2005 financial report cover revised copy · financial statements and schedules provided. this...

Wake County Manager

Wake County Board of Commissioners

David Cooke Tony Gurley

Chair

Michael Ferrell County Attorney Susan J. Banks Clerk to the Board Melinda Canady Finance Director

Harold Webb Vice Chair

Phil Jeffreys Kenn Gardner

Herb Council Joe Bryan Betty Lou Ward

Wake County North Carolina

Comprehensive Annual Financial Report

for the fiscal year ended June 30, 2006

Prepared by the Wake County Finance Department:

Melinda Canady, CPA, Finance Director Susan McCullen, CPA, Deputy Finance Director Amber Cosse, Administrative Assistant Angela Buffaloe, CLGPO, Buyer Angela Mason, Information Technology Technician Ann Marshall, Accounting Technician Audrey Moore, Financial Systems Administrator Camille Schaffer, Senior Accountant Carolyn Watson, Risk Management Specialist Cheryl Spivey, CPA, Debt Manager Cindy Dean, Senior Accounting Technician Frank Bobbitt, CPA, Quality Assurance Manager Jackie Forlines, CPP, Financial Services Manager Jean Blackman, Senior Accounting Technician Joyce Dewar, Administrative Assistant Karen Thiessen, Senior Accountant Kate George, CPA, Risk Manager Kim Lorbacher, CPA, Accounting & Reporting Manager LaWanda Ray, Risk Management Analyst Lisa Austin, Administrative Assistant

Lisa Avery, Payroll Manager Loretta Alston, Executive Secretary Mary Anne McIntire, Investment Analyst Melissa England, Buyer/Contracts Renee Arrington, Accountant Sandy Carrington, Senior Accounting Technician Scott Hanner, Buyer Sheila C. Hopkins, CGAP, Financial Systems Administrator Sonya Hicks, Senior Accounting Technician Stephan Demeritte, Senior Accounting Technician Tamara Williams, Senior Accounting Technician Teresa Mason, Financial Systems Administrator Teresa Wells, Accountant Tom Wester, CLGPO, Purchasing Director Tracey Aviles, Senior Accounting Technician Traci Payne, Project Manager Vera Lane, Accountant Wanda Hughes, Safety Officer

TABLE OF CONTENTS INTRODUCTORY SECTION: Title Page Board of County Commissioners and County Officials Table of Contents Organization Chart Letter of Transmittal GFOA Certificate of Achievement for Excellence in Financial Reporting

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IVVIIIX

XV FINANCIAL SECTION: Independent Auditors’ Report 1 Management’s Discussion and Analysis 2 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 17 Statement of Activities 19 Fund Financial Statements: Balance Sheet – Governmental Funds 20 Reconciliation of Balance Sheet to Statement of Net Assets 22 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 23 Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 25 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual – General Fund 26 Statement of Net Assets – Proprietary Funds 27 Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Funds 28 Statement of Cash Flows – Proprietary Funds 29 Statement of Fiduciary Net Assets 31 Statements of Changes in Fiduciary Net Assets – Fiduciary Funds 32 Notes to the Financial Statements 33 Required Supplementary Information: Required Supplementary Information-Law Enforcement Officers’ Special Separation Allowance 60 General Fund: Comparative Balance Sheets 61 Comparative Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual 62 Statement of Revenues, Expenditures and Changes in Fund Balance - Detailed Budget and Actual 63 Schedules of Revenues, Expenditures, and Changes in Fund Balances – Major Governmental Funds: Affordable Housing Fund, from Inception 70 Debt Service Fund, Budget and Actual 71 Capital Improvements Fund, from Inception 72 School Capital Fund, from Inception 73 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds 74

Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds 75 Combining Balance Sheet – Nonmajor Special Revenue Funds 76 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Special Revenue Funds 77 Combining Balance Sheet – Nonmajor Capital Project Funds 78 Schedules of Revenues, Expenditures, and Changes in Fund Balances Sewer Districts Fund, from Inception 79 Capital Area Workforce Development Fund, from Inception 80 Special Tax Districts Fund, Budget and Actual 81 Revaluation Reserve Fund, from Inception 82 Major Facilities Fund, Budget and Actual 83 911 Special Revenue Fund, from Inception 84 Wake Community College Capital Projects Fund, from Inception 85 State School Bond Fund, from Inception 86 Budgetary Combining Balance Sheet, Solid Waste Operating and Capital Project Funds (Non-GAAP) 87 Solid Waste Fund, Budget and Actual 88 Solid Waste Construction Fund, from Inception 90 Risk Management Fund, Budget and Actual 91 Agency Funds: Combining Statement of Changes in Assets and Liabilities 92 Capital Assets: Schedule of Governmental Capital Assets by Source 94 Schedule of Governmental Capital Assets by Function and Category 95 General Obligation Indebtedness: Schedule of Changes in Governmental Long-term Debt 96 Schedule of Long-Term Debt Maturities and Annual Debt Service Requirements for Governmental Activities

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STATISTICAL SECTION: Table 1 – Net Assets by Component – Last Five Years 98 Table 2 – Changes in Net Assets – Last Five Years 99 Table 3 – Fund Balance of Governmental Funds Last Five Fiscal Years

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Table 4 – Changes in Fund Balance of Governmental Funds Last Five Fiscal Years

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Table 5 – Assessed Value and Actual Value of Taxable Property Last Ten Fiscal Years

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Table 6 – Direct and Overlapping Property Tax Rates Last Ten Fiscal Years

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Table 7 – Principal Property Tax Payers Current Year and Nine Years Ago

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Table 8 – Property Tax Levies and Collections Last Ten Fiscal Years

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Table 9 – Schedule of Ad Valorem Taxes Receivable 107 Table 10 – Analysis of Current Tax Levy – Countywide Levy 108

Table 11 – Ratios of Outstanding Debt by Type Last Ten Fiscal Years

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Table 12 – Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years

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Table 13 – Direct and Overlapping Governmental Activities Debt 111 Table 14 – Legal Debt Margin Information Last Ten Fiscal Years

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Table 15 – Demographic and Economic Statistics Last Ten Fiscal Years

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Table 16 – Principal Employers – Current Year and Nine Years Ago 114 Table 17 – Full-time Equivalent County Government Employees by Function Last Nine Fiscal Years

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Table 18 – Operating Indicators by Function Last Ten Fiscal Years

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Table 19 – Capital Asset Statistics by Function Last Ten Fiscal Years

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Denotes liaison relationship

County Attorney

Budget & Management Services Information Services

Facilities Design & Construction Human Resources

Finance Department Planning Department

General Services Administration Revenue Department

GENERAL GOVERNMENT

Human Services Board of Elections

Community Services Office of the Sheriff

Public Safety Register of Deeds

Environmental Services Wake CountyPublic School System

Workforce Development Wake TechnicalCommunity College

Alcoholic Beverage Control

County Manager Clerk to the Board

Board of County Commissioners

Wake County Citizens

Wake County Government Fiscal Year 2006

October 20, 2006 Residents of Wake County The Honorable Board of County Commissioners Wake County, North Carolina

Maintaining the fiscal strength and stability of County government is a primary goal of the Wake County Board of Commissioners. This Comprehensive Annual Financial Report (Financial Statements) of Wake County, North Carolina, for the fiscal year ended June 30, 2006, reflects the achievement of that goal. Each year this document is prepared to provide you with details about how the County receives, spends and accounts for its money, as well as key indicators of its financial strength. The County’s Finance Department prepares the Financial Statements and assumes all responsibility for the accuracy of the data, the completeness and fairness of the presentation, and all disclosures. We believe the data and presentation are fair and accurate and that you will find everything necessary in this document to gain an understanding of the County’s financial activities over the last fiscal year. Wake County Government’s financial statements have been audited by Cherry, Bekaert & Holland, L.L.P., a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the County 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 statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the County’s financial statements for the fiscal year ended June 30, 2006, are fairly presented in conformity with generally accepted accounting principles. The independent auditor’s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the County was part of a broader, federally mandated “Single Audit” designed to meet the special 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 County’s separately issued Single Audit Report. We are required to present a Management’s Discussion and Analysis (MD&A) section as an introduction to the financial information. This section immediately follows the auditor’s opinion and provides an overview and analysis of the County’s significant transactions in fiscal year 2006, to aid readers in understanding their financial impact and relationship to the Financial Statements and schedules provided. This letter of transmittal is written to complement the MD&A. FINANCIAL REPORTING ENTITY The Financial Statements include all funds and account groups of the County, including all activities considered to be part of (controlled by or dependent on) the County. Control by, or dependence on, the County was determined in accordance with the criteria established by the Governmental Accounting Standards Board (GASB) and included in the GASB’s guidance in defining the governmental reporting entity. The financial reporting entity includes all funds and account groups of Wake County, as well as its component units. Component units are legally separate entities for which Wake County is financially accountable. The Wake County Board of Alcoholic Beverage Control is a component unit of Wake County and is presented as a proprietary fund. Proprietary funds are used to account for a government’s continuing business-type organizations and activities. Most of the generally accepted accounting principles of proprietary funds are those applicable to similar private businesses. PROFILE OF WAKE COUNTY The recurring publicity of Wake County as one of the most desirable places to live and work in the United States, as evidenced by recent surveys in national magazines, has continued to turn the spotlight on the quality of life

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enjoyed by Wake County citizens. National accolades received recently by the Triangle include:

• #1 Area for Tech Business (Raleigh-Durham, NC), Silicon Valley Leadership Group, September 2006

• #3 Best City for Entrepreneurs (Raleigh-Durham-Chapel Hill, NC) Entrepreneur.com, August 2006

• #10 Fastest Growing MSA (Raleigh-Cary, NC) US Census Bureau, July 2000 - July 2005 (Released August 2006)

• #3 Top Metro Overall (Raleigh-Cary, NC) Expansion Management Mayor’s Challenge, August 2006

• #12 Best Sports City (Raleigh-Durham-Chapel Hill, NC) The Sporting News, August 2006

• #4 Greatest Home Price Appreciation Market (Raleigh-Durham, NC) Veros, July 2006

• #6 Best City for Singles (Raleigh-Durham, NC) Forbes.com, July 2006

• 5-Star Business Metro for Business Expansion (Raleigh, NC) Expansion Management, July/August 2006

Wake County is the second most-populous county in the state. Its 12 municipalities include Raleigh, the County seat and state capital. A unique mix of urban and rural areas and small towns distinguishes Wake from other counties and provides something for every lifestyle. Located in the north central section of the state on the Piedmont Plateau, Wake County is on a major industrial corridor approximately halfway between Washington, D.C.,

and Atlanta. North Carolina’s beautiful mountains and serene beaches are each within easy driving distance. The County’s topography is characterized by low, rolling hills in the northwest, changing gradually to level land in the southeast. The location, geography and climate make Wake County an enjoyable place to live, work, learn and play, while also contributing significantly to the economic viability of the region. FACTORS AFFECTING FINANCIAL CONDITION Economic Diversity The County’s economic diversity provides a strong foundation for the area’s economy. On June 30, 2006, the unemployment rate stood at 3.5%, compared with 4.8% for the state and 4.8% for the nation. A sampling includes:

• manufacturing (including light manufacturing of telecommunications equipment, pharmaceuticals, electrical and machine parts, and electrical components)

• service industries • seven public and private institutions of higher education, including

North Carolina State University, recognized as a national leader in research and technology

• state and local government, including the principal executive, legislative, judicial and regulatory offices of state government

• three general-care hospitals, two of which are not-for-profit, providing a total of 1,492 patient beds.

Additionally, Research Triangle Park (RTP), straddled on the Wake and Durham county line, is a major source of employment and economic stimulus for the entire area. Organized in 1959, RTP today encompasses 7,000 acres set aside for research and research-oriented manufacturing. The combined annual salaries in RTP amount to more than $2.7 billion. Since its founding, RTP has developed steadily on the Durham County portion. In 1990, Wake County began installing water/sewer lines in its portion to open the 31 sites located on the south side for economic development. To date, 17 companies have located in the Wake County portion, building nearly 2.5 million sq. ft. of space for biotechnology and information technology purposes. Another 1.1 million sq. ft. is under construction.

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Of the approximately 39,000 people currently employed in RTP, the Research Triangle Foundation estimates that 58 percent reside in Wake County, evidence that it is very much a primary component of our economy.

Long-Term Planning Wake County’s regional economy is expected to remain relatively stable in the foreseeable future. In an effort to influence economic growth, the County established an Economic Development Commission and contracts with the Greater Raleigh Chamber of Commerce to promote economic development throughout the County. The County’s economic development efforts are helping bring thousands of new, high-paying jobs, millions in investments, and strong corporate citizens with global impact. In the past year, Swiss drug maker Novartis has chosen Holly Springs for a vaccine-production facility, and Fidelity Investments has added more than 2,000 new jobs in RTP. Also, Credit Suisse announced expansion here in April. The Blue Ribbon Committee on the Future of Wake County spent six months examining Wake County’s infrastructure needs for the next 25 years and identifying options to pay for those. The committee’s report recommends the County seek legislative authority for ways to pay for growth in addition to property tax revenues, such as sales taxes. Commissioners appointed a Citizens’ Facilities Advisory Committee to examine school construction plans and County construction plans to ensure wise use of taxpayers’ dollars.

Wake County has completed the Post-Closure-Use Master Plan for the North Wake Landfill, calling for hiking/biking trails, athletic fields, a dog park and an environmental education center. Neighborhood citizens, City of Raleigh, Wake County Schools and sports and environmental groups collaborated on the plan.

Unemployment Rate Trends Wake County is stepping up efforts to secure state and private funding for a local mental health crisis inpatient facility. With Dorothea Dix Hospital, a state facility, closing in 2007, the County is engaging the hospital community to identify operating partners. The County budgeted $5 million to cover anticipated operating deficits, and previously had earmarked $10 million, with $5 million from Wake Alcoholic Beverage Control Board, to help cover construction costs. 0.00%

2.00%4.00%6.00%8.00%

2000 2001 2002 2003 2004 2005 2006 Wake County Emergency Medical Services (EMS) has placed new cardiac monitor-defibrillators in all ambulances. Paramedics partnered with Rex Healthcare and WakeMed Raleigh to implement new technology that is getting heart attack patients to life-saving hospital treatment 50% faster. The Automatic Vehicle Location (AVL) system will allow computerized tracking of ambulance locations to improve response times.

Wake County North Carolina United States

Wake County is working with partners locally and regionally to better address stormwater pollution, water quality and flooding challenges through the Stormwater Management Task Force. Wake adopted new flood-hazard maps that are available online. The County completed the initial phase of a long-term fire apparatus replacement program, purchasing 13 new pumper-tankers, 7 tankers, 11 brush trucks and 15 administrative vehicles. This countywide approach saved taxpayers an estimated $600,000. Wake County officials will break ground in December 2006 for the Northern Regional Center in Wake Forest. Citizens from Wake Forest and Rolesville have given input on the center’s scope of services. The County is studying the feasibility of a fourth regional center in western Wake. Community Improvement Plan The primary goal of the Community Improvement Plan (CIP) is to ensure that the County is investing in infrastructure for a growing community and

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that quality services continue to be delivered to Wake County citizens in a timely and efficient manner. The County ensures effective and efficient service delivery through investments in renovations and new capital improvements that preserve the integrity of facilities, maintain the quality of current fixed assets, and provide new services when needed. In connection with the County’s capital planning, in June 2006 Commissioners adopted a seven-year, $3.57-billion CIP for fiscal years 2007-13. The current CIP totals $3.57 billion of initiatives to improve the capital infrastructure of the County, of which $2.857 billion is dedicated to the Wake County Public School System. The remaining $661 million would be invested in several areas of capital need, including criminal justice ($464.9 million), County building improvements ($41.9 million), community college facilities ($36.5 million), fire suppression ($32.5 million), water/sewer ($14.8 million), solid waste operations ($14.1 million), investments in libraries ($12.5 million), and automation ($20.5 million). Five years ago, Wake County initiated a new capital funding program with an increased emphasis on debt financing in order to expand the County’s ability to support capital projects. There are two fundamental strategies that are key to the success of the new program: 1) dedicating a funding stream specifically to capital, and 2) maintaining a financing ratio of 80% debt and 20% cash. Dedicating annual revenue streams for a capital program requires a great deal of fiscal discipline. It also is essential for the success of the long-term capital program and to deliver quality services to the current and future residents of Wake County. This means setting aside a percentage of the property and sales tax proceeds each year to fund current and future capital payments. The dedicated stream of revenue is critical to the integrity of the capital financial model, as it assures that funds are available to pay for additional debt service payments. Funding is set aside each year in debt service as it is incurred in the future years of the CIP planning period. A major part of the debt-based strategy was initiated when Wake County citizens passed bond referenda in November 2000 to support the use of general obligation bond funding of schools, jail facilities and open space. The support of this strategy continued when citizens passed bond referenda in October 2003 for schools and library

construction, and in November 2004 for Wake Technical Community College and open space. At present, the two primary funding sources for the CIP are dedicated property tax revenue (16.5 cents) and a percentage of the sales tax receipts to the capital program. The sales tax percentage is based upon legislation codified in the North Carolina General Statutes. A third funding source is investment earnings from the General Fund. Since debt service payments and investment earnings are both interest rate-sensitive, the two are linked together to leverage the variable debt portion of our portfolio. Property Tax Revenues: One of the most significant aspects of the financial model is the commitment to dedicate a portion of the property tax to capital investments. This means that a percentage of the property tax revenues is specifically dedicated to debt service payments and pay-as-you-go funding as needed throughout the seven-year plan. As the largest single source of revenues for the County, the dedication of property tax revenues represents a critical contribution to maintaining the integrity of the capital program. Sales Tax Revenues: Wake County continues to contribute a portion of sales tax revenues for school capital expenditures as outlined in the state statutes. More specifically, N.C. General Statute 105, Articles 40 and 42, require that 30 percent and 60 percent of the receipts from sales taxes (authorized by the respective Articles) be used for either public school capital outlays or for servicing county debt incurred for school purposes. Other funding sources used in the County’s CIP are as follows: 1) transfers from other funds, 2) investment earnings, 3) fund balance appropriations, 4) grants and 5) donations. Transfers from Other Funds: In addition to the property and sales tax allocations, transfers from the Fire Tax District Fund will contribute to the capital investment model over the seven-year period. Investment Earnings: As bonds are sold, transfers from other funds occur, and actual expenditures occur at a slower pace than anticipated, cash in the capital projects and debt service funds can be invested in money market securities. The investment earnings in capital funds are used for capital purposes. Consequently, these earnings can be a viable funding source in the capital investment model. Beginning in fiscal year 2004, General Fund

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investment earnings were added to the model to leverage the variable-rate debt, as both are interest rate-sensitive. Fund Balance Appropriations: Another source of revenue for capital expenditures is the fund balance in the capital projects funds. This is a one-time source and cannot be used as a recurring source of funding for the capital program. Grants: Grants from the N.C. Public School Building Capital Fund will contribute to the capital investment model over the seven-year period. Donations: Finally, as the momentum from an innovative volunteer contributions campaign builds, donations are expected to supplement tax appropriations in the Community Improvement Plan. Although not identified in the current plan, this has the potential of being an excellent source of revenue for future library capital needs, as well. OTHER ACCOMPLISHMENTS Wake County opened West Regional Library in northwestern Cary on a plot of land donated by the Town of Cary. This library was identified in the Capital Improvement Program as one of the facilities to be developed with proceeds from the October 2003 $35-million library bond. Cameron Village Regional Library opened in a renovated and expanded 36,000-square-foot space. Wake County and the City of Raleigh collaborated to open and staff the Hurricane Katrina Evacuation Center. Over the 2005 Labor Day weekend, some 400 evacuees from New Orleans were flown to Raleigh. The center was open for 19 days and provided shelter, food, clothing, economic, health and other support services to more than 1,500 people. Wake volunteers were invaluable in the effort. Wake County’s Child Welfare program became part of the National Breakthrough Series Collaborative to reduce racial disparities for local children. Casey Family Programs sponsors the national initiative bringing together 9 states and only 3 other U.S. counties.

Wake County completed the Courthouse Plaza Accessibility Project to accompany the City’s reopening of Fayetteville Street. Along with ongoing asbestos removal and maximizing courtroom space, the plaza project is part of overall renovations to the Courthouse, in accordance with the Criminal Justice Facilities Master Plan. The County was honored for its Open Space Program, preserving 3,200 acres since 2000. Wake is one of six counties nationwide to win the County Leadership in Conservation Awards from the Trust for Public Land and the National Association of Counties. Also, the Conservation Trust of North Carolina presented the County the Local Government of the Year award for its outstanding commitment to protecting land and water resources in the state. AWARDS AND ACKNOWLEDGMENTS Certificate of Achievement for Excellence in Financial Reporting The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Wake County for its comprehensive annual financial report for the fiscal year ended June 30, 2005. This was the 22nd consecutive year in which the County has received this recognition. To be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, the contents of which conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. The GFOA award is valid for a period of one year. Acknowledgments We appreciate the assistance and dedication of the Finance Department staff throughout the year, especially during the preparation of this document. We would like to thank all members of the department who contributed to its preparation and the County’s independent certified public accountants, Cherry, Bekaert & Holland, L.L.P., for their assistance. The cooperation of each County department is appreciated as we work together to conduct the County’s financial operations. We also express our appreciation to the

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members of the Wake County Board of Commissioners for their continued support, guidance and advice in planning and conducting the financial activities of the County in a responsible and progressive manner. The County’s excellent financial status is a tribute to that involvement. Respectfully submitted, David Cooke David Cooke County Manager

Melinda Canady Melinda Canady Finance Director

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WAKE COUNTY, NORTH CAROLINA MANAGEMENT’S DISCUSSION AND ANALYSIS

As the management of Wake County, North Carolina, we offer readers of our financial statements this narrative overview and analysis of the financial activities of the County for the fiscal year ended June 30, 2006. We encourage readers to read the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages IX – XIV in the Introductory section of this report. Financial Highlights for Wake County, North Carolina

• The County has maintained an “Aaa” bond rating from Moody’s Investors Service since 1973, an “AAA” rating from Standard & Poor’s Corporation since 1983, and an “AAA” rating from Fitch for the seventh year in a row. This bond rating is a clear indication of the sound financial condition of The County. The County is one of the few counties in the country that maintains the highest financial rating from all three major rating agencies. This achievement is a key factor in keeping interest costs low on the County’s outstanding general obligation debt. These ratings were reaffirmed in October 2005.

• The County issued $41 million of general obligation school bonds in October 2005. The bonds were sold at a net interest cost of

4.23%.

• Also during the fiscal year ended June 30, 2005, the County began a general obligation commercial paper program in an amount up to $309 million. Of the $309 million program, $225 million is for public school capital, $40 million is for Wake Technical Community College, $26 million is for open space, and $18 million is for libraries. The County issues commercial paper as expenditures for these purposes are incurred. During the fiscal year, the County issued a total of $58.25 million of commercial paper under this program with interest rates between 3.19 and 3.7%.

• On the government-wide statements, the liabilities of the County exceeded its assets at the close of the fiscal year by $227 million (net

deficit). The County’s net deficit is impacted considerably by the general obligation debt the County has issued on the behalf of the school system to fund school capital outlay. Under North Carolina law, the County is responsible for providing capital funding for the School System. The County has chosen to meet its legal obligation to provide school capital funding by leveraging taxpayer dollars using a mixture of County funds and general obligation debt. The assets funded by the County are owned, utilized, and maintained by the School System. Since the County, as the issuing government, acquires no school capital assets, the County has incurred a liability without a corresponding increase in assets. At the end of the fiscal year, the outstanding balance of the school-related debt exceeded $1 billion dollars, of which $38 million is short-term commercial paper notes that will be retired with general obligation debt that will be issued during the fiscal year ending June 30, 2007.

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• As of the close of the 2006 fiscal year, the County’s governmental funds reported combined ending fund balances of $400 million, down from $604 million for the prior fiscal year. In the fiscal year ended June 30, 2006, the County began issuing short-term commercial paper notes to finance the school system capital program. As a result, there are not any outstanding bond proceeds in the 2006 fund balance; outstanding bond proceeds totaled $136 million at the end of fiscal year 2005. Additional expenditures in the school capital program which are not capital expenditures for the County of $86.6 million account for the balance of the decrease in governmental fund balance. Increases in other governmental funds activity were largely offset by a $63 million increase in governmental funds revenue.

• During fiscal year 2006 the governmental funds balance decreased $204 million. The various components of this decrease included a

$130 million decrease in the amount reserved for encumbrances, a $14 million increase in the amount Reserved by State Statute, a $77 million decrease in the amount designated for subsequent year’s expenditures, and a $12 million decrease in the total undesignated amount of fund balance. These changes were anticipated in accordance with the County’s operating and seven-year capital financial models to build schools as well as County projects such as libraries, public safety, and parks.

• At the end of the 2006 fiscal year, the unreserved fund balance for the County’s General Fund was $97.1 million or 11.95% (percent)

of total General Fund expenditures and transfers out for the fiscal year, a decrease from $102.6 million and 13.60% of total General Fund expenditures and transfers out at the end of the prior fiscal year. Of this $97.1 million, $13 million has been designated for subsequent year expenditures in the budget for the fiscal year ending June 30, 2007 and $80.7 million has been designated for working capital, resulting in $3.4 million being reported as unreserved and undesignated.

Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the basic financial statements. The basic financial statements consist of three components; 1) the government-wide financial statements, 2) the fund financial statements, and 3) the notes to the financial statements. The basic financial statements present two different views of the County through the use of government-wide statements and fund financial statements. In addition to the basic financial statements, this report contains other supplemental information that will enhance the reader’s understanding of the financial condition of the County.

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Required Components of Annual Financial Report

Management'sDiscussion and

Analysis

BasicFinancial

Statements

Government-wide

Financial

Statements

Fund

Financial

Statements

Notes to the

Financial Statements

Basic Financial Statements The first two statements in the basic financial statements are the Government-wide Financial Statements. The statements provide both short and long-term information about the County’s financial status, using the full-accrual basis of accounting, in a manner similar to a private-sector business.

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The two government-wide statements report the County’s net assets and how they have changed. Net assets reported on the statement of net assets are the difference between the County’s total assets and total liabilities. The statement of activities presents information showing how the County’s net assets have changed during the 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 the related cash flows. The two government-wide statements are each divided into three categories: 1) governmental activities; 2) business-type activities; and 3) component units. The governmental activities include most of the County’s basic services such as education, human services, public safety, environmental services, community development and cultural services, and general government services. Property and other taxes as well as state and federal grant funds finance most of these activities. The business-type activities are those that the County charges customers to provide. For Wake County, only the Solid Waste function is reported as a business-type activity. The final category is the component units. Although legally separate from the County, Wake County ABC Board is important to the County because the County exercises control over the Board by appointing its members and because the Board is required to distribute its profits to the County. The government-wide financial statements are on Pages 17 - 19 of this report. The next statements within the basic financial statements are the Fund Financial Statements. These statements focus on the activities of the individual parts of the County’s government at a more detailed level than the government-wide statements. There are four parts to the fund financial Statements: 1) the governmental funds statements; 2) the budgetary comparison statement; 3) the proprietary fund statements; and 4) the fiduciary fund statements. The fund financial statements provide a more detailed look at the County’s most significant activities. 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 County, like all other governmental entities in North Carolina, uses fund accounting to ensure and reflect compliance (or non-compliance) with finance-related legal requirements, such as the General Statutes or the County’s budget ordinance. All of the funds of The County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds – Governmental funds are used to account for those same functions reported as governmental activities in the government-wide financial statements. Most of the County’s basic services are accounted for in governmental funds. Governmental funds financial statements focus on the near-term inflows and outflows of spendable resources, as well as on the balances of spendable resources available at the end of the fiscal year. Governmental funds are reported using an accounting method called modified accrual accounting which provides a current financial resources focus. The relationship between government activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is described in a reconciliation that is a part of the fund financial statements.

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The Budgetary Comparison Statement is the next part of the fund financial statements that is presented. The County adopts an annual budget for its General Fund, as required by the North Carolina General Statutes. The budget is a legally adopted document that incorporates input from the citizens of the County, the management of the County, and the decisions of the Board about which services to provide and how to pay for them. It also authorizes the County to obtain funds from identified sources to finance these current period activities. The budgetary statement provided for the General Fund demonstrates how well the County complied with the budget ordinance and whether or not the County has provided the services as planned when the budget was adopted. The budgetary comparison statement uses the budgetary basis of accounting and is presented using the same format, language, and classifications as the Statement of Revenues, Expenditures and Changes in Fund Balance. The statement shows four columns: 1) the original budget as adopted by the board; 2) the final budget as amended by the board; 3) the actual resources, charges to appropriations, and ending balances in the General Fund; and 4) the variance between the final budget and the actual results. Proprietary Funds – The County has only two proprietary funds. Enterprise Funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The County uses an enterprise fund to account for its solid waste landfill operations. This fund is the same as the function shown in the business-type activities in the Statement of Net Assets and the Statement of Activities. Internal Service Funds are an accounting device used to accumulate and allocate costs internally among the functions of The County. The County uses an internal service fund to account for its risk management activity. Because this operation benefits predominately governmental rather than business-type activities, the internal service fund has been included within the governmental activities in the government-wide financial statements. Agency Funds – Agency funds are used to account for assets the County holds on behalf of others. Wake County has three agency funds that are used to account for taxes collected for and remitted to other municipalities within the County, funds held by Wake County Human Services on behalf of clients, and fines and forfeitures that are collected from citizen’s and disbursed to the School System under North Carolina law. The final section of the basic financial statements is the notes to the financial statements. The notes are essential to a full understanding of the data provided in the government-wide and fund financial statements because they explain in detail some of the data contained in those statements. After the notes, this report presents certain required supplementary information concerning the County’s progress in funding its obligation to provide pension benefits to law enforcement personnel. Finally, combining statements are provided to show details about the County’s non-major governmental funds, as well as enterprise and internal service funds. Budgetary information for each fund as required by the North Carolina General Statutes and detailed comparison statements, including encumbrances reported for internal reporting purposes for the County’s General Fund and annually budgeted funds, can also be found in this section.

6

Government-wide Financial Analysis As noted earlier, the County’s liabilities exceeded assets by $227 million as of June 30, 2006. Net assets are reported in two categories: invested in capital assets, net of related debt of $301 million and unrestricted net deficit of ($528). The largest portion of Wake County’s net assets reflects its investment in capital assets (e.g., land, buildings, vehicles, and equipment), less any related debt still outstanding that was issued to acquire those assets that is still outstanding. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County’s investment in its capital assets is reported net of the outstanding related debt, the resources needed to repay that debt must be provided by other sources, since the capital assets cannot be used to liquidate these liabilities. The amount reported as invested in total capital assets increased to $301 million from $284 in the prior fiscal year. The largest portion of the increase relates to the County’s governmental activities. For the fiscal year ended the amount invested in capital assets, net of related debt for governmental activities increased by $19.6 million to $290.8 million. One of the primary reasons for this increase is the increase in general obligation debt-other outstanding from $96.5 million as of June 30, 2005 to $109.9 million as of June 30, 2006 and a corresponding increase in capital assets for governmental activities of $50.5 million during fiscal 2006. The other category of net assets is unrestricted net assets. This balance may be used to meet the government’s ongoing obligations to citizens and creditors. At June 30, 2006, the unrestricted deficit of $(528) million is attributable primarily to the general obligation bonds issued by Wake County for the school system within the governmental activities. Even though the debt issued has been issued to finance capital outlay and construction for the School System, the Governmental Accounting Standards Board has determined that it is not capital debt for the County since it is not financing assets that are owned by the County. As a result, the school debt is reportable within the unrestricted category of net assets rather than as part of the category invested in capital assets, net of related debt. The breakdown of the unrestricted portion of net equity is defined as follows:

School System Debt $(1,005,433,252)

All other unrestricted 1,533,619,185 Total unrestricted

(Deficit) $( 528,185,933) The amount reported in the total unrestricted category increased from $(510) as of June 30, 2005 to $(528) as of June 30, 2006. This increase was primarily the result of an increase in the County’s school system debt outstanding from $991 million as of June 30, 2005 to $1.005 billion as of June 30, 2006. This debt is not considered capital debt for the County since the School System, not the County, holds title to the assets purchased or constructed with the debt proceeds.

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Wake County’s Net Assets June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005 Governmental Governmental Business-type Business-type Total Total Activities Activities Activities Activities Current and other assets $ 581,798,649 $ 710,072,045 $ 38,479,164 $ 32,662,433 $ 620,277,813 $ 742,734,478 Capital assets 400,629,443 350,156,570 10,193,631 12,531,246 410,823,074 362,687,816 Total assets 982,428,092 1,060,228,615 48,672,795 45,193,679 1,031,100,887 1,105,422,294 Long-term liabilities/schools 1,005,433,252 991,084,852 - - 1,005,433,252 991,084,852 Long-term liabilities/other 120,109,040 105,683,383 14,136,707 13,314,647 134,245,747 118,998,030 Other liabilities 116,371,278 99,798,640 2,267,449 3,312,948 118,638,727 103,111,588 Total liabilities 1,241,913,570 1,196,566,875 16,404,156 16,627,595 1,258,317,726 1,213,194,470 Net assets: Invested in capital assets, net of related debt 290,775,463 271,213,100 10,193,631 12,531,246 300,969,094 283,744,346 Restricted/Bonds - 118,153,362 - - - 118,153,362 Unrestricted (550,260,941) (525,704,722) 22,075,008 16,034,838 (528,185,933) (509,669,884) Total net assets $ (259,485,478) $ (136,338,260) $ 32,268,639 $ 28,566,084 $ (227,216,839) $ (107,772,176)

The impact of the inclusion of the school system debt, without the corresponding assets, continues to be offset by the following positive operational initiatives and results:

• Continued diligence in the collection of property taxes by maintaining a collection percentage of 98.8%. • Planning and management of revenues and expenditures through the use of financial models for the capital, debt service, and various

operating budgets.

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• Continued low cost of bonded debt that is a direct result of the County’s high bond rating by each of the three major rating agencies.

As noted earlier, we consider this unique achievement to be a key factor in keeping the interest costs on the County’s general obligation debt outstanding of $1,046.5 million at June 30, 2006.

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Wake County’s Changes in Net Assets

June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005

Governmental Governmental Business-type Business-type June 30, 2006 June 30, 2005

Activities Activities Activities Activities Total TotalRevenues:Program revenues:Charges for services 94,610,770$ 89,755,068$ 20,528,263$ 19,390,570$ 115,139,033$ 109,145,638$ Operating grants and contributions 130,992,525 115,401,175 1,038,558 969,896 132,031,083 116,371,071 General revenues:Property taxes 468,502,179 446,187,553 - - 468,502,179 446,187,553 Sales and use taxes 136,593,464 124,603,942 - - 136,593,464 124,603,942 Grants and contributions not restricted to specific programs 5,704,166 4,038,667 - - 5,704,166 4,038,667 Other general revenues 67,653,560 55,235,080 1,589,026 1,038,874 69,242,586 56,273,954

Total revenues 904,056,664 835,221,485 23,155,847 21,399,340 927,212,511 856,620,825

Expenses:General administration 68,198,823 53,512,005 - - 68,198,823 53,512,005 Human services 250,108,791 242,823,255 - - 250,108,791 242,823,255 Education 496,720,211 389,668,265 - - 496,720,211 389,668,265 Community development and cultural 55,385,595 45,969,169 - - 55,385,595 45,969,169 Environmental services 8,145,774 8,233,369 - - 8,145,774 8,233,369 Public safety 99,183,648 85,983,497 - - 99,183,648 85,983,497 Interest on long-term debt 49,736,040 44,964,694 - - 49,736,040 44,964,694 Solid waste - - 19,178,292 21,587,342 19,178,292 21,587,342

Total expenses 1,027,478,882 871,154,254 19,178,292 21,587,342 1,046,657,174 892,741,596

Increase (decrease) in net assets before transfers (123,422,218) (35,932,769) 3,977,555 (188,002) (119,444,663) (36,120,771)

Transfers 275,000 200,000 (275,000) (200,000) - -

Change in net assets (123,147,218) (35,732,769) 3,702,555 (388,002) (119,444,663) (36,120,771)

Net assets, beginning of year (136,338,260) (100,605,491) 28,566,084 28,954,086 (107,772,176) (71,651,405)

Net assets, end of the year (259,485,478)$ (136,338,260)$ 32,268,639$ 28,566,084$ (227,216,839)$ (107,772,176)$

For the Year Ended For the Year Ended For the Year Ended

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Governmental activities. Governmental activities decreased the County’s beginning net assets by $123.1 million or 103.09% of the total decrease in the net assets of the County. As in prior fiscal years, the $123.1 million decrease is due in large part to increasing and continued capital spending in the school construction program. Since the School System, not the County, capitalizes these construction costs, they are included in the County’s statement of changes as operating expenses within the education function. Business-type activities. Business-type activities increased the County’s beginning net assets by $3.7 million, this increase of $3.7 million from the prior year was primarily the result of a $1.1 million increase in fees collected for the County’s landfill and a $2.4 million decrease in the operating costs associated with the landfill. Financial Analysis of the County’s Funds As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The County’s six major funds, as defined by GAAP for the fiscal year ended June 30, 2006, were the General Fund, the Affordable Housing Fund, the Debt Service Fund, the Capital Improvements Fund, the School Capital Fund, and the Solid Waste Fund, which is an enterprise fund. At June 30, 2006, the governmental funds of Wake County reported a combined fund balance of $400 million, a decrease of $204 million, from the prior fiscal year. As in prior fiscal years, the Debt Service Fund balance continued to increase, increasing by $4.4 million in total. The Debt Service Fund balance will be used to fund future debt service payments. The increase in the Debt Service Fund balance was offset by decreased in the County’s capital funds. The Capital Improvements Fund and the School Capital Fund decreased by $36.3 million and $168.6 million, respectively. These decreases resulted because capital building programs are growing as a result of the increased capital needs of a growing population. These decreases were in accordance with the County’s seven-year financial plan, which provides for capital needs for the county, the school system and the community college system by dedicating revenue sources to provide a stable financial model by which the County can meet its capital needs. In addition, the County had $135.7 million in unspent bond proceeds in the prior fiscal year; however, the County had no unspent bond proceeds as of June 30, 2006. During the 2006 fiscal year, the County began issuing general obligation commercial paper for certain components of its capital program and as a result, reimburses itself for capital expenditures. Governmental Funds. The focus of the County’s governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing the County’s financing requirements. Specifically, unreserved fund balance can be a useful measure of a government’s net resources available for spending at the end of the fiscal year. The General Fund is the chief operating fund of the County. At the end of the 2006 fiscal year, the total fund balance of the General Fund was $163 million. Of that $163 million, $97.1 million was unreserved fund balance. $3.4 million of the total $97.1 million was undesignated, a decrease from $13.7 million in the prior fiscal year.

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General Fund Budgetary Highlights: During the fiscal year ended June 30, 2006, the County revised its General Fund budget on several occasions. Generally, budget amendments fall into one of three categories: 1) amendments made to adjust the estimates that are used to prepare the original budget ordinance once exact information is available; 2) amendments made to recognize new funding amounts from external sources, such as Federal and State grants; and 3) increases in appropriations that become necessary to maintain services. Total amendments to the General Fund increased budgeted revenues and expenditures by $19 million or 2.4%. $10 million of the $19 million increase resulted from County Human Services taking advantage of additional revenues from outside sources, including charges for services and intergovernmental revenues. An additional $2.8 million was also allocated to the Wake County School System midyear to cover additional students not anticipated at the time the budget was prepared. Remaining budget amendments generally covered various grant awards received throughout the year. Actual revenues and transfers in exceeded the amounts projected in the final budget by $2.2 million in fiscal year 2006. The positive variance is due mainly to higher than expected property tax revenues, which were $6.2 million over the budgeted projection. There was also a positive variance of $2 million in building permits and inspection fees charged by the County. These positive variances were offset in large part by negative budget variances for grants from federal, state and local sources, which received a combined $2 million less than budgeted projections and Charges for Services, which received $4.5 million less. The negative budget variances for Intergovernmental resulted from large differences between the budgeted and actual revenues associated with Public Safety Homeland Security grants as a result of actual activities being different from planned activities. These are multi-year grants where the planned activities are expected to be expended in the 2007 fiscal year. The Charges for Services difference was related to ongoing changes in mental health in North Carolina that changed the funding stream as well as the associated expenditures of various mental health billed services, where some direct benefit payments began to be made directly to the providers, where in the past the funds flowed through the County. Actual expenditures and transfers out were $18.5 less than budget, due in large part to below projected spending in Public Safety, which was $6 million below budget, also because of the same timing differences related to various Homeland Security grants. Other departments that contributed to the positive variance in costs were Human Services, $6.6 million below budget due almost entirely to various grant activity and to the changes in the mental health funding process; General Services, $2.07 million below budget; the Board of Elections $.7 million under budget; and non-departmental costs were $.8 million under budget. Proprietary Funds. The County’s proprietary funds provide the same type of information found in the government-wide statements but in more detail. Unrestricted net assets in the proprietary fund statement of net assets for the Solid Waste Landfill Fund at the end of the fiscal year amounted to $22 million, an increase of $6 million, or 37.97%, over the $16 million reported at the end of fiscal year 2005. This increased amount is attributable to a reduction in cost of services from the prior fiscal year.

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Capital Asset and Debt Administration

Wake County Capital Assets (net of Amortization and Depreciation)

Governmental Business-type

Activities Activities Total

2006 2005 2006 2005 2006 2005

Land $ 25,171,436 $ 25,173,538 $ 1,875,253 $ 1,817,850 $ 27,046,689 $ 26,991,388

Landfills - - 7,054,343 9,377,830 7,054,343 9,377,830

Buildings 169,847,689 172,556,270 1,009,209 1,024,965 170,856,898 173,581,235

Machinery and equipment 3,274,881 4,904,955 4,273 6,971 3,279,154 4,911,926

Vehicles and motorized equipment 10,395,908 8,966,953 - - 10,395,908 8,966,953

Improvements 5,978,837 6,168,480 232,628 246,227 6,211,465 6,414,707

Infrastructure 7,753,659 7,753,659 - - 7,753,659 7,753,659

Construction in progress 178,207,033 124,632,715 17,925 57,403 178,224,958 124,690,118

Total $ 400,629,443 $ 350,156,570 $ 10,193,631 $ 12,531,246 $ 410,823,074 $ 362,687,816

Capital assets. The County’s investment in capital assets for its governmental and business-type activities as of June 30, 2006, totals $411 million (net of accumulated depreciation). These assets include buildings, vehicles, equipment, as well as land and landfills. For the fiscal year ended June 30, 2005, these amounts included infrastructure for the first time as the County capitalized its infrastructure in accordance with requirements mandated by the Governmental Accounting Standards Board in GASB Statement 34. Major capital asset transactions during 2006 fiscal year included the continuation of a detention facility expansion, continued land acquisitions for Open Space Preservation Program, a new system automation project for Finance/HR processes, a new library in the western area of the county that is slated to open during fiscal year 2007, along with renovations to other libraries and continued improvements to judicial facilities. Additional information on the County’s capital assets can be found in Note 6. of the Basic Financial Statements.

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Long-term Debt. As of June 30, 2006, the County had total general obligation bonded debt outstanding of $1.046 billion, $1.005 billion of which was issued to help meet the capital outlay needs for the School System. In addition to capital leases, the County also has outstanding clean water loans, qualified zone academy bonds, and installment purchases. A summary of total outstanding debt is shown below. Wake County's Outstanding Debt - Governmental Activities 2006 2005 General Obligation bonds (schools) $ 965,043,843 $ 989,123,314 General Obligation bonds (other) 81,460,731 86,846,198 Capital leases 733,181 607,239 Clean water revolving loans 237,923 475,843 Qualified zoning academy bonds (schools) 1,798,077 1,961,538 Commercial paper notes payable (schools) 38,591,332 - Commercial paper notes payable (other) 19,658,668 - Installment purchases 7,763,477 8,570,962 Total $ 1,115,287,232 $ 1,087,585,094 Wake County’s total general obligation debt decreased by $28.6 million or 27% during the fiscal year ended June 30, 2006. This planned decrease occurred because the County only issued $41 million in new general obligation bonds during the 2006 fiscal year, which were offset with a decrease in outstanding debt of $69.6 million that was retired. Further, the County issued $58.3 million in short-term commercial paper notes that will be retired with general obligation bonds in the spring of 2007, which the County began utilizing to finance the construction phase of projects. Additional information regarding the County’s long-term debt can be found in Note 10 of the Basic Financial statements.

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Economic Factors and Next Year’s Budgets and Rates

• The unemployment rate in the County was 3.5% (percent) at June 30, 2006, compared with seasonally adjusted federal and State rates of 4.6% (percent).

• The total assessed value of property in the County continues to increase. From fiscal year 2005 through fiscal year 2006 the total

assessed value increased from $71.1 billion to $75.1 billion, an increase of 5%. • Sales tax collections increased to $137 million for the fiscal year ended June 30, 2006 from $125 million in the prior fiscal year, a

9.62% increase. Also, occupancy and prepared food and beverage taxes increased to $26.5 million from a total of $24.2 million in the prior fiscal year, a 9.8% increase.

• Wake County continues to grow, adding an estimated 27,000 persons to its population over the past year and more that 5,700 new

children to its public school system.

• The average yield on investments was 3.83% for fiscal year 2006, compared to 2.30% for fiscal year 2005. Investment earnings increased significantly by 28% in fiscal year 2006 from the prior year as interest rates in the market place continued to rise and older investments matured out of the County’s portfolio. As in prior years, the County has continued to utilize detailed cash flow planning which has allowed us to keep cash invested until it was needed for expenditure, maximizing the maturity on our investments and our earnings on our portfolio. The County realized investment earnings on all funds of $23.1 million for the fiscal year ended June 30, 2006, on an average portfolio balance of more than $604.5 million. This compares to 2005 earnings of $14.2 million on an average portfolio balance of $549.4 million.

Some of these factors and others were considered when management prepared Wake County’s budget ordinance for the 2007 fiscal year. Budget Highlights for the Fiscal Year Ending June 30, 2007 Governmental Activities: The County has approved an $852 million General Fund budget for fiscal year 2007, which represents a $43 million or 5.19% increase over the original budget adopted for the fiscal year 2006. This increase was primarily attributable to a steady growth in property taxes ($22.3 million), sales taxes ($4.1 million). In fiscal year 2007, a 3-cent property tax increase was approved that is expected to generate an additional $22.9 million. Budgeted expenditures for operating public schools increased $29.1 million (11.87%) from the original budget adopted for fiscal year 2006 as a result of continued growth in student enrollment and the construction and operations associated with new schools to accommodate student growth.

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Other General Fund increases resulted from increased budgeting of $6 million in Public Safety that is the result of a new Hammond Road Detention Facility and $1.9 million for the additional operating costs associated with the openings of West Regional Library, Holly Springs Community Library, and North Regional Library. Finally, an additional $5 million was required for increases in debt service payments. Business – type Activities: For the 2007 fiscal year, the County has not budgeted any increases in charges for services or household fees related to the solid waste function. The total operating budget of $22.8 million for fiscal year 2007 represents an increase of $1.7 million or 8% (percent) over the prior fiscal year. Requests for Information This report is designed to provide a general overview of the County’s finances for those with an interest in this area. Questions concerning any of the information found in this report or requests for additional information should be directed to the Director of Finance, Wake County, North Carolina, 336 Fayetteville Street Mall, Raleigh, NC 27602. Additional information concerning Wake County can also be obtained by referring to the County’s website at http://www.wakegov.com. Copies of financials statements and additional information concerning the Wake County Board of Alcoholic Control, a discretely presented component unit of the County, may be obtained at 225 Hillsborough St., Raleigh, NC 27602.

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Wake County

Basic

Financial Statements

WAKE COUNTY, NORTH CAROLINA (Continued)

STATEMENT OF NET ASSETSAs of June 30, 2006

Primary Government Component Unit

Business- Board ofGovernmental type Alcoholic

Activities Activities Total Control

ASSETS

Cash and investments - pooled equity 474,131,567$ 35,118,942$ 509,250,509$ -$ Cash and investments - cash equivalents 1,139,862 - 1,139,862 16,648,047 Taxes receivable (net) 5,770,212 - 5,770,212 - Accounts receivable (net) 73,602,544 2,842,944 76,445,488 410 Loans receivable 20,147,047 - 20,147,047 - Accrued interest receivable 5,406,032 402,317 5,808,349 - Prepaid items 245,597 - 245,597 - Internal balances (114,961) 114,961 - - Inventories 272,556 - 272,556 4,033,941 Net pension asset 1,042,261 - 1,042,261 - Bond issuance costs 155,932 - 155,932 - Capital assets not being depreciated:

Land 25,171,436 1,875,253 27,046,689 - Construction in progress 178,207,033 17,925 178,224,958 -

Capital assets (net of accumulated depreciation):

Landfills - 7,054,343 7,054,343 - Buildings 169,847,689 1,009,209 170,856,898 4,589,752 Improvements 5,978,837 232,628 6,211,465 - Machinery and equipment 3,274,881 4,273 3,279,154 498,587 Vehicles and motorized equipment 10,395,908 - 10,395,908 - Infrastructure 7,753,659 - 7,753,659 -

TOTAL ASSETS 982,428,092 48,672,795 1,031,100,887 25,770,737

The notes to the financial statements are an integral part of this statement. 17

WAKE COUNTY, NORTH CAROLINA

STATEMENT OF NET ASSETSAs of June 30, 2006

Primary Government Component Unit

Business- Board ofLIABILITIES Governmental type Alcoholic

Activities Activities Total Control

Accounts payable and accrued liabilities 46,047,330$ 2,267,449$ 48,314,779$ 5,865,042$ Due to other governmental units 32,767,106 - 32,767,106 - Accrued interest payable 13,805,434 - 13,805,434 - Unearned revenues 5,129,395 - 5,129,395 - Housing loan deferred revenue 18,622,013 - 18,622,013 - Commercial paper notes payable

Schools 38,591,332 - 38,591,332 - Other 19,658,668 - 19,658,668 -

Long term liabilities:Amounts due within one year:

Water bonds/capital leases 456,733 - 456,733 - General obligation bonds - schools 62,987,848 - 62,987,848 - General obligation bonds - other 7,662,152 - 7,662,152 - Quality zoning academic bonds 163,461 - 163,461 - Installment purchases 833,891 - 833,891 - Compensated absences payable 10,255,060 38,331 10,293,391 -

Amounts due beyond one year:Water bonds/capital leases 514,371 - 514,371 - General obligation bonds - schools 902,055,995 - 902,055,995 - General obligation bonds - other 73,798,579 - 73,798,579 - Quality zoning academic bonds 1,634,616 - 1,634,616 - Installment purchases 6,929,586 - 6,929,586 - Closure/Post closure costs - 14,098,376 14,098,376 -

Total liabilities 1,241,913,570 16,404,156 1,258,317,726 5,865,042

NET ASSETS

Invested in capital assets, net of related debt 290,775,463 10,193,631 300,969,094 5,088,339 Restricted for:

Working capital - - - 1,808,895 Unrestricted (See Note 1.Q) (550,260,941) 22,075,008 (528,185,933) 13,008,461

Total net assets (deficit) (259,485,478)$ 32,268,639$ (227,216,839)$ 19,905,695$



STATEMENT OF ACTIVITIESFor the Year Ended June 30, 2006

Component UnitCharges Operating Board of

for Grants and Governmental Business-type AlcoholicExpenses Services Contributions Activities Activities Total Control

FUNCTIONS/PROGRAMS

Primary Government: Governmental activities: General administration 68,198,823$ 12,027,205$ 2,416,522$ (53,755,096)$ -$ (53,755,096)$ Human services 250,108,791 58,876,026 112,417,917 (78,814,848) - (78,814,848) Education 496,720,211 - 8,218,405 (488,501,806) - (488,501,806) Community development and cultural 55,385,595 7,017,247 2,435,970 (45,932,378) - (45,932,378) Environmental services 8,145,774 2,546,631 358,126 (5,241,017) - (5,241,017) Public safety 99,183,648 14,143,661 5,145,585 (79,894,402) - (79,894,402) Interest on long-term debt 49,736,040 - - (49,736,040) - (49,736,040)

Total governmental activities 1,027,478,882 94,610,770 130,992,525 (801,875,587) - (801,875,587)

Business-type activities: Solid Waste 19,178,292 20,528,263 1,038,558 - 2,388,529 2,388,529

Total primary government 1,046,657,174$ 115,139,033$ 132,031,083$ (801,875,587) 2,388,529 (799,487,058)

Component unit: Board of Alcoholic Control 45,791,056$ 47,031,347$ -$ 1,240,291$

General revenues: Property taxes 468,502,179 - 468,502,179 - Sales taxes 136,593,464 - 136,593,464 - Occupancy and prepared food taxes 26,532,040 - 26,532,040 - Other taxes 16,564,492 - 16,564,492 - Grants and contributions not restricted to specific programs 5,704,166 - 5,704,166 - Unrestricted investment earnings 18,525,606 1,122,962 19,648,568 568,164 Other 6,031,422 466,064 6,497,486 21,162 Transfers 275,000 (275,000) - -

Total general revenues and transfers 678,728,369 1,314,026 680,042,395 589,326

Change in net assets (123,147,218) 3,702,555 (119,444,663) 1,829,617

Net assets (deficit), beginning of year (136,338,260) 28,566,084 (107,772,176) 18,076,078

Net assets (deficit), end of year (259,485,478)$ 32,268,639$ (227,216,839)$ 19,905,695$

Program RevenuesPrimary Government

Net (Expense) Revenue andChanges in Net Assets


WAKE COUNTY, NORTH CAROLINA (continued)

BALANCE SHEETGOVERNMENTAL FUNDSAs of June 30, 2006

NonmajorFunds

Affordable Debt Capital School Other TotalGeneral Housing Service Improvements Capital Governmental Governmental

Fund Fund Fund Fund Fund Funds Funds ASSETS

Cash and investments - pooled equity 132,301,338$ 3,312,061$ 60,531,388$ 88,490,537$ 158,132,117$ 20,102,672$ 462,870,113$ Cash and investments - cash equivalents 1,139,812 50 - - - - 1,139,862 Taxes receivable (net) 5,605,468 - - - - 164,743 5,770,211 Accounts receivable (net) 62,163,266 22,120 - 5,099,153 1,859,233 4,010,613 73,154,385 Prepaid expenditures 245,522 - - - - 75 245,597 Loans receivable - 18,622,013 110,368 1,414,666 - - 20,147,047 Accrued interest receivable - 2,022 2,656,814 725,272 1,656,900 257,675 5,298,683 Internal balances (interfund receivable) 758,307 - 4,958,620 4,143,625 - - 9,860,552 Inventories 272,555 - - - - - 272,555

TOTAL ASSETS 202,486,268$ 21,958,266$ 68,257,190$ 99,873,253$ 161,648,250$ 24,535,778$ 578,759,005$

LIABILITIES AND FUND BALANCES

Liabilities: Accounts payable and accrued liabilities 28,960,651$ 111,825$ 81,603$ 6,435,883$ 43,233$ 5,327,818$ 40,961,013$ Due to other governmental units - - - - 32,758,332 8,099 32,766,431 Internal balances (interfund payable) - - 4,143,625 - - 5,716,927 9,860,552 Deferred revenues 10,272,934 18,622,013 - 6,142,209 713,618 832,409 36,583,183 Commercial paper notes payable - - 250,167 15,998,912 38,402,590 3,598,331 58,250,000

Total Liabilities 39,233,585 18,733,838 4,475,395 28,577,004 71,917,773 15,483,584 178,421,179

Major Funds



BALANCE SHEETGOVERNMENTAL FUNDSAs of June 30, 2006

NonmajorFunds

Affordable Debt Capital School Other TotalGeneral Housing Service Improvements Capital Governmental Governmental

Fund Fund Fund Fund Fund Funds FundsFund Balances: Reserved for inventories 272,555$ -$ -$ -$ -$ -$ 272,555$ Reserved for noncurrent receivable 673,431 - - - - - 673,431 Reserved for encumbrances 5,178,786 1,387,915 4,102 21,597,141 86,214,344 354,078 114,736,366 Reserved by State statute 59,979,643 24,142 7,725,802 5,240,507 3,516,133 2,907,464 79,393,691 Unreserved: Designated for subsequent year's expenditures 13,016,863 - - - - - 13,016,863 Designated for subsequent year's expenditures - special revenue funds - 1,812,371 - - - 5,752,238 7,564,609 Designated for subsequent year's expenditures - capital project funds - - - 44,458,601 - - 44,458,601 Designated for subsequent years' debt service - - 56,051,891 - - - 56,051,891 Designated for subsequent years' debt service - special revenue funds - - - - - 734,941 734,941 Designated for working capital 80,686,087 - - - - - 80,686,087 Designated for working capital - special revenue funds - - - - - 235,236 235,236 Undesignated 3,445,318 - - - - - 3,445,318 Undesignated - special revenue funds - - - - - 2,202,206 2,202,206 Undesignated - capital project funds - - - - - (3,133,969) (3,133,969)

Total Fund Balances 163,252,683 3,224,428 63,781,795 71,296,249 89,730,477 9,052,194 400,337,826

TOTAL LIABILITIES AND FUND BALANCES 202,486,268$ 21,958,266$ 68,257,190$ 99,873,253$ 161,648,250$ 24,535,778$ 578,759,005$

Major Funds


WAKE COUNTY, NORTH CAROLINAReconciliation of the Balance Sheet to the Statement of Net AssetsAs of June 30, 2006

Fund balances - Governmental Funds 400,337,826$

Amounts reported for governmental activities in the Statement of Net Assets are different because:

Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds 400,629,443

Other long-term assets are not available to pay for current-period expenditures and therefore are deferred in the funds 13,822,266

An internal service fund is used by management to charge the costs of risk management to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets. 6,915,314

Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. (1,081,190,327)

Net assets (deficit) of governmental activities (259,485,478)$



STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDSFor the Year Ended June 30, 2006

Affordable Debt Capital School Total TotalGeneral Housing Service Improvements Capital Nonmajor Governmental

REVENUES: Fund Fund Fund Fund Fund Funds Funds

Taxes 603,516,564$ -$ -$ -$ -$ 44,032,026$ 647,548,590$ Licenses and permits 4,455,484 - - - - - 4,455,484 Intergovernmental 114,955,825 3,003,067 - 1,637,621 8,218,405 5,848,414 133,663,332 Charges for services 82,997,253 219,953 - 6,448,191 - 620,625 90,286,022 Investment earnings 277,815 6,762 7,845,289 2,808,562 6,584,796 687,537 18,210,761 Miscellaneous 902,560 20,000 - 1,044,597 - - 1,967,157 Total Revenues 807,105,501 3,249,782 7,845,289 11,938,971 14,803,201 51,188,602 896,131,346

EXPENDITURES: Current: General administration 55,354,680 - 32,654 10,648,114 - 1,461,466 67,496,914 Human services 239,443,124 3,109,997 - 3,008,963 - 5,885,590 251,447,674 Education 267,807,500 - - - 224,372,107 4,183,414 496,363,021 Community development and cultural 20,434,342 - - 37,026,429 - 22,586,539 80,047,310 Environmental services 8,266,909 - - 4,453,710 - - 12,720,619 Public safety 76,156,171 - - 21,108,722 - 14,698,671 111,963,564 Debt service: Principal - - 70,480,946 - - - 70,480,946 Interest - - 49,736,040 - - - 49,736,040 Total Expenditures 667,462,726 3,109,997 120,249,640 76,245,938 224,372,107 48,815,680 1,140,256,088

REVENUES OVER (UNDER) EXPENDITURES 139,642,775 139,785 (112,404,351) (64,306,967) (209,568,906) 2,372,922 (244,124,742)

Major Funds



STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDSFor the Year Ended June 30, 2006

Affordable Debt Capital School Total TotalGeneral Housing Service Improvements Capital Nonmajor Governmental

Fund Fund Fund Fund Fund Funds Funds

OTHER FINANCING SOURCES (USES):

Transfers in 1,070,961$ 1,104,000$ 115,471,000$ 29,043,481$ -$ 986,290$ 147,675,732$ Transfers out (144,748,290) - - (1,000,000) - (6,785,442) (152,533,732) Bonds issued - - - - 41,000,000 - 41,000,000 Bond premiums - - 1,358,620 - - - 1,358,620 Capital leases, capital donations

and installment purchases 2,670,274 - - - - 10,243 2,680,517

Total Other Financing Sources (Uses) (141,007,055) 1,104,000 116,829,620 28,043,481 41,000,000 (5,788,909) 40,181,137

NET CHANGE IN FUND BALANCES (1,364,280) 1,243,785 4,425,269 (36,263,486) (168,568,906) (3,415,987) (203,943,605)

Fund Balances at beginning of year 164,616,963 1,980,643 59,356,526 107,559,735 258,299,383 12,468,181 604,281,431

FUND BALANCES AT END OF YEAR 163,252,683$ 3,224,428$ 63,781,795$ 71,296,249$ 89,730,477$ 9,052,194$ 400,337,826$

Major Funds



Reconciliation of the Statement of Revenues,Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of ActivitiesFor the Year Ended June 30, 2006

Amounts reported for governmental activities in the statement of activities aredifferent because:

Net change in fund balances - total governmental funds (203,943,605)$

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of theseassets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by whichcapital outlays increases exceeded the book value of capital asset decreases in fiscal year being reported. 66,180,209

Depreciation expense for the fiscal year being reported (15,707,336)

The issuance of long-term debt (e.g. bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neithertransaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statementof activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. 31,144,837

Revenues in the statement of activities that do not provide current financial resources are not reported as revenuesin the funds. 559,840

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 the governmental funds. (56,826)

An internal service fund is used by management to charge the costs of risk management to individual funds. The net revenue of the internal service fund is reported with governmental activities. (1,324,337)

Change in net assets of governmental activities (123,147,218)$



GENERAL FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFor the Year Ended June 30, 2006 Variance with

Final Budget - Positive

Original Final Actual (Negative)REVENUES: Taxes 595,954,000$ 595,954,000$ 603,516,564$ 7,562,564$ Licenses and permits 3,955,409 3,955,409 4,455,484 500,075 Intergovernmental 109,507,024 116,918,278 114,955,825 (1,962,453) Charges for services 86,779,461 87,513,427 82,997,253 (4,516,174) Investment earnings 77,210 77,210 277,815 200,605 Miscellaneous 560,613 568,084 902,560 334,476

Total Revenues 796,833,717 804,986,408 807,105,501 2,119,093

EXPENDITURES: Current: General administration 63,333,096 57,700,425 52,684,406 5,016,019 Human services 236,007,941 246,022,413 239,443,124 6,579,289 Education 261,452,000 267,807,500 267,807,500 - Community development and cultura 20,057,146 21,034,136 20,434,342 599,794 Environmental services 8,101,201 8,529,764 8,266,909 262,855 Public safety 77,211,616 82,183,063 76,156,171 6,026,892

Total Expenditures 666,163,000 683,277,301 664,792,452 18,484,849

REVENUES OVER EXPENDITURES 130,670,717 121,709,107 142,313,049 20,603,942

OTHER FINANCING SOURCES (USES): Transfers in 1,022,870 1,022,870 1,070,961 48,091 Transfers out (142,633,000) (144,748,290) (144,748,290) -

Total Other Financing Sources (Uses (141,610,130) (143,725,420) (143,677,329) 48,091

REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (10,939,413) (22,016,313) (1,364,280) 20,652,033

APPROPRIATED FUND BALANCE 10,939,413 22,016,313 - (22,016,313)

REVENUES, OTHER FINANCING SOURCES, AND APPROPRIATED FUND BALANCE UNDER EXPENDITURES AND OTHER USES -$ -$ (1,364,280) (1,364,280)$

FUND BALANCE AT BEGINNING OF YEAR 164,616,963

LESS: EXPENDITURES ASSOCIATED WITH CAPITAL LEASE INCEPTION & CAPITAL DONATIONS (2,670,274)

ADD: PROCEEDS OF CAPITAL LEASES AND CAPITAL DONATIONS 2,670,274

TOTAL LEASE INCEPTIONS, CAPITAL DONATIONS AND PROCEEDS -

FUND BALANCE AT END OF YEAR 163,252,683$

Budgeted Amounts



STATEMENT OF NET ASSETSPROPRIETARY FUNDSAs of June 30, 2006 Business-type Governmental

Activities ActivitiesEnterprise Internal Service

Solid Waste Risk ManagementFund Fund

ASSETSCurrent assets:

Cash and investments - pooled equity 35,118,942$ 11,261,454$ Accounts receivable (net) 2,842,944 499,930 Accrued interest receivable 402,317 107,348 Total current assets 38,364,203 11,868,732

Noncurrent assets:Capital assets not being depreciated: Land 1,875,253 - Construction in progress 17,925 - Capital assets (net of accumulated depreciation): Landfills 7,054,343 - Buildings 1,009,209 - Machinery and equipment 4,273 - Improvements 232,628 - Total capital assets 10,193,631 -

Total assets 48,557,834 11,868,732

LIABILITIESCurrent liabilities:

Accounts payable and accrued liabilities 2,267,449 535,858 Other liabilities - 4,285,096 Total current liabilities 2,267,449 4,820,954

Noncurrent liabilities: Compensated absences 38,331 17,503 Closure/postclosure care costs 14,098,376 - Total noncurrent liabilities 14,136,707 17,503

Total liabilities 16,404,156 4,838,457

NET ASSETSInvested in capital assets 10,193,631 - Unrestricted 21,960,047 7,030,275

Total net assets 32,153,678 7,030,275$ Adjustment to reflect the consolidation of Risk Management Fund activities related to Solid Waste Fund 114,961 Net assets of business-type activities 32,268,639$



STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSPROPRIETARY FUNDSFor the Year Ended June 30, 2006

Business-type GovernmentalActivities ActivitiesEnterprise Internal Service


OPERATING REVENUES: Licenses and permits 4,700$ -$ Charges for services 20,523,563 19,966,703 Miscellaneous 466,064 69,300

Total Operating Revenues 20,994,327 20,036,003

OPERATING EXPENSES: Cost of service 15,368,446 27,103,422 Administration 1,451,531 216,824 Depreciation and amortization 2,355,540 -

Total Operating Expenses 19,175,517 27,320,246

OPERATING INCOME (LOSS) 1,818,810 (7,284,243)

NON-OPERATING REVENUES AND EXPENSES: Intergovernmental 1,038,558 509,290 Investment earnings 1,122,962 314,841 Income (loss) before transfers 3,980,330 (6,460,112)

TRANSFERS: Transfers in - 5,133,000 Transfers out (275,000) -

CHANGE IN NET ASSETS 3,705,330 (1,327,112)

TOTAL NET ASSETS, BEGINNING OF YEAR 28,448,348 8,357,387

TOTAL NET ASSETS, END OF YEAR 32,153,678$ 7,030,275$

Reconciliation to Changes in net assets of business-type activities:

Change in net assets 3,705,330$

Adjustment to reflect the consolidation of the Risk Management Fund activites related to Solid Waste (2,775) Change in net assets of business-type activities 3,702,555$



STATEMENT OF CASH FLOWSPROPRIETARY FUNDSFor the Year Ended June 30, 2006

Business-type GovernmentalActivities Activities


CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 19,449,938$ 19,941,925$ Cash payments to suppliers for goods and services (16,141,294) (23,714,838) Cash payments to employees for services (902,122) (773,824) Other operating revenues 470,764 69,300

Net cash provided (used) by operating activities 2,877,286 (4,477,437)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Intergovernmental revenue 1,038,558 509,290 Transfers in - 5,133,000 Transfers out (275,000) -

Net cash provided by noncapital financing activities 763,558 5,642,290

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Acquisition of capital assets (17,925) -

Net cash used by capital and related financing activities (17,925) -

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received on investments 974,023 264,369



STATEMENT OF CASH FLOWSPROPRIETARY FUNDSFor the Year Ended June 30, 2006

Business-type GovernmentalActivities Activities


Net increase in cash and cash equivalents 4,596,942$ 1,429,222$

Cash and cash equivalents at beginning of year 30,522,000 9,832,232

CASH AND CASH EQUIVALENTS AT END OF YEAR 35,118,942$ 11,261,454$

RECONCILIATION OF OPERATING (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:

Operating income (loss) 1,818,810$ (7,284,243)$ Adjustments to reconcile operating income/loss to net cash provided (used) by operating activities:

Depreciation and amortization 2,355,540 - Increase in accounts receivable (1,073,625) (24,778) Increase/(decrease) in accounts payable and accrued liabilities (223,439) 2,831,584

Total adjustments 1,058,476 2,806,806

Net cash provided (used) by operating activities 2,877,286$ (4,477,437)$



STATEMENT OF FIDUCIARY NET ASSETSFIDUCIARY FUNDSAs of June 30, 2006

Separation AgencyAllowance Funds

ASSETS

Cash and investments - pooled equity 2,755,626$ 1,327,337$ Accounts receivable (net) - 36,055 Accrued interest receivable 24,805 2,537

Total assets 2,780,431 1,365,929

LIABILITIESOther liabilities - 1,040,526 Due to other governmental units - 325,403

Total liabilities - 1,365,929$

NET ASSETSHeld in trust for employee's pension benefits (Schedule of Funding Progress on page 60) 2,780,431$



STATEMENT OF CHANGES IN FIDUCIARY NET ASSETSFIDUCIARY FUNDSFor the Year Ended June 30, 2006

SeparationAdditions: Allowance

Employer Contributions 538,000$

Net investment income 81,852

Total additions 619,852

Deductions:Benefits 762,777

Net increase (142,925)

Net assets held in trust for pension benefits:

Beginning of year 2,923,356

End of year 2,780,431$


Wake County, North Carolina Notes to the Financial Statements For the Year Ended June 30, 2006

The County of Wake (County) was established in 1771 by the North Carolina General Assembly under North Carolina State Law [General Statute (G.S.) 153A-10]. The County is governed by a seven-member board of commissioners and provides the following services: public safety, culture-recreation, human services programs, community development, environmental services, planning and zoning, employment and training, education and general administration.

NOTE 1. Summary of Significant Accounting Policies

The accounting policies of the County conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to

governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles in the United States. The following is a summary of the more significant accounting policies: The County is one of the 100 counties established in North Carolina under State Law [G.S. 153A-10]. As required by GAAP, these financial statements present the County and its component unit, a legally separate entity for which the County is financially accountable. The discretely presented component unit below is reported in a separate column in the County’s government-wide financial statements to emphasize that it is legally separate from the County. Discretely Presented Component Unit Wake County Board of Alcoholic Control (ABC Board)The members of the ABC Board's governing board are appointed by the County Board of Commissioners. The ABC Board is required by State statute to distribute its surpluses to the General Fund of the County. The ABC Board has a June 30 year-end. The financial statement may be obtained at 225 Hillsborough St., Raleigh, NC 27602.

A. Reporting Entity

The Statement of Net Assets and the Statement of Changes in Net Assets, which are the government-wide statements, report information on all of the nonfiduciary activities of the County and its component unit. Most of the interfund activity has been removed from these statements. The County’s governmental activities, which are supported primarily by taxes and intergovernmental revenues, are reported separately from its business-type activities, which rely on charges for services for support. Likewise, the County is reported separately from the ABC Board, a legally separate component unit for which the County is financially accountable. The Statement of Activities demonstrates the degree to which the direct expenses of specific functions are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include charges for services and grants or contributions that are restricted to meeting the operational or capital requirements of a particular function. Revenues that are not properly included among program revenues, including all taxes, are reported as general revenues.

B. Government-wide and FundFinancial Statements

Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the fiduciary funds are excluded from the government-wide statements. Major individual governmental funds are included as separate columns in the fund financial statements. The proprietary funds distinguish operating revenues and expenses from nonoperating items. The operating items generally result from providing services in connection with the fund’s principal ongoing operations. All revenues and expenses not meeting the operating criteria are reported as nonoperating items. The government-wide, proprietary, and fiduciary fund financial statements are reported using the economic resources measurement focus, except for the agency funds which have no measurement focus. The government-wide, proprietary fund, and fiduciary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all the eligibility requirements imposed by the provider are met.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

33

34

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay the liabilities of the current period. Expenditures are recognized when a fund liability is incurred, if measurable, except for unmatured principal and interest on general long-term debt which are recognized when due. In the governmental funds statements, property taxes, investment earnings and charges for services of the current fiscal period are susceptible to accrual and thus counted as revenue for the current fiscal period if received within 30 days of year-end. With the exception of sales tax distributions, revenues collected beyond 30 days after year end are not susceptible to accrual because generally they are either not available or not measurable until received in cash. Sales tax distributions are accrued and treated as revenue for the current fiscal period if received within 90 days of year-end. The County reports the following major funds: General Fund - The general fund is the general operating fund of the County. It is used to account for all financial resources except those required to be accounted for in another fund. The primary revenue sources are ad valorem taxes and federal and State grants. The primary expenditures are for education, human services, public safety, environmental, cultural and recreational services, community development, and general governmental services.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Cont.)

Affordable Housing Fund - The Affordable Housing fund provides housing rehabilitation, infrastructure improvements, and relocation assistance to households meeting eligibility requirements. These programs are funded with both County funds and federal grant moneys.

Debt Service Fund - The County budgets and pays debt service for its general obligation bonds from this fund. Capital Improvements Fund – The Capital Improvements Fund accounts for the acquisition of land and buildings by the County for general public purpose. School Capital Fund – The School Capital Fund accounts for the construction and renovation of school building projects financed by County-issued bonds, various State grants, and other County funds. Solid Waste Fund - The Solid Waste Fund accounts for the County’s landfills, container sites, and recycling operations. Additionally, the County reports the following fund and fund types: Internal Service Fund - The County has one internal service fund: the Risk Management Fund, which accounts for the insurance needs (both purchased insurance and self-retained risks) of all County departments. Fiduciary Fund Types

Pension Trust Fund - The Pension Trust Fund accounts for the Law Enforcement Officers' Special Separation Allowance enacted by State legislature. Agency Funds - Agency funds are used to account for assets held by the County as an agent for individuals, private organizations, other governments, and/or other funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The County maintains three agency funds: the Municipal Tax Fund, which collects and disburses the taxes for municipalities in the County; the Human Services Fund, which accounts for moneys deposited with County departments for the benefit of certain individuals; and the Fines and Forfeitures Fund, which accounts for moneys received from the Court System for disbursement to the Wake County Public School System. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that these standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. The County has the option of following subsequent private-sector guidance for the business-type activities and enterprise funds, subject to this same limitation. The County has elected not to follow subsequent private-sector guidance. Basis of accounting refers to when revenues and expenditures or expenses and the related assets and liabilities are recognized in the accounts and reported in the combined financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied.

All funds of the County are accounted for during the year on the modified accrual basis of accounting in accordance with North Carolina General Statutes. The governmental funds are also reported using the modified accrual basis of accounting. The proprietary funds are reported using the full accrual basis of accounting. The County recognizes assets of nonexchange transactions in the period when the underlying transaction occurs, when an enforceable legal claim has arisen, or when all eligibility requirements are met. Revenues are recognized, on the modified accrual basis, when they are measurable and available. Nonexchange transactions occur when one government provides (or receives) value to (from) another party without receiving (or giving) equal or nearly equal value in return. Various intergovernmental revenues, sales taxes, property taxes and most donations are examples of nonexchange transactions.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Cont.)

Under the terms of grant agreements, the County funds certain programs by specific grants, resources and/or general revenues. Thus when program

expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the County’s policy to first apply grant resources to such programs and then general revenues. In compliance with the North Carolina Local Government Budget and Fiscal Control Act, the Board of County Commissioners adopts an annual budget ordinance using the modified basis of accounting for all governmental and proprietary funds except funds authorized by project ordinances. The annual budget for governmental funds and proprietary funds must be adopted no later than July 1. Agency and pension trust funds are not required by state law to be budgeted. All capital projects funds and special revenue funds other than the Special Tax District and the Major Facilities Funds are budgeted under project ordinances spanning more than one fiscal year and are controlled by project. Project appropriations continue until the projects are complete. The Debt Service Fund is also budgeted annually.

D. Budgetary Data Control

For those funds for which annual budgets are adopted, appropriations are budgeted and controlled on a functional basis and amended as necessary during the fiscal year. The County Manager is authorized to transfer budgeted amounts between appropriations within the same fund. However, any transfers exceeding $75,000 shall be reported to the Board of County Commissioners at the next regularly scheduled meeting. For the Risk Management Internal Service Fund, the Manager may transfer amounts for departmental losses, damages, premiums, or liabilities. Revisions that alter the total appropriations of any fund must be approved by the Board of County Commissioners. Annual appropriations lapse at the end of the budget year.

Amounts reported as general administration expenditures on the Statement of Revenues, Expenditures, and Changes in Fund Balances for the General Fund differ from the amounts reported in the General Fund Statement of Revenues, Expenditures, and changes in Fund Balances-Budget and Actual by $2,670,274. This amount represents the expenditures associated with the inception of capital leases and capital donations that are not required to be budgeted by the County under the NC law. All deposits of the County are made in board-designated official depositories and are secured as required by State Law [G.S. 159-31]. The County may designate as an official depository any bank or savings and loan association whose principal office is located in North Carolina. Also, the County may establish time deposit accounts such as NOW and SuperNOW accounts, money market accounts and certificates of deposit. State law [G.S. 159-30(c)] authorizes the County to invest in obligations of the United States or obligations fully guaranteed both as to principal and interest by the United States; obligations of the State of North Carolina; bonds and notes of any North Carolina local government or public authority; obligations of certain non-guaranteed federal agencies; certain high quality issues of commercial paper and bankers' acceptances; and the North Carolina Capital Management Trust (NCCMT), a Securities and Exchange Commission registered (2a-7) mutual fund. As required, the County’s investments are stated at fair value as determined by quoted market prices. The NCCMT Cash Portfolio securities are valued at fair value, which is the NCCMT’s share price. The NCCMT Term Portfolio securities are valued based upon a matrix pricing system and/or appraisal by a pricing service. Except for the Pension Trust Fund and unspent bond proceeds, the County pools moneys from several funds to facilitate disbursement and investment and maximize investment income. Income from pooled moneys is allocated to participating funds based on the funds' respective share of total pooled cash and investments. The County pools moneys from several funds to facilitate disbursement and investment and to maximize investment income. Therefore, all cash and investments are essentially demand deposits and are considered cash and cash equivalents.

E. Deposits and Investments

Outstanding balances between funds are reported as “due to/from other funds”. Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide statements as “internal balances.”

F. Receivables and Payables

35

In accordance with State law [G.S. 105-347 and G.S. 159-13(a)], ad valorem taxes for property other than vehicles are levied on July 1, the beginning of the fiscal year and are due on September 1 (lien date); however, no penalties or interest are assessed until the following January 6. Property taxes on certain registered motor vehicles are assessed and collected throughout the year. The taxes are based on the assessed values as of January 1, 2005.

G. Taxes Receivable Deferred Revenues

Ad valorem taxes collected within 30 days after the fiscal year end for the year ended June 30, 2006 and prior years are accrued within the funds because the amounts are considered measurable and available. The remaining ad valorem taxes receivable are not accrued, as the amount is not considered available. These taxes receivable are significantly past due and are not considered to be an available resource to finance the operations of the subsequent year. GAAP states that property taxes, which are measurable but not available, should be initially recorded as deferred revenues under the modified accrual basis of accounting. The receivable amount is reduced by an allowance for uncollectible taxes and an amount equal to the net receivable is shown as deferred revenue on the combined balance sheet. In addition, property taxes collected in advance of the fiscal year to which they apply are recorded as deferred revenues. Allowances for uncollectible accounts are maintained on all types of receivables that historically experience uncollectible amounts. Allowances are based on collection experience and management's evaluation of the current status of existing receivables.

H. Allowances for Uncollectible Accounts

Inventories are valued at cost, using the weighted average method. The inventories of the General Fund consist of expendable supplies and are recorded as expenditures when consumed. The General Fund inventories reported on the fund balance sheet are offset by a fund balance reserve, which indicates that it does not constitute a resource available for appropriation. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

I. Inventories and Prepaid Expenditures

Capital assets that are purchased or constructed are recorded at historical cost. Donated assets are recorded at estimated market value at the time of donation. The County defines capital assets as assets with an individual cost of more than $5,000, and an estimated useful life of more than two years. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Depreciation is computed using the straight-line method. Any interest incurred during the construction phase of proprietary fund type capital assets is reflected in the capitalized value of the asset being constructed. Capital assets are depreciated on the following basis: Buildings 40 years Vehicles and Motorized Equipment 5 years Machinery and Equipment 3 years Improvements 40 years Infrastructure 20-50 years Land used for landfills is depleted using the straight-line method over its expected useful life of 3 years.

J. Capital Assets

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bond using the straight line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements governmental fund types report the face amount of debt issued as an other financing source. Bond premiums and discounts, as well as bond issuance costs, are recognized during the current period. The face amount of the debt issued and any related premium are reported as other financing sources. Discounts on issuance are reported as other financing uses. Issuance costs are reported as a reduction of proceeds.

K. Long-Term Debt

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L. Compensated Absences The vacation policy of the County provides for the accumulation of up to thirty days earned vacation leave with such leave being fully vested when earned. An expense and a liability for vacation pay and salary-related payments are accrued as the leave is earned in the government-wide and proprietary fund financial statements. The compensated absences liability is liquidated using funds to which the liability accrued as the accumulated leave is used. The County's sick leave policy provides for an unlimited accumulation of earned sick leave. Sick leave does not vest but any unused sick leave accumulated at the time of retirement may be used in the determination of length of service for retirement benefit purposes. Since the County has no obligation for the accumulated sick leave until it is actually taken, no accrual for sick leave has been made.

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 balance represent tentative management plans that are subject to change. State law [G.S. 159-13(b)(16)] restricts the appropriation of fund balance to an amount not to exceed the sum or cash and investments minus the sum of liabilities, encumbrances and deferred revenues arising from cash receipts as those amounts stand at the close of the fiscal year preceding the budget year.

M. Fund Equity

Net assets in government-wide and proprietary fund financial statements are classified as invested in capital assets, net of related debt; restricted; and unrestricted. Restricted net assets represent constraints on resources that are either a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or b) imposed by law through state statute.

N. Comparative Reclassifications

Certain amounts presented in the prior year’s data have been reclassified in order to be consistent with the current year’s presentation.

O. Reconciliation of Government-wide and Fund Financial Statements

1. Explanation of certain differences between the governmental fund balance sheets and the government-wide statement of net assets.

The governmental fund balance sheet includes reconciliation between the fund balance – total governmental funds and net assets – governmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains, “ long term liabilities, including bonds payable, are not due in the current period and therefore are not reported in the funds.” The details of this ($1,081,190,327) difference are as follows: Outstanding long-term debt payable (per Note 10) (1,067,292,292)$ Add:

Accrued interest payable (13,805,434) Payable to granting agency (266,036)

Less:Compensated absences related to internal service fund

included in Note 10 17,503 Bond issuance costs (to be amortized over life of debt) 155,932

Net adjustments to reduce fund balance - total governmentalfunds to arrive at net assets - governmental activities (1,081,190,327)$

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O. Reconciliation of Government-wide and Fund Financial Statements (Cont.)

2. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances – total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation states “the issuance of long term debt such as bonds and leases provides current financial resources to governmental funds while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is issued while these amounts are deferred and amortized in the statement of activities.” The details of this $31,144,837 difference are as follows: Debt issued or incurred:

Proceeds of refunded general obligation debt (41,000,000)$ Capital lease financing (278,111) Plus: premiums on bond issuance (1,358,620) Compensated absences increases (9,473,024) Interest expense accrual and other adjustments 1,663,104 Total Increases (50,446,651)

Principal repayments:General obligation debt - schools 61,194,540 General obligation debt - other 8,440,460 Installment purchase payments 807,485 Quality zoning academy bonds 163,461 Current year amortization of bond premiums 2,188,558 Clean water revolving loan payments 237,920 Capital lease payments 152,169 Compensated absences, decreases 8,401,105 Change in compensted absences related to internal service fund 5,790 Total Decreases 81,591,488

Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities 31,144,837$

On the Statement of Net Assets, the unrestricted (deficit) for governmental activities is composed of the following:

P. Unrestricted (deficit)

For school debt (1,005,433,252)$

All other 455,172,311

Total unrestricted net assets (550,260,941)$

Under North Carolina law, the County is responsible for providing capital funding for the Wake County Board of Education (the “School System”). The County has chosen to meet its legal obligation to provide school capital funding by using a mixture of County funds and general obligation debt. The assets funded by the County are owned, utilized and maintained by the school system. Since the County, as the issuing government, acquires no capital assets, the County has incurred a liability without a corresponding increase in assets. At the end of the fiscal year, the outstanding balance of the school-related debt was $1,005,433,252. However, the entire amount of school debt outstanding is general obligation debt, which is collateralized by the full faith, credit, and taxing power of the County. The County is authorized and required by State law to levy ad valorem taxes, without limit as to rate or amount, as may be necessary to pay the debt service on its general obligation bonds. Principal and interest requirements will be provided by an appropriation in the year in which they become due.

NOTE 2. Related Organizations

Industrial Facilities and Pollution Control Financing Authority The County Board of Commissioners is responsible for appointing the board members of the Wake County Industrial Facilities and Pollution Control Financing Authority, but the County's accountability for this organization does not extend beyond making these appointments. The Authority exists to issue and service revenue bond debt for private business for economic development purposes. Its primary revenues are the payments to service the issued debt that are received from the businesses involved. The County is not responsible for the debt issued by the Authority and the Authority's debt is not included in determining the County's legal debt limit. Wake County Housing Authority The County Board of Commissioners is responsible for appointing members of the Wake County Housing Authority, but the County's accountability for this organization does not extend beyond making these appointments. The Authority's purpose is to provide safe, decent, and affordable housing to County residents. Their operations are subsidized by the federal government and other grantors. The Authority determines its own budget and sets rental rates. The County is not responsible for deficits or liabilities of the Authority. Wake County Hospital System, Inc. The County Board of Commissioners is responsible for appointing eight of the fourteen members of the Hospital’s Board of Directors. The County’s accountability for this organization does not extend beyond making the appointments. The Hospital, a private, not-for-profit entity, operates as a community general hospital, providing care to indigent patients per an agreement with the County which states that it agrees to provide, on an annual basis, out of pocket indigent cost that equal or exceed 4.8% of its total adjusted revenue. Effective April 1, 1997, the Hospital and the County agreed that the County, as owner of certain hospital facilities and related property would transfer such property to the Hospital. Prior to the transfer, the Hospital issued revenue bonds to defease hospital revenue bonds previously issued by the County in the Hospital’s behalf. The proceeds of the new debt plus a sufficient amount of available funds were placed in an irrevocable trust to provide for all future debt service payments on the old hospital revenue bonds.

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NOTE 3. Joint Ventures Without Equity Interest

Wake Technical Community CollegeTechnical and vocational training beyond the secondary level is provided by Wake Technical Community College, with some financial assistance from the County. The College is a part of the state-wide system of community colleges and technical institutes. The College has a twelve-member Board of Trustees, four of which are appointed by the County Board of Commissioners. The County has no responsibility for the designation of management and exercises no control over the operations of the College beyond its annual appropriation. The County has an ongoing financial responsibility for the College because of the statutory responsibilities to provide funding for the College's facilities. The County remitted $13,021,500 to the College for operating purposes during the current year. In addition, the County made debt service payments of $2,469,347 on general obligation bonds issued to construct College facilities. The County does not have any equity interest in the joint venture; therefore, no equity interest has been reflected in the County's financial statements at June 30, 2006. Complete financial statements for the College may be obtained at their administrative offices at 9101 Fayetteville Road, Raleigh, NC 27603. Raleigh-Durham Airport AuthorityThe Raleigh-Durham Airport Authority is governed by a board appointed to plan and conduct the operations of the Raleigh-Durham International Airport. This eight-member governing body is jointly appointed by the City of Durham, City of Raleigh, County of Durham, and County of Wake, with each member government appointing two members to the Airport Authority board. The Airport Authority board selects the management and determines the budget and financing requirements for airport operations. The County and other participating governments each appropriate $12,500 annually to cover administration expenses incurred by the Authority. The participating governments have no equity interest in the joint venture; therefore, no equity interest is reflected in the County's financial statements. Complete financial statements for the Airport Authority may be obtained from the airport's administrative offices at 1051 Cargo Drive, Raleigh, NC 27623. Special Airport District of Durham and Wake CountiesThe Special Airport District of Durham and Wake Counties is a special taxing district governed by a four-member board comprised of two members each from the Durham and Wake Boards of County Commissioners. The District is a public body and body corporate limited to aiding the Raleigh-Durham Airport Authority in financing the construction of aeronautical facilities. The District is a joint venture of the two Boards of County Commissioners; however, the Counties do not have an equity interest in the District. Therefore, the County has not included any equity interest in the County's financial statements at June 30, 2006. The District may issue bonds or other obligations pursuant to the provisions of the Local Government Bond Act of the North Carolina General Statutes and is empowered to cause taxes to be levied upon all taxable property within the District sufficient to meet the obligations of the District. The County does not approve the budget of the District, nor does the County control the collection or disbursement of District funds. During the prior fiscal year ended June 30, 2005, the remaining general obligation bonded debt of the District was retired. As a result, the District had no financial transations during fiscal year 2006 and, accordingly, was not required to file any financial statements. Centennial AuthorityThe Centennial Authority is a local political subdivision of the State of North Carolina created pursuant to Section 4 of Chapter 458 of the 1995 Session Laws of North Carolina. The purpose of the Authority is to study, design, plan, construct, own, promote, finance and operate a regional facility in Wake County, North Carolina. The regional facility will consist of an arena, coliseum or other buildings or both, where sports, fitness, health recreational, entertainment or cultural activities can be conducted. In addition, the County remitted $1,537,034 for operations and $5,121,635 for debt service from the Occupancy and Prepared Food/Beverage taxes for the Authority. The County does not have any equity interest in the joint venture; therefore, no equity interest has been reflected in the County’s financial statements at June 30, 2006. Complete financial statements for the Authority may be obtained at their administrative offices at 1520 Blue Ridge Road, Suite 201, Raleigh, NC 27607.

Greater Raleigh Convention and Visitors Bureau

The Greater Raleigh Convention and Visitors Bureau (Bureau) was established in fiscal year 1992 in conjunction with a County occupancy tax levy to promote and solicit business, conventions, meetings and tourism in the County. The governing body of the Bureau is a twelve-member Board of Directors with six members appointed by the Raleigh City Council and six members appointed by the County Board of Commissioners.

Funding is derived from the six (6) percent occupancy tax levied upon the rental of rooms, lodging or similar accommodations, and from a one (1) percent prepared food & beverage tax levied on all prepared foods and beverages sold by Wake County businesses. Monthly, the County is required to distribute to the Bureau a percentage of the tax collected with a minimum aggregate annual distribution of $1,000,000. If tax revenues are not sufficient to fully fund the Bureau's minimum annual distributions, the County and City must fund the deficiency equally to ensure that the Bureau receives its minimum distribution of $1,000,000 in any fiscal year. All unexpended funds of the Bureau revert to the County and City at the end of each fiscal year. The Bureau is a joint venture of equal equity interest between the County and the City of Raleigh. The Wake County Board of Commissioners and the Raleigh City Council must approve the budget and all amendments. The Bureau does not have any outstanding indebtedness except for a minor investment in fixed assets, the only equity in the Bureau at year-end is for encumbrances, which will be expended, in the subsequent year. Based on this, no equity interest in the Bureau is recorded at June 30, 2006.

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NOTE 4. Deposits and Investments

1. Deposits: All of the County's deposits are either insured or collateralized using the Pooling Method. Under the Pooling Method, a collateral pool, all uninsured deposits are collateralized with securities held by the State Treasurer's agent in the name of the State Treasurer. Since the State Treasurer is acting in a fiduciary capacity for the County, these deposits are considered to be held by the County's agent in the County's name. The amount of the pledged collateral is based on an approved averaging method for non interest-bearing deposits and the actual current balance for interest-bearing deposits. Depositories using the pooling method report to the State Treasurer the adequacy of their pooled collateral covering uninsured deposits. The State Treasurer does not confirm this information with the County or the escrow agent. Because of the inability to measure the exact amount of collateral pledged for the County under pooling method, the potential exists for under collateralization, and this risk may increase in periods of high cash flows. However, the State Treasurer of North Carolina enforces strict standards of financial stability for each pooling depository. At year-end, the County's deposits had a carrying amount of $23,440,297 and a bank balance of $28,055,814. Of the bank balance, $540,387 was covered by federal depository insurance and $27,515,427 in interest-bearing deposits were covered by collateral held under the pooling method. 2. Investments As of June 30, 2006, the County had the following investments and maturities.

Less ThanInvestment Type Fair Value 2 Years 2 - 3 Years 3 - 5 YearsU.S. Government Treasuries 69,127,150$ 69,127,150$ -$ -$ U.S. Government Agencies 311,767,107 247,813,032 39,399,500 24,554,575 Commercial paper 61,121,679 61,121,679 - - N.C. Capital Management Trust -Cash portfolio 28,207,435 28,207,435 - - N.C. Capital Management Trust -Term portfolio 3,809,666 3,809,666 - - Certificates of Deposit 17,000,000 17,000,000 - - Total fair value 491,033,037$ 427,078,962$ 39,399,500$ 24,554,575$

* Because the NC Capital Management Trust Term Portfolio had a duration of 0.9 years, it was presented as an investment with a maturity of less than 2 years.

Interest Rate Risk. As a means of managing its exposure to fair value losses from increasing interest rates, the County has an informal investment policy that

limits investment maturities to a maximum of five years. A maximum of $90 million or 15% of the portfolio can be in the 2-3 year range and a maximum of $60 million or 10% or the portfolio can be in the 3-5 year range. .

Credit Risk. State law limits investments in commercial paper to the top rating issued by nationally recognized statistical rating organizations (NRSROs); however, the County had no formal policy on managing credit risk. As of June 30, 2006, the County’s investments in commercial paper were rated P1 by Standard & Poor’s, F1 by Fitch Ratings, and A1 by Moody’s Investors Service. In addition, all of the County's commercial paper carries a long-term debt rating of A or better. The County’s investments in the NC Capital Management Trust Cash Portfolio carried a credit rating of AAAm by Standard & Poor’s as of June 30, 2006. The County’s investment in the NC Capital Management Trust Term Portfolio is unrated. The Term Portfolio is authorized to invest in obligations of the US government and agencies, and in high grade money market instruments as permitted under North Carolina General Statutes 159-30 as amended. The County’s investments in US Agencies (Federal Home Loan Bank, Federal Farm Credit Bank, Fannie Mae and Fredddie Mac) are rated AAA by Standard & Poor’s and Aaa by Moody’s Investors Service.

Concentration risk: The County's informal investment policy limits the amount of investments to $20 million that is allowed in any one issuer's name. Custodial Credit Risk: For an investment, custodial credit risk is the risk that in the event of the failure of the counterparty, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. At June 30, 2006, all of the County's investments were in the County's name.

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NOTE 5. Receivables

Receivables, excluding accrued interest, as of year end for the County’s individual major and nonmajor funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows:

Affordable Debt Capital

General Housing Service Improvement School Non MajorFund Fund Fund Fund Fund Funds Totals

Property taxes 14,850,634$ -$ -$ -$ -$ 588,367$ 15,439,001$

Accounts 10,262,488 - - 8,197,915 - - 18,460,403

Interest - 2,022 2,656,814 725,272 1,656,900 257,675 5,298,683

Special assessments 99,354 - - - - - 99,354

Intergovernmental 51,644,068 - - - 1,859,233 1,265,406 54,768,707

Loans receivable - 18,760,629 110,368 1,414,666 - - 20,285,663

Other 5,434,964 50,066 - 319,240 - 2,745,207 8,549,477

Gross receivables 82,291,508 18,812,717 2,767,182 10,657,093 3,516,133 4,856,655 122,901,288

Less allowance for bad debts (14,522,774) (166,562) - (3,418,002) - (423,624) (18,530,962)

Net total receivables 67,768,734$ 18,646,155$ 2,767,182$ 7,239,091$ 3,516,133$ 4,433,031$ 104,370,326$

Revenues of the Solid Waste Fund are reported net of uncollectible amounts. Total uncollectible amounts related to revenues of the current period are $285,896.

Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that that have been received but not yet earned. At the end of the current period, the various components of deferred revenue were as follows:

Unavailable UnearnedTaxes receivable (General Fund) 4,245,040$ -$ Taxes receivable (Special District Fund) 164,743 - Housing loans receivable (Affordable Housing Fund) - 18,622,013 Loans receivable (Capital Improvements Fund) - 1,414,666 Prepaid taxes not yet earned (cash) - 2,821,111 Prepaid loans not yet earned (cash) - 180,000 Other cash deferred revenues (School Capital Fund) - 713,618 Other deferred revenues 8,421,992 -

12,831,775$ 23,751,408$

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NOTE 6. Capital asset activity for the year ended June 30, 2006 was as follows:

Capital Assets

Beginning EndingBalance Increases Decreases Balance

Governmental activities:

Capital assets, not being depreciated:Land 25,173,538$ -$ (2,102)$ 25,171,436$ Construction in progress 124,632,715 57,981,502 (4,407,184) 178,207,033 Total capital assets, not being depreciated 149,806,253 57,981,502 (4,409,286) 203,378,469

Capital assets, being depreciated:Buildings 218,959,406 2,835,181 (1,586) 221,793,001 Improvements Other than Buildings 7,585,757 - - 7,585,757 Machinery and equipment 27,284,610 1,953,669 (395,370) 28,842,909 Vehicles and motorized equipment 22,080,314 4,654,169 (2,509,877) 24,224,606 Infastructure 10,939,755 - - 10,939,755 Total capital assets being depreciated 286,849,842 9,443,019 (2,906,833) 293,386,028

Less accumulated depreciation for:Buildings 46,403,136 5,543,762 (1,586) 51,945,312 Improvements Other than Buildings 1,417,277 189,643 - 1,606,920 Machinery and equipment 22,379,655 3,584,973 (396,600) 25,568,028 Vehicles and motorized equipment 13,113,361 3,202,872 (2,487,535) 13,828,698 Infastructure 3,186,096 3,186,086 (3,186,086) 3,186,096 Total accumulated depreciation 86,499,525 15,707,336$ (6,071,807)$ 96,135,054

Total capital assets, being depreciated, net 200,350,317 197,250,974

Governmental activities capital assets, net 350,156,570$ 400,629,443$

NOTE 6. (Cont.) Beginning EndingBalance Increases Decreases Balance

Business-type activities:

Capital assets, not being depreciated:Land 1,817,850$ 57,403$ -$ 1,875,253$ Construction in progress 57,403 17,925 (57,403) 17,925 Total capital assets, not being depreciated/amortized 1,875,253 75,328 (57,403) 1,893,178

Capital assets, being depreciated/amortized:Landfills 35,124,359 - - 35,124,359 Buildings 1,166,902 - - 1,166,902 Machinery and equipment 28,621 - - 28,621 Vehicles and motorized equipment 31,751 - (20,178) 11,573 Improvements 504,900 - - 504,900 Total capital assets being depreciated/amortized 36,856,533 - (20,178) 36,836,355

Less accumulated depreciation/amortization for:Landfills 25,746,529 2,323,487 - 28,070,016 Buildings 141,937 15,756 - 157,693 Machinery and equipment 21,650 2,698 - 24,348 Vehicles and motorized equipment 31,751 - (20,178) 11,573 Improvements 258,673 13,599 - 272,272 Total accumulated depreciation/amortization 26,200,540 2,355,540$ (20,178)$ 28,535,902

Total capital assets, being depreciated/amortized, net 10,655,993 8,300,453

Business-type activities capital assets, net 12,531,246$ 10,193,631$

Capital Assets

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NOTE 6. (Cont.) Capital Assets

Depreciation and amortization expenses were charged to functions as follows:

Governmental activities:General administration 4,563,641$ Human services 1,608,786 Education 343,012 Community development and cultural 1,888,250 Environmental services 2,868,684 Public safety 4,434,963

Total depreciation expense - Governmental activities 15,707,336

Business-type activities:Solid waste 2,355,540

Total depreciation and amortization 18,062,876$

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NOTE 6. (Cont.) For the 2006 fiscal year, the construction in progress expenditures for governmental activities were as follows:

Capital Assets Construction in Progress:

Expended AtJune 30, 2006

800 MHZ Radio Communication System 19,878,162$ American Tobacco Trail 2,310,689Automation 16,185,501Barwell Road ECC 1,995,274County Building Renovations 4,953,766Detention Facility Expansion 33,263,248Downtown Parking Structures 560,882East Wake County Park 1,155,366EMS Station 4,807,135Fire Training 2,552,833Garland Jones Building 625,340Human Services Sunnybrook 3,961,746Inpatient Psychiatric Unit 2,195,649Judicial Facilities 10,122,873Libraries 15,323,132Little River Reservoir 16,191,154Open Space Preservation Program 12,415,697Open Space - Phase 1 - 3 7,398,811Open Space - Fuller Tract 2,740,171Open Space - Pleasants Tract 2,358,628Poe Center 500,000PSC Andover Controller Upgrade 212,784Radio System Infrastructure Dev & Insta 2,785,276Randleigh Farm Acquisition 1,916,135RTP Offsite Infrastructure Phase 3 2,140,375Security Improvement 4,063,798Southeast Regional Mechanical 159,723Southeast Regional Wake Co Park 1,848,490Telephone Replacement 1,490,671Yates Mill Education Building 1,823,615Projects under $100K 270,109

Total 178,207,033$

NOTE 7. Interfund Receivables/Payables and Transfers

Internal balances as of June 30, 2006 are $9,860,522. $758,307 represents amounts due to the General Fund by a non-major government funds for their share of cash and investments pooled equity. $4,958,620 represents principal and interest amounts due to the Debt Service Fund from the Special Districts fund for the purchase of large apparatus for the rural and municipal fire departments. $4,143,625 represents principal amounts due to the Capital Improvements Fund from the Debt Service Fund for the purchase of large apparatus for the rural and municipal fire departments.

The County’s General Fund transferred funds during fiscal year 2006 to fund debt service payments, capital improvements, the risk management program, economic developments and the County match for State and Federal Grant Programs. The $275,000 transferred from the Solid Waste enterprise fund is to cover administrative expenses incurred by the County’s General Fund on behalf of the solid waste program.

Interfund transfers:Affordable Debt Capital Other Internal

General Housing Service Improvements Governmental Service TotalFund Fund Fund Fund Funds Fund Transfers out

General Fund -$ 104,000$ 114,008,000$ 24,517,000$ 986,290$ 5,133,000$ 144,748,290$

Capital Improvements Fund - 1,000,000 - - - - 1,000,000

Other Governmental Funds 795,961 - 1,463,000 4,526,481 - - 6,785,442

Solid Waste Fund 275,000 - - - - - 275,000

Total transfers in 1,070,961$ 1,104,000$ 115,471,000$ 29,043,481$ 986,290$ 5,133,000$ 152,808,732$

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NOTE 8. Risk Management

The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction of, assets; errors and omissions; on-the-job injuries to employees; and natural disasters, as discussed below. The County has established a Risk Management Fund (internal service fund) to account for and finance both its uninsured and insured risks of loss. Effective August 1, 2005, the County’s group medical coverage went from fully insured to self-insured which is administered by an outside provider. The County also provides self-insured dental to its employees and dependents. There is no limit for in-network services and a $1,000,000 lifetime limit for out-of-network services for each covered employee/dependent's medical costs. The cost of providing medical coverage to participating employees and dependents is charged to benefiting funds as premiums. These premiums are an estimate of expected average claims per individual and are recorded as revenue in the internal service fund. Also in this fund, the County is self-insured up to a maximum of $500,000 for each workers' compensation claim, and up to $500,000 for other liability claims and $100,000 for each property damage claim. The County purchases commercial excess insurance for claims in excess of its self-insured retention and for other insurance and bonds to cover specific risks and officials, respectively. Settled claims have not exceeded this commercial coverage in any year since the fund was established in 1990. The County elects not to distribute claims and insurance coverage expenses to the County departments except for deductibles on auto and property claims. A transfer is made annually from the General Fund to fund administrative costs and establish actuarially determined assets to pay ultimate losses and scheduled premiums.

A. Property, Liability, Workers' Compensation and Self-Insured Employee Medical Coverages

The County's property and liability coverage at June 30, 2006 are as follows:

Property CoverageLiability

Coverage Coverage LimitsProperty Insurance - Building and Contents 250,000,000$ Workers' Compensation StatutoryEmployers' Liability 1,000,000$ General Liability, Public Officials Liability,Law Enforcement Liability, Auto Liabilityand Excess Liability 10,000,000$

The claims liability of $4,285,096 reported in the Risk Management Fund at June 30, 2006 is based on the requirements of Governmental Accounting Standards Board Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.

The claims liability is actuarially determined and includes an estimate for claims incurred but not reported. Changes in the fund's claims liability amount in fiscal years 2005 and 2006 are as follows:

Changes in the Fund's Claims Liability

2006 2005Beginning of fiscal year liability 1,435,535$ 1,061,341$ Current year claims and changes in estimates 8,435,340 3,153,008Property and liability claim payments (1,895,571) (1,520,834)Dental benefits claim payments (1,411,510) (1,257,980)Self-insured group medical payments (2,278,698) - Balance at fiscal year-end 4,285,096$ 1,435,535$

NOTE 9. Capital Lease Obligations and Operating Leases

The County leases certain equipment under lease agreements that are classified as capital leases for accounting purposes in accordance with GAAP. Obligations of these lease agreements are accounted for in the governmental activities of the government-wide statements. At June 30, 2006, the net book value of the assets acquired through capital leases is $488,472. The net present value of the future minimum lease payments at June 30, 2006 is $733,181 as detailed below. The County also leases buildings and office facilities as well as various equipment under non-cancelable operating leases. The total costs for all operating lease expenditures for the year ended June 30, 2006 were $2,012,983. The future minimum lease payments for non-cancelable operating leases are $5,086,888 as detailed below. At June 30, 2006, future minimum lease payments due under capital leases and operating leases with initial or remaining non-cancelable lease terms in excess of one year are as follows:

Year Ending Capital OperatingJune 30 Leases Leases2007 218,810$ 1,089,306$ 2008 201,860 859,880 2009 165,010 762,788 2010 149,651 686,724 2011 89,191 583,843 2012 12,987 591,601 2013 - 512,746

Total minimum lease payments 837,509 5,086,888$

Less: amount representing interest (104,328) Present value of net minimum lease payments 733,181$

The county leases office space under operating lease agreements with terms generally less than one year. Minimum future rentals on non-cancelable lease with terms in excess of one year are not material to the County’s financial statements. Rental revenue for the year ended June 30, 2006 was $302,581.

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NOTE 10. Long-term Debt

General Obligation Bonds: The general obligation bonds reported in Governmental Activities are collateralized by the full faith, credit and taxing power of the County. The County has issued both fixed and variable rate bonds. The fixed rate bonds bear interest at rates varying from 3.00 percent to 5.75 percent. From July 1, 2005 through March 31, 2006 the variable rate bonds bore an initial interest rate of 2.67%. Beginning April 1, 2006, the variable rate was reset weekly by the remarketing agent based on the minimum rate of interest necessary to enable the remarketing agent to remarket all of the weekly rate bonds in the secondary market. The rate ranged from 3.04% to 3.97% during the period April 1 through June 30, 2006. Principal and interest requirements will be provided by an appropriation in the Debt Service Fund in the the year in which they become due. General obligation bonds serviced by the General Fund and payable at June 30, 2006 are comprised of the following:

1997 School Bonds of $100,000,000 due in annual installments of $5,000,000 to $15,000,000 through March 2007; interest of 4.7% to 5.0%. 5,000,000$

1998 Public Improvement, Series Bonds of $159,000,000 due in annual installments of $8,000,000 to $15,000,000 through March 2015; interest of 4.4% to 4.6%. 95,000,000

2000 School Bonds of $24,000,000 due in annual installments of $1,000,000 to $4,000,000 through February 2010; interest of 5.2% to 5.75%. 4,000,000

2001 Criminal Justice Facility Bonds of $8,000,000 due in annual installments of $300,000 to $1,200,000 through August 2017, interest of 4.4% to 4.75%. 6,500,000

2001 School Bonds of $150,000,000 due in annual installments of $5,700,000 to $22,800,000 through February 2015, interest of 4.5% to 5.25%. 88,300,000

2002 Public Improvement Bonds of $188,000,000 due in annual installments of $8,500,000 to $34,000,000 through March 2018, interest of 4.00 to 4.75%. 154,000,000

2003A Public Improvement Bonds of $122,890,000 due in annual installments of $8,000,000 to $17,555,000 through April 2015, interest of 3.00 to 5.00%. 72,000,000

2003B Public Improvement Bonds of $55,000,000 due in periodic installments of $10,000,000 to $30,000,000 beginning in April 2016 through April 2018, interest is variable with a rate of 2.67% at June 30, 2005. The maximum amount of interest, which cannot exceed 12%, through maturity is $89,125,069. 55,000,000

2003C Public Improvement Bonds of $45,000,000 due in annual installments of $13,000,000 to $32,000,000 beginning in April 2019 through April 2020, interest is variable with a rate of 2.67% at June 30, 2005. The maximum amount of interest, which cannot exceed 12%, through maturity is $83,316,875. 45,000,000

2003A Refunding Bonds of $83,145,000 due in annual installments of $945,000 to $16,100,000 beginning February 1, 2004 through February 1, 2011 interest of 3.00 to 5.00%. 66,500,000

2003B Criminal Justice Facilities Bonds of $8,000,000 due in annual installments of $400,000 to $550,000 beginning February 1, 2004 through February 1, 2022, interest of 3.00 to 5.00% 7,200,000

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NOTE 10. (Cont.) 2004 Public Improvement Bonds of $130,000,000 due in annual installments of $10,000,000 beginning March 1, 2005 through March 1, 2017, interest of 3.00 to 5.00%. 110,000,000$

2004A Variable Rate School Bonds of $67,000,000 due in periodic installments of $29,000,000 to $38,000,000 beginning April 1, 2018 through April 1, 2019, interest is variables with a rate of 2.67% at June 30, 2005. The maximum amount of interest, which cannot exceed 12% is $110,345,556. 67,000,000

2004B Variable Rate School Bonds of $57,000,000 due in periodic installments of $17,000,000 to $40,000,000 beginning April 1, 2020 through April 1, 2021, interest is variables with a rate of 2.67% at June 30, 2005. The maximum amount of interest, which cannot exceed 12% is $92,036,667. 57,000,000

2004 Refunding Bonds of $114,380,000 due in annual installments of $2,865,000 to $23,870,000 beginning March 1, 2007 through March 1, 2015 interest of 4.00 to 5.00%. 114,380,000

2005 Refunding Bonds of $33,020,000 due in annual installments of $50,000 to $22,290,000 beginning February 1, 2006 through February 1, 2017 interest of 3.00 to 5.00%. 32,970,000

2005 School Bonds of $41,000,000 due in annual installments of $1,500,000 to $6,000,000 through May 2023, interest of 3.25 to 5.00% 41,000,000

Total general obligation bonds outstanding 1,020,850,000$

Long-term Debt

The annual requirements to amortize all general obligation debt outstanding as of June 30, 2006 are as follows:

June 30 Principal Interest Total2007 70,650,000$ 44,601,250$ 115,251,250$ 2008 70,605,000 41,393,930 111,998,930 2009 70,725,000 38,053,900 108,778,900 2010 70,655,000 34,748,512 105,403,512 2011 70,690,000 31,453,788 102,143,788

2012-2016 359,315,000 107,696,176 467,011,176 2017-2021 298,160,000 30,406,709 328,566,709 2022-2023 10,050,000 621,563 10,671,563

1,020,850,000$ 328,975,828$ 1,349,825,828$

The County is subject to the Local Government Bond Act of North Carolina which limits the amount of net bonded debt the County may have outstanding to 8 percent of the appraised value of property subject to taxation less property valued for abatement. At June 30, 2006, such statutory limit of the County was $6,010,777,645 providing a legal debt margin of $4,995,459,440. Authorized but unissued general obligation bonds as of June 30, 2006 totaled $718,500,000. Of this amount $309,000,000 was for authorized but unissued new general obligation bonds and $409,500,000 was for authorized but unissed refunding bonds.

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NOTE 10. (Cont.) Long-term Debt

Quality Zoning Academy Bonds: In 2003, the County issued $3,002,077 of Quality Zoning Academy Bonds as authorized by State Law [G.S. 16A-20]. These are installment financing agreements that are secured by the fixtures and improvements at Needham Broughton High School. The County is obligated to make annual debt service fund payments of $163,461 through December 2016. The scheduled payments by the County assume projected earning at a fixed rate of 4.02%. If the trustee fails to earn projected amounts, the County shall pay, in addition to its scheduled payments, the amount such that total payments in the Debt Service Fund shall equal $3,002,077.

Conduit Debt Obligations: Wake County Industrial Facilities and Pollution Control Financing Authority (the “Authority”) has used industrial revenue bonds to provide financial assistance to private businesses for economic development purposes. These bonds are secured by the properties financed as well as letters of credit and are payable solely from the payments received from the private businesses involved. Ownership of the acquired facilities is in the name of the private business served by the bond issuance. Neither the County, the Authority, the State of North Carolina, nor any political subdivision thereof is obligated in any manner for the repayment of the bonds. Accordingly, these bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2006, there were 16 series of industrial revenue bonds outstanding with an aggregate principal amount payable of $580 million.

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Interest Rate Swap: As part of the acquisition by the County of an 85% interest in Five County Stadium pursuant to an Interlocal Agreement dated December 19, 2002, the County assumed the obligations of the Town of Zebulon under an Installment Financing Agreement (“Original Agreement”) dated as of February 1, 1999. Effective April 20, 2004, the County entered into an Amended and Restated Installment Financing Agreement (“Amended Agreement”) and pay-fixed, receive-variable interest rate swap (“Swap”) for the purpose of refinancing the Original Agreement. The initial principal amount of the Amended Agreement was $9,000,000 and the notional amount of the Swap was $9,000,000. The notional value of the swap and the principal amount of the associated debt decline annually. The final maturity of the Amended Agreement and Swap is July 1, 2015. The interest rate on the Amended Agreement is 60.45% of one-month LIBOR plus 1.12%. Under the Swap, the County receives 60.45% of one-month LIBOR plus 1.12% (the same as the interest rate on the Amended Agreement) and pays 3.78%, effectively converting the Amended Agreement from variable-rate to fixed-rate. At June 30, 2006, the swap had a positive fair value to the County of $210,162. Fair value was estimated by the counterparty using mark to market valuations. As of June 30, 2006, the County was exposed to credit risk because the swap had a positive fair value. The swap counterparty, Bank of America, at June 30, 2006 was rated “Aa1” by Moody’s Investors Services, “AA+” by Standard and Poor’s and “AA-” by Fitch Ratings. Since the variable interest rate the County pays on the Amended Agreement and the variable interest rate the counterparty pays to the County on the swap are based on the same calculation, the net interest rate is the 3.78% fixed swap rate and there is no interest rate or basis risk. The derivative contract uses the International Swap Dealers Association Master Agreement, which includes standard termination events, such as failure to pay and bankruptcy. Termination could result in the County being required to make an unanticipated termination payment.


Interest Rate Swap (cont.): Swap payments and associated debt – Using the variable interest rate as of June 30, 2006 (4.21%) and assuming the rate remains the same for the following term of the agreement, debt service requirements of the Amended Agreement debt and net swap payments would be as follows:

Variable Rate Interest RatePrincipal Interest Swaps, Net Total

2007 708,891$ 314,200$ (32,092)$ 990,999$ 2008 736,320 283,652 (28,972) 991,000 2009 764,157 252,648 (25,805) 991,000 2010 794,377 218,991 (22,366) 991,002 2011 825,113 184,758 (18,871) 991,000

2012-2016 3,709,663 371,446 (37,939) 4,043,170

Total 7,538,521$ 1,625,695$ (166,045)$ 8,998,171$

Amended Variable Rate Installment Purchase Agreement

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Changes In Long-Term Liabilities: Long-term liability activity for the year ended June 30, 2006, was as follows:


Beginning Ending Due withinBalance Additions Reductions Balance one year

Governmental activities:

General obligation bonds 1,049,485,000$ 41,000,000$ 69,635,000$ 1,020,850,000$ 70,650,000$ Plus: Premiums on issuance 26,484,512 1,358,620 2,188,558 25,654,574 N/ATotal general obligation bonds payable 1,075,969,512 42,358,620 71,823,558 1,046,504,574 70,650,000

Quality Zoning Academic Bonds 1,961,538 - 163,461 1,798,077 163,461

Installment Purchases 8,570,962 - 807,485 7,763,477 833,891

Capital leases 607,239 278,111 152,169 733,181 218,810

Clean water revolving loans 475,843 - 237,920 237,923 237,923

Compensated absences 9,183,141 9,473,024 8,401,105 10,255,060 10,255,060

Total Governmental Activiities 1,096,768,235$ 52,109,755$ 81,585,698$ 1,067,292,292$ 82,359,145$

Business-type activities:

Landfill 13,270,038$ 828,338$ -$ 14,098,376$ N/A

Compensated absences 44,609 40,765 47,043 38,331 38,331

Total Business-type Activities 13,314,647$ 869,103$ 47,043$ 14,136,707$ 38,331$

Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for governmental activities. At June 30, 2006, $17,503 of the internal service funds compensated absences were included in ending compensated absences for governmental activities.

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NOTE 11. Additional Social Welfare Expenditures

The following amount was paid on behalf of the County by the State from federal and State funds. The human services payments were disbursed directly to vendors and individual recipients. For the year ended June 30, 2006 this amount, which is not included in the financial statements because the County has no primary responsibility beyond making eligibility determinations, is approximately $434.8 million.

NOTE 12. Compliance Audits of Federal and State Assisted Programs

The County participates in a number of federal and State grant programs which are subject to audit in accordance with Office of Management and Budget Circular A-133 "Audits of States, Local Governments, and Non-Profit Organizations”, the Single Audit Act Amendments of 1996, and the State Single Audit Implementation Act. The County expects such expenditures, if any, which may be disallowed by the granting agencies to be immaterial.

NOTE 13. Multiple-Employer Pension Plan Obligations

Local Governmental Employees’ Retirement System Plan Description. Wake County contributes to the statewide Local Governmental Employees’ Retirement System (LGERS), a cost-sharing multiple-employer defined benefit pension plan administered by the State of North Carolina. LGERS provides retirement and disability benefits to plan members and their beneficiaries. Article 3 of G.S. Chapter 128 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. The LGERS is included in the Comprehensive Annual Financial Report (CAFR) for the State of North Carolina. That report may be obtained by writing to the Office of the State Controller, 3512 Bush Street, Raleigh, North Carolina 27609, or by calling (919) 981-5454. Funding Policy. Plan members are required to contribute six percent of their annual covered salary. The County is required to contribute at an actuarially determined rate. For the County, the current rate for employees not engaged in law enforcement and for law enforcement officers is 4.80% and 5.27%, respectively, of annual covered payroll. The contribution requirements of members and of Wake County are established and may be amended by the North Carolina General Assembly. The County’s contributions to LGERS for the years ended June 30, 2004, 2005, and 2006 were $6,241,446, $6,635,941 and $7,118,601, respectively. The contributions made by the County equaled the required contributions for each year. Supplemental Retirement Income Plan Plan Description. Wake County contributes to the Supplemental Retirement Income Plan (Plan), a defined contribution pension plan administered by the Department of State Treasurer and a Board of Trustees. The plan provides retirement benefits to all employees of the County who are employed at least half time. Article 5 of the G.S. Chapter 135 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. The County's total payroll in fiscal year 2006 was $151,040,214. The County's contributions were calculated using the base salary amount of $146,500,351. The County made contributions amounting to $7,325,018. Employees made voluntary contributions of $3,831,339.

Funding Policy. This Supplemental Retirement Income Plan is provided through the Local Government Employees' Retirement System. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. Employees are eligible to participate from the date of employment. State legislation requires that the County contribute an amount equal to 5 percent of the employee's base salary each month for all law enforcement officers. Wake County also makes a 5 percent contribution for all other employees employed at least half time. All covered employees may make voluntary contributions to the plan. The County's contributions for each employee (and interest allocated to the employee's account) are fully vested immediately.

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NOTE 14. Law Enforcement Officers' Special Separation Allowance

Plan Description. Wake County administers a public employee retirement system (the “Separation Allowance”), a single-employer defined benefit pension plan that provides retirement benefits to the County’s qualified sworn law enforcement officers. The Separation Allowance is equal to .85 percent of the annual equivalent of the base rate of compensation most recently applicable to the officer for each year of creditable service. The retirement benefits are not subject to any increases in salary or retirement allowances that may be authorized by the General Assembly. Article 12D of G.S. Chapter 143 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. The Separation Allowance is reported in the County’s financial statements as a pension trust fund and a separate report is not issued.

All full-time County law enforcement officers are covered by the Separation Allowance. At December 31, 2005, the Separation Allowance’s

membership consisted of: Retirees receiving benefits 42 Active plan members 354 Total 396

Basis of Accounting. Employer contributions to the plan are recognized when due and when the County has made a formal commitment to provide the contributions. Benefits are recognized when due and payable in accordance with the terms of the plan.

Methods Used to Value Investments. Investments are reported at fair value. Short-term debt, deposits, repurchase agreements, and the North Carolina Capital Management Trust investments are reported at fair value. Certain longer-term United States Government and Agency securities are valued at the last reported sales price.

Contributions. The County is required by Article 12D of G.S. Chapter 143 to provide these retirement benefits and has chosen to fund the amounts necessary to cover the benefits earned by making contributions based on actuarial valuations. For the fiscal year ended June 30, 2006, the County contributed $538,000, or 3.6% of annual covered payroll. There were no contributions made by employees. The County’s obligation to contribute to this plan is established and may be amended by the North Carolina General Assembly. Administration costs of the Separation Allowance are financed by the General Fund.

The annual required contribution for the fiscal year ended June 30, 2006 was determined as part of the December 31, 2004 actuarial valuation using the projected unit credit actuarial cost method. The actuarial assumptions included (a) a 7.25% investment rate of return and (b) projected salary increases ranging from 5.9% per year to 9.8% per year. (B) Included an inflation component of 3.75%. The assumptions did not include post-retirement benefit increases. The actuarial value of assets was market value. The unfunded actuarial accrued liability is being amortized as a level percent of pay on an open basis. The remaining amortization period at December 31, 2004 was 20 years.

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Trend Information

Fiscal Year Ended

June 30, 2004 June 30, 2005 June 30, 2006

Annual Pension Cost (APC)

$499,544 $494,511 $594,826

Percentage of APC Contributed

110.98% 131.65% 90.45%

Net Pension Obligation (asset)

NOTE 14. (Cont.) Law Enforcement Officers' Special Separation Allowance

($ 942,598) ( 1,099,087) ( 1,042,261)

The County's annual pension cost and net pension obligation (asset) to the Separation Allowance for the current year were as follows:

Annual required contribution 599,284$ Interest on net pension obligation (79,684) Adjustment to annual required contribution 75,226

Annual pension cost 594,826 Contributions made 538,000

Decrease in net pension obligation 56,826 Net pension obligation (asset), beginning of year (1,099,087)

Net pension asset, end of year (1,042,261)$

Plan Description. Wake County also contributes to the Registers of Deeds’ Supplemental Pension Fund (FUND), a non-contributory, defined contribution plan administered by the North Carolina Department of State Treasurer. The Fund provides supplemental pension benefits to any county register of deeds who is retired under the Local Governmental Employees’ Retirement System (LGERS) or an equivalent locally sponsored plan. Article 3 of G.S. Chapter 161 assigns the authority to establish an amend benefit provisions to the North Carolina General Assembly.

NOTE 15. Register of Deeds' Supplemental Pension Fund

Funding Policy. On a monthly basis, the County remits to the Department of State Treasurer an amount equal to four and one half percent (4.5%) of the monthly receipts collected pursuant to Article 1 of G.S. 161. Immediately following January 1 of each year, the Department of State Treasurer divides ninety-three (93%) of the amount in the fund at the end of the preceding calendar year into equal shares to be disbursed as monthly benefits. The remaining seven percent (7%) of the Funds assets may be used by the Department of State Treasurer in administering the Fund. For the fiscal year ended June 30, 2006 the county’s actual and required contributions were $304,192.

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NOTE 16. Post-Employment Benefits

In addition to providing pension benefits, Wake County has elected to provide health care benefits to retirees of the County who participate in the North Carolina Local Governmental Employees' Retirement System (System) and have at least five to twenty years of continuous service with the County, depending on date of hire. The County pays the full cost of coverage for these benefits as incurred on a pay-as-you-go basis. Also, retirees can purchase coverage for their dependents at the County's group rates. Currently, 554 retirees are eligible for post-retirement health benefits. For the fiscal year ended June 30, 2006, the County made payments for post-retirement health benefit premiums of $2,188,340. These premium costs are expended in the Risk Management Fund (an internal service fund) and are based on estimated annual medical claims per individual. The County has elected to provide death benefits to employees through the Death Trust Plan for members of the Local Government Employees’ Retirement System (Death Trust Plan), a multiple-employer State-administered cost-sharing plan funded on a one-year term cost basis. The beneficiaries of these employees’ who die in active service after one year of contributing membership in the System, or who die within 180 days after termination of service or retirement and have at least one year of contributing membership in the system at the time of death are eligible to receive death benefits. Lump sum death benefit payments to beneficiaries are equal to the employee’s 12 highest months salary in a row during the 24 months prior the employee’s death; however, the benefit may not exceed $50,000. All death benefit payments are made from the Death Benefit Plan. The County has no liability beyond the payment of monthly contributions. Contributions are determined as a percentage of monthly payroll, based upon rates established annually by the State of North Carolina.

Separate rates are set for employees not engaged in law enforcement and for law enforcement officers. Because the benefit payments are made by the Death Benefit Plan and not by the County, the County does not determine the number of eligible participants. For the fiscal year ended June 30, 2006 the County made contributions to the State for death benefits of $113,420. The County's required contributions for employees not engaged in law enforcement and for law enforcement officers represented .07 percent and .14 percent of covered payroll, respectively. The contributions to the Death Trust are not separated between the post-employment benefit amount and the other benefit amount, as the amounts cannot be reasonably estimated.

NOTE 17. Commitments and Contingencies

The County is involved in several pending lawsuits, which it intends to defend vigorously. The County Attorney estimates that the potential liability resulting from such litigation that is not covered by insurance is not material and would not have a material adverse effect on the financial position of the County at June 30, 2006.

NOTE 18. Closure and Postclosure Landfill Costs

The County owns five solid waste landfills which are accounted for in the enterprise fund. State and Federal laws and regulations require the County to place a final cover on its landfills when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, the County reports a portion of these closure and postclosure care costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. The current estimate of postclosure maintenance and monitoring costs is approximately $15 million. The landfill closure and postclosure liability of $14,098,376 is included in accounts payable and accrued liabilities in the enterprise funds at June 30, 2006. The liability represents a cumulative amount reported to date based on the use of 100 percent of the North Wake unlined facility and the contract amount reserved for closure of the Feltonsville Construction and Demolition facility. Both the North Wake and Feltonsville Construction and Demolition facilities stopped accepting waste in fiscal year 2004. The North Wake Construction and Demolition facility reached capacity in August 2003. Bids were received and a contract was awarded for closure of the facility in late 2003. The closure construction was successfully completed in early 2004. Therefore no further post-closure funds need to be reserved in fiscal year 2005 or beyond. The closure contract for the Feltonsville Construction and Demolition facility was bid and awarded in fiscal year 2004. The closure construction was completed in fiscal year 2005. No further post-closure funds need to be reserved in fiscal year 2005 or beyond. The North Wake Subtitle Design Facility is estimated to be 88.22% full and will close in or around October, 2007. The County will recognize the remaining estimated cost of closure and postclosure care costs of $1,270,501 as the remaining estimated capacity is filled. Actual costs may be higher due to inflation, changes in technology, or changes in regulations.

NOTE 19. Interest on Unpaid Motor

During the year the North Carolina General Assembly enacted House Bill 1779 which provides for the creation of a combined motor vehicle registration renewal and property tax collection system. The Bill called for an increase in the first month’s interest on uncollected property taxes on registered motor vehicles. This applied to all property taxes levied on registered motor vehicles. The additional interest collected on behalf of the County was required to be remitted to the Department of State Treasurer and be used by the Division of Motor Vehicles to create a combined registration and collection system. Amounts collected by the County and disbursed to the Department of State Treasurer during the year ended June 30, 2006 was $96,619 and $73,763.

Vehicle Property Taxes

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NOTE 20. Comparative Data/Reclassifications

Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding of the changes in the County’s financial position and operations. Comparative totals have not been included on the statements where their inclusion would not provide an enhanced understanding of the County’s financial position or would cause the statements to be unduly complex or difficult to understand. Also, certain amounts presented in the prior year’s data have been reclassified to be consistent with the current year’s presentation.

NOTE 21. Stewardship, Compliance and Accountibility

The Wake County Community College Capital Project fund had a deficit fund balance of ($3,133,969) as of June 30, 2006. The fund issued commercial paper of $3,598,331during fiscal year 2006. Due to the nature of the financing arrangement, these proceeds were required to be classified as a short-term liability in the fund statements. The will be cured when the commercial paper notes payable are paid off with the issuance of long-term general obligation bonds. The County expects to issue long-term general obligation bonds and pay off the commercial paper notes payable during fiscal year 2007.

The following significant component unit information and accounting policies are disclosed to allow for fair presentation and to supplement the financial data included in the combined financial statements.

(1) Deposits and Investments

The deposits and investments of the ABC Board are governed by the same North Carolina General Statutes and generally accepted accounting principles that are applicable to the County. These statutes and other reporting requirements are found in Note 4. Deposits: At June 30 2006, the Board's deposits had a carrying amount of $9,062,413 and a bank balance of $10,534,205. All of the bank balance was either insured by federal depository insurance, or collateralized under the pooling method.

NOTE 22. Discretely Presented Component Unit Disclosures

Investments: State law [G.S. 159-30(c)] authorized the Board to invest in obligations of the United States or obligations fully guaranteed both as to principal and interest by the United States; obligations of the State of North Carolina; bonds and notes of any North Carolina local government or public authority; obligations of certain non-guaranteed federal agencies; certain high quality issues of commercial paper and banker's acceptances; and the North Carolina Capital Management Trust (NCCMT), an SEC registered (2a-7) money market mutual fund.

(2) Risk Management

The ABC Board is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The ABC Board has property, general liability, auto liability, workers' compensation and employee health coverage. The ABC Board also has liquor legal liability coverage. There have been no significant reductions in insurance coverage from the prior year and settled claims have not exceeded coverage in any of the past three fiscal years.

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LAW ENFORCEMENT OFFICERS' SPECIAL SEPARATION ALLOWANCE - REQUIRED SUPPLEMENTARY INFORMATION

Schedule of Funding Progress

Actuarial AccruedActuarial Liability (AAL) Unfunded UAAL as a

Actuarial Value of -Projected Unit AAL Funded Covered % of CoveredValuation Assets Credit (UAAL) Ratio Payroll Payroll

Date (a) (b) (b-a) (a/b) ( c ) (( b-a ) / c )12/31/1996 2,347,408 2,136,614 (210,794) 109.87% 7,941,841 (2.65)%12/31/1997 2,381,181 2,620,844 239,663 90.86% 7,933,157 3.02%12/31/1998 2,504,558 2,913,167 408,609 85.97% 8,884,169 4.60%12/31/1999 2,560,685 3,546,264 985,579 72.21% 9,469,345 10.41%12/31/2000 2,668,037 5,063,960 2,395,923 52.69% 11,270,100 21.26%12/31/2001 2,749,482 5,736,108 2,986,626 47.93% 12,038,409 24.81%12/31/2002 2,587,018 6,144,460 3,557,442 42.10% 12,471,841 28.52%12/31/2003 3,142,240 6,410,126 3,267,886 49.02% 13,512,764 24.18%12/31/2004 2,640,759 7,147,681 4,506,922 36.95% 14,453,419 31.18%12/31/2005 2,599,117 7,091,401 4,492,284 36.65% 14,936,129 30.08%

Schedule of Employer Contributions

Year Ended Annual Required PercentageJune 30 Contribution Contributed

1997 105,430 94.38%1998 137,392 102.63%1999 161,103 72.86%2000 221,879 68.76%2001 399,554 51.18%2002 459,905 45.55%2003 410,600 51.02%2004 538,000 100.00%2005 498,334 130.64%2006 599,284 89.77%

Notes to the Required Schedules:

The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation follows.

Valuation date 12/31/2005 Actuarial Assumptions:Actuarial cost method Projected unit credit Investment rate of return 7.25%Amortization method Level percent of pay open Projected salary increases 4.5% to 12.3%Remaining amortization period 20 years Includes inflation at 3.75%Asset Valuation method Market Value Cost of Living adjustments None

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GENERAL FUNDCOMPARATIVE BALANCE SHEETSJune 30, 2006 and 2005

June 30, June 30,2006 2005

ASSETS

Cash and investments - pooled equity 132,301,338$ 141,410,233$ Cash and investments - cash equivalents 1,139,812 1,215,804Taxes receivable (net) 5,605,468 5,133,694Accounts receivable (net) 62,163,266 57,036,318Accrued interest receivable - - Due from other funds 758,307 1,060,510 Prepaid expenditures 245,522 185,332 Loans receivable - 3,922 Inventories 272,555 236,314

TOTAL ASSETS 202,486,268$ 206,282,127$

LIABILITIES AND FUND BALANCE

Liabilities: Accounts payable and accrued liabilities 28,960,651$ 32,147,248$ Due to other funds - 11,290 Deferred revenues 10,272,934 9,506,626

Total Liabilities 39,233,585 41,665,164

Fund Balance: Reserved for inventories 272,555 236,314 Reserved for noncurrent receivable 673,431 739,616 Reserved for encumbrances 5,178,786 5,644,690 Reserved by state statute 59,979,643 55,333,370 Unreserved: Designated for subsequent year expenditures 13,016,863 10,939,413 Designated for working capital 80,686,087 78,028,147 Undesignated 3,445,318 13,695,413

Total Fund Balance 163,252,683 164,616,963

TOTAL LIABILITIES AND FUND BALANCE 202,486,268$ 206,282,127$

61


GENERAL FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUALFor the Year Ended June 30, 2006With Comparative Actual Amounts for the Year Ended June 30, 2005

2005

Budget Actual ActualREVENUES: Taxes 595,954,000$ 603,516,564$ 568,293,147$ Licenses and permits 3,955,409 4,455,484 3,826,961 Intergovernmental 116,918,278 114,955,825 107,986,471 Charges for services 87,513,427 82,997,253 82,244,747 Investment earnings 77,210 277,815 80,730 Miscellaneous 568,084 902,560 983,296Total Revenues 804,986,408 807,105,501 763,415,352

EXPENDITURES: Current: General administration 57,700,425 52,684,406 49,688,805 Human services 246,022,413 239,443,124 228,733,066 Education 267,807,500 267,807,500 248,315,000 Community development and cultural 21,034,136 20,434,342 18,801,198 Environmental services 8,529,764 8,266,909 7,550,021 Public safety 82,183,063 76,156,171 65,498,927Total Expenditures 683,277,301 664,792,452 618,587,017

REVENUES OVER EXPENDITURES 121,709,107 142,313,049 144,828,335

OTHER FINANCING SOURCES (USES): Transfers in 1,022,870 1,070,961 626,604 Transfers out (144,748,290) (144,748,290) (135,688,000)Total Other Financing Sources (Uses) (143,725,420) (143,677,329) (135,061,396)

REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (22,016,313) (1,364,280) 9,766,939

APPROPRIATED FUND BALANCE 22,016,313 - -

REVENUES, OTHER FINANCING SOURCES, AND APPROPRIATED FUND BALANCE OVER EXPENDITURES AND OTHER USES -$ (1,364,280) 9,766,939

FUND BALANCE AT BEGINNING OF YEAR 164,616,963 154,850,024

BUDGETARY FUND BALANCE 163,252,683 164,616,963

LESS: EXPENDITURES ASSOCIATED WITH CAPITAL LEASEINCEPTION & CAPITAL DONATIONS (2,670,274) (523,937)

ADD: PROCEEDS OF CAPITAL LEASES & CAPITAL DONATIONS 2,670,274 523,937TOTAL LEASE INCEPTION AND PROCEEDS - -

FUND BALANCE AT END OF YEAR 163,252,683$ 164,616,963$

2006

62


GENERAL FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEDETAILED BUDGET AND ACTUALFor the Year Ended June 30, 2006With Comparative Actual Amounts for the Year Ended June 30, 2005

2005

Budget Actual ActualREVENUES:

TAXES Ad valorem property - current 438,170,000$ 442,344,883$ 421,422,321$ Ad valorem property - prior 5,500,000 6,655,090 7,079,537 Tax penalties, interest and other 1,375,000 2,275,257 2,115,987 Leased rental vehicle tax 2,200,000 2,407,688 2,013,845 Real property transfer 8,500,000 10,608,018 8,574,547 Sales 137,811,000 136,593,464 124,603,942 Payments in lieu of taxes 1,148,000 1,146,502 1,146,017 Other taxes 1,250,000 1,485,662 1,336,951 Total Taxes 595,954,000 603,516,564 568,293,147

LICENSES AND PERMITS Beer and wine licenses 50,000 54,438 55,694 Marriage licenses 132,000 139,825 134,225 Building permits and inspections 3,773,409 4,261,221 3,637,042 Total Licenses and Permits 3,955,409 4,455,484 3,826,961

2006

63



2005

Budget Actual ActualINTERGOVERNMENTAL REVENUE Federal and State: Human services 103,412,077$ 104,058,811$ 100,139,403$ Payments in lieu of taxes 175,340 190,117 236,764 Public library 483,000 546,165 636,064 Public safety 7,661,175 4,544,561 1,708,298 Others 1,808,850 1,113,535 942,292 Total Federal and State 113,540,442 110,453,189 103,662,821

Local: Human services 981,686 1,052,476 935,373 Others 2,396,150 3,450,160 3,388,277 Total Local 3,377,836 4,502,636 4,323,650

Total Intergovernmental 116,918,278 114,955,825 107,986,471

2006

64



2005

Budget Actual ActualCHARGES FOR SERVICES Fees - revenue collector 844,450$ 900,137$ 947,160$ Fees - register of deeds 6,545,400 6,590,485 5,755,967 Fees - community services 1,044,017 740,145 551,616 Fees - planning & development 731,958 1,154,466 674,160 Fees - sheriff 3,442,300 4,089,783 3,232,377 Fees - emergency medical services 6,394,672 6,812,611 6,250,257 Fees - household subcription -EMS 446,220 458,100 452,230 Fees - fire services 178,426 179,425 148,535 Fees - other public safety 675,766 566,324 624,720 Public health 9,710,434 10,567,774 10,814,417 Social services 222,801 2,332,592 219,303 Area mental health 49,399,503 40,600,662 45,617,245 Environmental services 1,222,358 1,272,647 1,075,071 Libraries 568,750 619,376 641,035 Court facilities fees 1,550,000 1,702,764 1,476,293 Bureau of identification 775,000 779,676 775,376 Other fees and charges 3,761,372 3,630,286 2,988,985 Total Charges for Services 87,513,427 82,997,253 82,244,747

INVESTMENT EARNINGS 77,210 277,815 80,730

MISCELLANEOUS Sale of materials and fixed assets 537,933 850,915 693,763 Other 30,151 51,645 289,533 Total Miscellaneous 568,084 902,560 983,296

TOTAL REVENUES 804,986,408 807,105,501 763,415,352

2006

65



2005

Budget Actual Encumbrances Total ActualEXPENDITURES:

GENERAL ADMINISTRATION County commissioners 471,184$ 448,520$ -$ 448,520$ 433,629$ County manager 961,542 955,489 - 955,489 1,097,345 Human resources 1,527,343 1,527,343 - 1,527,343 1,467,895 Board of elections 2,537,634 1,777,455 - 1,777,455 2,291,123 Budget and management services 571,033 565,783 1,662 567,445 519,067 Finance 2,436,476 2,416,988 4,943 2,421,931 2,212,672 Revenue 4,620,636 4,507,516 27,816 4,535,332 4,221,019 County attorney 1,135,315 1,120,099 1,827 1,121,926 1,014,605 Register of deeds 2,871,554 2,655,859 121,096 2,776,955 2,324,056 Planning 1,478,124 1,368,634 2,358 1,370,992 1,226,242 General services 24,062,959 21,991,513 968,694 22,960,207 20,649,367 Facilities design & construction 1,061,584 1,037,940 20,000 1,057,940 844,593 Non-departmental 1,577,657 792,859 653,230 1,446,089 292,435 Public agencies 3,313,564 2,952,073 157,438 3,109,511 3,315,331 Information services 9,073,820 8,566,335 306,719 8,873,054 7,779,426 Total General Administration 57,700,425 52,684,406 2,265,783 54,950,189 49,688,805

HUMAN SERVICES Medical examiner 200,000 206,825 - 206,825 218,125 Resource Management 15,945,732 18,731,051 35,742 18,766,793 17,132,181 Family and Youth Success 114,304,274 106,881,877 287,361 107,169,238 112,631,124 Community Health 18,178,688 17,391,714 251,601 17,643,315 12,453,070 Mental Health 9,319,183 8,265,362 13,276 8,278,638 924,053 Transportation 1,781,442 1,210,547 52,895 1,263,442 1,020,293 Adult Community Support Services 20,108,537 20,200,169 - 20,200,169 19,785,259 Emergency & Adult Health Services 17,799,422 16,897,929 - 16,897,929 19,196,162 Eastern Regional Center 3,653,430 3,825,079 2,801 3,827,880 3,362,630 Southern Regional Center 3,722,567 3,685,353 - 3,685,353 3,324,914 Economic Self-Sufficiency 41,009,138 42,147,218 20,306 42,167,524 38,685,255 Total Human Services 246,022,413 239,443,124 663,982 240,107,106 228,733,066

2006

Encumbrances are included for internal reporting purposes only.66



2005

Budget Actual Encumbrances Total ActualEDUCATION Wake County Public Schools: Current expense 251,247,744$ 251,247,744$ -$ 251,247,744$ 233,570,793$ Capital outlay 3,128,256 3,128,256 - 3,128,256 2,834,207 Community use of schools and other 410,000 410,000 - 410,000 410,000 Total Wake County Public Schools 254,786,000 254,786,000 - 254,786,000 236,815,000

Wake Technical College: Current expense 11,860,500 11,860,500 - 11,860,500 11,089,000 Capital outlay 1,161,000 1,161,000 - 1,161,000 411,000 Total Wake Technical College 13,021,500 13,021,500 - 13,021,500 11,500,000

Total Education 267,807,500 267,807,500 - 267,807,500 248,315,000

COMMUNITY DEVELOPMENT AND CULTURAL Community Development: Administration 319,072 285,098 - 285,098 305,931 Cooperative extension - - - - 541,543 Veterans services 93,349 126,873 - 126,873 - Public libraries 14,207,993 13,901,402 131,654 14,033,056 12,036,822 Geographic information services 1,620,217 1,492,633 20,000 1,512,633 1,451,297 Building inspections 2,432,594 2,395,162 10,501 2,405,663 2,266,010 Parks and recreation 2,360,911 2,233,174 42,787 2,275,961 2,199,595 Total Community Development and Cultural 21,034,136 20,434,342 204,942 20,639,284 18,801,198

2006

Encumbrances are included for internal reporting purposes only. 67



2005

Budget Actual Encumbrances Total ActualEXPENDITURES:

ENVIRONMENTAL SERVICES Environmental services 8,529,764$ 8,266,909$ 210,822$ 8,477,731$ 7,550,021$ Total Environmental Services 8,529,764 8,266,909 210,822 8,477,731 7,550,021

PUBLIC SAFETY Sheriff Department: Sheriff 28,335,831 28,033,992 247,790 28,281,782 26,441,442 Detention 22,740,648 22,199,334 157,881 22,357,215 18,171,018 Total Sheriff Department 51,076,479 50,233,326 405,671 50,638,997 44,612,460

Other public safety 31,106,584 25,922,845 1,427,586 27,350,431 20,886,467 Total Public Safety 82,183,063 76,156,171 1,833,257 77,989,428 65,498,927

TOTAL EXPENDITURES 683,277,301 664,792,452 5,178,786 669,971,238 618,587,017

2006




2005

Budget Actual Actual

REVENUES OVER EXPENDITURES 121,709,107$ 142,313,049$ 144,828,335$

OTHER FINANCING SOURCES (USES) Transfers in 1,022,870 1,070,961 626,604 Transfers out (144,748,290) (144,748,290) (135,688,000)

Total Other Financing Sources (Uses (143,725,420) (143,677,329) (135,061,396)

REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (22,016,313) (1,364,280) 9,766,939

APPROPRIATED FUND BALANCE 22,016,313 - -

REVENUES, OTHER FINANCING SOURCES, AND APPROPRIATED FUND BALANCE OVER EXPENDITURES AND OTHER USES -$ (1,364,280) 9,766,939

FUND BALANCE AT BEGINNING OF YEAR 164,616,963 154,850,024

BUDGETARY FUND BALANCE 163,252,683 164,616,963

LESS: EXPENDITURES ASSOCIATED WITH CAPITAL LEASE INCEPTIONS & CAPITAL DONATIONS (2,670,274) (523,937)

ADD: PROCEEDS OF CAPITAL LEASES AND CAPITAL DONATIONS 2,670,274 523,937 TOTAL LEASE INCEPTIONS, CAPITAL DONATIONS AND PROCEEDS - -

FUND BALANCE AT END OF YEAR 163,252,683$ 164,616,963$

2006

69


AFFORDABLE HOUSING FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL From Project Inception Through June 30, 2006

ActualProject Prior Current Total

Authorization Years Year To DateREVENUES:

Intergovernmental 22,874,577$ 16,914,352$ 3,003,067$ 19,917,419$ Charges for services 635,186 524,712 219,953 744,665 Investment earnings (2,300) 368,856 6,762 375,618 Miscellaneous 1,924,200 1,711,816 20,000 1,731,816

Total Revenues 25,431,663 19,519,736 3,249,782 22,769,518

EXPENDITURES:Human Services

Other Programs 10,968,427 8,477,425 394,271 8,871,696 Mental health 1,503,603 1,357,134 - 1,357,134 Disaster recovery 1,332,066 1,331,645 - 1,331,645 Housing and community revitalization 15,699,386 12,251,739 1,984,737 14,236,476 Home grant 4,738,563 1,760,041 730,989 2,491,030


REVENUES UNDER EXPENDITURES (8,810,382) (5,658,248) 139,785 (5,518,463)

OTHER FINANCING SOURCES:Transfers in 8,810,382 7,638,891 1,104,000 8,742,891

REVENUES AND OTHER SOURCES OVER EXPENDITURES -$ 1,980,643$ 1,243,785 3,224,428$

Fund Balance at beginning of year 1,980,643


70


DEBT SERVICE FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL For the Year Ended June 30, 2006

Budget Actual Encumbrances TotalREVENUES:Investment earnings 7,000,000$ 7,845,289$ -$ 7,845,289$

EXPENDITURES:

Debt service - principal 70,480,946 70,480,946 - 70,480,946 Debt service - interest 49,856,825 49,736,040 - 49,736,040 Miscellaneous 159,001 32,654 4,102 36,756 Budgetary reserves 2,049,228 - - - Total expenditures 122,546,000 120,249,640 4,102 120,253,742

REVENUES UNDER EXPENDITURES (115,546,000) (112,404,351) (4,102) (112,408,453)

OTHER FINANCING SOURCES:Transfers in 115,471,000 115,471,000 - 115,471,000 Appropriated fund balance 75,000 - - - Total Other Financing Sources 115,546,000 115,471,000 - 115,471,000

REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES, BUDGETARY BASIS -$ 3,066,649 (4,102)$ 3,062,547$


BUDGETARY FUND BALANCE 62,423,175

Add: Bond premiums 1,358,620

REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 4,425,269


FUND BALANCES AT END OF YEAR 63,781,795$

2006



CAPITAL IMPROVEMENTS FUNDSCHEDULE OF REVENUES AND EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL From Project Inception Through June 30, 2006



Intergovernmental 12,829,186$ 8,400,002$ 1,637,621$ 10,037,623$ Charges for services 11,066,163 4,672,459 6,448,191 11,120,650 Investment earnings 2,280,768 48,768,043 2,808,562 51,576,605 Miscellaneous 2,546,845 2,201,095 1,044,597 3,245,692

Total Revenues 28,722,962 64,041,599 11,938,971 75,980,570

EXPENDITURES - CAPITAL PROJECTS:

Park projects 21,803,901 10,271,068 2,412,197 12,683,265 Library projects 38,745,192 8,347,427 18,628,138 26,975,565 General administration projects 54,820,810 12,329,427 4,196,961 16,526,388 Other community development projects 73,905,407 53,756,980 15,986,094 69,743,074 Enviromental services projects 28,463,773 15,484,313 4,453,710 19,938,023 Public safety projects 121,176,239 78,731,339 21,108,722 99,840,061 Human services projects 18,419,168 11,951,241 3,008,963 14,960,204 Automation projects 22,988,986 8,126,082 6,451,153 14,577,235


REVENUES UNDER EXPENDITURES (351,600,514) (134,956,278) (64,306,967) (199,263,245)

OTHER FINANCING SOURCES AND (USES):

Bond issue and lease proceeds 85,298,075 61,100,000 - 61,100,000 Transfers in 211,958,894 182,416,013 29,043,481 211,459,494 Transfers out (2,000,000) (1,000,000) (1,000,000) (2,000,000) Appropriation of fund balance 56,343,545 - - -

Total Other Financing Sources and (Uses) 351,600,514 242,516,013 28,043,481 270,559,494

REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES -$ 107,559,735$ (36,263,486) 71,296,249$



72


SCHOOL CAPITAL FUNDSCHEDULE OF REVENUES AND EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL From Project Inception Through June 30, 2006



Intergovernmental 55,802,015$ 37,381,157$ 8,218,405$ 45,599,562$ Charges for services 330,823 - - - Investment earnings 9,143,957 37,440,662 6,584,796 44,025,458

Total Revenues 65,276,795 74,821,819 14,803,201 89,625,020


Wake County Public Schools 1,255,615,729 711,096,779 224,372,107 935,468,886

TOTAL EXPENDITURES 1,255,615,729 711,096,779 224,372,107 935,468,886

REVENUES UNDER EXPENDITURES (1,190,338,934) (636,274,960) (209,568,906) (845,843,866)

OTHER FINANCING SOURCES AND (USES):Bond issue proceeds 1,004,592,693 746,659,822 41,000,000 787,659,822 Transfers in 164,017,837 164,017,837 - 164,017,837 Transfers out (16,103,316) (16,103,316) - (16,103,316) Appropriated fund balance 37,831,720 - - -

Total Other Financing Sources and (Uses) 1,190,338,934 894,574,343 41,000,000 935,574,343

REVENUE AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES -$ 258,299,383$ (168,568,906) 89,730,477$



73

Nonmajor Governmental Funds

Special Revenue Funds Special revenue funds account for proceeds of revenue sources that are restricted to expenditures for specific purposes. These funds are established under the provisions of the North Carolina General Statutes: The Sewer Districts Fund accounts for the revenues and expenditures to connect six subdivisions to municipal or public utility wastewater systems. The Capital Area Workforce Development Fund accounts for the federal Department of Labor grant activities conducted within the Job Training Partnership Act (JTPA) and the Workforce Development Act of 1998. The Special Tax Districts Fund accounts for the revenues received as part of ad valorem tax collections and their subsequent distribution to various special tax districts throughout the County. The Revaluation Reserve Fund accounts for the expenditures necessary for periodic property tax revaluations required under State law and the financing resources, which are primarily operating transfers from the General Fund. The Major Facilities Fund accounts for the accumulation of revenues to be spent on the construction of major facilities in accordance with an interlocal agreement between Wake County and other local governments located within the County. The 911 Special Revenue Fund accounts for 911 telephone charges and expenditures. It was established pursuant to State law. Capital Project Funds Capital project funds account for the proceeds of bond issues and all other resources segregated for the acquisition, construction, and reconstruction of capital assets. The Wake Community College Capital Projects Fund accounts for the construction and renovation of building projects for the Community College financed with bonds authorized and issued by the County. It was established in fiscal 2004, prior to that these projects had been accounted for as part of the School Capital Fund. The State Bond Fund accounts for the construction and renovation of school building projects financed with State bonds authorized and issued under the Public School Building Bond Act of 1996.


COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDSAs of June 30, 2006

Total TotalNonmajor Nonmajor

Special CapitalRevenue Project Total

ASSETS

Cash and investments - pooled equity 19,388,273$ 714,399$ 20,102,672$ Taxes receivable, net 164,743 - 164,743 Accounts receivable, net 4,010,613 - 4,010,613 Accrued interest receivable 257,675 - 257,675 Prepaid expenditures 75 - 75

TOTAL ASSETS 23,821,379$ 714,399$ 24,535,778$


Liabilities:Accounts payable and accrued liabilities 5,085,880$ 241,938$ 5,327,818$ Due to other governmental units - 8,099 8,099 Due to other funds 5,716,927 - 5,716,927 Deferred revenues 832,409 - 832,409 Commercial paper notes payable - 3,598,331 3,598,331

Total Liabilities 11,635,216 3,848,368 15,483,584

Fund Balances: Reserved for encumbrances 354,078 - 354,078 Reserved by state statute 2,907,464 - 2,907,464 Unreserved: Designated for subsequent years' debt service 734,941 - 734,941 Designated for subsequent years' expenditures 5,752,238 - 5,752,238 Designated for working capital 235,236 - 235,236 Undesignated 2,202,206 (3,133,969) (931,763) Total Fund Balances 12,186,163 (3,133,969) 9,052,194

TOTAL LIABILITIES AND FUND BALANCES 23,821,379$ 714,399$ 24,535,778$

74


COMBINING STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCESNONMAJOR GOVERNMENTAL FUNDSFor the Year Ended June 30, 2006

Total TotalNonmajor Nonmajor

Special CapitalRevenue Project Total

REVENUES:

Taxes 44,032,026$ -$ 44,032,026$ Intergovernmental 5,848,414 - 5,848,414 Charges for services 620,625 - 620,625 Investment earnings 681,776 5,761 687,537

Total Revenues 51,182,841 5,761 51,188,602

EXPENDITURES General administration 1,461,466 - 1,461,466 Human services 5,885,590 - 5,885,590 Education - 4,183,414 4,183,414 Community development and cultural 22,586,539 - 22,586,539 Public safety 14,698,671 - 14,698,671

Total Expenditures 44,632,266 4,183,414 48,815,680

REVENUES OVER (UNDER) EXPENDITURES 6,550,575 (4,177,653) 2,372,922

OTHER FINANCING SOURCES (USES): Transfers in 986,290 - 986,290 Transfers out (6,785,442) - (6,785,442) Capital leases 10,243 - 10,243

Total Other Financing Sources (Uses) (5,788,909) - (5,788,909)

REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES 761,666 (4,177,653) (3,415,987)

Fund Balances at beginning of year 11,424,497 1,043,684 12,468,181

FUND BALANCES AT END OF YEAR 12,186,163$ (3,133,969)$ 9,052,194$

75


COMBINING BALANCE SHEETNONMAJOR SPECIAL REVENUE FUNDSAs of June 30, 2006

911Capital Area Special Special

Sewer Workforce Tax Revaluation Major RevenueDistricts Development Districts Reserve Facilities Fund Total

ASSETS

Cash and investments - pooled equity 734,941$ -$ 8,182,794$ 2,280,384$ 7,672,922$ 517,232$ 19,388,273$ Taxes receivable, net - - 164,743 - - - 164,743 Accounts receivable, net - 1,274,878 - - 2,512,415 223,320 4,010,613 Accrued interest receivable 7,720 - 85,946 16,931 142,886 4,192 257,675 Prepaid expenditures - 75 - - - - 75

TOTAL ASSETS 742,661$ 1,274,953$ 8,433,483$ 2,297,315$ 10,328,223$ 744,744$ 23,821,379$


Liabilities:Accounts payable

and accrued liabilities -$ 516,646$ 4,261$ 112,434$ 4,403,213$ 49,326$ 5,085,880$ Due to other funds - 758,307 4,958,620 - - - 5,716,927 Deferred revenues - - 832,409 - - - 832,409

Total Liabilities - 1,274,953 5,795,290 112,434 4,403,213 49,326 11,635,216

Fund Balances: Reserved for encumbrances - - - 354,078 - - 354,078 Reserved by state statute 7,720 - - 16,931 2,655,301 227,512 2,907,464 Designated for subsequent years' debt service 734,941 - - - - - 734,941 Designated for subsequent years' expenditures - - 700,000 1,314,623 3,269,709 467,906 5,752,238 Designated for working capital - - 235,236 - - - 235,236 Unreserved: Undesignated - - 1,702,957 499,249 - - 2,202,206 Total Fund Balances 742,661 - 2,638,193 2,184,881 5,925,010 695,418 12,186,163

TOTAL LIABILITIES AND FUND BALANCES 742,661$ 1,274,953$ 8,433,483$ 2,297,315$ 10,328,223$ 744,744$ 23,821,379$

76


COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCESNONMAJOR SPECIAL REVENUE FUNDSFor the Year Ended June 30, 2006

Capital Area Special 911Sewer Workforce Tax Revaluation Major Special

Districts Development Districts Reserve Facilities Revenue TotalREVENUES:

Taxes -$ -$ 16,554,252$ -$ 26,532,040$ 945,734$ 44,032,026$ Intergovernmental - 5,848,414 - - - - 5,848,414 Charges for services 49,596 4,135 - - - 566,894 620,625 Investment earnings 30,425 - 204,024 70,257 368,587 8,483 681,776 Total Revenues 80,021 5,852,549 16,758,276 70,257 26,900,627 1,521,111 51,182,841

EXPENDITURES:

General administration - - - 1,461,466 - - 1,461,466 Human services - 5,885,590 - - - - 5,885,590 Community development 252,363 - 333,286 - 22,000,890 - 22,586,539 Public safety - - 13,564,713 - - 1,133,958 14,698,671 Total Expenditures 252,363 5,885,590 13,897,999 1,461,466 22,000,890 1,133,958 44,632,266

REVENUES OVER (UNDER) EXPENDITURES (172,342) (33,041) 2,860,277 (1,391,209) 4,899,737 387,153 6,550,575

OTHER FINANCING SOURCES (USES):

Transfers in - 11,290 - 975,000 - - 986,290 Transfers out - - (3,998,481) - (2,786,961) - (6,785,442) Capital leases - - - 10,243 - - 10,243

Total other financing sources and uses - 11,290 (3,998,481) 985,243 (2,786,961) - (5,788,909)

NET CHANGE IN FUND BALANCES (172,342) (21,751) (1,138,204) (405,966) 2,112,776 387,153 761,666

Fund Balances at beginning of year 915,003 21,751 3,776,397 2,590,847 3,812,234 308,265 11,424,497

FUND BALANCES AT END OF YEAR 742,661$ -$ 2,638,193$ 2,184,881$ 5,925,010$ 695,418$ 12,186,163$

77


COMBINING BALANCE SHEETNONMAJOR CAPITAL PROJECT FUNDSAs of June 30, 2006

Wake Community College StateCapital SchoolProjects Bond Total

ASSETS

Cash and investments - pooled equity 706,300$ 8,099$ 714,399$

TOTAL ASSETS 706,300$ 8,099$ 714,399$


Liabilities:Accounts payable and accrued liabilities 241,938$ -$ 241,938$ Due to other governmental units - 8,099 8,099 Commercial paper notes payable 3,598,331 - 3,598,331

Total Liabilities 3,840,269 8,099 3,848,368

Fund Balances: Unreserved: Undesignated (3,133,969) - (3,133,969)

Total Fund Balances (3,133,969) - (3,133,969)

TOTAL LIABILITIES AND FUND BALANCES 706,300$ 8,099$ 714,399$

78


SEWER DISTRICTS FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL From Project Inception Through June 30, 2006


Authorization Years Year To DateREVENUES: Intergovernmental 502,050$ 327,050$ -$ 327,050$ Charges for services 4,286,814 2,114,056 49,596 2,163,652 Investment earnings 404,711 564,323 30,425 594,748 Miscellaneous 350,986 118,309 - 118,309

Total Revenues 5,544,561 3,123,738 80,021 3,203,759

EXPENDITURES: Community development 6,383,967 5,427,351 252,363 5,679,714

REVENUES UNDER EXPENDITURES (839,406) (2,303,613) (172,342) (2,475,955)

OTHER FINANCING SOURCES:Proceeds of long-term debt - 2,379,210 - 2,379,210 Transfers in 839,406 839,406 - 839,406

Total Other Financing Sources 839,406 3,218,616 - 3,218,616

REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES -$ 915,003$ (172,342) 742,661$

Fund Balance at beginning of year 915,003

FUND BALANCE AT END OF YEAR 742,661$

79

WAKE COUNTY, NORTH CAROLINACAPITAL AREA WORKFORCE DEVELOPMENT FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUALFrom Project Inception Through June 30, 2006


REVENUES: Authorization Years Year To Date

Intergovernmental 20,533,209$ 13,131,987$ 5,848,414$ 18,980,401$ Charges for services - 775 4,135 4,910 Miscellaneous - 4,102 - 4,102

Total Revenues 20,533,209 13,136,864 5,852,549 18,989,413

EXPENDITURES:Employment & Training 1997-2001 141,530 141,530 - 141,530 Welfare-to-work Grant 1,165,792 1,168,327 11,290 1,179,617 WIA Administration 758,202 205,138 457,557 662,695 Compacity Building 1,986,152 1,030,316 623,056 1,653,372 Administrative - Omnibus Funds 27,521 20,835 6,686 27,521 Dislocated Worker - Omnibus Funds 220,744 187,515 33,229 220,744 Dislocated Worker - Supplemental 1,000,000 - 1,000,000 1,000,000 Title I - Adult 2,595,771 1,270,778 1,197,307 2,468,085 Title I - Youth 2,692,456 1,594,262 972,519 2,566,781 Title I - Dislocated Workers 5,985,568 4,713,502 1,114,537 5,828,039 Hurricane Katrina - NEG 825,000 - 246,885 246,885 USDOL Direct Grants 2,990,952 2,682,244 222,524 2,904,768 Other County - (33,703) - (33,703)


REVENUES OVER (UNDER) EXPENDITURES 143,521 156,120 (33,041) 123,079

OTHER FINANCING SOURCES (USES):Transfers in 11,290 - 11,290 11,290 Transfers out (154,811) (134,369) - (134,369)

Total Other Financing Sources and Uses (143,521) (134,369) 11,290 (123,079)

REVENUES OVER (UNDER) EXPENDITURES AND OTHER USES -$ 21,751$ (21,751) -$

Fund balance at beginning of year 21,751

FUND BALANCE AT END OF YEAR -$

80


SPECIAL TAX DISTRICTS FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL For the Year Ended June 30, 2006

Budget Actual Encumbrances TotalREVENUES:

Taxes - ad valorem property 16,511,463$ 16,554,252$ -$ 16,554,252$ Investment earnings - 204,024 - 204,024 Miscellanous - - - - Total Revenues 16,511,463 16,758,276 - 16,758,276

EXPENDITURES: Community development 333,285 333,286 - 333,286 Public Safety: Rural fire districts 13,659,461 13,564,713 - 13,564,713

Total Expenditures 13,992,746 13,897,999 - 13,897,999

REVENUES OVER EXPENDITURES 2,518,717 2,860,277 - 2,860,277

OTHER FINANCING USES: Transfers out (3,998,481) (3,998,481) - (3,998,481)

REVENUES OVER (UNDER) EXPENDITURES AND OTHER USES (1,479,764) (1,138,204) - (1,138,204)

Fund balance appropriated 1,479,764 - - -

REVENUES AND FUND BALANCE OVER EXPENDITURES AND OTHER USES -$ (1,138,204) -$ (1,138,204)$



2006



REVALUATION RESERVE FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL From Project Inception Through June 30, 2006

ActualProject Prior Total

Authorization Years Actual To DateREVENUES:

Investment earnings 660,601$ 1,096,285$ 70,257$ 1,166,542$

EXPENDITURES:

General administration - Revaluation 12,467,673 9,180,438 1,461,466 10,641,904


OTHER FINANCING SOURCES:

Proceeds of capital leases - - 10,243 10,243 Transfers in 11,650,000 10,675,000 975,000 11,650,000

Total Other Financing Sources 11,650,000 10,675,000 985,243 11,660,243

REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES (157,072) 2,590,847 (405,966) 2,184,881

Fund balance appropriated 157,072 - - -

REVENUES, OTHER SOURCES, AND FUND BALANCE APPROPRIATED OVER (UNDER) EXPENDITURES -$ 2,590,847$ (405,966) 2,184,881$



82


MAJOR FACILITIESSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN APPROPRIATED FUND BALANCEFor the Year Ended June 30, 2006

2006

Budget ActualREVENUES:Taxes: Occupancy tax 11,363,842$ 12,134,712$ Prepared food tax 13,613,250 14,397,328 Total taxes 24,977,092 26,532,040 Charges for services - - Investment earnings - 368,587

Total Revenues 24,977,092 26,900,627

EXPENDITURES: Raleigh hold harmless - occupancy 680,000 680,000 Cary hold harmless - occupancy 549,990 588,534 Greater Raleigh Convention and Visitors Bureau 2,997,200 3,189,919 Centennial Authority operations 7% 1,444,376 1,537,034 Centennial - Debt service 5,208,422 5,121,635 Raleigh annual distribution - $1M 1,000,000 1,000,000 Convention Center 8,763,621 9,883,768 Unallocated 1,546,522 -

Total Expenditures 22,190,131 22,000,890

REVENUES OVER EXPENDITURES 2,786,961 4,899,737

OTHER FINANCING USES:Transfers out to General Fund (795,961) (795,961) Transfers out to Debt Service Fund (991,000) (991,000) Transfers out to Capital Improvement Fund (1,000,000) (1,000,000)

Total other financing uses (2,786,961) (2,786,961)

REVENUES UNDER EXPENDITURES AND OTHER FINANCING USES -$ 2,112,776


FUND BALANCES AT END OF YEAR 5,925,010$

83


911 SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL From Project Inception Through June 30, 2006


REVENUES: Authorization Years Year To Date

Taxes 4,890,605$ 5,293,011$ 945,734$ 6,238,745$ Intergovernmental 2,039,000 - - - Charges for services 355,517 373,024 566,894 939,918 Investment earnings - 27,762 8,483 36,245

Total Revenues 7,285,122 5,693,797 1,521,111 7,214,908

EXPENDITURES:

Public safety 7,420,122 5,520,532 1,133,958 6,654,490

REVENUES OVER (UNDER) EXPENDITURES (135,000) 173,265 387,153 560,418

OTHER FINANCING SOURCES:

Transfers in 135,000 135,000 - 135,000

REVENUES AND OTHER SOURCES OVER EXPENDITURES -$ 308,265$ 387,153 695,418$

Fund Balance at beginning of year 308,265 FUND BALANCE AT END OF YEAR 695,418$

84


WAKE COMMUNITY COLLEGE CAPITAL PROJECTS FUNDSCHEDULE OF REVENUES AND EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL From Project Inception Through June 30, 2006



Investment earnings 3,640,235$ 3,252,951$ 5,761$ 3,258,712$ Miscellaneous - 483,601 - 483,601

Total Revenues 3,640,235 3,736,552 5,761 3,742,313


Wake Technical College 75,592,420 34,645,053 4,183,414 38,828,467

TOTAL EXPENDITURES 75,592,420 34,645,053 4,183,414 38,828,467


OTHER FINANCING SOURCES: Bonds issued 71,952,185 31,952,185 - 31,952,185

REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES -$ 1,043,684$ (4,177,653) (3,133,969)$


FUND BALANCE AT END OF YEAR (3,133,969)$

85


STATE SCHOOL BOND FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL From Project Inception Through June 30, 2006



Intergovernmental: State 123,297,205$ 121,891,799$ -$ 121,891,799$


Capital outlay 123,297,205 121,891,799 - 121,891,799

REVENUES OVER (UNDER) EXPENDITURES -$ -$ - -$

Fund Balance at beginning of year -

FUND BALANCES AT END OF YEAR -$

86


BUDGETARY COMBINING BALANCE SHEETSOLID WASTE OPERATING AND CAPITAL PROJECT FUNDS (NON-GAAP)MODIFIED ACCRUAL BASIS OF ACCOUNTINGAs of June 30, 2006

Solid SolidWaste Waste

Operating Capital June 30,Fund Project 2006

ASSETS

Cash and investments - pooled equity 33,428,343$ 1,690,599$ 35,118,942$ Accounts receivable, net 2,842,944 - 2,842,944 Accrued interest receivable 360,590 41,727 402,317

TOTAL ASSETS 36,631,877$ 1,732,326$ 38,364,203$


Liabilities: Accounts payable and accrued liabilities 16,184,754$ 179,854$ 16,364,608$ Deferred revenues 1,707,544 - 1,707,544 Total Liabilities 17,892,298 179,854 18,072,152

Fund Balances: Reserved for encumbrances 767,857 212,819 980,676 Reserved by state statute 1,495,990 41,727 1,537,717 Unreserved:

Designated for white goods 437,806 - 437,806 Designated for subsequent year's expenditures 1,393,973 - 1,393,973 Undesignated 14,643,953 1,297,926 15,941,879

Total Fund Balances 18,739,579 1,552,472 20,292,051

TOTAL LIABILITIES AND FUND BALANCES 36,631,877$ 1,732,326$ 38,364,203$

87


SOLID WASTE FUNDSCHEDULE OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL (NON-GAAP BASIS)For the Year Ended June 30, 2006With Comparative Actual Amounts for the Year Ended June 30, 2005

2005

Budget Actual ActualREVENUES:

Intergovernmental 951,500$ 1,038,558$ 969,896$ Licenses and permits - 4,700 9,444 Charges for services 19,172,209 19,905,000 19,170,702 Investment earnings 460,000 1,015,909 692,881 Miscellaneous 274,500 466,064 336,267Total Revenues 20,858,209 22,430,231 21,179,190

EXPENDITURES:

Cost of service 19,683,290 15,362,207 17,632,570 Administration 1,797,964 1,457,809 1,434,687Total Expenditures 21,481,254 16,820,016 19,067,257

REVENUES OVER (UNDER) EXPENDITURES (623,045) 5,610,215 2,111,933

2006

88


SOLID WASTE FUNDSCHEDULE OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL (NON-GAAP BASIS)For the Year Ended June 30, 2006With Comparative Actual Amounts for the Year Ended June 30, 2005

2005

Budget Actual ActualOTHER FINANCING SOURCES AND (USES): Transfers out (275,000) (275,000) (200,000)

REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES: (898,045) 5,335,215 1,911,933

APPROPRIATED FUND BALANCE 898,045 - -

REVENUES, OTHER SOURCES AND APPROPRIATED FUND BALANCE OVER (UNDER) EXPENDITURES AND OTHER USES -$ 5,335,215$ 1,911,933$

Reconciliation from budgetary basis of modified accrual to full accrual basis:

REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES: 5,335,215$ 1,911,933$

Reconciling items:Compensated absences expenses 6,278 (17,335) Net decrease in deferred revenue 618,562 210,424 Investment earnings - Construction Fund 107,054 9,726 Expenditures - Construction Fund (24,164) (364,962) Acquisition of capital assets 17,925 183,248 Disposals of capital assets - (2,911) Depreciation and depletion (2,355,540) (2,353,967)

Change in net assets 3,705,330$ (423,844)$

2006

89


SOLID WASTE CONSTRUCTION FUNDSCHEDULE OF REVENUES AND EXPENDITURESBUDGET AND ACTUAL (NON-GAAP BASIS)From Project Inception Through June 30, 2006

ActualProject Prior Curent Total to

Authorization Years Year Date

REVENUES:Proceeds on sale of bonds 22,000,000$ 22,034,318$ -$ 22,034,318$ Investment earnings 1,190,334 2,104,097 107,054 2,211,151 Miscellaneous 2,658,790 - - - Total revenues 25,849,124 24,138,415 107,054 24,245,469

EXPENDITURES:Enterprise Infrastructure 19,561,645 20,731,233 24,164 20,755,397 Debt service: Interest 441,619 916,359 - 916,359 Future projects 4,491,240 - - - Other 731,383 398,004 - 398,004 Total expenditures 25,225,887 22,045,596 24,164 22,069,760

REVENUES OVER (UNDER) EXPENDITURES 623,237 2,092,819 82,890 2,175,709

OTHER FINANCING SOURCES AND USES:Transfers in 3,738,000 3,738,000 - 3,738,000 Transfers out (623,237) (623,237) - (623,237) Advance refunding (3,738,000) (3,738,000) - (3,738,000) Appropriated fund balance - - - - Total other financing sources and uses (623,237) (623,237) - (623,237)

REVENUES, OTHER SOURCES, AND APPROPRIATED FUND BALANCE OVER (UNDER) EXPENDITURES AND OTHER USES -$ 1,469,582$ 82,890 1,552,472$

Fund Balance at the beginning of the year 1,469,582

FUND BALANCE AT THE END OF THE YEAR 1,552,472$

90


RISK MANAGEMENTSCHEDULE OF REVENUES, EXPENDITURES AND APPROPRIATED FUND BALANCEBUDGET AND ACTUAL (NON-GAAP BASIS)For the Year Ended June 30, 2006

2006

Budget ActualREVENUES:

Intergovernmental revenue -$ 509,290$ Charges of services 21,775,906 19,966,703 Investment earnings 150,000 314,841 Miscellaneous - 69,300 Total Revenues 21,925,906 20,860,134

EXPENDITURES:

Cost of service - 27,097,632 Administration - 216,824 Total Expenditures 28,982,025 27,314,456

REVENUES UNDER EXPENDITURES (7,056,119) (6,454,322)

OTHER FINANCING SOURCES: Transfers in 5,133,000 5,133,000

REVENUES AND OTHER FINANCING SOURCES UNDER EXPENDITURES (1,923,119) (1,321,322)

FUND BALANCE APPROPRIATED 1,923,119 -

REVENUES, OTHER FINANCING SOURCES, AND APPROPRIATED FUND BALANCE OVER (UNDER) EXPENDITURES -$ (1,321,322)$

Reconciling itemsCompensated absences expense (5,790)

Change in net assets (1,327,112)$

91


AGENCY FUNDSCOMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIESFor the Year Ended June 30, 2006

Balance BalanceJune 30, 2005 Additions Deductions June 30, 2006

MUNICIPAL TAX FUND

ASSETSCash and investments - pooled equity 250,007$ 325,403$ (250,007)$ 325,403$

LIABILITIESDue to other governmental units 250,007$ 325,403$ (250,007)$ 325,403$

HUMAN SERVICES FUND

ASSETSCash and investments - pooled equity 583,719$ 635,937$ (583,719)$ 635,937$ Accounts receivable - 400 - 400 Accrued interest receivable 264 382 (264) 382 TOTAL ASSETS 583,983$ 636,719$ (583,983)$ 636,719$

LIABILITIESOther liabilities 583,983$ 636,719$ (583,983)$ 636,719$

92


AGENCY FUNDSCOMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIESFor the Year Ended June 30, 2006

Balance BalanceJune 30, 2005 Additions Deductions June 30, 2006

FINES AND FORFEITURES

ASSETSCash and investments - pooled equity 235,664$ 365,997$ (235,664)$ 365,997$ Accounts receivable 25,207 35,655 (25,207) 35,655 Accrued interest - 2,155 - 2,155 TOTAL ASSETS 260,871$ 403,807$ (260,871)$ 403,807$

LIABILITIESOther liabilities 260,871$ 403,807$ (260,871)$ 403,807$ TOTAL LIABILITIES 260,871$ 403,807$ (260,871)$ 403,807$

TOTAL - ALL AGENCY FUNDS

ASSETSCash and investments - pooled equity 1,069,390$ 1,327,337$ (1,069,390)$ 1,327,337$ Accounts receivable 25,207 36,055 (25,207) 36,055 Accrued interest receivable 264 2,537 (264) 2,537 TOTAL ASSETS 1,094,861$ 1,365,929$ (1,094,861)$ 1,365,929$

LIABILITIESOther liabilities 844,854$ 1,040,526$ (844,854)$ 1,040,526$ Due to other governmental units 250,007 325,403 (250,007) 325,403 TOTAL LIABILITIES 1,094,861$ 1,365,929$ (1,094,861)$ 1,365,929$

93


SCHEDULE OF GOVERNMENTALCAPITAL ASSETS BY SOURCE

As of June 30, 2006

June 30,2006

Governmental Capital Assets:

Land 25,171,436$ Buildings 221,793,001 Improvements 7,585,757 Machinery and equipment 28,842,909 Vehicles and motorized equipment 24,224,606 Infrastructure 10,939,755 Construction in progress 178,207,033

Total governmental capital assets 496,764,497$

Investment in governmental capital assets by source:

County purchase 494,832,731 Grant-funded assets 1,639,137 Donations 155,971 State court awards 26,842 Federally forfeited assets 109,816

Total investment in governmental capital assets 496,764,497$

94


SCHEDULE OF GOVERNMENTAL CAPITAL ASSETS BY FUNCTION AND CATEGORY

As of June 30, 2006

Machinery Vehicles and and Motorized Construction

Function Land Buildings Improvements Equipment Equipment Infrastructure in progress Total

General administration 10,315,338$ 38,615,056$ 1,642,861$ 11,996,588$ 21,186,138$ 166,474$ -$ 83,922,455$

Human services 2,806,473 46,317,589 - 1,859,697 1,868,191 - - 52,851,950

Education 270,700 9,776,600 3,943,902 43,449 - - - 14,034,651

Community development 7,500,132 57,717,989 961,804 2,649,979 182,592 1,546,444 - 70,558,940

Environmental services 296,141 2,632,863 - 103,474 30,120 9,226,837 - 12,289,435

Public safety 3,982,652 66,732,904 1,037,190 12,189,722 957,565 - - 84,900,033

Construction in progress - - - - - - 178,207,033 178,207,033

Total GovernmentalCapital Assets 25,171,436$ 221,793,001$ 7,585,757$ 28,842,909$ 24,224,606$ 10,939,755$ 178,207,033$ 496,764,497$

95

WAKE COUNTY, NORTH CAROLINASCHEDULE OF CHANGES IN GOVERNMENTAL LONG-TERM DEBTAs of June 30, 2006

Debt Net DebtDate Interest Amount Outstanding Additions Outstanding

of Issue Rate Issued June 30, 2005 (Retirements) June 30, 2006

GENERAL OBLIGATION BONDS:

1996 Public improvement bonds 03/01/96 4.25-4.60% 107,000,000$ 6,350,000$ (6,350,000)$ -$ 1997 School bonds 03/01/97 4.70-5.00% 100,000,000 10,000,000 (5,000,000) 5,000,000 1998 Public improvement 02/03/98 4.40-4.60% 159,000,000 103,000,000 (8,000,000) 95,000,000 2000 School bonds 02/01/00 5.20-5.75% 24,000,000 5,000,000 (1,000,000) 4,000,000 2001 Criminal justice facility bonds 02/01/01 4.40-4.75% 8,000,000 6,800,000 (300,000) 6,500,000 2001 School bonds 02/01/01 4.50-5.25% 150,000,000 94,000,000 (5,700,000) 88,300,000 2002 Public improvement bonds 03/01/02 4.00-4.75% 188,000,000 162,500,000 (8,500,000) 154,000,000 2003A Public improvement bonds 04/01/03 3.00-5.00% 122,890,000 88,335,000 (16,335,000) 72,000,000 2003B Public improvement 04/08/03 variable 55,000,000 55,000,000 - 55,000,000 2003C Public improvement 04/08/03 variable 45,000,000 45,000,000 - 45,000,000 2003 Criminal Justice Facilities 11/01/03 3.00-5.00% 8,000,000 7,600,000 (400,000) 7,200,000 Refunding series 2003A 11/01/03 3.00-5.00% 83,145,000 74,500,000 (8,000,000) 66,500,000 Public Improvement 2004 04/01/04 3.00-5.00% 130,000,000 120,000,000 (10,000,000) 110,000,000 School 2004A 04/21/04 variable 67,000,000 67,000,000 - 67,000,000 School 2004B 04/21/04 variable 57,000,000 57,000,000 - 57,000,000 Refunding series 2004 11/01/04 4.00-5.00% 114,380,000 114,380,000 - 114,380,000 Refunding series 2005 04/01/05 3.00-5.00% 33,020,000 33,020,000 (50,000) 32,970,000 2005 School bonds 11/01/05 3.25-5.00% 41,000,000 - 41,000,000 41,000,000

Total General Obligation Bonds 1,049,485,000 (28,635,000) 1,020,850,000

OTHER LONG-TERM DEBT:

Clean water revolving loans 475,843 (237,920) 237,923 Installment purchase 8,570,962 (807,485) 7,763,477 Qualified zone acadamy bonds 1,961,538 (163,461) 1,798,077 Capitalized equipment leases 607,239 125,942 733,181 Compensated absences 9,183,141 1,071,919 10,255,060

Total other long-term debt 20,798,723 (11,005) 20,787,718

TOTAL GOVERNMENTAL LONG-TERM DEBT 1,070,283,723$ (28,646,005)$ 1,041,637,718$

96


SCHEDULE OF LONG-TERM DEBT MATURITIES ANDANNUAL DEBT SERVICE REQUIREMENTS FOR GOVERNMENTAL ACTIVITIESAs of June 30, 2006

PUBLIC SCHOOLS OTHER TOTALBONDED DEBT

Fiscal YearEnded Principal Principal Principal

June 30 Principal and Interest Principal and Interest Principal and Interest

2007 62,987,848$ 103,910,457$ 7,662,152$ 11,340,793$ 70,650,000$ 115,251,250$ 2008 62,856,970 100,924,230 7,748,030 11,074,700 70,605,000 111,998,930 2009 62,966,559 98,051,880 7,758,441 10,727,020 70,725,000 108,778,900 2010 62,905,920 95,036,465 7,749,080 10,367,047 70,655,000 105,403,512 2011 63,641,075 92,827,338 7,048,925 9,316,450 70,690,000 102,143,788 2012 64,665,092 90,890,809 6,884,908 8,821,582 71,550,000 99,712,391 2013 64,525,159 87,642,924 7,059,841 8,665,688 71,585,000 96,308,612 2014 64,159,142 84,358,832 7,305,858 8,592,281 71,465,000 92,951,113 2015 64,056,347 81,371,650 7,368,653 8,323,362 71,425,000 89,695,012 2016 67,529,972 81,941,465 5,760,028 6,402,583 73,290,000 88,344,048

2017-2021 289,595,185 319,248,381 8,564,815 9,318,328 298,160,000 328,566,709 2022-2023 9,500,000 10,097,500 550,000 574,063 10,050,000 10,671,563

Total BondedDebt 939,389,269 1,246,301,931 81,460,731 103,523,897 1,020,850,000 1,349,825,828

OTHER LONG-TERM DEBT: Total capitalized leases, clean water revolving loans, installment purchases, and qualified zone academy bonds:

2007 163,461 163,461 1,249,156 1,588,951 1,412,617 1,752,412 2008 163,461 163,461 1,007,935 1,296,860 1,171,396 1,460,321 2009 163,461 163,461 909,569 1,156,010 1,073,030 1,319,471 2010 163,461 163,461 933,841 1,140,651 1,097,302 1,304,112 2011 163,461 163,461 911,549 1,080,191 1,075,010 1,243,652

2012-2016 817,311 817,311 3,722,531 4,056,155 4,539,842 4,873,466 2017 163,461 163,461 - - 163,461 163,461

Total OtherLong-Term Debt 1,798,077 1,798,077 8,734,581 10,318,818 10,532,658 12,116,895

TOTAL LONG-TERM DEBT 941,187,346$ 1,248,100,008$ 90,195,312$ 113,842,715$ 1,031,382,658$ 1,361,942,723$

On the Statement of Net Assets as of June 30, 2006, the amounts reported as liabilities for general obligation bonds - schools also includes premiums on issuance of bonds of $25,654,574 which will be amortized over the life of it's related debt. 97

WAKE COUNTY, NORTH CAROLINA TABLE 1

Net Assets by ComponentLast Five Fiscal Years(accrual basis of accounting)

2002 2003 2004 2005 2006Governmental activities Invested in capital assets, net of related debt 216,615,147 224,848,030 245,210,981 271,213,100 290,775,463 Restricted 143,360,307 170,022,875 235,402,786 118,153,362 - Unrestricted (312,465,048) (431,042,516) (586,749,650) (525,704,722) (550,260,941) Total governmental activities net assets 47,510,406 (36,171,611) (106,135,883) (136,338,260) (259,485,478)

Business-type activities Invested in capital assets, net of related debt 7,719,075 13,410,733 14,704,876 12,531,246 10,193,631 Unrestricted 16,523,588 15,728,573 14,249,210 16,034,838 22,075,008 Total business-type activities net assets 24,242,663 29,139,306 28,954,086 28,566,084 32,268,639

Primary government Invested in capital assets, net of related debt 224,334,222 238,258,763 259,915,857 283,744,346 300,969,094 Restricted 143,360,307 170,022,875 235,402,786 118,153,362 - Unrestricted (295,941,460) (415,313,943) (572,500,440) (509,669,884) (528,185,933) Total primary government net assets 71,753,069 (7,032,305) (77,181,797) (107,772,176) (227,216,839)

Note: Accrual-basis financial information for the county government as a whole is available back to 2002 only, the year GASB Statement 34 was implemented.

Fiscal Year

98

WAKE COUNTY, NORTH CAROLINA TABLE 2(Continued)

Changes in Net Assets, Last Five Fiscal Years(accrual basis of accounting)

2002 2003 2004 2005 2006ExpensesGovernmental Activities: General Administration 49,506,145$ 51,330,952$ 54,201,940$ 53,512,005$ 68,198,823$ Human Services 168,467,005 200,852,992 220,415,369 242,823,255 250,108,791 Education 358,038,338 385,545,985 404,812,302 389,668,265 496,720,211 Community development and cultural 35,922,466 31,479,090 46,704,583 45,969,169 55,385,595 Environmental services 22,250,937 13,390,447 7,990,415 8,233,369 8,145,774 Public Safety 49,320,793 65,907,096 83,790,986 85,983,497 99,183,648 Interest on long-term debt 28,509,919 34,836,423 41,558,609 44,964,694 49,736,040 Total governmental activities 712,015,603 783,342,985 859,474,204 871,154,254 1,027,478,882 Business-type activities: Solid Waste 18,901,398 15,178,211 19,646,419 21,587,342 19,178,292 Total primary government expenses 730,917,001$ 798,521,196$ 879,120,623$ 892,741,596$ 1,046,657,174$

Program RevenuesGovernmental activities:Charges for services: General Administration 9,884,419$ 12,040,665$ 11,521,846$ 10,086,239$ 12,027,205$ Human Services 38,034,311 43,294,837 53,275,988 57,961,578 58,876,026 Education 27,610 - - - Community development and cultural 3,965,162 4,227,622 3,895,261 5,403,582 7,017,247 Environmental services 1,389,196 2,549,316 (2,176,942) 3,165,264 2,546,631 Public Safety 9,739,503 9,195,951 12,268,841 13,138,405 14,143,661 Operating grants and contributions: General Administration 17,348 14,340 777,190 174,869 2,416,522 Human Services 77,368,948 91,485,027 96,970,607 109,445,162 112,417,917 Education 13,771,225 11,086,572 8,211,083 1,603,647 8,218,405 Community development and cultural 841,326 880,610 593,876 1,955,922 2,435,970 Environmental services 99,222 332,663 329,378 184,143 358,126 Public Safety 984,854 1,703,912 2,304,421 2,037,432 5,145,585 Total governmental activities program revenues 156,123,124 176,811,515 187,971,549 205,156,243 225,603,295 Business-type activities: Charges for services: solid waste 21,186,855 18,845,829 18,221,208 19,390,570 20,528,263 Operating grants and contributions: solid waste 596,667 612,299 720,972 969,896 1,038,558 Total business-type activities program revenues 21,783,522 19,458,128 18,942,180 20,360,466 21,566,821 Total primary government program revenues 177,906,646$ 196,269,643$ 206,913,729$ 225,516,709$ 247,170,116$

Fiscal Year

99


Changes in Net Assets, Last Five Fiscal Years(accrual basis of accounting)

Fiscal Year2002 2003 2004 2005 2006

Net (Expense)/RevenueGovernmental activities (555,892,479)$ (606,531,470)$ (671,502,655)$ (665,998,011)$ (801,875,587)$ Business-type activities 2,882,124 4,279,917 (704,239) (1,226,876) 2,388,529 Total primary government net expense (553,010,355)$ (602,251,553)$ (672,206,894)$ (667,224,887)$ (799,487,058)$

General Revenues and Other Changes in Net AssetsGovernmental activities: Property taxes 373,575,036$ 383,894,617$ 429,529,325$ 446,187,553$ 468,502,179$ Sales taxes 89,182,936 97,870,395 116,532,025 124,603,942 136,593,464 Occupancy and prepared food taxes 20,421,223 21,107,763 22,075,691 24,157,920 26,532,040 Other taxes 8,565,160 10,229,575 11,651,401 14,015,438 16,564,492 Grants and contributions

not restricted to specific programs 12,481,572 4,020,888 5,586,138 4,038,667 5,704,166 Unrestricted investment earnings 15,018,122 10,651,187 8,328,643 14,142,548 18,525,606 Other 657,932 693,003 669,596 2,919,174 6,031,422 Transfers 3,799,298 196,000 200,000 200,000 275,000 Total governmental activities 523,701,279 528,663,428 594,572,819 630,265,242 678,728,369 Business-type activities: Unrestricted investment earnings 985,184 688,648 488,225 702,607 1,122,962 Other 23,507 124,078 230,794 336,267 466,064 Transfers (145,000) (196,000) (200,000) (200,000) (275,000) Total business-type activities 863,691 616,726 519,019 838,874 1,314,026 Total primary government 524,564,970$ 529,280,154$ 595,091,838$ 631,104,116$ 680,042,395$

Change in Net AssetsGovernment activities (32,191,200)$ (77,868,042)$ (76,929,836)$ (35,732,769)$ (123,147,218)$ Business-type activities 3,745,815 4,896,643 (185,220) (388,002) 3,702,555 Total primary government (28,445,385)$ (72,971,399)$ (77,115,056)$ (36,120,771)$ (119,444,663)$

Note: Accrual-basis financial information for the county government as a whole is only available to 2002, the year GASB Statement 34 was implemented.

100


Fund Balance of Governmental FundsLast Five Fiscal Years(modified accrual basis of accounting)

2002 2003 2004 2005 2006General Fund Reserved 44,731,065$ 50,576,597$ 57,310,188$ 61,953,990$ 66,104,415$ Unreserved Designated 70,186,739 77,701,690 82,154,600 88,967,560 93,702,950 Undesignated 23,070,973 7,554,664 15,385,236 13,695,413 3,445,318 Total General Fund 137,988,777$ 135,832,951$ 154,850,024$ 164,616,963$ 163,252,683$

All Other Governmental Funds Reserved 155,595,616$ 156,513,070 210,129,145 249,427,470 128,971,628 Unreserved Designated Affordable Housing Fund - - 571,467 434,654 1,812,371 Debt Service Fund 21,797,140 39,467,129 51,600,999 57,550,208 56,051,891 Capital Improvements Fund 62,738,171 91,973,212 110,307,300 82,236,977 44,458,601 School Capital Fund 157,211,533 179,763,937 208,315,508 40,272,397 - Water, Wastewater, and Flood Control Fund 12,497,060 - - - - Other Nonmajor Funds 5,178,549 7,768,479 8,051,167 9,138,970 6,722,415 Undesignated Other Nonmajor Funds 567,013 3,091,433 1,297,847 603,792 (931,763) Total All Other Governmental Funds 415,585,082$ 478,577,260$ 590,273,433$ 439,664,468$ 237,085,143$

Note: Due to changes in the county's fund structure connected with the implementation of GASB Statement 34, fund balance information is available back to 2002 only.

Fiscal Year

101


Changes in Fund Balances of Governmental FundsLast Five Fiscal Years(modified accrual basis of accounting)

Fiscal Year2002 2003 2004 2005 2006

Revenues Taxes 485,189,732$ 514,161,092$ 580,295,091$ 609,308,349$ 647,548,590$ Licenses and permits 2,296,153 2,229,574 2,541,490 3,826,961 4,455,484 Intergovernmental 105,804,714 109,444,008 113,838,108 118,587,529 133,663,332 Charges for services 55,829,622 69,059,260 80,177,453 84,971,746 90,286,022 Investment earnings 14,609,693 10,442,735 8,285,340 13,965,562 18,210,761 Miscellaneous 1,310,252 968,615 1,265,598 1,747,001 1,967,157 Total revenues 665,040,166 706,305,284 786,403,080 832,407,148 896,131,346

Expenditures General administration 46,325,340 52,727,040 54,531,419 54,503,193 67,496,914 Human services 168,052,098 199,717,806 218,390,386 242,728,896 251,447,674 Education 357,706,273 385,202,779 404,531,045 389,311,077 496,363,021 Community development and cultural 43,881,587 36,993,252 62,777,646 58,106,647 80,047,310 Environmental services 22,116,657 9,228,803 9,230,777 9,699,551 12,720,619 Public safety 59,223,035 78,959,634 91,279,148 101,784,936 111,963,564 Debt service Principal 44,096,211 51,900,000 61,348,461 70,642,456 70,480,946 Interest 29,081,649 35,429,497 41,094,397 44,964,694 49,736,040 Total expenditures 770,482,850 850,158,811 943,183,279 971,741,450 1,140,256,088 Excess of revenues over (under) expenditures (105,442,684) (143,853,527) (156,780,199) (139,334,302) (244,124,742)

Other Financing Sources (Uses) Operating transfers in 149,890,005 163,007,957 148,219,664 140,916,584 147,675,732 Operating transfers out (148,090,708) (165,311,957) (150,648,664) (142,716,584) (152,533,732) Refunding bonds issued 26,890,000 (87,375,000) 147,400,000 41,000,000 Payment to refunded bond escrow agent (26,495,000) 83,145,000 (151,425,000) 1,358,620 Bond proceeds and premiums 187,904,255 206,515,179 287,036,497 5,718,339 - Proceeds of capital leases and installment purchases 35,700 83,700 150,384 523,937 2,680,517 Total other financing sources (uses) 189,739,252 204,689,879 280,527,881 417,276 40,181,137

Net change in fund balances 84,296,568$ 60,836,352$ 123,747,682$ (138,917,026)$ (203,943,605)$

Debt service as a percentage of noncapital expenditures 9.90% 10.67% 12.15% 12.55% 11.21%

Note: Due to changes in the county's fund structure connected with the implementation of GASB Statement 34, fund balance information is available back to 2002 only.

102


Assessed Value and Actual Value of Taxable Property1

Last Ten Fiscal Years

Public County-wide Special Tax AverageFiscal Real Personal Service Tax Districts CountyYear Property Property Companies Total Rate3 Tax Rate3 Tax Rate3

1997 24,493,532,470$ 6,624,856,347$ 2,997,615,399$ 34,116,004,216$ 0.630$ $ .02-.10 0.710$ 1998 25,971,960,437 7,817,188,121 2,978,270,506 36,767,419,064 0.630 .0211-.10 0.712 1999 27,626,003,323 8,515,277,492 2,809,577,045 38,950,857,860 0.630 .06-.10 0.719 2000 29,470,677,149 9,153,582,837 2,834,533,948 41,458,793,934 0.730 0.085 0.815 2001 46,042,127,552 9,778,590,453 3,704,776,332 59,525,494,337 0.564 0.070 0.634 2002 49,086,983,833 10,391,893,495 3,887,953,582 63,366,830,910 0.564 0.090 0.654 2003 51,858,523,059 10,521,444,050 4,074,884,981 66,454,852,090 0.604 0.100 0.704 2004 54,347,709,322 10,601,740,204 3,477,604,369 68,427,053,895 0.604 0.100 0.704 2005 56,733,308,581 10,954,988,975 3,436,614,540 71,124,912,096 0.604 0.100 0.704 2006 59,644,957,346 12,084,539,414 3,405,223,801 75,134,720,561 0.604 0.100 0.734

Notes:(1) All taxable property is subject to the county-wide tax. Most property in unincorporated areas is subject to special district taxes. The County's property tax is levied each July 1 on the assessed value listed as of the prior January 1 for all real and personal property located in the County except for certain registered motor vehicles which are assessed and collected throughout the year. Assessed valuations are established by the Board of County Commissioners at 100% of estimated market value for real property and 100% of actual value for personal property. Public service company property is certified by the State of North Carolina at 100% of actual value, with no distinction between real and personal property values.(2) A revaluation of real property is required by N.C. General Statutes at least every eight years. The last revaluation was completed for tax fiscal year 2001.(3) Per $1000 of value.

103


Direct and Overlapping Property Tax RatesLast Ten Fiscal Years(rate per $100 of assessed value)

Year Taxes Are Payable1997 1998 1999 2000 20012 2002 2003 2004 2005 2006

County Direct Rates County-wide Rate 0.630$ 0.630$ 0.630$ 0.730$ 0.564$ 0.564$ 0.604$ 0.604$ 0.604$ 0.634$ Various Special Tax Districts .02-.10 .0211-.10 .06-.10 0.085 0.070 0.090 0.100 0.100 0.100 0.100 Total average direct rate 0.710 0.712 0.719 0.815 0.634 0.654 0.704 0.704 0.704 0.734

Municipality RatesTown of Angier 0.460 0.500 0.530 Town of Apex 0.520 0.520 0.520 0.520 0.420 0.400 0.400 0.400 0.400 0.400 Town of Cary 0.540 0.540 0.540 0.540 0.430 0.420 0.420 0.420 0.420 0.420 Town of Fuquay-Varina 0.590 0.590 0.590 0.590 0.490 0.520 0.520 0.520 0.520 0.520 Town of Garner 0.640 0.640 0.640 0.640 0.520 0.520 0.560 0.560 0.560 0.575 Town of Holly Springs 0.620 0.620 0.620 0.620 0.530 0.530 0.530 0.530 0.530 0.530 Town of Knightdale 0.510 0.520 0.520 0.530 0.440 0.460 0.480 0.500 0.500 0.500 Town of Morrisville 0.600 0.600 0.600 0.600 0.470 0.470 0.470 0.470 0.470 0.468 City of Raleigh 0.538 0.538 0.525 0.525 0.385 0.385 0.385 0.395 0.395 0.435 Town of Rolesville 0.550 0.550 0.620 0.485 0.485 0.485 0.485 0.485 0.485 0.485 Town of Wake Forest 0.560 0.560 0.560 0.600 0.500 0.520 0.530 0.540 0.540 0.540 Town of Wendell 0.590 0.590 0.590 0.590 0.540 0.540 0.540 0.540 0.540 0.540 Town of Zebulon 0.525 0.525 0.525 0.525 0.460 0.460 0.480 0.480 0.480 0.500

Notes:(1) All taxable property is subject to the county-wide tax. Most property in unincorporated areas is also subject to special district taxes. (2) A revaluation of real property is required by N. C. General Statues at least every eight years. Revaluation was completed for fiscal year 2001.

104


Percentage Percentageof Total of TotalTaxable Taxable

Assessed Assessed Assessed AssessedTaxpayer Valuation Rank Valuation Valuation Rank Valuation

Progress Energy Carolinas, Inc. 2,077,332,906$ 1 2.76% 1,667,093,806$ 1 5.20%

Cisco Systems Inc 395,082,096 2 0.53% - - -

SAS Institute Inc 365,082,380 3 0.49% 120,178,993 5 0.37%

Bellsouth Tel Co 325,208,533 4 0.43% 259,257,046 3 0.81%

NC Eastern Municipal Power Agency 299,213,133 5 0.40% 687,792,807 2 2.15%

Weeks Realty LP 268,665,884 6 0.36% - - -

Highwoods Realty Ltd Partnership 185,964,692 7 0.25% 122,353,200 4 0.38%

CVM Holdings LLC 173,085,658 8 0.23% 106,956,683 7 0.33%

Public Service Co of NC Inc 158,859,070 9 0.21% 89,157,768 8 0.28%

Summit Properties Partnership LP 144,168,044 10 0.19% - - -

Glaxo Wellcome Inc. - - - 109,549,483 6 0.34%

North Hills Inc. - - - 73,192,509 9 0.23%

UDRT of North Carolina LLC - - - 70,911,938 10 0.22%

4,392,662,396$ 5.85% 3,306,444,233$ 10.31%

Principal Property Tax Payers

Current Year and Nine Years Ago

Fiscal Year 2006 Fiscal Year 1997

June 30, 2006

105


Property Tax Levies and CollectionsLast Ten Fiscal Years

Taxes Levied Collected within thefor the Fiscal Year of the Levy Collections Total Collections to Date

Fiscal Fiscal Year Total Percentage of in Subsequent Percentage of Year (Original Levy) Adjustments Adjusted Levy Amount Original Levy Years Amount Adjusted Levy1997 226,790,022$ (3,163,022)$ 223,627,000$ 218,784,000$ 97.83% 4,302,678 223,086,678$ 99.76%1998 238,247,196 (1,189,949) 237,057,247 233,441,402 98.47% 3,082,581 236,523,983 99.78%1999 253,279,255 (1,158,536) 252,120,719 247,636,243 98.22% 3,911,216 251,547,459 99.77%2000 309,811,633 (2,110,379) 307,701,254 302,815,101 98.41% 4,172,979 306,988,080 99.77%2001 349,753,540 (3,955,817) 345,797,723 340,645,895 98.51% 4,459,899 345,105,794 99.80%2002 371,311,309 (4,175,679) 367,135,630 360,581,007 98.21% 4,476,672 365,057,679 99.43%2003 388,161,413 (2,532,263) 385,629,150 379,113,991 98.31% 5,529,930 384,643,921 99.74%2004 429,108,412 (2,841,221) 426,267,191 421,511,979 98.88% 3,693,636 425,205,615 99.75%2005 447,296,073 (2,915,368) 444,380,705 439,305,034 98.86% 3,613,538 442,918,572 99.67%2006 471,423,336 (4,606,253) 466,817,083 461,233,986 98.80% - 461,233,986 98.80%

Notes: Taxes for the fiscal year ended June 30, 2006 at the collection rate of 98.80% are a composite of the following collections by category: Vehicle taxes 91.04% Real and personal property taxes 99.62%

Amounts included above represent taxes in the General Fund and the Special Tax District Fund.

106


Schedule of Ad Valorem Taxes ReceivableJune 30, 2006

Uncollected UncollectedFiscal Balance Collections Balance

Year June 30, 2005 Additions and Credits June 30, 2006

2005-2006 - 466,817,083 461,233,986 5,583,097$

2004-2005 6,192,533 - 3,255,550 2,936,983 2003-2004 1,654,280 - 310,165 1,344,115 2002-2003 1,276,078 - 290,849 985,229 2001-2002 2,214,277 - 136,326 2,077,951 2000-2001 750,119 - 58,190 691,929 1999-2000 761,188 - 48,014 713,174 1998-1999 603,983 - 30,723 573,260 1997-1998 554,114 - 20,850 533,264

Total 14,006,572$ 466,817,083$ 465,384,653 15,439,002.00

Less allowance for uncollectable valorem taxes receivable (9,668,791)

Ad valorem taxes receivable (net) 5,770,211$

Reconcilement with revenues:Taxes - ad valorem 465,554,225 Reconciling items: Interest collected 1,106,556 Other adjustments (735,796) Amounts written off for tax year 1996-1997 per statute of limitations (540,332)

Total collections and credits 465,384,653$

Note: This schedule includes the General fund and the Special Tax District fund.

107


Propertyexcluding

Registered RegisteredProperty Total Motor MotorValuation Rate Levy Vehicles Vehicles

Original levy: Property taxed at current year's rate 87,942,272,463$ 0.604$ 455,522,177$ 425,018,166$ 30,504,011$ Motor vehicles taxed at prior year's rate 2,488,599,300 0.604 14,834,263 - 14,834,263 Penalties - - - - Total 90,430,871,763 470,356,440 425,018,166 45,338,274

Discoveries: Current year taxes - - - - Prior year taxes - - - - Penalties - 607,234 607,234 - Total - 607,234 607,234 -

Abatements (214,048,384) (4,606,253) (3,685,003) (921,250) Total property valuation 90,216,823,379$

Deferred Levy 459,662 459,662 -

Net levy 466,817,083 422,400,059 44,417,024

Uncollected taxes at June 30, 2006 5,583,097 1,602,434 3,980,663

Current year's taxes collected 461,233,986$ 420,797,625$ 40,436,361$

Current levy collection percentage 98.80% 99.62% 91.04%

Total Levy

County-wide

Analysis of Current Tax Levy - Countywide LevyJune 30, 2006

108


Ratios of Outstanding Debt by TypeLast Ten Fiscal Years

Business-Type

Governmental Activities ActivitiesGeneral Quality Clean Percentage

General Obligation Zoning Water Total Total ofFiscal Obligation Commercial Installment Academy Revolving Capital Governmental Revenue Primary Personal PerYear Bonds Paper Purchases Bonds Loans Leases Activities Bonds Government Income1 Capita1

1997 435,045,000$ -$ 1,350,992$ -$ -$ 235,465$ 436,631,457$ -$ 436,631,457$ 2.54% 765.30 1998 565,690,000 - 680,692 - 2,141,283 881,351 569,393,326 22,095,000 591,488,326 3.11% 998.24 1999 529,295,000 - 418,700 - 1,903,365 1,000,769 532,617,834 19,390,207 552,008,041 2.69% 900.90 2000 516,895,000 - 143,112 - 1,665,445 605,595 519,309,152 16,476,006 535,785,158 2.35% 846.11 2001 637,515,000 - - - 1,427,525 303,265 639,245,790 13,441,805 652,687,595 2.73% 993.12 2002 782,130,000 - - - 1,189,604 86,536 783,406,140 10,287,604 793,693,744 3.30% 1,171.11 2003 926,625,000 - - 2,288,460 951,683 118,956 929,984,099 6,998,403 936,982,502 3.80% 1,341.04 2004 1,123,210,000 - 9,474,957 2,124,999 713,763 200,710 1,135,724,429 - 1,135,724,429 4.30% 1,577.98 2005 1,049,485,000 - 8,570,962 1,961,538 475,843 607,239 1,061,100,582 - 1,061,100,582 4.02% 1,405.33 2006 1,020,850,000 58,250,000 7,763,477 1,798,077 237,923 733,181 1,089,632,658 - 1,089,632,658 4.13% 1,392.89

Notes: Details regarding the county's outstanding debt can be found in the notes to the financial statements. (1) See Schedule 13 for personal income and population data. 2005 and 2006 ratios are calculated using 2004 personal income.

109


Ratios of General Bonded Debt OutstandingLast Ten Fiscal Years

General Bonded Debt OutstandingGeneral Less: Total Percentage of

General Obligation Amounts General Actual TaxableFiscal Obligation Commercial Available in Debt Bonded Value of PerYear Bonds Paper Service Fund Debt Property1 Capita

1997 435,045,000$ -$ -$ 435,045,000 1.28% 762.51 1998 565,690,000 - - 565,690,000 1.54% 954.70 1999 529,295,000 - - 529,295,000 1.36% 863.83 2000 516,895,000 - - 516,895,000 1.25% 816.28 2001 637,515,000 - - 637,515,000 1.07% 970.03 2002 782,130,000 - (21,797,140) 760,332,860 1.20% 1,121.89 2003 926,625,000 - (39,601,655) 887,023,345 1.33% 1,269.54 2004 1,123,210,000 - (52,003,056) 1,071,206,944 1.57% 1,488.34 2005 1,049,485,000 - (59,356,526) 990,128,474 1.39% 1,311.34 2006 1,020,850,000 58,250,000 (63,781,795) 1,015,318,205 1.35% 1,297.89

Notes: Details regarding the county's outstanding debt can be found in the notes to the financial statements.(1) See Table 5 for property assessed/actual value data.(2) Population data can be found in Table 13.

110


Direct and Overlapping Governmental Activities DebtAs of June 30, 2006

EstimatedShare of

Estimated Direct andDebt Percentage Overlapping

Outstanding Applicable Debt

Municipality: Apex 14,576,496$ 100% 14,576,496$ Cary 99,057,232 100% 99,057,232 Fuquay-Varina 3,316,463 100% 3,316,463 Garner 9,205,399 100% 9,205,399 Holly Springs 18,245,535 100% 18,245,535 Knightdale 4,825,037 100% 4,825,037 Morrisville 4,568,246 100% 4,568,246 Raleigh 246,039,876 100% 246,039,876 Rolesville 635,409 100% 635,409 Wake Forest - 100% - Wendell 547,650 100% 547,650 Zebulon 454,068 100% 454,068

Overlapping debt 401,471,411$ 401,471,411$

Direct debt 1,089,632,658$ 1,089,632,658$

Total direct and overlapping debt 1,491,104,069$ 1,491,104,069$

Source: Overlapping debt provided by each municipality.Note: Percentage of overlap based on assessed property values.

111


Legal Debt Margin InformationLast Ten Years

Fiscal Year1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Assessed Value of Property 34,116,004,216$ 36,767,419,064$ 38,950,857,860$ 41,458,793,934$ 59,525,494,337$ 63,366,830,910$ 66,454,852,090$ 68,427,053,895$ 71,124,912,096$ 75,134,720,561$

Debt Limit, 8% of Assessed Value (Statutory Limitation) 2,729,280,337 2,941,393,525 3,116,068,629 3,316,703,515 4,762,039,547 5,069,346,473 5,316,388,167 5,474,164,312 5,689,992,968 6,010,777,645

Amount of Debt Applicable to Limit General Obligation Bonds 435,045,000 565,690,000 529,295,000 516,895,000 637,515,000 782,130,000 926,625,000 1,123,210,000 1,049,485,000 1,020,850,000 General Obligation Commercial Paper - - - - - - - - - 58,250,000 Less: Resources Restricted to Paying Principal - - - - - (21,797,140) (39,601,655) (52,003,056) (59,356,526) (63,781,795) Total net debt applicable to limit 435,045,000 565,690,000 529,295,000 516,895,000 637,515,000 760,332,860 887,023,345 1,071,206,944 990,128,474 1,015,318,205

Legal Debt Margin 2,294,235,337$ 2,375,703,525$ 2,586,773,629$ 2,799,808,515$ 4,124,524,547$ 4,309,013,613$ 4,429,364,822$ 4,402,957,368$ 4,699,864,494$ 4,995,459,440$

Total net debt applicable to limit as a percentage of debt limit 15.94% 19.23% 16.99% 15.58% 13.39% 15.00% 16.68% 19.57% 17.40% 16.89%

Note: The County is subject to the Local Government Bond Act of North Carolina which limits the amount of net bonded debt the County may hav outstanding to 8 percent of the appraised value of property subject to taxation. The legal debt margin is the difference between the debt limit and the county's net debt outstanding applicable to the limit, and represents the county's legal borrowing authority.

112


Demographic and Economic StatisticsLast Ten Years

Personal PerIncome2 Capita

Population (thousands Personal School UnemploymentYear Estimates1 of dollars) Income Enrollment3 Rate4

1997 570,540 17,219,483$ 30,181$ 84,757$ 1.8%1998 592,534 18,993,986 32,056 90,098 1.6%1999 612,728 20,486,325 33,435 92,865 1.4%2000 633,233 22,767,434 35,954 94,353 2.4%2001 657,210 23,901,757 36,369 97,583 4.0%2002 677,725 24,024,425 35,449 101,397 5.6%2003 698,697 24,631,247 35,253 104,373 5.2%2004 719,733 26,403,048 36,685 108,620 4.2%2005 755,053 * * 113,547 4.0%2006 782,283 * * 119,306 3.5%

* Information not yet available

(1) 1997-2004 U.S. Census. 2005-2006 State Data Center(2) Bureau of Economic Analysis(3) North Carolina Department of Public Instruction. 1997-2005 Final Average Daily Membership 2006 Wake County Public Schools.(4) North Carolina Employment Security Commission. 1997-2005 Annual Average. 2006 June.

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Principal EmployersCurrent Year and Nine Years Ago

Percentage Percentageof Total County of Total County

Employer Employees Rank Employment Employees Rank EmploymentState of North Carolina 37,671 1 9.20% 23,230 1 6.99%Wake County Public Schools 15,000 2 3.67% 9,209 3 2.77%International Business Machines (IBM) 13,000 3 3.18% 13,000 2 3.91%North Carolina State University 7,787 4 1.90% 6,123 5WakeMed Health and Hospitals 6,500 5 1.59% 4,000 7 1.20%GlaxoSmithKline 4,800 6 1.17% 3,980 8 1.20%Pinkerton and Burns 4,500 7 1.10%SAS Institute, Inc. 4,300 8 1.05%WakeMed Faculty Physicians Internal Medicine 4,000 9 0.98%Rex Healthcare 3,800 10 0.93% 2,945 9 0.89%NORTEL/Northern Telecom, Inc. 8,500 4 2.56%Winn-Dixie 4,300 6 1.29%Wake County 2,694 10 0.81%

101,358 24.77% 77,981 21.62%

Source: Greater Raleigh Chamber of Commerce.

2006 1997

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Full-time Equivalent County Government Employees by FunctionLast Nine Fiscal Years

Function/Program 1998 1999 2000 2001 2002 2003 2004 2005 2006General administration 316.30 314.90 328.75 332.30 353.05 365.30 380.75 392.60 419.10Human services 1,233.17 1,312.66 1,350.26 1,348.85 1,372.47 1,491.84 1,581.67 1,645.42 1,666.32Community development and cultural 216.50 235.00 243.50 238.00 239.50 240.88 240.38 247.00 275.00Environmental services 82.50 87.75 95.75 98.75 105.00 100.00 98.00 104.00 106.00Public safety 619.80 634.00 647.00 651.00 686.00 746.00 811.00 828.00 940.00

Total 2,468.27 2,584.31 2,665.26 2,668.90 2,756.02 2,944.02 3,111.80 3,217.02 3,406.42

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WAKE COUNTY, NORTH CAROLINA TABLE 18Operating Indicators By FunctionLast Ten Fiscal Years

Fiscal Year2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

Function/ProgramGeneral Administration

Registered voters 506,186 486,456 432,176 413,657 398,454 426,375 390,261 369,919 361,994 349,854 Taxable real estate parcels 293,371 283,003 269,655 249,750 239,098 229,431 228,671 216,118 207,403 206,600 Tax bills 1,032,300 976,847 933,900 902,977 874,053 841,738 802,512 767,000 735,704 675,000 Deeds and real estate documents recorded 218,366 175,095 160,525 140,221 162,037 146,498 121,856 Acres of land being landscaped 645 617 580 551 514 477 436 * * *

Human ServicesFamily medicaid recipients * 41,409 36,687 * * * * * * *Laboratory tests 239,180 228,300 School nurse health support services 9,575 * * * * * * * * *Families receiving maternal and child health case management services 3,137 * * * * * * * * *Adult inpatient substance abuse services 800+ * * * * * * * * *Adult care home residents served through on-site inspections 2500-3000 * * * * * * * * *Homeless served - street outreach 201 * * * * * * * * *Homeless sheltered at S. Wilmington St. Center 1,703 * * * * * * * * *Persons testing for HIV/STD 1,280 * * * * * * * * *Number of transportation trips provided 135,957 129,483 Food assistance individuals * 40,658 37,714 32,343 27,604 * * * * *

EducationStudents attending public school1 120,504 113,547 108,620 104,373 101,397 97,583 94,353 92,865 90,098 84,757 Public school teachers2 8,385 7,757 7,435 7,600 7,200 7,050 7,000 6,800 5,853 5,848 Community college students-average semester3 31,367 27,461 26,194 25,722 24,628 24,184 24,576 25,258 22,035 22,114 Community college faculty3 1,058 1,088 1,057 1,083 999 1,013 * * * *

Community Development and CulturalLibraries - Circulation of youth services 4,284,910 3,903,455 3,571,214 3,291,782 3,272,332 3,108,263 2,918,723 2,928,720 2,860,000 2,609,364 Libraries - Circulation of adult services 4,061,217 3,364,907 3,057,416 2,875,264 2,875,264 2,724,640 2,628,098 2,664,880 2,488,588 2,396,672 Park visitation 822,835 805,999 744,481 684,868 773,181 723,004 666,395 606,906 436,469 344,141 Residential permits issued - new 1,703 1,857 1,666 1,322 1,534 1,763 1,570 1,783 1,750 1,407 Commercial permits issued - new 1,192 1,125 1,196 1,034 1,086 1,036 946 1,016 961 868 Building permits - additional, alterations 41 64 60 65 99 119 153 68 81 76 Inspections performed 61,836 57,141 50,020 42,973 49,176 48,894 49,566 51,518 46,080 *

Environmental ServicesAnimal control service calls 6,672 4,721 6,493 7,081 5,738 6,805 6,857 * * *Animals impounded 10,368 6,361 8,896 8,714 7,763 * * * * *Sanitation inspections 7,222 7,033 8,772 7,466 7,732 7,207 5,416 5,044 5,021 5,751

Public SafetyDetention intake * 32,269 28,000 * * * * * * *Civil processes served * 86,121 86,424 79,408 74,708 69,910 64,575 * * *Pistol permits processed * 10,271 10,170 12,430 10,617 7,775 8,912 8,003 8,470 8,150 Average daily jail population * 1,193 1,138 890 752 821 905 921 850 720 Fire/medical incidents responded to by contracting fire departments * 22,805 19,824 20,162 17,610 14,641 8,245 5,922 * *Wake EMS trips 24,849 23,266 22,310 21,448 19,676 * * * * *

Solid WasteTons received at North Wake Landfill 451,919 389,268 365,326 349,902 375,365 * * * * *Household hazardous waste customers 12,088 8,975 7,470 * * * * * * *

* Information not available.(1) North Carolina Department of Public Instruction. 1997-2005 Final Average Daily Membership. 2006 Wake County Public Schools.(2) Wake County Pubic Schools.(3) Wake Techinical Community College Planning and Research Department.

116


Capital Asset Statistics by FunctionLast Ten Fiscal Years

Fiscal Year2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

Function/ProgramGeneral Administration

Rentable square footage 2,968,199 2,842,465 2,781,886 2,704,944 2,678,366 2,678,366 2,661,692 2,800,000 2,682,868 2,560,438

Human ServicesNumber of centers 15 * * * * * * * * *

EducationNumber of schools 139 132 127 125 122 120 117 109 106 102

Community Development and CulturalLibraries - branches 17 17 17 17 17 17 17 17 17 17Volume of library books 1,476,396 1,520,714 1,490,551 1,463,271 1,473,248 1,435,753 1,406,080 1,302,744 1,255,223 1,292,489Number of County Parks 7 * * * * * * * * *Number of School Parks 16 * * * * * * * * *

Public SafetySheriff - Stations 5 4 4 3 2 2 2 2 2 2Detention capacity 1,312 1,312 896 896 896 1,067 819 819 819 819EMS - Stations 15 15 17 11 11 11 8 8 6 6

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