing structures, and the construction of a
multifamily rental apartment complex in the Beach Target Area. There is no amortization schedule for
this note. The proceeds for the note are to be repaid by July 2011 with an interest rate of 3%. The
balance outstanding at June 30, 2006, was $1,105,026.
In March 2006, the Redevelopment Agency received loan funds from Salz Leather, Inc., to be used to
finance the acquisition of land. There is no amortization schedule for this note. The proceeds of the note
are to be repaid by March 2009 with an interest rate of 5%. The balance outstanding at June 30, 2006 was
$3,100,000.
Tax Allocation Bonds
In October 2004, The Redevelopment Agency issued $5,245,000 in tax allocation bonds. The proceeds
were used, together with other funds, to redeem, on December 1, 2004, all of the Agency’s outstanding
1996 Merged Earthquake Recovery and Reconstruction Project Area Tax Allocation Refunding Bonds, in
the amount of $2,505,000, and to raise additional funds for programs, projects and activities related to the
Redevelopment Project. Annual principal payments of $120,000 - $305,000 will be made through October,
2031; interest ranges from 2.50% to 4.625%. The 2004 Tax Allocation Bonds will be secured by a pledge of
and first lien of the tax increment revenues derived from the Redevelopment Project, net of certain
amounts which are payable to other taxing agencies. The balance outstanding at June 30, 2006 was
$5,125,000.
The annual debt service requirements on the tax allocation bonds at June 30, 2006, were as follows:
For the Year

Ending
2007 $ 120,000 $ 206,016 $ 326,016
2008 125,000 202,954 327,954
2009 130,000 199,766 329,766
2010 130,000 196,516 326,516
2011 135,000 192,866 327,866
2012-2016 750,000 891,759 1,641,759
2017-2021 905,000 734,053 1,639,053
2022-2026 1,115,000 522,792 1,637,792
2027-2031 1,395,000 240,820 1,635,820
2032 320,000 7,400 327,400
Total $ 5,125,000 $ 3,394,942 $ 8,519,942
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City of Santa Cruz
Lease Obligations
In December 1998, the City acquired a new telecommunications system under a capital lease agreement
payable in semi-annual installments of $87,706 through December 2005. The interest rate is 4.85%. This
lease has been allocated to the General Fund, all enterprise funds, the Equipment Services Internal
Service Fund, and the Agency. The lease has been fully paid-off as of June 30, 2006.
In August 1999, the City acquired a new information technology system under a capital lease agreement
payable in semi-annual installments of $138,444 through August 2005 with an interest rate of 5%. The
lease has been allocated to the General Fund, the Water, Wastewater and Refuse enterprise funds, and
the Agency. The lease has been fully paid-off as of June 30, 2006.
In August 2001, the City acquired miscellaneous vehicles, equipment and computer software under a
capital lease agreement payable in semi-annual installments of $331,597 though August 2006, with an
interest rate of 4.46%. This lease has been allocated to the General Fund, the Water, Wastewater, Refuse
and Parking enterprise funds, and the Agency. The balance outstanding at June 30, 2006 was $141,924.
In June 2002, the City acquired land under a capital lease agreement with Zion’s First National Bank in
the amount of $765,000. The agreement is payable in semi-annual installments of $61,362 through 2021,
with a 4.88% interest rate through January 2007 and a variable interest rate thereafter. From January
2007 through January 2021, the interest is to be recomputed, for each interest period, based on 90% of the
current Index Rate. The balance outstanding at June 30, 2006 was $642,113.
In July 2004, the City entered into a five year capital lease agreement to obtain financing in the amount of
$580,000 for the purchase of a seventy-five foot aerial fire truck to replace a 1979 Crown Telesquirt unit.
The annual installment payment of $125,781 begins in August 2005 and ends in August 2009. Interest is
at the rate of 3.33% and the payments will be made from the General Fund. The balance outstanding at
June 30, 2006 was $463,876.
The annual debt service requirements on the capital leases at June 30, 2006, were as follows:
For the Year

Ending
2007 $ 282,285 $ 50,346 $ 332,631
2008 145,500 41,642 187,142
2009 150,834 36,309 187,143
2010 156,369 30,774 187,143
2011 36,331 25,031 61,362
2012-2016 210,045 96,764 306,809
2017-20211 266,549 40,261 306,810
Total $ 1,247,913 $ 321,127 $ 1,569,040
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City of Santa Cruz
Other Long-Term Liabilities
The Redevelopment Agency is obligated under three separate Owner Participation Agreements (OPA),
for various portions of the $1,250,000 Chestnut Street Special Assessment District Debt. Under the first
OPA the Agency owes $265,860 as of June 30, 2006. Under the second OPA, the Agency owes $31,690.
Under a third OPA the Agency assumed responsibility for an additional 48.68% of the Special
Assessment Debt contingent upon the availability of tax increment. The Agency is liable for principal in
the amount of $647,286 and interest, currently estimated at $67,334. The total of $944,836 will be paid
with annual installments through 2011, as follows:
For the Year

Ending
2007 $ 95,746 $ 48,733 $ 144,479
2008 154,632 40,353 194,985
2009 166,757 31,633 198,390
2010 176,009 22,177 198,186
2011 188,134 12,261 200,395
2011-2015 163,558 1,606 165,164
Total $ 944,836 $ 156,763 $ 1,101,599
Conduit Debt
During the fiscal year 2003, the Agency issued variable rate demand multifamily housing revenue
bonds to provide funding for loans made to Santa Cruz Shaffer Road Investors L.P., and 1010 Pacific
Investors L.P. (both California limited partnerships). The revenue bonds were used to finance a portion
of the costs of building a 206-unit multifamily residential development and for the rehabilitation and
equipping of a 113-unit multifamily residential development within the city limits. The housing
facilities are to be occupied by persons of low and very low income, to the extent required by federal tax
law.
The bonds were issued under a Trust Indenture, dated July 1, 2002 between the Agency, and Wells
Fargo Bank, National Association, as trustee. For the Shaffer Road Apartments, the Agency issued 2002
Series A bonds and 2002 Series A-T in the amounts of $29,925,000 and $2,750,000 respectively. For the
1010 Pacific Avenue Apartments, 2002 Series B bonds in the amount of $21,650,000 were issued. The
amount outstanding as of June 30, 2006 is $54,325,000. The bonds mature on August 15, 2035.
The bonds and interest are limited obligations of the Agency, payable solely from the “trust estate”
which is specifically assigned and pledged to such purposes to the extent provided in the Official
Statements. The trust estate includes the Agency’s interest in the loans made to the developer, including
rights to receive payments on the loans, and rights to certain bond proceeds and related revenues. The
Official Statements contain more information regarding the trust estate.
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City of Santa Cruz
B. Proprietary Fund Obligations
A summary of long-term debt transactions of the City for the enterprise funds for the year ended June 30,
2006, is as follows:
Classification
Amount Amount
Balance Balance Due Within Due in More
July 1, 2005 Additions Retirements June 30, 2006 One Year then One Year
Compensated absences $ 810,883 $ - $ (59,289) 751,594 $ 501,062 $ 250,532
Landfill closure costs 5,450,974 300,433 - 5,751,407 - 5,751,407
Certificates of participation 28,662,892 - (7,747,015) 20,915,877 1,732,015 19,183,862
Revenue bonds payable 4,680,000 23,265,000 (4,680,000) 23,265,000 665,000 22,600,000
Notes payable 40,240,469 - (2,418,132) 37,822,337 2,485,044 35,337,293
Lease obligations 3,108,344 1,298,193 (1,261,185) 3,145,352 975,620 2,169,732
Total $ 82,953,562 $ 24,863,626 $ (16,165,621) $ 91,651,567 $ 6,358,741 $ 85,292,826
Compensated absences
As shown in the table above, the total amount outstanding at June 30, 2006 was $751,594 for
compensated absences. In prior years, compensated absences have been liquidated primarily by the
enterprise funds.
Landfill closure costs
As shown in the table above, the total amount outstanding at June 30, 2006 was $5,751,407 for landfill
closure costs. Refer to Note 8 for landfill closure details.
Certificates of Participation
Certificates of Participation payable at June 30, 2006, are comprised of the following individual issues:
Santa Cruz Golf and Redevelopment Agency Certificates, issued in November, 1998, in the amount of
$2,080,000, was used to refinance an issue used for improvements to the City's golf course and projects
within the City's redevelopment plan areas. Annual payments of $125,000 to $215,000 will be made
through May 2010; interest ranges from 3.5% to 4.25%. Annual debt service is covered by lease
payments made by the City and secured by covenants made by the City in a lease with the Corporation.
The balance outstanding relating to the Golf Course fund at June 30, 2006, was $570,877.
Santa Cruz Parking Certificates issued in November 1998, in the amount of $7,955,000, were used for the
construction of a second parking structure in the downtown area. The certificates are a liability of the
Parking Enterprise Fund. Annual payments are $155,000 - $445,000. The certificates bear interest at 3.5%
to 4.9%. Interest is payable semi-annually on May 1 and November 1 and principal is payable annually
on May 1 through the year 2019. The balance outstanding at June 30, 2006, was $6,345,000.
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City of Santa Cruz
B. Proprietary Fund Obligations, Continued
Certificates of Participation, Continued
Santa Cruz Storm Water Certificates, issued in October 1999, in the amount of $6,665,000 was issued to
finance the City’s share of the San Lorenzo River Flood control and Beautification Project and to repay
the Wastewater Enterprise Fund for earlier loans to rehabilitate and retrofit bridges across the San
Lorenzo River. Annual payment of $105,000 to $250,000 will be made through October 2019; interest
ranges from 4.0% to 5.6%. This has been refinance by the 2005 Storm Water Revenue Refunding bonds.
The balance outstanding at June 30, 2006, was zero.
Santa Cruz Refuse Certificates, issued in October 1999, in amount of $4,345,000, were issued to repay the
Wastewater Enterprise Fund for earlier loans to construct a tunnel at the City’s landfill and a leachate
line from the landfill to the City’s sewer treatment plant. Annual payments of $100,000 to $245,000 will be
made through October 2020; interest ranges from 4.0% to 5.625%. The balance outstanding at June 30,
2006, was $3,705,000.
Santa Cruz Refuse Certificates issued in March 2001, in the amount of $7,500,000, were used in the
purchase of certain property and improvements, and to finance the acquisition, construction and
improvement of the project. The installment payments are payable solely from and secured by a first
pledge of certain revenues of the City’s Refuse Enterprise Fund. Annual payments are $45,000 to
$720,000. The certificates bear interest at 3.5% to 4.875%. Interest represented by the certificates will be
payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2001. Principal is
payable annually on October 1 through the year 2021. The certificates are subject to optional and
mandatory prepayment. The balance outstanding at June 30, 2006, was $5,615,000.
Santa Cruz Refuse Certificates, issued in May 2004, in the amount of $1,590,000 was used to refinance
the Santa Cruz Landfill Certificates issued in 1993. Annual payments of $495,000 to $545,000 will be
made through 2008: Interest ranges from 4.0 % to 5.375%. The City is obligated, subject to abatement,
under the Agreement to pay the certificate payments from any source of legally available funds. The
City is currently liable and may become liable on other obligations payable from general revenues, some
of which may have priority over the lease payments. The balance outstanding relating to the Refuse
Fund at June 30, 2006, was $1,070,000.
Santa Cruz Golf Agency Certificates issued in May 2004, in the amount of $3,700,000 was used to
finance the acquisition and construction of improvements to the DeLaveaga Golf Course. Annual
payments of $ 90,000 to $ 260,000 will be made through 2029; interest ranges from 4.0% to 5.375%. The
City is obligated, subject to abatement, under the Agreement to pay the certificate payments from any
source of legally available funds. The City is currently liable and may become liable on other obligations
payable from general revenues, some of which may have priority over the lease payments. The balance
outstanding relating to the Golf Course Fund at June 30, 2006 was $3,610,000.
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City of Santa Cruz
Certificates of Participation, Continued
The annual debt service requirements on the certificates of participation at June 30, 2006, were as follows:
For the Year

Ending
2007 $ 1,732,015 $ 974,620 $ 2,706,635
2008 1,799,151 904,064 2,703,215
2009 1,306,287 830,535 2,136,822
2010 823,424 786,839 1,610,263
2011 670,000 751,332 1,421,332
2012-2016 3,805,000 3,274,930 7,079,930
2017-2021 4,855,000 2,243,012 7,098,012
2022-2026 4,320,000 643,586 4,963,586
2027-2030 1,605,000 146,374 1,751,374
Total $ 20,915,877 $ 10,555,292 $ 31,471,169
Annual principal and interest requirements for the certificates of participation are apportioned to the
various funds based on the percentage share of certificate proceeds.
Revenue Bonds Payable
2005 Waste Water Revenue Refunding Bonds, issued in November 2005, in the amount of $4,715,000 was
used to refinance the Series B Sewer Revenue Bonds issued in February 1994. Annual payments of
$200,000 to $350,000 will be made through November 2023; interest ranges from 3.0% to 4.50%. Annual
debt service is payable solely from and secured by a lien on net revenues of the sewer system. The
2005 Storm Water Revenue Refunding Bonds, issued in September 2005, in the amount of $6,100,000 was
used to refinance the Santa Cruz Storm Water Certificates issued in October 1999. Annual payments of
$160,000 to $385,000 will be made through October 2029; interest ranges from 3.0% to 4.375%. The bonds
are special obligations of the City payable solely from the revenues received by the City from the
ownership and operation of the Storm Water Enterprise. All revenues are irrevocably pledged to the
payment of the bonds. The balance outstanding at June 30, 2006, was $6,100,000.
The 2006 Water Revenue Bonds issued in May 2006, in the amount of $12,450,000 was used to finance
construction of a new transmission main connecting the Graham Hill Water Treatment Plant to the Bay
Street Reservoir. Annual payments of $220,000 to $555,000 will be made through March 2036; interest
ranges from 4.0% to 4.625%. The bonds are special obligations of the City payable from the Net
Revenues received by the City from the ownership and operation of the City’s Water System. The
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City of Santa Cruz
Revenue Bonds Payable, Continued
The annual debt service requirements on the revenue bonds at June 30, 2006, were as follows:
Ending
2007 $ 665,000 $ 871,358 $ 1,536,358
2008 590,000 939,455 1,529,455
2009 615,000 917,605 1,532,605
2010 635,000 895,830 1,530,830
2011 660,000 874,017 1,534,017
2012-2016 3,645,000 3,998,114 7,643,114
2017-2021 4,385,000 3,215,982 7,600,982
2022-20226 4,645,000 2,212,753 6,857,753
2027-2031 4,105,000 1,283,281 5,388,281
2032-2037 3,320,000 482,529 3,802,529
Total $ 23,265,000 $ 15,690,924 $ 38,955,924
Under conditions of the various revenue bond covenants, the Wastewater Enterprise Fund is required to
provide adequate cash and maintain adequate revenues to cover future bond payments. Cash and
investments set aside for this purpose is shown in the financial statements as restricted cash and
investments.
Under condition of the storm water revenue refunding bond covenant, the Storm Water Enterprise Fund
is required to maintain adequate revenues to cover future bond payments.
Under conditions of the water revenue bond covenant, the Water Enterprise Fund is required to maintain
adequate revenues to cover future bond payments.
Notes Payable
State of California loans for the construction of a water main line north of the City. Proceeds for the note
were received in September 1995, to be repaid in semi-annual installments of $46,679, including interest
at 2.973%, through April 2016. This debt is recorded in the Water Enterprise Fund. The balance
outstanding at June 30, 2006, was $767,774.
State of California loans for the construction of secondary treatment improvements at the City's
wastewater treatment plant. Loan proceeds were received as the City incurred project expenditures.
Repayment began August 1999. Annual payments of $3,417,099, including interest at 2.8%, will be made
through August 2018. This debt is recorded in the Wastewater Enterprise Fund. The balance
outstanding at June 30, 2006, was $36,721,230.
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City of Santa Cruz
Notes Payable, Continued
State of California loans for the construction of certain solid waste facilities to assist them to achieve or
improve compliance with state minimum standards. Proceeds were received in March 2001, and the
loan is to be repaid in $33,333 annual payments of principal through 2016. No interest is due on the
principal balance of the loan outstanding. This debt is recorded in the Refuse Enterprise Fund. The
balance outstanding at June 30, 2006, was $333,333.
The annual debt service requirements on the notes at June 30, 2006, were as follows:
For the Year

Ending
2007 $ 2,485,044 $ 1,050,498 $ 3,535,542
2008 2,553,788 981,752 3,535,540
2009 2,624,583 910,958 3,535,541
2010 2,697,247 838,295 3,535,542
2011 2,771,988 763,553 3,535,541
2012-2016 15,010,137 2,621,150 17,631,287
2017-2021 9,679,550 547,043 10,226,593
Total $ 37,822,337 $ 7,713,249 $ 45,535,586
Lease Obligations
The City leases equipment in the Refuse, Water, Wastewater, Parking, and Golf Course funds under
various capital lease agreements payable in semi-annual and annual installments through August 2006
with interest rates ranging from 4.5% to 5.9%. In December 2003, the City entered into an equipment
lease agreement in the amount of $656,182 payable in sixty months. The payments are due in ten
consecutive semi-annual payments, and each payment includes 3.13% interest per year on the unpaid
principal. In November 2002, the City entered into another equipment lease in the amount of $1,038,840
payable in sixty months. The payments are due in ten consecutive semi-annual payments, and each
payment includes 3.26% interest per year on the unpaid balance. The combined Refuse, Water,
Wastewater, Parking, and Golf Course funds balance outstanding at June 30, 2006, was $537,130.
In December 1998, the City acquired a new telecommunications system under a capital lease agreement
payable in semi-annual installments of $87,706 through December 2005 with an interest rate of 4.85%.
This lease has been allocated to the General Fund, all enterprise funds, the Equipment Operations
internal service fund, and the Agency. The lease has been paid-off as of June 30, 2006.
In August 1999, the City acquired a new information technology system under a capital lease agreement
payable in semi-annual installments of $114,770 through August 2005 with an interest rate of 5%. The
lease has been allocated to the General Fund, the Water, Wastewater, and Refuse enterprise funds, and
the Agency. The lease has been paid-off as of June 30, 2006.
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City of Santa Cruz
Lease Obligations, Continued
In August 2001, the City acquired miscellaneous vehicles, equipment and computer software under a
capital lease agreement payable in semi-annual installments of $331,597 through August 2006, with an
interest rate of 4.46%. This lease has been allocated to the General Fund, the Water, Wastewater, Refuse
and Parking enterprise funds, and the agency. The balance outstanding at June 30, 2006 was $182,415.
In January 2005, The City acquired four refuse trucks under a capital lease agreement payable in semi-
annual installments of $88,482 through February 2009 with an annual interest rate of 3.04%. This lease
has been allocated to the Refuse fund. The balance outstanding at June 30, 2006, was $503,758.
In April 2005, the City acquired twenty-five receptacles, three recycling trucks and a truck retrofit under
a capital lease agreement payable in semi-annual installments of $85,636 through May 2010 with an
annual interest rate of 3.70%. This lease has been allocated to the Refuse Fund. The balance outstanding
at June 30, 2006, was $631,403.
In May 2006, the City acquired one front loader and five side loader under a capital lease agreement
payable in semi-annual installments of $135,798 though June 2011 with an annual interest rate of 4.16%
allocated to the Refuse fund. The balance outstanding is $1,214,724.
In December 2005, the City entered into a capital lease agreement for lease rental of two fairway
mowers. The lease is payable in quarterly installments of $9,584 through December 2010 with an annual
interest rate of 3.90%. The lease has been allocated to the Golf Course Fund. The Balance outstanding at
June 30, 2006 was $75,922.
The annual debt service requirements on the lease obligations at June 30, 2006, were as follows:
For the Year

Ending
2007 $ 1,088,453 $ 106,277 $ $ 1,194,730
2008 753,527 67,280 820,807.00
2009 593,244 43,654 636,898.00
2010 437,389 23,506 460,895.00
2011 272,739 8,245 280,984.00
Total $ 3,145,352 $ 248,962 $ 3,394,314
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City of Santa Cruz
C. Defeased Debt
On September 29, 2005, the City issued $6,100,000 in Storm Water Revenue Refunding Bonds. $6,100,000
(par value) of these revenue refunding bonds, with an interest rate of 4%, were used to advance refund
$6,090,000 of outstanding 1999 Storm Water Enterprise Certificate of Participations with an average
interest rate of 5.60%. The net proceeds of $6,008,439 (after payment of $313,585 in underwriting fees
and other issuance costs),plus an additional $456,578 of 1999 Storm Water Enterprise Certificate of
Participation Reserve Fund monies were deposited in an irrevocable trust with an agent and invested in
a federal money market fund to provide for debt service payments on the 1999 certificates, which will
be called on October 1, 2007. As a result, the 1999 Storm Water Certificate of Participation are
considered to be defeased and the liability for those certificates has been removed from the Storm Water
enterprise fund statement of net assets.
The City completed an advance refunding to reduce its total debt service payments by $939,477, which
resulted in an economic gain (difference between present value of the old and new debt service
payments) of $462,440.
On November 22, 2005, the City issued $4,715,000 in Wastewater Revenue Refunding Bonds. $4,715,000
(par value) of these revenue refunding bonds, with an interest rate of 4.10%, were used to advance
refund $4,530,000 of outstanding 1994 Sewer Revenue Bonds with an average interest rate of 5.65%. The
net proceeds of $4,518,464 (after payment of $197,000 in underwriting fees and other issuance costs),
plus an additional $411,370 of 1994 Reserve Fund monies were deposited in an irrevocable trust with an
agent and invested in a federal money market fund to provide for debt service payments on the 1994
revenue bonds, which will be called on December 22, 2005. As a result, the 1994 Wastewater revenue
bonds are considered to be defeased and the liability for those bonds has been removed from the
Wastewater enterprise fund statement of net assets.
The City completed an advanced refunding to reduce its total debt service payments by $199,665, which
resulted in an economic gain (difference between present value of the old and new debt service
payments) of $645,380.
7. RISK MANAGEMENT AND SELF-INSURANCE
The City has an established Risk Management Fund (an internal service fund) to account for a self-insurance
program. Under this program, the City is completely self-insured for unemployment insurance, vision, and
dental insurance claims. For the period ending June 30, 2006, the City was self-insured for workers'
compensation up to $500,000 per occurrence and for general liability up to $1,000,000 per occurrence. Claims
in excess of these amounts are insured. The City has contracted with outside administrators to administer
the programs. There were no significant reductions in insurance coverage. Settlements have not exceeded
insurance coverage in any of the past three fiscal years.
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City of Santa Cruz
7. RISK MANAGEMENT AND SELF-INSURANCE, Continued
In January 1997, the City joined the Authority for California Cities Excess Liability (ACCEL). The Authority
for California Cities Excess Liability (ACCEL) is a joint powers authority organized under the provisions of
Section 6500 et. seq. of the California Government code. ACCEL was founded in 1986 to provide medium-
sized California cities self-funding for catastrophic losses. There are currently 12 members. ACCEL operates
a liability program which is subject to an annual independent financial audit and biennial actuarial study.
ACCEL is governed by a twelve member Board of Directors. Each member agency appoints a representative
to the Board of Directors. Each member of the Board of Directors has a single vote for policy and charter
changes. ACCEL is funded by its member participants and, at the discretion of its Board of Directors, may
assess the members for additional premiums (in an unlimited amount) in the event ACCEL assets at any
time are insufficient to discharge its liabilities.
For the fiscal year 2005-2006, the deposit rate was $0.60 per one-hundred dollars of payroll. ACCEL self-
funded $2,000,000 excess of a $1,000,000 member self-insured retention, and purchased a $20,000,000
commercial excess insurance policy, providing a total limit of $23,000,000 per occurrence. In addition to the
$23,000,000 program limits, two members purchased optional limits of $10,000,000, and two members
purchased another optional $10,000,000. Members were also charged administrative costs in equal
amounts. The City of Santa Cruz elected to pay the $360,000 administrative fee from pooled deposits.
ACCEL’s day-to-day operations are administered by Driver Alliant Insurance Services contracted by ACCEL
to provide accounting, risk consulting, insurance brokerage, and program administration services. Driver’s
responsibility also includes the administration of policies as set forth by the ACCEL Joint Powers Authority
Agreement, By-laws, and by the Board of Directors.
The authority provides coverage above each member’s self-insured retention (SIR), subject to aggregate limit.
Historically, nine members have $500,000 SIRS and two members have $1,000,000 SIRS.
ACCEL provided an optional coverage of $500,000 excess of $500,000 per occurrence through 1989-90,
however this coverage is no longer available.
Prior to July 1, 1990, ACCEL pooled losses incurred by its members up to $10,000,000. Effective July 1, 1990,
ACCEL created a reinsurance pool within the $9,000,000 excess of $1,000,000 layer by purchasing $5,000,000
excess of $5,000,000 coverage. On July 1, 1997, ACCEL further reduced its exposure and purchased coverage
of $17,000,000 excess of $3,000,000 coverage. Due to favorable market conditions, ACCEL purchased
coverage of $19,000,000 excess of $1,000,000 effective July 1, 1998. Six members with SIR of $500,000
purchased additional coverage of $500,000 excess of $500,000 (including the City of Santa Cruz). As of July 1,
2000, nine members purchased insurance of $19,500,000 excess of $1,000,000. ACCEL was fully insured
through June 30, 2003.
As of July 1, 2003, the Authority purchased a reinsurance covering $20,000,000 excess of $2,000,000 and
pooled losses in the layer $1,000,000 excess of $1,000,000. All members have SIR of $1,000,000.
ACCEL members may participate in the purchase of other insurance, such as excess worker’s compensation
and excess liability over $12 million per occurrence where risk is not transferred to the pool. Effective
September 1, 2003, ACCEL purchased excess insurance for all losses in excess of $2,000,000 per occurrence.
ACCEL does not administer claims for these programs; therefore, no revenue or expense is reflected in
ACCEL’s financial statements.
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City of Santa Cruz
ACCEL has a retrospective rating plan whereby all premiums collected, together with related investment
income earned, in excess of pooled losses and loss expenses for each program year will be returned to
members beginning five years after the end of the program year. Losses and loss expenses are allocated to
each member based on a weighted actual loss formula. At the June 2006 Board of Directors meeting, a
retrospectively rated refund was made available for distribution to the members for program years 2
through 15 in the amount of $10,435,477. Members could elect to have all or a portion of their refund, or
choose retain the funds in the respective program year in the member city. The City of Santa Cruz’
retrospective rated refund is $550,058.
Summary audited financial information for ACCEL as of and for the year ended June 30, 2006, is as follows:
Assets
Cash and investments $ 22,951,718

Other assets 467,313
Total assets $ 23,419,031
Liabilities and Net Assets
Unpaid claims liability $ 9,506,000

retrospectively rated refunds liability 13,374,872
Other liabilities 441,621
Total liabilities 23,322,493
Net assets 96,538
Total liabilities and net assets $ 23,419,031
Revenues
Premiums earned $ 5,721,090

Investment income 634,010
Administrative fees 359,500
Retro Assessment -
Total revenues 6,714,600
Expenses
Loss provision and premiums paid $ 6,340,757

General and administrative 343,936
Total expenses 6,684,693
Net income/ (loss) 29,907
Net assets, beginning of year 66,631
Net assets, end of year $ 96,538
Complete financial statements for ACCEL can be obtained from Driver Alliant Insurance Services, 600
Montgomery Street, 9th Floor, San Francisco, CA 94111.
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City of Santa Cruz
Risk Management Fund revenues are primarily premium charges received from other funds and are planned
to match expenses of insurance premiums for coverage in excess of self-insured amounts, estimated
payments resulting from self-insurance programs, and operating expenses. Department charges are based
on historical experience. Claims known to be payable and the estimated liability for the balance, based on a
case-by-case review of all claims is recorded as claims payable. An additional estimate of the amount to be
paid for claims incurred, but not reported, is also recorded as claims payable. Changes in the Risk
Management Fund's claims liability amount for the years ended June 30, 2004 through 2006 are as follows:
CLAIMS PAYABLE
Beginning Claims Ending

Balance Incurred Payments Balance
June 30, 2004 $ 11,007,290 $ 7,217,089 $ (3,848,258) $ 14,376,121

June 30, 2005 14,376,121 3,350,942 (2,463,787) 15,263,276
June 30, 2006 10,719,455 2,686,917 (2,399,082) 11,007,290
The General Fund and Redevelopment Agency Fund typically have been used in prior years to liquidate the
liability for claims and judgments.
8. LANDFILL CLOSURE AND POSTCLOSURE COSTS
In accordance with requirements established by the California Integrated Waste Management Board, the
City has recognized a portion of the landfill's closure and postclosure care (closure) costs. These cost
estimates are based on the amount of landfill used to date. The total estimated costs are as follows:
Total estimated closure costs $ 4,393,999

Total estimated postclosure costs 8,524,739
Total estimated closure and postclosure costs $ 12,918,738
The City has increased the landfill’s capacity through excavations and plans to continue excavating in
future years to increase capacity. This effort has also increased the estimates of the closure and postclosure
costs. At June 30, 2006, the estimated landfill closure cost liabilities of $5,751,407 and estimated annual
landfill closure cost of $300,433 were calculated as follows:
Total estimated closure and postclosure costs $ 12,918,738

Percent of used capacity to total capacity 44.52%
Estimate landfill closure and postclosure cost liability 5,751,422

Miscellaneous adjustments (15)
Estimated total closure and postclosure costs liability 5,751,407

Previous closure costs accrued 5,450,974
Fiscal year 2006 expense for closure and postclosure costs $ 300,433
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City of Santa Cruz
8. LANDFILL CLOSURE AND POSTCLOSURE COSTS, Continued
The landfill has an estimated remaining capacity of 5,816,715 cubic yards and has a current projected closure
date of January 2038.
Based upon the requirements of the California Integrated Waste Management Board, the City set aside
$166,558 to fund future closure and post closure costs for the year ended June 30, 2006. All cash is invested.
The market value of the invested cash at June 30, 2006 was $3,172,777, and is available to provide for closure
and postclosure costs. Total funds accumulated as of June 30, 2006, are comprised as follows:
Closure $ 1,314,425
Postclosure 1,858,352
Total $ 3,172,777
The City has also estimated corrective action costs of $361,265 for a reasonable foreseeable landfill release.
This amount is based on a March 1995 Hydrogeologic Summary for Support of Financial Assurance
Mechanism report which is adjusted annually for inflation. Sufficient funds to cover these potential costs are
available in the Refuse Fund’s unrestricted cash account.
The estimated closure and corrective action costs are current estimates based on data provided by an
independent consultant and are subject to changes in inflation, technological advancements, or regulatory
changes.
9. RETIREMENT PLANS
A. Pension Plan
Plan Description
The City contributes to the California Public Employees' Retirement System (PERS); an agent
multiple-employer defined benefit pension plan. PERS provides retirement and disability benefits,
annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a
common investment and administrative agent for participating public entities within the State of
California. Benefit provisions and all other requirements are established by state statute and city
ordinance. Copies of PERS’ annual financial report may be obtained from their Executive Office located
at 400 P Street, Sacramento, CA 95814.
Funding Policy
City employees are required to contribute 9% for safety employees and 7% for all other employees of
their annual covered salary. The City employer is required to contribute at an actuarially determined
rate; the fiscal year 2006 rate is 13.835% for miscellaneous employees, 32.616% for police safety
employees, and 38.181% for fire safety employees of annual covered payroll. There is a cost sharing
agreement with miscellaneous employees whereby the employee is required to pay the employer share
above 6.354%, a portion on a pre-tax basis and a portion on a post-tax basis. The contribution
requirements of City employees and the City employer are established and may be amended by PERS.
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City of Santa Cruz
9. RETIREMENT PLANS, Continued
A. Pension Plan, Continued
Annual Pension Cost
For fiscal year 2006, the City’s annual pension cost of $6,330,030 for PERS was equal to the City’s
required and actual contributions. The required contribution was determined as part of the June 30,
2004, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumption
included (a) 7.75% investment rate of return (net of administrative expenses); (b) projected salary
increases ranging from 3.25% to 14.45% depending on age, service, and type of employment, and (c) 2%
per year cost-of-living adjustments. Both (a) and (b) included an inflation component of 3.0%. The
actuarial value of PERS assets was determined using techniques that smooth the effects of short-term
volatility in the market value of investments over a three-year period. PERS unfunded actuarial accrued
liability (or surplus) is being amortized as a level percentage of projected payroll on a closed basis. The
amortization period at June 30, 2004 was 17 years for public safety police employees, 17 years for public
safety fire employees, and 30 years for miscellaneous employees for prior and current service unfunded
liability.
Fiscal Annual Percentage Net

Year Pension of APC Pension
Ended Cost (APC) Contributed Obligation
June 30, 2004 $ 4,729,159 100% $ -
June 30, 2005 6,175,176 100% -
June 30, 2006 6,330,030 100% -
10. POST-EMPLOYMENT RETIREMENT BENEFITS
The City pays a portion of its retiree’s health insurance premium. All part-time and full-time regular
employees that meet certain requirements (continuous service with the City and minimum age) are eligible.
As of June 30, 2006, there were 143 employees eligible. The benefit will be provided until the retiree becomes
eligible for Medicare. The benefit is provided through the memorandum of understanding (MOU) the City
has entered into with each bargaining unit. The retirees are paid monthly by the City per the amount
specified in each MOU. The City paid $104,952 in post-employment retirement benefits to 65 participants for
the year ended June 30, 2006.
11. COMMITMENTS AND CONTINGENCIES
The City participates in a number of Federal assisted grant programs, of which the principal grants are the
Disaster Assistance Program, Community Development Block Grant, HOME grant program, various
Department of Justice and Department of Transportation grant programs. These programs are subject to
program compliance audits by the grantors or their representatives. The amount, if any, of expenditures,
which may be disallowed by the granting agencies upon audit, cannot be determined at this time although
the City expects such amounts to be immaterial.
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City of Santa Cruz
11. COMMITMENTS AND CONTINGENCIES, Continued
The California Legislature granted tidal and submerged lands in trust to the City to be used for a number of
statewide purposes in furtherance of navigation, commerce and fisheries. In accordance with this legislation,
revenues derived from the Wharf are required to be used for purposes permitted under the grant statute.
There are a number of lawsuits presently against the City. While the ultimate outcome of these lawsuits is
not determinable, in the opinion of the City Attorney and City management, recovery from the City, if any,
would not have a material effect on the accompanying financial statements.
The following schedule summarizes the major contractual commitments of the City as of June 30, 2006:
Major Commitments and Contracts for Professional Services:

Utility Billing Software Implementation $ 136,345
Refuse Trucks Purchase Agreement 1,214,728
Belz Treatment Plant Rehabiliation Review 303,085
Total major professional services 1,654,158
Major Commitments and Contracts for Capital Projects:

Skate Park Construction Contract 988,359
Construction for Restroom Facility at Lighthouse Field State Beach 854,000
Design Services for Sewer System Master Plan 235,156
WWTF Slide Gate and Valves Project 209,000
RRF Design and Build Recycle Center 327,191
Loan from South County Housing Corp 1,160,000
North Coast Rehabilitation 452,998
Felton Booster Pump Station Upgrade 459,191
Bay St System Transmission Improvement Project 15,762,771
Santa Cruz County Kinsley St Improvement Project 202,868
Archaeological Service for Bay St Reservoir 225,216
Desal Pilot Study on Water Supply 3,149,044
Total major capital projects 24,025,794
Total Other Commitments 3,088,258
Total Commitments and Contracts $ 28,768,210
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City of Santa Cruz
12. OPERATING LEASES
The City is obligated under various operating leases for the use of land, buildings, office space and
equipment. Lease expenditures, primarily for governmental funds, for the year ended June 30, 2006 were
$203,332. Future minimum lease payments required by lease agreements that have initial or remaining non-
cancelable lease terms in excess of one year as of June 30, 2006 are as follows:
Year Ending June 30, Balance
2007 $ 44,256
2008 44,256
2009 44,256
2010 5,348
Total future minimum lease payments $ 138,116
The City leases (as lessor) office facilities, buildings, and wharf facilities under operating leases to various
entities and individuals. Total revenues from these leases for the year ending June 30, 2006 were $847,881.
The total cost of leased assets as of June 30, 2006 was $11,815,902, and the accumulated depreciation of those
assets that are depreciable amounted to $1,463,896. Future estimated revenues from these leases are as
follows:
Year Ending June 30, Amount
2007 $ 749,238
2008 608,666
2009 453,798
2010 367,850
2011 322,877
Future years 3,582,011
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City of Santa Cruz
13. RESERVED AND DESIGNATED FUND BALANCES
Fund balances at June 30, 2006, have been reserved and designated for the following purposes:
Redevelopment Special Debt Capital

General Agency Revenue Service Projects
Fund Fund Funds Fund Funds Total
Reserved for:
Encumbrances $ 672,177 $ 1,425,393 $ 799,354 $ - $ 2,072,847 $ 4,969,771
Noncurrent receivables and advances 3,215,332 3,872,408 1,934,535 - - 9,022,275
Prepaid items 168,498 120,000 2,440 - - 290,938
Debt service - 64,935 - - - 64,935
Capital projects 15,000 - - - - 15,000
Low and moderate income housing 256,106 856,624 - - - 1,112,730
Total reserved 4,327,113 6,339,360 2,736,329 - 2,072,847 15,475,649
Designated for:
Accrued comp. absences 1,361,990 - - - - 1,361,990
Debt service - 3,430,717 - 707,775 - 4,138,492
Capital projects - 4,528,208 - - - 4,528,208
City public trust 5,332,947 - - - - 5,332,947
Unemployment insurance 49,040 - - - - 49,040
Housing in-lieu programs 205,315 - - - - 205,315
Computer loan program 76,221 - - - - 76,221
Kiosk maintenance 24,219 - - - - 24,219
Street trees 30,395 - - - - 30,395
Equipment maintenance 40,866 - - - - 40,866
Police programs - - 66,361 - - 66,361
Highway projects - - 4,488 - - 4,488
Housing - - 465,602 - - 465,602
Public works programs - - - - 21,567 21,567
Public Art - - - - 71,074 71,074
Total designated 7,120,993 7,958,925 536,451 707,775 92,641 16,416,785
Unreserved, Undesignated 11,354,586 - 3,341,962 - 281,931 14,978,479
Total fund balances $ 22,802,692 $ 14,298,285 $ 6,614,742 $ 707,775 $ 2,447,419 $ 46,870,913
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City of Santa Cruz
14. DEFICIT NET ASSETS
The Risk Management internal service fund had deficit net assets of $4,256,330 as of June 30, 2006. This
deficit is due to estimated liability insurance claims and workers’ compensation claims liabilities in excess
of cash and other assets available in the fund. It is anticipated that this deficit will be made up in future
years by increased contributions from other City funds. The City is working to establish an actuarially
approved plan to fund the increased liability over a number of years. Net assets in the fund are designated
for the following insurance activities:
Net Assets
Workers' compensation insurance $ (4,829,809)

Liability insurance 152,232
Group health insurance 421,247
Total net assets $ (4,256,330)
15. SUBSEQUENT EVENTS
Measure H was approved by the City of Santa Cruz voters in November 2006 authorizing an increase of
¼% to the current sales tax rate, and making permanent an existing ¼% temporary sales tax rate (Measure
F) that was scheduled to sunset in 2009. Effective April 1, 2007, the State Board of Equalization will show
the Measure H approved sales tax increase of ½% for a total City sales tax rate of 8.50%. The increase is
expected to generate an additional $2.4 million in annual City revenues.
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REQUIRED SUPPLEMENTARY INFORMATION
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City of Santa Cruz
Required Supplementary Information
1. BUDGETARY INFORMATION
An annual budget is adopted by the City Council no later than the first regular meeting in July for the fiscal
year beginning July first. As part of the budget process, all City departments submit budget requests for the
next fiscal year. These requests are reviewed, and a final City Manager recommended budget showing
estimated revenues and expenditures of the City is prepared. This proposed budget is transmitted to the
City Council and made available to the public for review. Study sessions and a public hearing are
conducted before final adoption of the budget by the City Council.
The City Manager is authorized to approve appropriation transfers within any department up to a specified
amount; however, any new appropriation or appropriation transfer between departments requires approval
by the City Council. Several supplemental appropriations were necessary during the year and are reflected
in the budget amounts in the financial statements. Expenditures may not legally exceed appropriations at
the department level.
Under the City Charter, all unexpended appropriations shall lapse at the end of the fiscal year unless they
are lawfully committed, or are required by law to be continuously appropriated from year to year.
Lawfully committed amounts include amounts legally encumbered at year end. Encumbrance accounting,
under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded
in order to reserve that portion of the applicable appropriation, is employed as an extension of formal
budgetary integration in the governmental fund types. Encumbrances outstanding at year-end are reported
as reservation of fund balances since they do not constitute expenditures or liabilities, and re-appropriations
in the subsequent year provide authority to complete these transactions as expenditures.
In addition, project-length (or non-lapsing) budgets are adopted for capital improvement and other projects,
and grant-funded projects or programs that may not be completed within the fiscal year during which the
budget appropriation for the project or program originates. Under these circumstances, the appropriation
continues until project or program completion, or unless the appropriation is subsequently amended or
rescinded by the City Council.
In the Budgetary Comparison Schedules, the “Original Budget” column includes the final adopted budget
amounts, re-appropriations for prior year encumbrances, and continuing appropriations for project-length
budgets automatically carried over from prior years.
The City Charter requires the City Council, upon recommendation of the City Manager and after providing
sufficient funds to meet debt service and operating needs, to annually set aside in the enterprise funds an
amount to be used for the acquisition and betterment of plant facilities. Such amounts, if any, would be
shown in the financial statements as cash and investments held for betterment of plant facilities. No such
funds were set aside during the year ended June 30, 2006.
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City of Santa Cruz
Required Supplementary Information, Continued
1. BUDGETARY INFORMATION, Continued
Budgets are adopted each year for all general, special revenue, debt service, and capital projects funds.
These governmental fund budgets are prepared on a basis consistent with generally accepted accounting
principles (GAAP), except in the following areas:
¾ Budgetary basis revenues include repayments of loan principal. Budgetary basis expenditures
include loans made. On a GAAP basis both of these are considered as reclassifications of fund
balance (between reserved and unreserved fund balance).
¾ GAAP basis revenues include the fair value adjustment to investment earnings. GAAP basis
expenditures include compensated absences expense. Neither of these are included in the
budgetary basis.
A reconciliation of differences between budgetary and GAAP revenues and expenditures follows the budget
comparison schedules.
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BUDGETARY SCHEDULES
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City of Santa Cruz
Budgetary Comparison Schedule, General Fund

Variance with
Budgeted Amounts Actual Amounts Positive Budget to GAAP Actual Amounts
Original Final (Budgetary Basis) (Negative) Differences (GAAP Basis)
REVENUES:
Taxes $ 35,534,911 $ 37,418,532 $ 39,495,863 $ 2,077,331 $ - $ 39,495,863

Licenses and permits 680,650 680,650 615,448 (65,202) - 615,448
Intergovernmental 658,250 1,221,766 1,073,997 (147,769) - 1,073,997
Charges for services:
External 7,041,866 7,129,866 7,485,166 355,300 - 7,485,166
Internal 2,974,352 2,975,780 2,844,775 (131,005) - 2,844,775
Interagency 8,888,047 8,966,867 8,732,523 (234,344) - 8,732,523
Subtotal charges for services 18,904,265 19,072,513 19,062,464 (10,049) - 19,062,464
Fines and forfeitures 2,004,200 2,004,200 1,962,697 (41,503) - 1,962,697

Use of money and property 2,411,321 2,412,509 2,595,824 183,315 (53,915) 2,541,909
Other revenues 151,500 163,447 216,721 53,274 - 216,721
Total revenues 60,345,097 62,973,617 65,023,014 2,049,397 (53,915) 64,969,099
EXPENDITURES:
Current:
General government 10,149,185 10,340,928 9,666,858 674,070 - 9,666,858
Public safety 27,306,800 26,874,378 26,837,330 37,048 - 26,837,330
Parks and recreation 11,249,212 10,956,820 9,402,529 1,554,291 - 9,402,529
Library 9,442,046 9,450,494 9,250,499 199,995 - 9,250,499
Public works 4,320,390 4,276,147 3,565,397 710,750 - 3,565,397
Community and economic development 2,697,524 3,112,197 1,000,492 2,111,705 - 1,000,492
Social services 845,752 1,048,192 1,566,695 (518,503) - 1,566,695
Capital outlay 453,416 1,076,040 765,851 310,189 - 765,851
Debt service:
Principal 289,252 289,252 204,928 84,324 - 204,928
Interest and fiscal charges 48,277 48,277 48,264 13 - 48,264
Total expenditures 66,801,854 67,472,725 62,308,843 5,163,882 - 62,308,843
REVENUES OVER (UNDER) EXPENDITURES (6,456,757) (4,499,108) 2,714,171 7,213,279 (53,915) 2,660,256

Proceeds from asset disposition 25,000 25,000 25,256 256 - 25,256
Proceeds from long-term debt issued - - - - - -
Loan principal recipts 431,767 431,767 - (431,767) - -
Transfers in 1,130,188 1,130,188 99,894 (1,030,294) - 99,894
Transfers out (241,874) (864,295) (19,509) 844,786 - (19,509)
Total other financing sources (uses) 1,345,081 722,660 105,641 (617,019) - 105,641
Net change in fund balances (5,111,676) (3,776,448) 2,819,812 6,596,260 (53,915) 2,765,897
FUND BALANCES:
Beginning of the year 8,180,104 7,981,589 15,163,949 7,182,360 4,872,846 20,036,795
End of year $ 3,068,428 $ 4,205,141 $ 17,983,761 $ 13,778,620 $ 4,818,931 $ 22,802,692
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City of Santa Cruz
General Fund
Reconciliation of Net Changes in Fund Balances - Budgetary to GAAP Basis:
Net Change in Fund Balances - Budgetary Basis $ 2,819,812
The amount reported in the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund
Balances was different because:
Unrealized gains and losses on investments, which are considered a component of investment income in the
Statement of Revenues, Expenditures and Changes in Fund Balances, are not included as revenue on a
budgetary basis. (53,915)
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances $ 2,765,897
Reconciliation of Fund Balances - Budgetary to GAAP Basis:

Fund Balances - Ending - Budgetary Basis $ 17,983,761
Cumulative effect of unrealized gains and losses on investments (171,411)

Reserved and designated balances unavailable for appropriation 4,287,564
Designated for noncurrent component of compensated absences 702,778
Fund Balances - Ending - GAAP Basis $ 22,802,692
99
City of Santa Cruz
Budgetary Comparison Schedule, Redevelopment Agency
Final Budget -
REVENUES:
Tax increment $ 9,106,875 $ 9,106,875 $ 10,323,206 $ 1,216,331 $ - $ 10,323,206

Use of money and property 344,683 344,683 512,254 167,571 (40,731) 471,523
Other revenues 89000 200,285 147,053 (53,232) - 147,053
Total revenues 9,540,558 9,651,843 10,982,513 1,330,670 (40,731) 10,941,782
EXPENDITURES:
Current:
Community and economic development 8,033,978 10,644,328 6,978,325 3,666,003 - 6,978,325
Capital outlay 3,079,900 7,582,687 6,282,979 1,299,708 - 6,282,979
Debt service:
Principal 2,773,948 2,780,349 2,728,577 51,772 (2,214,965) 513,612
Interest and fiscal charges 391,446 421,531 409,555 11,976 - 409,555
Bond issuance costs - - - - - -
Total expenditures 14,279,272 21,428,895 16,399,436 4,965,711 (2,214,965) 14,184,471
REVENUES OVER (UNDER) EXPENDITURES (4,738,714) (11,777,052) (5,416,923) 6,296,381 2,174,234 (3,242,689)
Loan proceeds 9,000 9,000 3,123,322 3,114,322 (23,322) 3,100,000

Long term advance proceeds - - - - - -
Loan principal receipts 58,425 58,425 - (58,425) - -
Proceeds from long-term debt issued - - - - - -
Premiums on bonds sold - - - - - -
Payment to refunded bond escrow agent - - - - - -
Total other financing sources (uses) 67,425 67,425 3,123,322 3,055,897 (23,322) 3,100,000
Net change in fund balances (4,671,289) (11,709,627) (2,293,601) 9,352,278 2,150,912 (142,689)
- - - - -
FUND BALANCES:
Beginning of the year, as restated 3,428,587 3,859,262 11,172,112 7,312,850 3,268,862 14,440,974
End of year $ (1,242,702) $ (7,850,365) $ 8,878,511 $ 16,665,128 $ 5,419,774 $ 14,298,285
100
City of Santa Cruz
Redevelopment
Agency Fund

Net Change in Fund Balances - Budgetary Basis $ (2,293,601)
Proceeds of both short term loans and long term advances from the City are considered budgetary resources,
but are not revenues on a GAAP basis. (23,322)
The Agency budgets for both short term and long term loan and advance principal repayments to the City, but
these payments are not considered expenditures on a GAAP basis. 2,214,965
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances $ (142,689)


Reserved balances unavailable for appropriation 5,564,147
All funds are reserved or designated for debt service, capital projects, or low and moderate income housing.
101
102
City of Santa Cruz
PUBLIC EMPLOYEE RETIREMENT SYSTEM (PERS)

SCHEDULE OF FUNDING PROGRESS
Miscellaneous Employees
(Overfunded)
Unfunded Actuarial
Entry Age (Overfunded) Liability as
Actuarial Actuarial Actuarial Actuarial Percentage of
Valuation Value of Accrued Accrued Funded Covered Covered
Date Assets Liability Liability Ratio Payroll Payroll
June 30, 2003 $ 129,704,897 $ 150,709,327 $ 21,004,430 86.1% $ 35,526,589 59.1%

June 30, 2004 139,133,604 160,182,390 21,048,786 86.9% 33,778,451 62.3%
June 30, 2005 150,956,645 170,106,283 19,149,638 88.7% 32,905,030 58.2%
Police Safety Employees

Unfunded
(Overfunded)
Unfunded Actuarial
CalPERS Risk Pool Information (see comment below):

June 30, 2003 $ 3,577,742,166 $ 4,270,573,982 $ 692,831,816 83.8% $ 476,089,674 145.5%
June 30, 2004 4,424,586,846 5,383,921,942 959,335,096 82.2% 575,296,434 166.8%
June 30, 2005 5,295,150,375 6,367,049,264 1,071,898,889 83.2% 664,147,796 161.4%
Fire Safety Employees

Unfunded
(Overfunded)
Unfunded Actuarial
CalPERS Risk Pool Information (see comment below):

June 30, 2003 $ 3,577,742,166 $ 4,270,573,982 $ 692,831,816 83.8% $ 476,089,674 145.5%
June 30, 2004 4,424,586,846 5,383,921,942 959,335,096 82.2% 575,296,434 166.8%
June 30, 2005 5,295,150,375 6,367,049,264 1,071,898,889 83.2% 664,147,796 161.4%
Since the City has less than 100 active members in Fire and Police plans in at least one valuation since
June 30, 2004, the City is required to participate in a risk pool. An actuarial valuation was performed with
other participants within the same risk pool. Therefore, standalone information of the schedule of the
funding progress for the City was not disclosed.
103
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104
SUPPLEMENTARY INFORMATION
105
106
Non-Major Governmental Funds
Special Revenue Funds:

Police - Accounts for state and federal grants and other revenues restricted to be used for police
programs.
State Highway Funds - This fund is used to account for the City's apportionment of the State excise tax
on gasoline and other related grants or receipts that are restricted for the planning, construction and
maintenance of streets and roads. It is also used to account for a subvention of the State sales tax on
gasoline (Traffic Congestion Relief Funds) that are restricted for street and highway maintenance, and
rehabilitation and reconstruction of necessary associated facilities such as drainage and traffic control
devices.
Traffic Impact Fee Funds - This fund is used for capital improvements to mitigate traffic impacts
generated by land development. The fee provides financial resources for improvements to transit stops,
bike and pedestrian facilities, signal coordination, park and ride lots, and other alternative
transportation sources impacted by development, and is levied on all Citywide projects requiring a
building permit (residential remodels and limited expansions expected to generate less than five new
trips per day are exempt).
Parks and Recreation - Accounts for tax and fee revenues restricted for parks and recreation use.
Housing and Community Development - Accounts for receipts and expenditures under the Housing and
Community Development Act, which includes Community Development Block Grant funds and HOME
program funds. It also is used to account for Red Cross housing reconstruction loan repayments and
income and related expenditures for a City-owned rental property.
Transportation Development Act Fund - This fund is used to account for receipts of State Transportation
Development Act (TDA) funds restricted to be used for specialized or unmet transit needs. Acting as the
public agency sponsor, the City contracts with non-profit agencies to meet these obligations.
Debt Service Fund:
General Obligation Bonds - This fund accounts for the debt service for a $7 million general obligation
bond issue approved by voters in November 1998. Funds for payment of principal and interest on the
bonds are generated by a property tax override assessment of $9.00 per $100,000 of assessed value.
Capital Projects Fund:
General Capital Improvement - This fund is used to account for capital improvements for which special
projects funds have not been established. A portion of the City's transient occupancy tax receipts,
combined with other funding sources, such as grants, provides funding for capital projects of general
benefit, such as storm drain improvements, or improvements to public buildings.
107
City of Santa Cruz
Combining Balance Sheet
June 30, 2006
Special Revenue
Housing and
State Traffic Parks and Community
Police Highway Impact Fee Recreation Development
ASSETS
Cash and cash equivalents $ 246,396 $ 1,503,594 $ 567,034 $ 1,620,001 $ 1,459,316

Interest receivable 2,101 13,731 2,329 17,899 285,976
Taxes receivable - - - - -
Accounts receivable - net 2,990 101,108 - - 2,763
Due from other governments - 127,754 - - 95,948
Prepaid items - 768 - - 1,076
Restricted assets:
Cash and cash equivalents - - - - -
Investments - - - - -
Total restricted assets - - - - -
Notes receivable - net - - 26,824 368,848 633,223

Loans receivable - net - - - - 1,301,012
Total assets $ 251,487 $ 1,746,955 $ 596,187 $ 2,006,748 $ 3,779,314
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable and other current liabilities $ 105 $ 57,013 $ - $ 1,531 $ 54,127
Due to other funds 250 - - 4,200 44,386
Intergovernmental payable - - - - 52
Deferred revenue 168,484 237,043 26,824 368,848 273,086
Advances from other funds - - - - 530,000
Total liabilities 168,839 294,056 26,824 374,579 901,651
Fund Balances:
Reserved 2,801 707,454 - - 2,026,074
Unreserved, designated 66,361 4,488 - - 465,602
Special revenue funds 13,486 740,957 569,363 1,632,169 385,987
Capital projects funds - - - - -
Total fund balances 82,648 1,452,899 569,363 1,632,169 2,877,663
Total liabilities and fund balances $ 251,487 $ 1,746,955 $ 596,187 $ 2,006,748 $ 3,779,314
108
Debt Service Capital Projects
Transportation General Total Other

Development General Capital Governmental
Act Obligation Bond Improvement Funds
$ - $ 675,566 $ 1,384,811 $ 7,456,718

- 5,764 23,841 351,641
- 26,446 589,088 615,534
- - 24,267 131,128
- - 890,219 1,113,921
- - - 1,844
- - 5,035 5,035
- - 277,519 277,519
- - 282,554 282,554
- - 1,028,895
- - - 1,301,012
$ - $ 707,776 $ 3,194,780 $ 12,283,247
$ - $ 1 $ 402,687 $ 515,464
- - 19,723 68,559
- - - 52
- - 224,950 1,299,235
- - 100,001 630,001
- 1 747,361 2,513,311
- - 2,072,847 4,809,176
- 707,775 92,641 1,336,867
- - - 3,341,962
- - 281,931 281,931
- 707,775 2,447,419 9,769,936
$ - $ 707,776 $ 3,194,780 $ 12,283,247
109
City of Santa Cruz
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Housing and
State Traffic Parks and Community
Police Highway Impact Fee Recreation Development
REVENUES:
Taxes $ - $ - $ - $ 417,202 $ -
Intergovernmental 116,495 1,831,811 - - 848,870
Charges for services 39,503 - - 245,496 -
Fines and forfeitures 2,538 - - - -
Use of money and property 6,606 29,089 2,453 51,818 70,799
Other revenues - 5,280 575,718 - 9,228
Total revenues 165,142 1,866,180 578,171 714,516 928,897
EXPENDITURES:
Current:
Public safety 101,299 - - - -
Public works - 593,519 - - -
Transit - - - - -
Community and economic development - - - - 457,651
Social services - - - - 126,572
Capital outlay 97,652 1,374,685 - - 11,268
Debt service:
Principal - - - - -
Interest and fiscal charges - - - - 19,223
Total expenditures 198,951 1,968,204 - - 614,714
REVENUES OVER
(UNDER) EXPENDITURES (33,809) (102,024) 578,171 714,516 314,183
Proceeds from long-term debt issued - - - - -

Transfers in - 8,808 - - -
Transfers out (644) - (8,808) (677,437) -
Total other financing sources (uses) (644) 8,808 (8,808) (677,437) -
Net change in fund balances (34,453) (93,216) 569,363 37,079 314,183
FUND BALANCES:
Beginning of year 117,101 1,546,115 - 1,595,090 2,563,480
End of year $ 82,648 $ 1,452,899 $ 569,363 $ 1,632,169 $ 2,877,663
110
Debt Service Capital Projects
Transportation General Total Other

Development General Capital Governmental
Act Obligation Bond Improvement Funds
$ - $ 542,683 $ 1,256,775 $ 2,216,660

624,214 - 1,200,850 4,622,240
- - - 284,999
- - - 2,538
- 13,499 46,463 220,727
- - 95,925 686,151
624,214 556,182 2,600,013 8,033,315
- - - 101,299
- - - 593,519
624,214 - - 624,214
- - - 457,651
- - - 126,572
- - 3,389,354 4,872,959
- 177,616 253,621 431,237

- 228,068 216,407 463,698
624,214 405,684 3,859,382 7,671,149
- 150,498 (1,259,369) 362,166
- - 100,000 100,000
- - 752,555 761,363
- - (51,772) (738,661)
- - 800,783 122,702
- 150,498 (458,586) 484,868
- 557,277 2,906,005 9,285,068
$ - $ 707,775 $ 2,447,419 $ 9,769,936
111
City of Santa Cruz
Schedule of Budget and Actual Revenues
General Fund
Variance with
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final (Budgetary Basis) (Negative)
REVENUES:
Taxes:
Property $ 10,459,158 $ 10,627,228 $ 11,586,222 $ 958,994
Sales and use 11,318,723 11,173,723 11,738,917 565,194
Business license 798,000 773,000 777,068 4,068
Franchise 766,000 3,218,551 2,136,686 (1,081,865)
Transient occupancy 2,047,000 1,100,000 2,128,373 1,028,373
Parking 200,000 220,000 229,629 9,629
Utility users 7,800,000 8,160,000 8,304,371 144,371
Admission 1,650,000 1,650,000 1,715,133 65,133
Property transfer 200,000 200,000 562,724 362,724
Business improvement 180,000 180,000 200,708 20,708
Other taxes 116,030 116,030 116,032 2
Total taxes 35,534,911 37,418,532 39,495,863 2,077,331

Licenses and permits:
Construction permits 636,400 636,400 570,829 (65,571)
Other licenses and permits 44,250 44,250 44,619 369
Total licenses and permits 680,650 680,650 615,448 (65,202)

Intergovernmental revenues:
Federal 23,450 244,978 212,832 (32,146)
State 621,800 963,788 848,165 (115,623)
Local 13,000 13,000 13,000 -
Total intergovernmental revenues 658,250 1,221,766 1,073,997 (147,769)

General government:
Legislative - - 1,400 1,400
Management and support 578,176 578,176 588,624 10,448
Planning and zoning 899,785 1,074,785 1,482,116 407,331
Other general government 8,000 8,000 19,341 11,341
Public safety:
Police 1,384,369 1,384,369 1,304,322 (80,047)
Fire 397,348 397,348 426,269 28,921
Protective inspection 360,500 360,500 371,380 10,880
Other public safety 25,000 25,000 58,141 33,141
Parks and recreation:
Parks 42,000 42,000 45,960 3,960
Recreation 1,446,900 1,446,900 1,394,378 (52,522)
Other parkes and recreation 870,000 870,000 912,366 42,366
Subtotal of charges for services 6,099,078 6,187,078 6,604,297 417,219
112
City of Santa Cruz
Schedule of Budget and Actual Revenues, Continued
General Fund
Variance with
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final (Budgetary Basis) (Negative)
Charges for services, Continued:
Subtotal from previous page $ 6,099,078 $ 6,187,078 $ 6,604,297 $ 417,219
Public works:
Engineering 85,000 85,000 95,504 10,504
Transportation 843,000 843,000 771,247 (71,753)
Community and economic development:
Other community and economic development 14,788 14,788 14,118 (670)
Internal charges for services provided 2,974,352 2,975,780 2,844,775 (131,005)
Interagency personnel services charges: 0
Library 8,047,295 8,055,743 7,889,487 (166,256)
Redevelopment Agency 840,752 911,124 843,036 (68,088)
Subtotal interagency charges 8,888,047 8,966,867 8,732,523 (234,344)
Total charges for services 18,904,265 19,072,513 19,062,464 (10,049)
Fines and forfeitures:

Court and traffic fines 1,723,000 1,723,000 1,603,759 (119,241)
Other fines and forfeitures 281,200 281,200 358,938 77,738
Total fines and forfeitures 2,004,200 2,004,200 1,962,697 (41,503)

Use of money and property:
Investment income 527,588 528,776 643,341 114,565

Rents and royalties 1,883,733 1,883,733 1,952,483 68,750
Total use of money and property 2,411,321 2,412,509 2,595,824 183,315
Other revenues:
Contributions and donations 59,500 71,447 39,904 (31,543)
Other miscellaneous revenues 92,000 92,000 176,817 84,817
Total other revenues 151,500 163,447 216,721 53,274
Total revenues 60,345,097 62,973,617 65,023,014 2,049,397
OTHER FINANCING SOURCES:
Proceeds from asset dispositions 25,000 25,000 25,256 256

Proceeds from long-term debt issued - - - -
Loan and advance principal receipts 431,767 431,767 - (431,767)
Transfers in 1,130,188 1,130,188 99,894 (1,030,294)
Total other financing sources 1,586,955 1,586,955 125,150 (1,461,805)
Total revenues and other financing sources $ 61,932,052 $ 64,560,572 $ 65,148,164 $ 587,592
113
City of Santa Cruz
Schedule of Budget and Actual Expenditures and Other Financing Uses For Legally Adopted
Appropriations by Department - General Fund
Services, Supplies
Personnel and Other Debt Capital Actual Amounts
Services Charges Service Outlay (Budgetary Basis)
City Council $ 166,616 $ 153,152 $ - $ 200 $ 319,968

City Clerk 449,925 118,019 - 77,496 645,440
City Manager 550,146 121,432 - - 671,578
City Attorney 14,059 578,738 - - 592,797
Human Resources 452,463 428,420 - 604 881,487
Finance 2,681,004 887,742 - 116,980 3,685,726
Police 13,529,087 3,355,257 - 284,101 17,168,445
Fire 8,031,769 744,639 203,524 131,189 9,026,798
Parks and Recreation 6,831,449 3,110,974 - 49,108 9,991,531
Library 7,855,748 1,394,751 - - 9,250,499
Public Works 2,662,440 895,771 - 95,046 3,653,257
Planning and Community Development 1,767,986 746,399 - 2,068 2,502,131
Redevelopment Administration 841,114 29,300 - - 884,736
Non-Departmental 7,185 2,893,274 - - 2,900,459
Debt service - - 49,668 - 133,991
Capital projects - - - - -
Total expenditures 45,840,991 15,457,868 253,192 756,792 62,308,843
Advances to other funds - - - - -

Transfers out - - - - 19,509
Total expenditures and other

financing uses $ 45,840,991 $ 15,457,868 $ 253,192 $ 756,792 $ 62,328,352
Budget to GAAP Differences:

See reconciliation in Required Supplementary Information Note 1.
114
Variance with
Final Budget -
Final Positive Budget to GAAP Actual Amounts
Budget (Negative) Differences (GAAP Basis)
$ 370,694 $ 50,726 $ - $ 319,968

787,938 142,498 - 645,440
812,381 140,803 - 671,578
594,473 1,676 - 592,797
973,081 91,594 - 881,487
3,879,905 194,179 - 3,685,726
18,410,148 1,241,703 - 17,168,445
9,208,875 182,077 - 9,026,798
11,035,292 1,043,761 - 9,991,531
9,450,494 199,995 - 9,250,499
4,412,808 759,551 - 3,653,257
3,124,990 622,859 - 2,502,131
1,048,192 163,456 - 884,736
3,229,450 328,991 - 2,900,459
134,004 13 - 133,991
- - - -
67,472,725 5,163,882 - 62,308,843
279,981 279,981 - -
584,314 564,805 - 19,509
$ 68,337,020 $ 6,008,668 $ - $ 62,328,352
115
City of Santa Cruz
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Police Special Revenue Fund
Final Budget -
REVENUES:
Intergovernmental $ 100,000 $ 104,805 $ 116,495 $ 11,690 $ - $ 116,495

Charges for services 45,000 45,000 39,503 (5,497) - 39,503
Fines and forfeitures - - 2,538 2,538 - 2,538
Use of money and property 1,600 1,600 6,927 5,327 321 6,606
Total revenues 146,600 151,405 165,463 14,058 321 165,142
EXPENDITURES:
Current:
Public safety:
Police 101,000 101,000 101,299 (299) - 101,299
Capital outlay - 98,805 97,652 1,153 - 97,652
Total expenditures 101,000 199,805 198,951 (299) - 198,951
REVENUES OVER
(UNDER) EXPENDITURES 45,600 (48,400) (33,488) 13,759 321 (33,809)
Transfers out (500) (500) (644) (144) - (644)
Total other financing sources (uses) (500) (500) (644) (144) - (644)
Net change in fund balances 45,100 (48,900) (34,132) 13,615 321 (34,453)
FUND BALANCES:
Beginning of the year 116,210 22,051 119,772 97,721 2,671 117,101
End of year $ 161,310 $ (26,849) $ 85,640 $ 111,336 $ 2,992 $ 82,648
116
City of Santa Cruz
State Highway Special Revenue Fund
Final Budget -
REVENUES:
Intergovernmental $ 2,203,500 $ 5,747,244 $ 1,831,811 $ (3,915,433) $ - $ 1,831,811

Charges for services - - - - - -
Use of money and property 12,000 12,000 40,550 28,550 11,461 29,089
Other revenues - - 5,280 5,280 - 5,280
Total revenues 2,215,500 5,759,244 1,877,641 (3,881,603) 11,461 1,866,180
EXPENDITURES:
Current:
Public works:
Transportation 605,479 617,416 593,519 23,897 - 593,519
Capital outlay 2,042,250 6,701,358 1,374,685 5,326,673 - 1,374,685
Debt service:
Principal - - - - - -
Interest and fiscal charges - - - - - -
REVENUES OVER
(UNDER) EXPENDITURES (432,229) (1,559,530) (90,563) 1,468,967 11,461 (102,024)
Proceeds from asset disposition - 300,000 - (300,000) - -

Transfers in 75,000 139,000 8,808 (130,192) - 8,808
Total other financing sources (uses) 75,000 439,000 8,808 - - 8,808
Net change in fund balances (357,229) (1,120,530) (81,755) 1,468,967 11,461 (93,216)
FUND BALANCES:
Beginning of the year 707,724 700,972 1,545,783 844,811 (332) 1,546,115
End of year $ 350,495 $ (419,558) $ 1,464,028 $ 2,313,778 $ 11,129 $ 1,452,899
117
City of Santa Cruz
Traffic Impact Fee Fund
Final Budget -
REVENUES:
Intergovernmental $ - $ - $ - $ - $ - $ -
Use of money and property - - 4,530 4,530 2,077 2,453
Other revenues 75,000 75,000 575,718 500,718 - 575,718
Total revenues 75,000 75,000 580,248 505,248 2,077 578,171
EXPENDITURES:
Current:
Public works:
Transportation - - - - - -
Capital outlay - - - - - -
Debt service:
Principal - - - - - -
Interest and fiscal charges - - - - - -
Total expenditures - - - - - -
REVENUES OVER
(UNDER) EXPENDITURES 75,000 75,000 580,248 505,248 2,077 578,171
Transfers out (75,000) (139,000) (8,808) 130,192 - (8,808)
Total other financing sources (uses) (75,000) (139,000) (8,808) - - (8,808)
Net change in fund balances - (64,000) 571,440 505,248 2,077 569,363
FUND BALANCES:
Beginning of the year - - - - - -
End of year $ - $ (64,000) $ 571,440 $ 505,248 $ 2,077 $ 569,363
118
City of Santa Cruz
Parks and Recreation Fund
Final Budget -
REVENUES:
Taxes $ 522,360 $ 522,360 $ 417,202 $ (105,158) $ - $ 417,202

Use of money and property 20,000 20,000 51,818 31,818 - 51,818
Other revenues - - 245,496 245,496 - 245,496
Total revenues 542,360 542,360 714,516 172,156 - 714,516
Transfers out (1,086,246) (1,635,379) (677,437) 957,942 - (677,437)
Total other financing sources (uses) (1,086,246) (1,635,379) (677,437) 957,942 - (677,437)
Net change in fund balances (543,886) (1,093,019) 37,079 1,130,098 - 37,079
FUND BALANCES:
Beginning of the year 519,434 519,434 1,611,122 1,091,688 16,032 1,595,090
End of year $ (24,452) $ (573,585) $ 1,648,201 $ 2,221,786 $ 16,032 $ 1,632,169
119
City of Santa Cruz
Housing and Community Development Fund
Final Budget -
REVENUES:
Intergovernmental $ 1,638,492 $ 4,072,680 $ 848,870 $ (3,223,810) $ - $ 848,870

Other revenue - - 9,228 9,228 - 9,228
Total revenues 1,699,262 4,133,450 928,897 (3,204,553) - 928,897
EXPENDITURES:
Current:
Community and economic development:
Housing and community development 1,747,468 4,227,674 457,651 3,770,023 - 457,651
Social services:
CDBG social services 126,734 126,842 126,572 270 - 126,572
Capital outlay 47,181 779,034 11,268 767,766 - 11,268
Debt service:
Principal 200,000 90,000 90,000 - 90,000 -
Interest and fiscal charges 21,000 21,000 19,223 1,777 - 19,223
Total expenditures 2,142,383 5,244,550 704,714 4,538,059 90,000 614,714
REVENUES OVER
(UNDER) EXPENDITURES (443,121) (1,111,100) 224,183 1,333,506 (90,000) 314,183
Loan principal receipts 118,520 118,520 - (118,520) - -

Proceeds from long-term debt - 710,000 - (710,000) - -
Transfers out (80,000) (110,000) - 110,000 - -
Total other financing sources (uses) 38,520 718,520 - (718,520) - -
Net change in fund balances (404,601) (392,580) 224,183 614,986 (90,000) 314,183
FUND BALANCES:
Beginning of the year 1,253,705 1,276,668 1,407,117 130,449 (1,156,363) 2,563,480
End of year $ 849,104 $ 884,088 $ 1,631,300 $ 745,435 $ (1,246,363) $ 2,877,663
120
City of Santa Cruz
Transportation Development Act
Final Budget -
REVENUES:
Intergovernmental $ 624,214 $ 624,214 $ 624,214 $ - $ - $ 624,214
Total revenues 624,214 624,214 624,214 - - 624,214
EXPENDITURES:
Current:
Transit 624,214 624,214 624,214 - - 624,214
Total expenditures 624,214 624,214 624,214 - - 624,214
REVENUES OVER
(UNDER) EXPENDITURES - - - - - -
FUND BALANCES:
Beginning of the year - - - - - -
End of year $ - $ - $ - $ - $ - $ -
121
City of Santa Cruz
General Obligation Bond
Final Budget -
REVENUES:
Taxes $ 477,645 $ 477,645 $ 542,683 $ 65,038 $ - $ 542,683

Total revenues 488,145 488,145 556,182 68,037 - 556,182
EXPENDITURES:
Debt service:
Principal 177,616 177,616 177,616 - - 177,616
Interest and fiscal charges 228,234 228,234 228,068 166 - 228,068
Total expenditures 405,850 405,850 405,684 166 - 405,684
REVENUES OVER
(UNDER) EXPENDITURES 82,295 82,295 150,498 68,203 - 150,498
FUND BALANCES:
Beginning of the year 509,634 509,634 560,645 51,011 3,368 557,277
End of year $ 591,929 $ 591,929 $ 711,143 $ 119,214 $ 3,368 $ 707,775
122
City of Santa Cruz
General Capital Improvement Projects
Final Budget -
REVENUES:
Taxes $ 2,094,000 $ 2,094,000 $ 1,256,775 $ (837,225) $ - $ 1,256,775

Intergovernmental 346,754 5,032,210 1,200,850 (3,831,360) - 1,200,850
Use of money and property - 1,233 57,584 56,351 11,121 46,463
Other revenues 10,000 3,456,328 95,925 (3,360,403) - 95,925
Total revenues 2,450,754 10,583,771 2,611,134 (7,972,637) 11,121 2,600,013
EXPENDITURES:
Capital outlay 2,109,000 13,810,561 3,389,354 10,421,207 - 3,389,354

Debt service:
Principal 264,472 364,472 253,621 110,851 - 253,621
Interest and fiscal charges 216,389 216,389 216,407 (18) - 216,407
REVENUES OVER
(UNDER) EXPENDITURES (139,107) (3,807,651) (1,248,248) 2,559,403 11,121 (1,259,369)
Proceeds from long-term debt - 100,000 - (100,000) (100,000) 100,000

Transfers in 1,308,151 2,613,509 752,555 (1,860,954) - 752,555
Transfers out (1,030,465) (1,191,420) (51,772) 1,139,648 - (51,772)
Total other financing sources (uses) 277,686 1,522,089 700,783 (721,306) (100,000) 800,783
Net change in fund balances 138,579 (2,285,562) (547,465) 1,838,097 (88,879) (458,586)
FUND BALANCES:
Beginning of the year 613,075 546,222 2,726,391 2,180,169 (179,614) 2,906,005
End of year $ 751,654 $ (1,739,340) $ 2,178,926 $ 4,018,266 $ (268,493) $ 2,447,419
123
City of Santa Cruz
Other
Governmental
Funds
Net Change in Fund Balances - Budgetary Basis $ 319,848
Payments on a short term loan and advance principal repayments are considered expenditures on a
budgetary basis, but on a GAAP basis, these payments reduce liabilities. 90,000
On a budgetary basis, the City records loan principal receipts as revenue, but on a GAAP basis, these receipts
reduce receivables. 100,000
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances $ 484,868


Noncurrent advances payable (630,001)
Intergovernmental payable to be repaid from future appropriations (52)
Reserved balances unavailable for appropriation 2,749,611
Designated for noncurrent component of compensated absences 2,941
124
INTERNAL SERVICE FUNDS
Equipment Operations - This fund is used to account for the expenses related to city-wide fleet operations
and maintenance activities, including vehicles, communications equipment, and other pooled equipment.
Internal contributions to support this fund are based on cost recovery through charges to user departments
and funds. These charges do not include the cost of equipment replacement.
Stores Services - Accounts for the costs of operating a centralized warehouse used by the City.
Telecommunications - This fund is used to account for the expenses related to the acquisition of
communications equipment and ongoing maintenance of the telephone network including the main
telephone switch, voice mail system, pagers, cell phones, and fax machines. Internal contributions to support
this fund are based on cost recovery through user departments and funds. These charges do not include the
cost of equipment replacement.
Risk Management - Accounts for the expenses of the City's insurance program, including costs related to
claims, administration, legal defense, and insurance premiums. Internal contributions to support this fund are
based on cost recovery through charges to departments and funds. The following insurance activities are
provided for in this fund:
Workers' Compensation Insurance
Liability Insurance
Group Health Insurance
125
City of Santa Cruz
Combining Statement of Net Assets
All Internal Service Funds
June 30, 2006
Equipment Stores Tele- Risk

Operations Services communications Management Total
ASSETS
Current assets:
Cash and cash equivalents $ 561,266 $ 100,441 $ 94,620 $ 5,785,328 $ 6,541,655
Restricted cash and cash equivalents - - - - -
Interest receivable 5,004 954 612 51,586 58,156
Accounts receivable - net 31,006 - - 688 31,694
Due from other funds - - - - -
Prepaid items 3,394 5,000 192 1,153 9,739
Inventories - 129,288 - - 129,288
Deposits - - - 1,149,427 1,149,427
Total current assets 600,670 235,683 95,424 6,988,182 7,919,959
Noncurrent assets:
Capital assets:
Machinery and equipment 394,110 - 746,577 8,160 1,148,847
Software - - 336,296 - 336,296
Less accumulated depreciation (311,609) - (895,247) (5,032) (1,211,888)
Total capital assets
(net of accumulated depreciation) 82,501 - 187,626 3,128 273,255
Total noncurrent assets 82,501 - 187,626 3,128 273,255
Total assets $ 683,171 $ 235,683 $ 283,050 $ 6,991,310 $ 8,193,214
LIABILITIES
Accounts payable and other current liabilities $ 129,800 $ 8,072 $ 64,823 $ 262,353 $ 465,048
Due to other funds 5,004 953 672 5,049 11,678
Deposits payable - - - 152 152
Claims and judgments payable 27,204 - - 3,012,267 3,039,471
due in less than one year 21,036 - - - 21,036
Total current liabilities 183,044 9,025 65,495 3,279,821 3,537,385
Claims and judgments payable - - - 7,967,819 7,967,819
Compensated absences payable 13,602 - - - 13,602
due in more than one year - - - - -
Total noncurrent liabilities 13,602 - - 7,967,819 7,981,421
Total liabilities 196,646 9,025 65,495 11,247,640 11,518,806
NET ASSETS
Invested in capital assets, net of related debt 61,465 - 187,626 3,128 252,219
Restricted for:
Debt service - - - - -
Unrestricted 425,060 226,658 29,929 (4,259,458) (3,577,811)
Total net assets $ 486,525 $ 226,658 $ 217,555 $ (4,256,330) $ (3,325,592)
126
City of Santa Cruz
Combining Statement of Revenues, Expenses and Changes in Net Assets

OPERATING REVENUES:
Charges for services - internal $ 2,571,473 $ 161,393 $ 197,832 $ 6,089,485 $ 9,020,183

Charges for services - external 129,442 - 42,216 12,302 183,960
Other revenues 13,015 - - 108,251 121,266
Total operating revenues 2,713,930 161,393 240,048 6,210,038 9,325,409
OPERATING EXPENSES:
Personnel services 764,561 - 96,632 430,738 1,291,931

Services, supplies, and other charges 1,695,332 128,100 199,438 4,202,482 6,225,352
Depreciation and amortization 19,638 - 64,329 1,632 85,599
Total operating expenses 2,479,531 128,100 360,399 4,634,852 7,602,882
Operating income (loss) 234,399 33,293 (120,351) 1,575,186 1,722,527
NONOPERATING REVENUES (EXPENSES):
Investment earnings 13,761 2,818 2,164 142,670 161,413

Interest expense and fiscal charges (3,138) - (290) - (3,428)
Total nonoperating revenues (expenses) 10,623 2,818 1,874 142,670 157,985
Income (loss) before transfers 245,022 36,111 (118,477) 1,717,856 1,880,512
Transfers out (16,459) (3,218) (1,621) (14,272) (35,570)
Change in net assets 228,563 32,893 (120,098) 1,703,584 1,844,942
NET ASSETS:
Beginning of year 257,962 193,765 337,653 (5,959,914) (5,170,534)
End of year $ 486,525 $ 226,658 $ 217,555 $ (4,256,330) $ (3,325,592)
127
City of Santa Cruz
Combining Statement of Cash Flows

CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and users $ 119,746 $ - $ 42,216 $ 42,384 $ 204,346
Cash received from interfund services provided 2,583,115 151,402 198,030 6,090,986 9,023,533
Cash payments to suppliers for goods and services (1,719,144) (152,327) (155,695) (3,967,942) (5,995,108)
Cash payments to employees for services (772,133) - (96,632) (170,107) (1,038,872)
Cash received from (payments to) others 13,015 - - 108,251 121,266
Net cash provided (used) by operating activities 224,599 (925) (12,081) 2,103,572 2,315,165
CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES:
Transfers out (16,459) (3,218) (1,621) (14,272) (35,570)
Net cash provided (used) by
noncapital financing activities (16,459) (3,218) (1,621) (14,272) (35,570)
CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES:
Principal paid on capital debt (42,040) - (11,965) - (54,005)
Interest paid on capital debt (3,138) - (290) - (3,428)
Net cash provided (used) by capital
and related financing activities (45,178) - (12,255) - (57,433)
CASH FLOWS FROM INVESTING ACTIVITIES:

Interests receivable (1,526) (126) 187 (24,348) (25,813)
Investment income received 13,761 2,818 2,164 142,670 161,413
Net cash provided (used) by investing activities 12,235 2,692 2,351 118,322 135,600
Net increase (decrease) in cash and cash equivalents 175,197 (1,451) (23,606) 2,207,622 2,357,762
CASH AND CASH EQUIVALENTS:

Beginning of year 386,069 101,892 118,226 3,577,706 4,183,893
End of year $ 561,266 $ 100,441 $ 94,620 $ 5,785,328 $ 6,541,655
RECONCILIATION OF OPERATING INCOME (LOSS) TO

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating income (loss) $ 234,399 $ 33,293 $ (120,351) $ 1,575,186 $ 1,722,527
Adjustments to reconcile operating income (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization 19,638 - 64,329 1,632 85,599
Changes in current assets and liabilities:
Accounts receivable (9,696) - - 30,082 20,386
Due from other funds 10,116 - - - 10,116
Prepaid items (84) (5,000) (10) 503 (4,591)
Inventories - (19,340) - - (19,340)
Deposits - - - 81,781 81,781
Accounts payable and other current liabilities (23,728) 113 43,753 152,256 172,394
Due to other funds 1,526 (9,991) 198 1,349 (6,918)
Deposits payable - - - 152 152
Claims and judgments payable 27,204 - - 260,631 287,835
Compensated absences payable (34,776) - - - (34,776)
Total adjustments (9,800) (34,218) 108,270 528,386 592,638
Net cash provided (used) by operating activities $ 224,599 $ (925) $ (12,081) $ 2,103,572 $ 2,315,165
128
Private-Purpose Trust Funds
McCaskill Trust - Local History - is restricted in purpose to promulgate local history. The principal and
income benefit the Library Joint Powers Authority,
McCaskill Trust - Visually Impaired - is restricted in purpose to providing library materials for the visually
impaired. The principal and income benefit the Library Joint Powers Authority.
The Finkeldey Trust - is restricted in purpose for the acquisition of musical literature. The principal and
income benefit the Library Joint Powers Authority.
129
City of Santa Cruz
Combining Statement of Fiduciary Net Assets
June 30, 2006
McCaskill McCaskill Total

Trust - Local Trust - Visually Finkeldey Private-Purpose
History Impaired Trust Trust Funds
ASSETS
Cash and cash equivalents $ 260,175 $ 247,683 $ 11,128 $ 518,986

Receivables:
Interest receivable 2,498 2,378 107 4,983
Total assets 262,673 250,061 11,235 523,969
NET ASSETS
Held in trust for library programs $ 262,673 $ 250,061 $ 11,235 $ 523,969
130
City of Santa Cruz
Combining Statement of Changes in Fiduciary Net Assets
McCaskill McCaskill Total

Trust - Local Trust - Visually Finkeldey Private-Purpose
History Impaired Trust Trust Funds
ADDITIONS:
Investment earnings $ 7,718 $ 7,371 $ 346 $ 15,435
Total additions 7,718 7,371 346 15,435
DEDUCTIONS:
Library programs 5,000 6,300 755 12,055
Total deductions 5,000 6,300 755 12,055
Change in net assets 2,718 1,071 (409) 3,380
NET ASSETS:
Beginning of year 259,955 248,990 11,644 520,589
End of year $ 262,673 $ 250,061 $ 11,235 $ 523,969
131
132
Agency Funds
Library Joint Powers Authority - Used to account for funds held by the City in an agency capacity
for the Library Joint Powers Authority, which was established to finance the operations of the former
City/County library system.
Trust Deposit Holding - This fund is used to hold cash deposits received from outside parties on a
temporary basis.
Payroll Payables - Used to account for cash transferred from various funds to pay for payroll
liabilities, which are paid out of this fund.
Special Assessments - Accounts for assets held by the City in an agency capacity for special
assessment districts. The City acts as agent for collection of principal and interest payments from the
property owners and remits these monies to the bondholders. If funds are not available, the City is
under no obligation to make bond payments from its own funds.
133
City of Santa Cruz
Combining Statement of Fiduciary Net Assets
Agency Funds
June 30, 2006
Library Trust Total

Joint Powers Deposit Payroll Special Agency
Authority Holding Payables Assessments Funds
ASSETS
Cash and cash equivalents $ 510,464 $ 521,125 $ 276,417 $ 178,624 $ 1,486,630

Investments - - - 89,494 89,494
Receivables:
Interest receivable 10,813 1,472 - 1,975 14,260
Taxes receivable 553,799 - - 9,885 563,684
Accounts receivable 527,368 - - - 527,368
Due from other governments 16,467 - - - 16,467
Prepaid Items - - - - -
Total assets $ 1,618,911 $ 522,597 $ 276,417 $ 279,978 $ 2,697,903
LIABILITIES
Accounts payable and

other current liabilities $ 492,512 $ 5,521 $ 276,417 $ - $ 774,450
Due to other governments 1,110,680 - - - 1,110,680
Deferred revenue 15,024 - - - 15,024
Deposits payable 695 517,076 - - 517,771
Payable to bondholders - - - 279,978 279,978
Total liabilities $ 1,618,911 $ 522,597 $ 276,417 $ 279,978 $ 2,697,903
134
City of Santa Cruz
Combining Statement of Changes in Assets and Liabilities
Agency Funds
Balance Balance
Library Joint Powers Authority

Assets:
Cash and cash equivalents $ 123,394 $ 12,254,664 $ 11,867,594 $ 510,464
Receivables:
Taxes receivable 508,031 553,799 508,031 553,799
Accounts receivable 520,779 652,470 645,881 527,368
Due from other governments 466 16,467 466 16,467
Prepaid Items 46,710 - 46,710 -
Total assets $ 1,204,609 $ 13,500,713 $ 13,086,411 $ 1,618,911

Liabilities:
Accounts payable and other current liabilities $ 553,875 $ 3,040,565 $ 3,101,928 $ 492,512
Due to other governments 640,532 470,148 - 1,110,680
Deferred revenue 10,202 233,920 229,098 15,024
Deposit payable - 695 - 695
Total liabilities $ 1,204,609 $ 3,745,328 $ 3,331,026 $ 1,618,911
Trust Deposit Holding

Assets:
Cash and cash equivalents $ 446,306 $ 1,449,177 $ 1,374,358 $ 521,125
Interest receivable 847 5,089 4,464 1,472
Total assets $ 447,153 $ 1,454,266 $ 1,378,822 $ 522,597

Liabilities:
Accounts payable and other current liabilities $ 13,302 $ 1,065,954 $ 1,073,735 $ 5,521
Deposits payable 433,851 1,448,069 1,364,844 517,076
Total liabilities $ 447,153 $ 2,514,023 $ 2,438,579 $ 522,597
Payroll Payables
Assets:
Cash and cash equivalents $ 1,079,595 $ 65,111,898 $ 65,915,076 $ 276,417
Total assets $ 1,079,595 $ 65,111,898 $ 65,915,076 $ 276,417

Liabilities:
Accounts payable and other current liabilities $ 1,079,595 $ 1,913,355,891 $ 1,914,159,069 $ 276,417
Total liabilities $ 1,079,595 $ 1,913,355,891 $ 1,914,159,069 $ 276,417
Special Assessments
Assets:
Cash and cash equivalents $ 144,213 $ 205,101 $ 170,690 $ 178,624
Investments 91,632 - 2,138 89,494
Receivables:
Taxes receivable 7,891 9,885 7,891 9,885
Total assets $ 245,193 $ 218,933 $ 184,148 $ 279,978

Liabilities:
Accounts payable and other current liabilities $ 1,735 $ 1,346 $ 3,081 $ -
Payable to bondholders 243,458 36,520 - 279,978
Total liabilities $ 245,193 $ 37,866 $ 3,081 $ 279,978
135
136
STATISTICAL SECTION
(Unaudited)
This part of the City of Santa Cruz's comprehensive annual financial report presents detailed information
as a context for understanding what the information in the financial statements, note disclosures, and
required supplementary information says about the city's overall financial health.
Contents Page
Financial Trends
These tables contain trend information to help the reader understand how the city's financial
performance and well-being have changed over time.
Revenue Capacity
These tables contain information to help the reader assess the city's most significant local
revenue source, the property tax.
Debt Capacity
These tables present information to help the reader assess the affordability of the city's current
levels of outstanding debt and the city's ability to issue additional debt in the future.
Demographic and Economic Information

These tables offer demographic and economic indicators to help the reader understand the
environment within which the city's financial activities take place.
Operating Information
These tables contain service and infrastructure data to help the reader understand how the
information in the city's financial report relates to the services the city provides and the
activities it performs.
Sources: Unless otherwise noted, the information in these tables is derived from the
comprehensive annual financial reports for the relevant year.
137
This page is intentionally left blank.
138
City of Santa Cruz TABLE 1
Net Assets By Component
Last Four Fiscal Years
Fiscal Year Ended June 30

2003 2004 2005 2006
net of related debt $ 136,369,360 $ 136,556,019 $ 139,024,926 $ 142,216,967
Restricted 10,441,164 11,411,611 10,105,142 12,132,237
Unrestricted 16,662,826 12,267,438 18,695,330 19,428,634
Total governmental activities net assets $ 163,473,350 $ 160,235,068 $ 167,825,398 $ 173,777,838
Restricted - - 704,469 -
Unrestricted 62,492,429 58,267,139 57,125,277 78,560,182
Total business-type activities net assets $ 231,368,853 $ 232,662,289 $ 237,818,315 $ 242,835,587
Primary government:
Restricted 10,441,164 11,411,611 10,809,611 12,132,237
Unrestricted 79,155,255 70,534,577 75,820,607 97,988,816
Total primary government net assets $ 394,842,203 $ 392,897,357 $ 405,643,713 $ 416,613,425
The City of Santa Cruz implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not
available.
Source: City of Santa Cruz Finance Department
139
Changes in Net Assets

2003 2004 2005 2006
Expenses
General government $ 10,382,020 $ 11,451,699 $ 9,889,427 $ 9,755,194
Public safety 23,770,732 27,054,407 27,218,149 27,227,214
Parks and recreation 12,312,469 13,022,089 11,944,976 11,715,023
Library 8,441,896 8,697,195 8,934,173 9,179,637
Public works 9,790,984 9,618,748 7,801,586 9,047,430
Transit 569,247 588,183 586,896 624,214
Community and economic development 8,265,841 7,140,903 7,719,248 7,414,895
Social services 1,976,456 1,803,125 1,715,326 2,563,680
Interest and fiscal charges 979,508 1,126,311 1,066,994 883,866
Total governmental activities expenses 76,489,153 80,502,660 76,876,775 78,411,153
Water 13,994,913 13,707,644 14,643,440 15,204,565
Wastewater 14,824,444 15,456,161 15,524,855 16,192,904
Refuse 14,824,819 14,924,093 14,581,347 12,700,841
Parking 2,222,770 2,471,710 2,565,800 2,960,225
Storm Water 2,165,345 1,956,563 2,150,359 1,925,661
Golf course 1,745,322 1,811,128 1,781,330 2,325,920
Total business-type activities expenses 49,777,613 50,327,299 51,247,131 51,310,116
Total primary government expenses $ 126,266,766 $ 130,829,959 $ 128,123,906 $ 129,721,269
Program Revenues
General government $ 3,945,684 $ 3,938,389 $ 3,814,053 $ 4,662,211
Public safety 1,950,228 2,760,629 3,230,321 3,041,137
Library 7,005,781 7,672,089 8,152,865 8,478,112
Public works 3,459,306 3,083,205 4,008,187 4,253,232
Transit - - - 66,643
Community and economic development 432,651 110,889 115,183 996,327
Operating grants and contributions 3,979,717 3,165,361 2,829,078 2,125,537
Capital grants and contributions 5,823,628 4,864,757 5,141,507 2,499,565
Total governmental activities program revenues 30,395,708 29,551,576 30,154,809 29,313,957
Water 14,278,839 15,687,800 17,283,215 19,480,617
Wastewater 11,461,188 11,664,391 11,911,915 13,079,711
Refuse 13,341,636 14,583,240 14,562,560 13,525,848
Parking 2,209,631 2,478,911 2,635,129 2,654,549
Storm Water 892,378 862,150 872,569 869,490
Golf course 1,867,914 1,933,684 992,439 1,608,752
Operating grants and contributions 85,446 138,515 369,968 15,704
Capital grants and contributions 2,312,416 3,391,001 6,439,375 2,480,435
Total business-type activities program revenues 46,449,448 50,739,692 55,067,170 53,715,106
Total primary government program revenues 76,845,156 80,291,268 85,221,979 83,029,063
Net (expense)/revenue:
Governmental activities (46,093,445) (50,951,084) (46,721,966) (49,097,196)
Business-type activities (3,328,165) 412,393 3,820,039 2,404,990
Total primary government net (expense)/revenue $ (49,421,610) $ (50,538,691) $ (42,901,927) $ (46,692,206)
140
Changes in Net Assets

2003 2004 2005 2006
General Revenues and Other Changes in Net Assets
Taxes
Property taxes $ 15,078,406 $ 15,792,225 $ 16,476,980 $ 22,384,981
Sales and use taxes 8,291,244 9,084,026 11,383,231 11,738,917
Frachise taxes 3,132,743 3,329,454 3,478,971 2,136,686
Transient occupancy taxes 2,932,256 3,016,463 3,067,869 3,385,148
Utility users taxes 7,592,049 7,638,926 8,080,171 8,304,371
Admission taxes 1,664,150 1,724,330 1,629,164 1,715,133
Other taxes 2,000,338 2,480,973 2,107,273 2,303,363
Unrestricted grants and contributions 4,526,808 2,565,897 4,562,277 1,121,274
Investment earnings 1,095,006 437,672 846,634 1,380,087
Gain (loss) on sale of assets (4,963) 716,218 60,093 24,318
Extraordinary items 477,109 - - -
Miscellaneous 673,184 679,168 577,892 487,841
Transfers 57,444 334,346 78,584 67,517
Total governmental activities 47,515,774 47,799,698 52,349,139 55,049,636
Unrestricted grants and contributions - 250 222 -
Investment earnings 2,421,200 717,261 1,469,180 2,079,379
Gain (loss) on sale of assets 60,717 (11,712) - 91,920
Miscellaneous 545,733 108,532 97,529 508,500
Transfers (57,444) (334,346) (78,584) (67,517)
Total business-type activities 2,970,206 479,985 1,488,347 2,612,282
Total primary government $ 50,485,980 $ 48,279,683 $ 53,837,486 $ 57,661,918
Change in Net Assets
Governmental activities $ 1,422,329 $ (3,151,386) $ 5,627,173 $ 5,952,440
Business-type activities (357,959) 892,378 5,308,386 5,017,272
Total primary government $ 1,064,370 $ (2,259,008) $ 10,935,559 $ 10,969,712
The City of Santa Cruz implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is
not available.
141
City of Santa Cruz
Fund Balances of Governmental Funds
Last Ten Fiscal Years

1997 1998 1999 2000
General Fund
Reserved $ 6,499,142 $ 9,540,038 $ 5,600,632 $ 6,215,738
Unreserved, designated - - - -
Unreserved, undesignated 14,415,539 9,939,971 11,351,018 12,011,261
Total General Fund $ 20,914,681 $ 19,480,009 $ 16,951,650 $ 18,226,999
All other governmental funds

Reserved $ 4,684,281 $ 5,458,871 $ 10,138,359 $ 11,383,565
Unreserved, designated, reported in:
Redevelopment Agency fund 1,632,264 1,416,538 1,236,971 1,210,456
Special revenue funds - - - -
Debt service funds - - 1,502,558 890,922
Capital projects funds - - - -
Redevelopment Agency fund - - - -
Special revenue funds 968,407 1,467,435 1,418,246 (63,288)
Capital projects funds 3,076,335 1,839,601 2,158,532 1,508,205
Total all other governmental funds $ 10,361,287 $ 10,182,445 $ 16,454,666 $ 14,929,860
142
TABLE 3

2001 2002 2003 2004 2005 2006
$ 4,906,611 $ 4,008,809 $ 5,237,443 $ 4,388,586 $ 3,870,996 $ 4,327,113

5,194,894 6,392,382 5,922,853 7,638,171 7,435,828 7,120,993
9,170,827 6,974,625 4,806,652 5,964,197 8,729,971 11,354,586
$ 19,272,332 $ 17,375,816 $ 15,966,948 $ 17,990,954 $ 20,036,795 $ 22,802,692
$ 13,204,616 $ 14,174,955 $ 12,311,339 $ 13,691,282 $ 10,721,195 $ 11,148,536
1,351,077 994,997 4,014,256 3,987,557 6,497,637 7,958,925

- - 589,008 509,404 476,904 536,451
1,092,974 2,591,507 - - 557,277 707,775
- - 470,840 457,945 91,180 92,641
- (948,602) (55,035) - - -
861,078 660,747 1,747,678 2,207,906 3,185,320 3,341,962
671,223 1,558,754 446,564 (1,444,460) 2,196,529 281,931
$ 17,180,968 $ 19,032,358 $ 19,524,650 $ 19,409,634 $ 23,726,042 $ 24,068,221
143
144
Changes in Fund Balances of Governmental Funds

2003 2004 2005 2006
Revenues
Taxes $ 40,691,186 $ 42,529,756 $ 46,268,500 $ 52,035,729
Licenses and permits 614,012 529,649 603,344 615,448
Intergovernmental 14,011,928 10,258,114 11,479,068 5,696,237
Charges for services 16,952,167 17,191,373 17,968,817 19,347,463
Fines and forfeitures 1,587,698 1,805,734 2,032,817 1,965,235
Use of money and property 2,859,096 2,345,707 2,821,174 3,234,159
Other revenues 449,907 592,012 686,853 1,049,925
Total revenues 77,165,994 75,252,345 81,860,573 83,944,196
Expenditures
General government 9,673,413 8,967,025 9,390,901 9,666,858
Public safety 22,920,677 24,843,763 26,692,313 26,938,629
Library 8,412,201 8,528,577 8,980,823 9,250,499
Public works 5,592,617 4,539,192 4,248,358 4,158,916
Transit 569,247 588,183 586,896 624,214
Community and economic development 7,954,378 6,332,156 6,640,932 8,436,468
Social services 1,976,456 1,803,125 1,715,326 1,693,267
Capital outlay 11,340,680 9,553,173 7,846,456 11,921,789
Debt service:
Principal 1,116,090 1,718,937 2,231,549 1,149,776
Interest and fiscal charges 839,345 851,721 966,238 921,517
Bond issuance costs - - 276,569 -
Total expenditures 80,168,450 77,447,081 79,170,343 84,164,462
Excess of revenues
over (under) expenditures (3,002,456) (2,194,736) 2,690,230 (220,266)
Other financing sourses (uses)

Proceeds from asset dispositions 777,750 756,823 139,104 25,256
Proceeds from long-term debt issued - - 5,825,000 3,200,000
Premiums on bonds sold - - 23,994 -
Payment to refunded bond escrow agent - - (2,571,681) -
Transfers in 1,565,684 3,244,346 1,928,681 861,257
Transfers out (1,357,286) (2,139,754) (1,793,079) (758,170)
Total other financing sources (uses) 986,148 1,861,415 3,552,019 3,328,343
Net change in fund balances $ (2,016,308) $ (333,321) $ 6,242,249 $ 3,108,077
Debt service as a percentage of noncapital

expenditures 2.8% 3.8% 4.9% 2.9%
The City of Santa Cruz implemented GASB 34 for the fiscal year ended June 30, 2003. Prior to that implementation, expenditure amounts were
categorized differently in the fund statements. Information is not available now to reclassify those prior years' expenditures into comparable
categories for this table.
145
City of Santa Cruz
General Governmental Tax Revenues by Source1
Fiscal Year
Ended Sales Transient Utility
June 30 Property and Use2 Franchise Occupancy Users Admission
1997 $ 9,192,280 $ 10,314,425 $ 1,695,707 $ 2,710,994 $ 6,338,533 $ 1,511,605

1998 9,784,131 7,191,934 1,736,039 2,716,397 6,557,490 1,539,111
1999 10,484,409 7,415,341 2,476,604 3,174,694 6,912,440 1,502,540
2000 12,176,209 8,857,748 2,771,014 3,541,396 7,149,619 1,583,897
2001 13,342,450 9,790,693 2,851,830 3,900,905 8,246,829 1,611,318
2002 14,944,971 9,126,341 2,996,907 3,131,378 7,627,331 1,612,526
2003 15,629,920 8,291,244 3,132,743 2,932,256 7,592,049 1,664,150
2004 15,792,225 9,084,026 3,329,454 3,016,463 7,638,926 1,724,330
5
2005 16,501,921 11,383,231 3,478,971 3,067,869 8,080,171 1,629,164
6
2006 22,348,981 11,738,917 2,136,686 3,385,148 8,304,371 1,715,133
Notes:
1 This table includes all governmental fund types.
2 Fiscal year 1997 includes a half-cent sales tax override (Measure E) for earthquake repairs. This half-cent override ended
March 31, 1997.
3 Beginning with fiscal year 2003, business improvement taxes include the Co-op Retail Management Business Real Property
Improvement District.
4 Prior to fiscal year 2003, business license taxes were shown in permits and licenses.
5 A new quarter-cent sales tax override was implemented in fiscal year 2005. This temporary tax is scheduled to end on June
30, 2009.
6 Includes amounts for Property Taxes In Lieu of Vehicle License Fees
146
TABLE 5
Parks and
Business Property Business Recreation
Parking Improvement3 Transfer License4 Facilities Total
$ 158,576 $ 168,736 $ 136,174 $ - $ - $ 32,227,030

147,877 175,114 162,915 - - 30,011,008
192,352 167,500 186,624 - - 32,512,504
158,229 170,369 219,132 - - 36,627,613
178,373 183,711 200,041 - - 40,306,150
194,646 175,868 194,632 - - 40,004,600
199,371 273,965 191,042 784,446 551,514 41,242,700
221,133 296,536 276,466 792,893 357,305 42,529,757
221,790 292,422 325,305 777,308 510,348 46,268,505
229,629 316,742 562,723 777,068 417,202 51,932,606
147
General Fund Revenues by Source
Fiscal Year Licenses Charges Fines Use of Money

Ended and Inter- for and and Other Earthquake
June 30 Taxes Permits Governmental Services Forfeitures Property Revenues Relief Total
1997 $ 25,857,144 $ 1,335,623 $ 3,296,590 $ 8,450,778 $ 1,169,823 $ 4,057,707 $ 219,250 $ 654,926 $ 45,041,841
1998 23,292,917 1,366,948 3,410,230 6,290,188 1,064,554 3,623,968 280,513 - 39,329,318
1999 24,918,906 1,397,862 4,170,892 6,729,820 1,397,833 3,794,000 213,496 - 42,622,809
2000 27,646,368 1,595,964 4,732,311 6,566,033 1,347,496 3,574,121 324,802 - 45,787,095
2001 30,258,503 1,342,471 5,281,661 7,009,901 1,286,990 4,152,368 327,692 - 49,659,586
2002 29,238,472 1,267,939 5,339,612 7,151,012 1,282,697 3,577,774 397,896 - 48,255,402
2003 30,027,154 614,012 4,788,035 16,693,936 1,555,481 2,252,373 308,104 - 56,239,095
2004 31,696,322 529,649 3,745,601 16,865,754 1,799,557 2,086,163 418,764 - 57,141,810
2005 34,384,206 603,344 5,465,642 17,799,213 2,022,779 2,333,922 276,565 - 62,885,671
2006 39,495,863 615,448 1,073,997 19,062,464 1,962,697 2,541,909 216,721 - 64,969,099
Notes:
Beginning in fiscal year 2003, charges for personnel services provided to the Library Joint Powers
Authority were included in General Fund charges for services, as well as charges for interfund personnel
services provided.Also, prior to fiscal year 2003, business license taxes were shown in licenses and permits.
148
Assessed Value of Taxable Property

Fiscal Year Total Total

Ended Real Property Personal Assessed Direct Tax
June 30 Residential Commercial Other Total Property Value Rate
1997 $ 2,573,274,660 $ 393,559,654 $ 60,547,639 $ 3,027,381,953 $ 176,491,197 $ 3,203,873,150 0.000%

1998 2,672,618,165 398,841,413 80,522,177 3,151,981,755 176,321,921 3,328,303,676 0.000%
1999 2,760,380,015 449,610,460 87,470,143 3,297,460,618 186,050,833 3,483,511,451 0.000%
2000 2,980,522,986 510,282,517 92,665,671 3,583,471,174 198,830,667 3,782,301,841 0.009%
2001 3,193,569,036 537,141,067 113,773,535 3,844,483,638 207,913,809 4,052,397,447 0.009%
2002 3,494,071,877 611,373,783 111,624,535 4,217,070,195 237,668,331 4,454,738,526 0.009%
2003 3,657,553,824 663,946,747 122,103,592 4,443,604,163 237,898,436 4,681,502,599 0.009%
2004 3,882,699,208 700,948,081 123,781,647 4,707,428,936 225,168,674 4,932,597,610 0.009%
2005 4,150,085,545 755,991,976 126,848,221 5,032,925,742 217,439,195 5,250,364,937 0.009%
2006 4,563,844,105 788,484,799 110,751,935 5,463,080,839 216,627,737 5,679,708,576 0.009%
Notes:
Total Direct Tax Rate is from Table 8.
With the passage of a constitutional amendment (Proposition 13) and subsequently enacted State legislation, property is assessed
according to a base year rather than on a percentage of market value. Accordingly, a reliable estimate of actual value of taxable
property within the City is not possible.
Source County of Santa Cruz Auditor-Controller's Office

County of Santa Cruz Assessor's Office
149
1
Direct and Overlapping Property Tax Rates

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Direct Rates:
Debt service $ - $ - $ - $ 0.009 $ 0.009 $ 0.009 $ 0.009 $ 0.009 $ 0.009 $ 0.009
Total Direct Rate - - - 0.009 0.009 0.009 0.009 0.009 0.009 0.009
Overlapping Rates2:
County3 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
School Districts:
Cabrillo College - - 0.014 0.007 0.012 0.021 0.019 0.019 0.038 0.037
Santa Cruz Schools - - 0.038 0.016 0.077 0.067 0.075 0.074 0.068 0.081
Bonny Doon Schools 0.066 0.056 0.056 0.019 0.021 0.035 0.036 0.034 0.033 0.029
Live Oak Schools 0.072 0.058 0.052 0.050 0.046 0.043 0.037 0.023 0.042 0.043
Scotts Valley Schools 0.024 0.087 0.087 0.077 0.073 0.052 0.084 0.055 0.054 0.050
Total Overlapping Rate 1.162 1.201 1.247 1.169 1.229 1.218 1.251 1.205 1.235 1.240
Total Direct and Overlapping Rate $ 1.162 $ 1.201 $ 1.247 $ 1.178 $ 1.238 $ 1.227 $ 1.260 $ 1.214 $ 1.244 $ 1.249
Notes:
1 Rates are per $100.00 of assessed value.
2 Overlapping rates are those of entities that apply to property owners within the City of Santa Cruz. Not all overlapping rates apply
to all property owners (e.g., the rates for school districts apply only to the proportion of the city's property owners whose property is
located within the geographic boundaries of the school district).
3 The passage of a constitutional amendment (Proposition 13) in June 1978 limits the property tax rate to a base of $1.00 per $100.00.
The $1.00 rate is levied by the County and apportioned to local agencies according to a formula perscribed by the California
legislature
Source: Santa Cruz County Auditor - Controller's Office
150
Principal Property Taxpayers

Current Year and Nine Years Ago

2006 1997
Percentage Percentage
of Total of Total
Assessed Assessed Assessed Assessed
Taxpayer Valuation Rank Valuation Valuation Rank Valuation
Cypress Point RE Investors LLC $ 39,802,437 1 0.701% $ - -

Santa Cruz Shaffer Road Investors 31,770,292 2 0.559% - -
Santa Cruz Seaside Co 25,441,083 3 0.448% 23,942,433 2 0.747%
Santa Cruz Hotel LLC 23,478,493 4 0.413% - 0.000%
Frederick Electronics Corporation 22,968,102 5 0.404% 13,238,868 7 0.413%
1010 Pacific Investors 21,672,885 6 0.382% - -
CRRI/Seagate Ocean Street LLC 21,296,667 7 0.375% - -
Cooper House LLC 19,154,186 8 0.337% - 0.000%
Canfield Laurel & Pacific Partnership 17,941,994 9 0.316% - 0.000%
Harmony Partners LLC 17,694,429 10 0.312% - -
Silicon Systems Inc - - 172,212,569 1 5.375%
Thomas J. Lipton, Inc. - - 21,213,275 3 0.662%
Wm. Wrigley Jr. Co. - - 20,553,426 4 0.642%
Fremont Central Investment - - 13,688,624 5 0.427%
The Price Company - - 13,239,577 6 0.413%
Pacific Square Ltd Partners - - 11,209,800 8 0.350%
Outlook Apartments - - 9,674,950 9 0.302%
Sequoia Equities III, LLC - - 8,717,000 10 0.272%
Totals $ 241,220,568 4.247% $ 307,690,522 9.604%
Total assessed value $ 5,679,708,576 $ 3,203,873,150
Notes:
Taxpayers and values presented in this table reflect the County's Assessment Roll Reports.
The total assessed value is from Table 7.
Source: County of Santa Cruz Assessor's Office
151
152
1
Property Tax Levies and Collections
Outstanding
Fiscal Total Delinquent
Year Percent Delinquent Total Collections Outstanding Taxes as
Ended Total Tax Current Tax of Levy Tax Tax as Percent of Delinquent Percent of
June 30 2 2
Levy Collections Collected Collections Collections Current Levy Taxes Current Levy
1997 $ 8,800,364 $ 8,800,364 100.0% $ - $ 8,800,364 100.0% $ - -

1998 9,396,855 9,396,855 100.0% - 9,396,855 100.0% - -
1999 10,104,672 10,104,672 100.0% - 10,104,672 100.0% - -
2000 11,732,295 11,732,295 100.0% - 11,732,295 100.0% - -
2001 12,516,202 12,516,202 100.0% - 12,516,202 100.0% - -
2002 14,190,378 14,190,378 100.0% - 14,190,378 100.0% - -
2003 14,639,056 14,639,056 100.0% - 14,639,056 100.0% - -
2004 15,335,693 15,335,693 100.0% - 15,335,693 100.0% - -
2005 16,013,591 16,013,591 100.0% - 16,013,591 100.0% - -
2006 18,191,952 18,191,952 100.0% - 18,191,952 100.0% - -
Notes:
1 This table includes levies and collections for the Redevelopment Agency.
2 Because it adopted a new method of distributing property taxes (commonly referred to as the "Teeter Plan"), the County is
now responsible for all delinquent secured property taxes.
3 Does not include amounts for Property Taxes in Lieu of Vehicle License Fees
Source: County of Santa Cruz Auditor-Controller's Office

City of Santa Cruz Finance Department
153
City of Santa Cruz
Ratios of Outstanding Debt By Type

1997 1998 1999 2000 2001
Governmental Activities:
General obligation bonds $ - $ - $ 6,998,473 $ 7,176,298 $ 7,299,481
Tax allocation bonds 3,755,000 3,690,000 3,540,000 3,385,000 3,225,000
Certificates of participation 598,586 569,946 555,921 518,392 4,890,431
Capital leases - - 854,158 1,583,610 1,649,722
Notes - - - - -
Other - - - - 531,900
Total Governmental Activities 4,353,586 4,259,946 11,948,552 12,663,300 17,596,534
Business-type Activities:
Wastewater revenue bonds 21,335,000 20,570,000 19,745,000 5,210,000 5,085,000
Storm water revenue bonds - - - - -
Water revenue bonds 380,000 - - - -
Golf course revenue bonds 290,000 225,000 155,000 80,000 -
Certificates of Participation 12,315,054 9,221,558 14,251,608 22,339,568 28,985,383
Leases 1,546,663 2,175,315 1,619,560 2,353,054 2,942,887
Notes 45,399,542 51,938,582 50,976,494 48,894,934 47,221,604
Total Business-type Activities 81,266,259 84,130,455 86,747,662 78,877,556 84,234,874
Total Primary Government $ 85,619,845 $ 88,390,401 $ 98,696,214 $ 91,540,856 $ 101,831,408
Personal income $ 1,485,678,852 $ 1,570,062,816 $ 1,709,289,000 $ 1,890,711,810 $ 2,154,291,172

Debt as percentage of personal income 5.76% 5.63% 5.77% 4.84% 4.73%
Population 53,172 53,172 54,575 56,046 55,028
Debt per capita 1,610 1,662 1,808 1,633 1,851
Assessed value 3,203,873,150 4,932,597,610 5,250,364,937 5,679,708,576 4,681,502,599
Debt as percentage of assessed value 2.67% 1.79% 1.88% 1.61% 2.18%
Notes:
Personal income and population figures are from Table 16.
Assessed value is from Table 7.
154
TABLE 11

2002 2003 2004 2005 2006
$ 7,286,115 $ 7,260,759 $ 7,228,152 $ 7,183,381 $ 7,126,075

3,055,000 2,880,000 2,695,000 5,245,000 5,125,000
4,769,607 4,642,350 4,513,661 4,377,108 4,239,123
3,355,410 2,450,555 1,765,216 1,766,635 1,247,913
1,500,000 1,500,000 1,624,706 1,334,942 4,205,026
998,692 985,663 920,263 1,029,804 944,836
20,964,824 19,719,327 18,746,998 20,936,870 22,887,973
4,955,000 4,955,000 4,820,000 4,680,000 4,715,000

- - - - 6,100,000
- - - - 12,450,000
- - - - -
28,047,650 28,047,650 29,831,339 28,662,892 20,915,877
2,926,370 4,624,099 3,939,187 3,108,344 3,145,352
44,988,271 44,883,261 42,593,574 40,240,469 37,822,337
80,917,291 82,510,010 81,184,100 76,691,705 85,148,566
$ 101,882,115 $ 102,229,337 $ 99,931,098 $ 97,628,575 $ 108,036,539
$ 2,096,039,335 $ 2,085,569,904 $ 2,109,542,853 $ 2,247,596,565 $ 2,365,518,375

4.86% 4.90% 4.74% 4.34% 4.57%
55,085 55,633 56,289 56,451 56,925
1,850 1,838 1,775 1,729 1,898
4,932,597,610 4,681,502,599 4,932,597,610 5,250,364,937 5,679,708,576
2.07% 2.18% 2.03% 1.86% 1.90%
155
Ratios of General Bonded Debt Outstanding

Fiscal Less: Amount

Year General Available Percentage Debt
Ended Obligation in Debt of Assessed Per Assessed
June 30 Bonds Service Fund Total Value Capita Value Population
1997 $ - $ - $ - - $ - $3,203,873,150 53,172

1998 - - - - - 3,328,303,676 53,172
1999 6,998,473 12 6,998,461 0.20% 128 3,483,511,451 54,575
2000 7,176,298 125,218 7,051,080 0.19% 126 3,782,301,841 56,046
2001 7,299,481 277,763 7,021,718 0.17% 128 4,052,397,447 55,028
2002 7,286,115 324,117 6,961,998 0.16% 126 4,454,738,526 55,085
2003 7,260,759 389,184 6,871,575 0.15% 124 4,681,502,599 55,633
2004 7,228,153 457,945 6,770,208 0.14% 120 4,932,597,610 56,289
2005 7,183,381 557,277 6,626,104 0.13% 117 5,250,364,937 56,451
2006 7,126,075 707,777 6,418,298 0.11% 113 5,679,708,576 56,925
Notes:
Assessed Value is from Table 7.
Population figure is from Table 16.
156
Computation of Direct and Overlapping Debt

June 30, 2006
2005-2006 Assessed Valuation $ 5,679,708,576

Redevelopment Incremental Valuation: 899,383,880
Adjusted Assessed Valuation: $ 4,780,324,696
Total Percentage Amount

Debt Applicable Applicable
Outstanding to City1 to City
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
Cabrillo Joint Community College District $ 129,113,503 20.003% $ 25,826,574
Santa Cruz High School District 50,973,963 54.374% 27,716,583
Santa Cruz Elementary School District 24,742,596 94.653% 23,419,609
Live Oak School District 12,580,000 3.109% 391,112
Scotts Valley Unified School District 21,000,000 0.012% 2,520
2
City of Santa Cruz 7,126,075 100.000% 7,126,075
City of Santa Cruz 1915 Act Bonds 1,650,000 100.000% 1,650,000
Total Direct and Overlapping Tax and Assessment Debt $ 247,186,137 $ 86,132,473
DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Santa Cruz County Certificates of Participation $ 67,637,248 20.284% $ 13,719,539
Cabrillo Joint Community College District Certificates of Participation 3,040,000 20.003% 608,091
Scotts Valley Unified School District Certificates of Participation 3,985,000 0.012% 478
Santa Cruz City Schools Certificates of Participation 5,545,000 54.374% 3,015,038
Live Oak School District Certificates of Participation 4,000,000 3.109% 124,360
3
City of Santa Cruz General Fund Obligations 8,690,000 100.000% 8,690,000
Santa Cruz Consolidated Emergency Communication Center 950,976 100.000% 950,976
Monterey Bay Unified Air Pollution Control District Authority 3,495,000 7.086% 247,656
4
Total Direct and Overlapping General Fund Debt $ 97,343,224 $ 27,356,138
Combined Total Debt $ 344,529,361 $ 113,488,611
Notes:
1 Percentage of overlapping agency's assessed valuation located within boundaries of the city.
2 Debt is reported at the accreted value.
3 Excludes issues self-supporting from enterprise revenues ($7,515,000).
Includes $5,265,000 for Certificates of Participation that are primarily supported by enterprise revenue. Under the
lease agreement, however, the City is obligated to pay the lease payments from any source of legally available funds.
4 Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and
non-bonded capital lease obligations.
Ratios to 2005-2006 Assessed Valuation:

Direct Debt ($7,126,075) 0.13%
Total Direct and Overlapping Tax and Assessment Debt 1.50%
Ratios to Adjusted Assessed Valuation:

Combined Direct Debt ($15,829,781) 0.35%
Combined Total Debt 2.37%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/06: $0
Source: California Municipal Statistics, Inc.
157
City of Santa Cruz
Legal Debt Margin Information
1997 1998 1999 2000 2001
Debt limit $ 480,580,973 $ 499,245,551 $ 522,526,718 $ 567,345,276 $ 607,859,617
Total net debt applicable to limit - - 6,998,461 7,051,080 7,021,718

Legal debt margin $ 480,580,973 $ 499,245,551 $ 515,528,257 $ 560,294,196 $ 600,837,899
Total net debt applicable to the limit

as a percentage of debt limit 0.00% 0.00% 1.34% 1.24% 1.16%
Notes:
Section 1418 of the Charter of the City of Santa Cruz limits general obligation bond indebtedness to
15% of the total assessed valuation of all real personal property within the City.
Source: County of Santa Cruz Auditor-Controller's Office

City of Santa Cruz Finance Department
158
TABLE 14
2002 2003 2004 2005 2006
$ 668,210,779 $ 702,225,390 $ 739,889,642 $ 787,554,741 $ 851,956,286
6,961,998 6,871,575 6,770,208 6,626,104 6,418,298

$ 661,248,781 $ 695,353,815 $ 733,119,434 $ 780,928,637 $ 845,537,988
1.04% 0.98% 0.92% 0.84% 0.75%
Legal Debt Margin Calculation For Fiscal Year 2005-06:

Total assessed value $5,679,708,576
Debt limit (15% of total assessed value) 851,956,286

Debt applicable to limit:
General obligation bonds (reported at accreted value) 7,126,075
Less: Amount available in debt service fund
for repayment of bonds 707,777
Total net debt applicable to limit 6,418,298
Legal debt margin $ 845,537,988
159
City of Santa Cruz
Pledged-Revenue Coverage

1997 1998 1999 2000 2001 2002
Wastewater Revenue Bonds:
Wastewater charges and other $ 10,579,889 $ 10,730,501 $ 12,179,844 $ 12,846,315 $ 11,585,518 $ 12,146,047
Less: operating expenses 5,984,051 6,054,987 7,379,231 7,856,133 7,275,278 8,929,861
Net available revenue 4,595,838 4,675,514 4,800,613 4,990,182 4,310,240 3,216,186
Debt service:
Principal 405,000 725,000 765,000 115,000 120,000 125,000
Interest 1,309,565 1,234,454 1,227,031 296,608 290,733 284,608
Total 1,714,565 1,959,454 1,992,031 411,608 410,733 409,608
Coverage 2.68 2.39 2.41 12.12 10.49 7.85
Water Revenue Bonds:

Water charges and other $ 13,464,846 $ 14,468,484 $ 14,425,845 $ - $ - $ -
Less: operating expenses 6,987,765 7,319,245 8,546,215 - - -
Net available revenue 6,477,081 7,149,239 5,879,630 - - -

Debt service:
Principal 355,000 380,000 380,000 - - -
Interest 37,402 19,850 9,925 - - -
Total 392,402 399,850 389,925 - - -
Coverage 16.51 17.88 15.08 - - -
Certificates of Participation:
Special assessments and other $ - $ - $ - $ - $ 11,510,578 $ 12,080,193
Less: operating expenses - - - - 8,519,131 9,747,000
Net available revenue - - - - 2,991,447 2,333,193
Debt service:
Principal - - - - 110,000 100,000
Interest - - - - 223,868 537,580
Total - - - - 333,868 637,580
Coverage - - - - 8.96 3.66
Notes:
Details regarding the city's outstanding debt can be found in the notes to the financial statements. Operating
expenses do not include interest or depreciation.
160
TABLE 15

2003 2004 2005 2006
$ 12,306,445 $ 12,230,219 $ 12,578,070 $ 12,394,292

9,415,409 9,855,372 9,964,418 8,591,034
2,891,036 2,374,847 2,613,652 3,803,258
130,000 135,000 140,000 150,000

278,233 271,608 264,733 256,233
408,233 406,608 404,733 406,233
7.08 5.84 6.46 9.36
$ - $ - $ - $ 18,692,531
- - - 11,775,892
- - - 6,916,639
- - - -
- - - 121,517
- - - 121,517
- - - 56.92
$ 12,422,235 $ 13,577,644 $ 13,121,028 $ 13,218,521

10,447,158 11,045,892 11,350,148 9,859,552
1,975,077 2,531,752 1,770,880 3,358,969
145,000 695,000 720,000 755,000

529,300 514,088 487,153 457,327
674,300 1,209,088 1,207,153 1,212,327
2.93 2.09 1.47 2.77
161
Demographic and Economic Statistics
Fiscal Year Total Per Capita Per Capita

Ended Unemployment Personal Personal Taxable Taxable
June 30 Population1 Rate2 Income Income3 Sales4 Sales
1997 53,172 8.5% $ 1,485,679 $ 27,941 $ 550,962 $ 10,362

1998 53,172 7.9% 1,570,063 29,528 680,283 12,794
1999 54,575 7.3% 1,709,289 31,320 634,138 11,620
2000 56,046 6.4% 1,890,712 33,735 725,287 12,941
2001 55,028 5.2% 2,154,291 39,149 828,500 15,056
2002 55,085 5.8% 2,096,039 38,051 809,628 14,698
2003 55,633 7.5% 2,085,570 37,488 761,208 13,683
2004 56,289 7.9% 2,109,543 37,477 761,986 13,537
2005 56,451 7.2% 2,247,597 39,815 795,060 14,084
2006 56,925 6.4% 2,365,518 41,555 813,834 14,297
Notes:
Total Personal Income and Taxable Sales amounts are in thousands.
1
Source: State Department of Finance
2
State Employment Development Department
3
U.S. Department of Commerce
4
State Board of Equalization
162
Principal Employers
June 30, 2006
Fiscal Year Ended June 30, 2006

Percentage
Number of of Total
Employees Rank Employment
Employer:
University of California at Santa Cruz 4,250 1 4.570%

County of Santa Cruz 2,358 2 2.535%
City of Santa Cruz 1,066 3 1.146%
Plantronics 476 4 0.512%
Santa Cruz Beach-Boardwalk 347 5 0.373%
Costco 257 6 0.276%
Community Bridges 212 7 0.228%
Crow's Nest 195 8 0.210%
Santa Cruz Sentinel 174 9 0.187%
Santa Cruz Biotechnology Incorporated 158 10 0.170%
Totals 9,493 10.208%
Total employment1 93,000
This table shows the data for the current fiscal year. Prior years' data is not available in the City's business license database.
Source: City of Santa Cruz Business License database

1
U.S. Department of Labor - Bureau of Labor Statistics
163
1
Number of City Employees by Department
Current Year and Last Year

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Departments:
City Clerk 7 7 7 7 7 7 7 7 7 7
City Manager 5 5 5 5 5 5 5 5 5 4
Human Resources 11 12 12 12 13 13 13 12 12 13
Finance 33 34 34 36 38 38 38 36 35 38
Information Technology - - - - - - - - - -
Police 117 120 122 126 134 136 133 126 124 125
Fire 51 52 53 55 59 59 58 55 54 53
Parks and Recreation 110 113 114 118 126 127 125 118 116 111
Library 112 115 116 120 128 130 127 120 118 119
Public Works 205 209 212 219 235 239 232 219 216 216
Planning and Community Development 27 28 28 30 31 32 31 30 29 27
Redevelopment 8 8 8 8 9 9 9 8 8 9
Water 82 84 85 89 94 96 94 89 87 88
Total 768 787 796 825 879 891 872 825 724 722
Notes:
1 Personnel authorizations budgeted. Figures rounded to whole numbers.
Source: City of Santa Cruz Budget Document
164
Operating Indicators By Function


2003 2004 2005 2006
Function:
City Clerk
Hours for creating the agenda
for posting 326 305 291 **
Advisory body hours ** ** 600 600
Election hours 450 280 180 400
Initiative/referendum petitions
processing hours 40 ** 60 120
Police
Calls for service ** 76,069 76,498 70,065
Cases ** 14,717 14,076 14,212
Fire
Emergency calls 4,606 4,623 4,631 5,006
Inspections 1,603 1,853 1,727 1,794
Parks and Recreation
Number of classes 275 306 305 294
Facility rentals:
Parks 961 892 760 831
Louden Nelson ** 7,753 7,534 7,348
Civic Auditorium 181 146 183 193
Swimming pool ** 200 167 146
Special events produced 32 30 20 22
Library (all locations)
Items checked out 1,877,256 1,856,142 1,899,739 1,975,986
Queries handled 289,726 288,821 293,525 313,496
Open hours/week 470 432 432 438
Pubic Works
Overlay (square footage) - 524,963 - 251,106
Seal coat (square footage) - - - 320,879
Sewer
New connections 144 72 85 106
Average daily flow (MGD) 10.53 9.52 9.92 11.39
Annual total flow (MG) 3,843 3,475 3,621 4,157
Water
Active accounts 23,724 23,799 23,924 24,044
Averge daily consumption (MGD) 10 10 10 9
Annual consumption (MG) 3,603 3,660 3,448 3,340
Averge monthly residential bill $22 $25 $30 $34
This table shows data for the last four fiscal years. Prior years' data is not available.
** Unavailable.
Source: City of Santa Cruz Departments
165
Capital Asset Statistics By Function


1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Function:
Public Safety
Police:
Stations 1 1 1 1 1 1 1 1 1 1
Vehicular patrol units 43 43 55 55 78 78 43 43 61 61
Fire stations 3 3 3 3 3 3 3 3 3 3
Public Parking
Lots 21 19 20 21 23 22 26 20 21 21
Spaces 2,050 1,916 1,369 4,939 5,094 5,235 5,397 5,124 5,149 5,149
Parking meters 2,030 2,014 1,953 1,945 1,741 1,764 1,695 1,714 1,764 1,764
Parks and Recreation
Parks 28 28 29 29 29 30 30 30 30 30
Parks acreage 1,350 1,350 1,450 1,450 1,457 1,970 1,970 1,970 1,970 1,970
Playgrounds 13 13 11 11 11 17 17 17 17 17
Swimming pools 1 1 1 1 1 1 1 1 1 1
Tennis courts 7 7 7 7 7 7 7 7 8 8
Golf course 1 1 1 1 1 1 1 1 1 1
Libraries
Central library 1 1 1 1 1 1 1 1 1 1
Branch libraries within city 2 2 2 2 2 2 2 2 2 2
Branch libraries in county 7 7 8 7 7 7 7 7 7 7
Bookmobile - - - - 1 1 1 1 1 1
Streets
Miles of paved streets 145 145 145 136 136 136 136 136 136 136
Miles of alleys 9 9 9 13 13 13 13 13 13 13
Street lights 2,307 2,310 2,335 2,335 2,800 2,825 2,825 2,893 2,893 2,893
Sewer
Miles of sanitary sewers 200 200 200 208 62 148 148 151 151 151
Miles of storm drains 35 35 35 35 8 50 50 50 50 50
Water
Active accounts 22,557 22,694 23,024 23,064 23,170 23,310 23,590 23,724 23,799 23,924
Miles of water mains 300 300 300 300 300 300 300 300 290 291
Fire hydrants 1,841 1,850 1,890 1,890 1,904 1,913 1,997 2,019 2,089 2,060
Source: City of Santa Cruz Departments
166

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City of Santa Cruz, California

Santa Cruz Coastline

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Year Ended June 30, 2006

Cover by Natalia Duarte

Comprehensive Annual Financial Report

For the Fiscal Year Ended June 30, 2006

Kathryn Mintz Tori Hannah Charlene Pringle

Transmittal Letter ................................................................................................................................................... i

Independent Auditors’ Report........................................................................................................................... 1

Management’s Discussion and Analysis ......................................................................................................... 3

Basic Financial Statements:

Government-Wide Financial Statements:

Fund Financial Statements:

Proprietary Fund Financial Statements:

Fiduciary Fund Financial Statements:

Index to Notes to Basic Financial Statements ............................................................................................49

Notes to Basic Financial Statements ............................................................................................................51

Table of Contents, Continued

Required Supplementary Information:

Non-Major Governmental Funds:

Internal Service Funds:

Table of Contents, Continued

Private-Purpose Trust Funds:

STATISTICAL SECTION (Unaudited)

Net Assets by Component..................................................................................................................................... 139

October 27, 2006

Comprehensive Annual Financial Report

Profile of the Government

Factors Affecting Financial Condition

Economic Conditions and Outlook

Historical Trend Information

City of Santa Cruz

City of Santa Cruz, Sales Tax Trends

Transient Occupancy Tax

City of Santa Cruz,

City of Santa Cruz,

7.6 7.6 7.6

• The “Triple Flip”

Cash management and policies

Mayor Cynthia Mathews

Vice Mayor Emily Reilly Councilmember Mike Rotkin

Councilmember Ryan Coonerty Councilmember Tim Fitzmaurice

Councilmember Ed Porter Councilmember Tony Madrigal

City Manager, Richard C. Wilson

Assistant City Manager .....................................................................Martín Bernal

Chief of Fire ......................................................................................Ron Oliver

Chief of Police...................................................................................Howard Skerry

City Attorney .....................................................................................John G. Barisone

City Clerk ..........................................................................................Lesile Cook

Director of Finance............................................................................Sandra Benoit

Director of Human Resources ...........................................................Adela Gonzalez

Director of Libraries ..........................................................................Anne M. Turner

Director of Parks and Recreation ......................................................Dannettee E. Shoemaker

Director of Planning and Community Development.........................Greg Larson

Director of Public Works and City Engineer ....................................Mark Dettle

Director of Redevelopment Agency..................................................Ceil Cirillo

Director of Water Department...........................................................Bill Kocher

To the Honorable Mayor and Members of the City Council

The accompanying Required Supplementary Information, such as Management’s Discussion and

Financial Highlights – Primary Government (in $ millions)

Overview of the Financial Statements

City of Santa Cruz's Net Assets