2016 Financial Report (CAFR) - Electronic-FIXED

2016 Garfield County ColoradoComprehensiveAnnual FinancialReportFor the fiscal year endedDecember 31, 2016

Garfield County, Colorado Comprehensive Annual Financial ReportFor the Fiscal Year Ended December 31, 2016 Prepared by the Finance Department

    Prepared by the Finance Department Cathleen Van Roekel, Interim Finance Director Bob Prendergast, Interim Budget Officer Kelicia Costello, Accounting Manager: GL Jenny Langhorst, Accounting Payroll Manager Kyra Mangnall, Accountant Wendy Stewart, Accountant Sara McCallister, Payroll Support SpecialistIf you have questions regarding this report, call or fax us at: Phone: 970.945.7284 • Fax: 970.384.5011 Our mailing address is: Garfield County Finance Department 108 8th Street, Suite 201 Glenwood Springs, CO 81601 Contact us through our website: www.garfield-county.com

Garfield County, Colorado Comprehensive Annual Financial Report For the Year Ended December 31, 2016 Table of ContentsIntroductory Section Letter of Transmittal .................................................................................................A1-A5 GFOA Certificate of Achievement ................................................................................ A6 Organization Chart ........................................................................................................ A7 List of Elected and Appointed Officials.....................................................................A8-A9Financial Section Independent Auditor’s Report ..................................................................................B1-B3 Management’s Discussion and Analysis ................................................................B4-B23 Basic Financial Statements Governmental-wide Financial Statements Statement of Net Position ............................................................................................. C1 Statement of Activities................................................................................................... C2 Governmental Funds Financial Statements Balance Sheet – Governmental Funds ......................................................................... C3 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ......................................................................................................... C4 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds............................................................................................... C5 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities.......... C6 Proprietary Funds Financial Statements Statement of Net Position – Proprietary Funds ............................................................. C7 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds.................................................................................................... C8 Statement of Cash Flows – Proprietary Funds ............................................................. C9 Fiduciary Funds Financial Statements Statement of Assets and Liabilities – Agency Funds .................................................. C10 Notes to the Basic Financial Statements .......................................................... D1-D19 Required Supplementary Information General Fund and Major Special Revenue Funds General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual ................................................................................ E1 Road and Bridge Fund Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual ................................................................... E2 Human Services Fund Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual ................................................................... E3 Note to Required Supplementary Information ............................................................... E4 i  

Table of Contents (continued) Supplementary Information Capital Projects Fund Capital Expenditures Fund Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual.................................................... F1 Non-major Special Revenue Funds Combining Balance Sheet........................................................................................ F2-F3 Combining Statement of Revenues, Expenditures and Changes in Fund Balances............................................................................................................. F4-F5 Airport Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual ....................................................................... F6 Oil and Gas Mitigation Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual ................................................... F7 Conservation Trust Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual.................................................... F8 Grant Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual.................................................... F9 Clerk and Recorder EFTF Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual.................................................. F10 Traffic Study Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual ................................................................. F11 Retirement Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual ..................................................................... F12 Traveler’s Highland PID: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual.................................................. F13 Public Health Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual.................................................. F14 Proprietary Funds Enterprise Fund/Solid Waste Fund Schedule of Revenues, Expenditures and Changes in Net Position – Budget (Non-GAAP Basis) and Actual With Reconciliation to GAAP Basis ...................... F15 Internal Service Fund/Motor Pool Fund Schedule of Revenues, Expenditures and Changes in Net Position – Budget (Non-GAAP Basis) and Actual With Reconciliation to GAAP Basis ...................... F16 Fiduciary Funds/Agency Funds Combining Statement of Changes in Assets and Liabilities ........................................ F17 Local Highway Finance Report ......................................................................... F18-F19Statistical Section Net Position by Component ..........................................................................................G1 Changes in Net Position................................................................................................G2 Fund Balances - Governmental Funds .........................................................................G3 Changes in Fund Balance - Governmental Funds ......................................................................................................................G4 General Government Tax Revenues by Source ...........................................................G5 Assessed Value and Estimated Actual Value of Taxable Property ...............................G6 Property Tax Rates – Direct and Overlapping Governments ........................................G7 Property Tax Levies – Direct and Overlapping Governments .......................................G8 Principal Taxpayers.......................................................................................................G9 ii  

Table of Contents (continued) County Property Tax Levies and Collections ..............................................................G10 General Government Revenues by Source ................................................................G11 Direct and Overlapping Governmental Activities Debt ................................................G12 Computation of Legal Debt Margin – General Obligation Debt ...................................G13 Ratios of Outstanding Debt by Type ...........................................................................G14 Demographic and Economic Statistics........................................................................G15 Principal Employers ....................................................................................................G16 Positions by Department .............................................................................................G17 Capital Assets by Function/Program...........................................................................G18 Operating Indicators by Function/Program .................................................................G19 Property Transfers – Total Dollar Volume ...................................................................G20 Property Transfers – Total Unit Count ........................................................................G21 Property Transfers – Average Property Prices ...........................................................G22Statutory Report Section – Single Audit Reports and Schedules Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards ............................................................. H1-H2 Report on Compliance For Each Major Federal Program; Report on Internal Control Over Compliance Required by Uniform Guidance................................ H3-H4 Schedule of Findings and Questioned Costs ................................................................ H5 Schedule of Prior Audit Findings and Questioned Costs .............................................. H6 Schedule of Expenditures of Federal Awards ......................................................... H7-H8 iii  

INTRODUCTORY SECTION











A6

Garfield County Organization Chart - 2016   A7 

GARFIELD COUNTY, COLORADO As of December 31, 2016ELECTED OFFICIALS Tom Jankovsky John Martin Commissioner, District # 1 Mike Samson Commissioner, District # 2 Jim Yellico Commissioner, District # 3 Jean Alberico County Assessor Robert Glassmire County Clerk Lou Vallario County Coroner Scott Aibner County Sheriff Karla Bagley County Surveyor County Treasurer/Public TrusteeAPPOINTED BY BOARD OF COUNTY COMMISSIONERSCounty Attorney Tari WilliamsCounty Manager Kevin BatchelderDeputy County Manager Fred JarmanADMINISTRATION MANAGEMENT TEAMAirport Brian CondieCriminal Justice Services Rodney HollandsworthCommunications Renelle LottCommunity Development Sheryl BowerRoad & Bridge Deb FiscusFacilities Frank CoberlyFair & Events Doreen HerriottFinance Cathleen Van RoekelInformation Technology Gary NoffsingerProcurement Jamaica WattsHuman Services Mary Elliott BaydarianPublic Health Yvonne LongHuman Resources Diane Hayes A8

BOARD OF COUNTY COMMISSIONERSMike Samson John Martin Tom JankovskyThe board of county commissioners is a group of three elected officials which acts as theexecutive of the local government, levies local taxes, and is charged with the administrationof county governmental services such as courts, public health oversight, building codeenforcement, and public works such as road maintenance. A8 A9

FINANCIAL SECTION

M McMahan and Associates, l.l.c. Certified Public Accountants and Consultants& Chapel Square, Bldg C Web Site: www.mcmahancpa.comA 245 Chapel Place, Suite 300 Main Office: (970) 845-8800 P.O. Box 5850, Avon, CO 81620 Facsimile: (970) 845-8108 E-mail: [email protected] INDEPENDENT AUDITOR'S REPORT To the Board of County Commissioners Garfield County, Colorado Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Garfield County, Colorado, (the “County”), as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the County’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall financial statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Member: American Institute of Certified Public AccountantsPaul J. Backes, CPA, CGMA Avon: (970) 845-8800Michael N. Jenkins, CA, CPA, CGMA Aspen: (970) 544-3996Daniel R. Cudahy, CPA, CGMA Frisco: (970) 668-3481 B1

To the Board of County CommissionersGarfield County, ColoradoOpinionsIn our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the governmental activities, the business-type activities, each major fund,and the aggregate remaining fund information of Garfield County, Colorado as of December 31, 2016,and the respective changes in financial position and, where applicable, cash flows thereof for the yearthen ended in accordance with accounting principles generally accepted in the United States of America.Other MattersAccounting principles generally accepted in the United States of America require that Management’sDiscussion and Analysis in Section B be presented to supplement the basic financial statements. Suchinformation, although not a part of the basic financial statements, is required by the GovernmentalAccounting Standards Board, who considers it to be an essential part of financial reporting for placing thebasic financial statements in an appropriate operational, economic, or historical context. We have appliedcertain limited procedures to the required supplementary information in accordance with auditingstandards generally accepted in the United States of America, which consisted of inquiries ofmanagement about the methods of preparing the information and comparing the information forconsistency with management’s responses to our inquiries, the basic financial statements, and otherknowledge we obtained during our audit of the basic financial statements. We do not express an opinionor provide any assurance on the information because the limited procedures do not provide us withsufficient evidence to express an opinion or provide any assurance.The budgetary comparison information in Section E is not a required part of the basic financial statementsbut is supplementary information required by accounting principles generally accepted in the UnitedStates of America. The budgetary comparison information has been subjected to the auditing proceduresapplied in the audit of the financial statements and certain additional procedures, including comparing andreconciling such information directly to the underlying accounting and other records used to prepare thefinancial statement or to the financial statements themselves, and other additional procedures inaccordance with auditing standards generally accepted in the United States of America. In our opinion,the information is fairly stated in all material respects in relation to the financial statements as a whole.Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the County’s financial statements taken as a whole. The introductory section, combining fundfinancial statements, individual fund budgetary information, the Local Highway Finance Report, and thestatistical section listed in the accompanying table of contents are presented for purposes of additionalanalysis and are not a required part of the County’s financial statements. The combining fund financialstatements, the individual fund budgetary information, and the Local Highway Finance Report are theresponsibility of management and were derived from and relate directly to the underlying accounting andother records used to prepare the financial statements. Such information has been subjected to theauditing procedures applied in the audit of the financial statements and certain additional procedures,including comparing and reconciling such information directly to the underlying accounting and otherrecords used to prepare the financial statements or to the financial statements themselves, and otheradditional procedures in accordance with auditing standards generally accepted in the United States ofAmerica. In our opinion, the information is fairly stated in all material respects in relation to the financialstatements as a whole. The introductory and statistical sections have not been subjected to the auditingprocedures applied in the audit of the basic financial statements and, accordingly, we express no opinionon them. B2

To the Board of County CommissionersGarfield County, ColoradoAdditionally, the Schedule of Expenditures of Federal Awards included in the Single Audit section arepresented for the purpose of additional analysis, as required by Title 2 U.S. Code of Federal RegulationsPart 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for FederalAwards (“Uniform Guidance”), and are not a required part of the County’s financial statements. Suchinformation has been subjected to the auditing procedures applied audit of the financial statements andcertain additional procedures, including comparing and reconciling such information directly to theunderlying accounting and other records used to prepare the financial statement or to the financialstatements themselves, and other additional procedures in accordance with auditing standards generallyaccepted in the United States of America. In our opinion, the Schedule of Expenditures of FederalAwards is fairly stated in all material respects in relation to the financial statements as a whole.Other Reporting Required by Government Auditing StandardsIn accordance with Government Auditing Standards, we have also issued our report dated May 12, 2017on our consideration of the County’s internal control over financial reporting and on our tests of itscompliance with provisions of laws, regulations, contracts, and grant agreements and other matters. Thepurpose of that report is to describe the scope of our testing of internal control over financial reporting andcompliance and the results of that testing, and not to provide an opinion on the internal control overfinancial reporting or on compliance. That report is an integral part of an audit performed in accordancewith Government Auditing Standards in considering the County’s internal control over financial reportingand compliance.McMahan and Associates, L.L.C.May 12, 2017 B3

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016This section of Garfield County’s (the County) Comprehensive Annual Financial Report (CAFR) presentsnarrative discussion and analysis of the financial activities of the County for the fiscal year endedDecember 31, 2016. This information should be considered in conjunction with that furnished in the letterof transmittal, which can be found preceding this narrative, and with the County’s financial statementsand notes to the financial statements, which follow. FINANCIAL HIGHLIGHTS As of December 31, 2016, the County’s total assets were $467.2 million, and total liabilities and deferred inflow of resources were $40.4 million. The total net position was therefore $426.8 million, an increase of 0.4 percent ($1.5 million) over 2015. Total net position comprises the following: (1) Investment in capital assets including property and equipment, net of related debt (if any) and accumulated depreciation, of $298.0 million (2) Restricted net position of $61.6 million, which is constrained for specific purposes by external providers, such as creditors, or amounts constrained due to constitutional provisions or enabling legislation (3) Unrestricted net position of $67.3 million, which represents the portion available to maintain the County’s continuing obligations to its citizens and creditors. Total governmental fund revenues (including transfers in) in 2016 were $99.6 million, a 0.3 percent ($0.3 million) decrease under 2015. Total governmental fund expenditures (including transfers out) in 2016 were $97.2 million, a 4.7 percent ($4.8 million) decrease under 2015. As of December 31, 2016, the County’s governmental funds reported combined ending fund balances of $121.9 million. This compares to the prior year ending fund balances of $119.5 million, an increase of 2.0 percent ($2.4 million) during 2016. Approximately $41.3 million (33.9 percent) is unassigned fund balance. At the end of 2016, fund balance for the General Fund was $45.4 million, amounting to 90.3 percent of total General Fund expenditures. This compares to the prior year ending fund balance of $40.4 million with an increase of 12.4 percent ($5.0 million) during 2016.The above financial highlights are explained in more detail in the financial analysis section of thisdocument. B4

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016 OVERVIEW OF THE FINANCIAL STATEMENTSThis Management Discussion and Analysis document introduces the County’s basic financial statements.The basic financial statements include:  Government-wide Financial Statements  Fund Financial Statements  Notes to the Basic Financial StatementsThe County also includes in this report additional information to supplement the basic financialstatements.Government-wide Financial StatementsThe County’s annual report includes two government-wide financial statements. Financial reporting atthis level uses a perspective similar to that found in the private sector with its basis in accrual accountingand elimination or reclassification of activities between funds. The two statements are:The statement of net position presents all of the County’s assets, liabilities and deferred outflows andinflows, with the difference between reported as net position. Over time, increases or decreases in netposition may serve as a useful indicator of whether the financial position of the County as a whole isimproving or deteriorating. Evaluation of the overall health of the County should extend to othernonfinancial factors such as diversification of the taxpayer base or the condition of County infrastructure,in addition to the financial information provided in this report.The statement of activities reports how the County’s net position changed during the fiscal year. Allcurrent year revenues and expenditures are included regardless of when cash is received or paymentsare made. An important purpose of the design of the statement of activities is to show the financialreliance of the County's distinct activities or functions on revenues provided by the County's taxpayers.Both government-wide financial statements distinguish governmental activities of the County that areprincipally supported by property and sales taxes and from business-type activities that are intended torecover all or a significant portion of their costs through user fees and charges. Governmental activitiesinclude general government; public safety; health and welfare; culture and recreation; and maintenanceand improvement of transportation, infrastructure, buildings, grounds, and public works. Business-typeactivities include the solid waste disposal operations (landfill).The government-wide financial statements are presented on pages C1 and C2 of this report.Fund Financial StatementsThe fund financial statements are designed to report information about groupings of related accountsused to maintain control over resources segregated for specific activities or objectives. The County, likeother state and local governments, uses funds to ensure and demonstrate compliance with finance-related laws and regulations. Fund financial statements focus on the County’s most significant funds,known as major funds, rather than the County as a whole. Major funds are reported separately while allothers are combined into a single, aggregated presentation. Individual fund data for non-major funds areprovided in the form of combining statements in a later section of this report.All the funds of the County fall into one of three types: governmental funds, proprietary funds, andfiduciary funds. B5

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016Governmental funds. Most of the services provided by the County are accounted for in governmentalfunds. Governmental funds are used to account for essentially the same functions, which are reportedas governmental activities in the government-wide financial statements. Unlike the government-widefinancial statements, however, the governmental funds financial statements focus on the use ofspendable resources during the year and the balances available at the end of the year for future spending.Such information is useful in determining whether there will be adequate financial resources available tomeet the current and near-term needs of the County.Since the government-wide focus includes the long-term view, comparisons between these twoperspectives may provide insight into the long-term impact of near-term financing decisions. Both thegovernmental funds balance sheet and the governmental funds statement of revenues, expenditures andchanges in fund balances provide a reconciliation to facilitate the comparison between governmentalfunds and governmental activities.The County’s governmental funds are comprised of a general fund, a capital projects fund and elevenspecial revenue funds. Four governmental funds, the General Fund, the Road and Bridge Fund, theHuman Services Fund and the Capital Expenditures Fund are considered major funds for financialreporting purposes. Each of the major funds is presented in a separate column in the governmental fundfinancial statements presented on pages C3 through C6 of this report. Individual fund information for non-major governmental funds is found in combining statements in a later section of this report.Proprietary funds. Services for which the County charges customers a fee are accounted for inproprietary funds. The two County proprietary funds are the Solid Waste Disposal Fund and the MotorPool Fund. The Solid Waste Disposal Fund is an enterprise fund, which encompasses the same functionsreported as business-type activities in the government-wide statements. The Motor Pool Fund is aninternal service fund which reports activities that provide services to the County’s other programs andactivities on a cost reimbursement basis. For reporting purposes, the Motor Pool Fund is included in thegovernmental activities in the government-wide financial statements. The basic proprietary fund financialstatements are presented on pages C7 through C9 of this report.Fiduciary funds. Assets held in a trustee or agency on behalf of another legally separate party or entityare accounted for in fiduciary funds. Since the resources of these funds are not available to support theCounty’s own programs, they are not reflected in the government-wide financial statements and onlybalance sheet accounts are used. The County has no trustee funds. The County agency fund informationis presented on pages C10 and F17 of this report.Notes to the Basic Financial StatementsThe accompanying notes to the financial statements provide information essential to a full understandingof the government-wide and fund financial statements. The notes to the financial statements begin onpage D1 of this report.Other Supplementary InformationIn addition to the basic financial statements and accompanying notes, this report also presents certainsupplementary information on the County's annual budget. The County adopts a budget appropriated foreach fund. Budgetary comparison statements are included as Required Supplementary Information forthe General Fund, the Road and Bridge Fund, and the Human Services Fund on pages E1 – E3.Budgetary comparison schedules for all other governmental funds including the Capital ExpendituresFund type can be found in the Supplementary Information section of this report on pages F1, and F6through F14. The proprietary funds budgetary comparison schedules are on pages F15 and F16. Thesestatements and schedules demonstrate compliance with the County’s adopted and amended budget. B6

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016 GOVERNMENT-WIDE FINANCIAL ANALYSISSummary of Net PositionAn analysis of net position may serve as a useful indicator of a government’s financial health. Total assetsfor the County on December 31, 2016 were $467.2 million, total liabilities were $10.1 million, and deferredinflows of resources were $30.3 million. The County’s net position is therefore $426.8 million, an increaseof 0.4 percent over December 31, 2015. The following provides a summary of the County’s net position(as presented on page C1): SUMMARY OF NET POSITION ($) Governmental Activities Business-type Activities TOTAL 2016 2015 2016 2015 2016 2015Assets: $163,386,284 $175,888,940 $5,841,719 $5,767,827 $169,228,003 $181,656,767Current assets 294,911,984 296,524,819 3,059,085 3,332,842 297,971,069 299,857,661Capital assets 458,298,268 472,413,759 8,900,804 9,100,669 467,199,072 481,514,428Total Assets 6,990,939 6,170,319 115,606 685,451 7,106,545 6,855,770Liabilities: 1,625,132 1,412,256 1,366,669 1,309,544 2,991,801 2,721,800Current liabilities 8,616,071 7,582,575 1,482,275 1,994,995 10,098,346 9,577,570Non-current liabilitiesTotal Liabilities 30,262,162 46,610,360 - - 30,262,162 46,610,360Total Deferred 294,911,984 296,524,819 3,059,085 3,332,842 297,971,069 299,857,661Inflow of Resources 61,576,776 61,960,567 - - 61,576,776 61,960,567 62,931,275 59,735,438 67,290,719 63,508,270Net Position: 4,359,444 3,772,832Inv. in capital assetsRestrictedUnrestrictedTotal Net Position $419,420,035 $418,220,824 $7,418,529 $7,105,674 $426,838,564 $425,326,498The County continues to maintain very strong current ratios. The current ratio compares current assetsto current liabilities and is an indication of the ability to pay obligations within one year. The current ratiofor governmental activities is 4:1 and 54:1 for business-type activities. For the County overall, the currentratio is 4:1 meaning current assets are four times greater than current liabilities.The County reported positive balances in net position for both governmental and business-type activities.Net position increased $1.2 million for governmental activities and increased by $313 thousand forbusiness-type activities. The County's overall total net position increased during 2016 by $1.5 million.The gain in net position is due to higher revenues compared to 2015.As of December 31, 2016, the County’s governmental activities reported a combined ending net positionof $419.4 million, an increase of 0.3 percent ($1.2 million) more than the prior year. Of this, 15.0 percent($62.9 million) is unrestricted and constitutes available funds for spending in the coming year at theCounty’s discretion. Legally restricted net position includes $32.4 million restricted to road and bridge,$18.0 million restricted to human services, $4.7 million restricted to capital projects, $3.0 million restrictedto emergency reserve, and $3.0 million restricted to public health.Approximately 70 percent of the governmental activities’ net position is invested in capital assets. Capitalassets are tangible property used in the operation of the County such as land, roads and bridges,buildings, machinery, furnishings and equipment. The County uses these capital assets to provideservices to its citizens. For business-type activities, 41.2 percent of its net position is invested in capitalassets providing facilities and equipment for the Solid Waste Disposal Fund. B7

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016Summary of Changes in Net PositionGovernmental activities and business-type activities increased the County’s net position by $1.5 millionor 0.4 percent.The following table provides a summary of the County’s changes in net position for governmental andbusiness-type activities in 2016 and 2015: SUMMARY OF CHANGES IN NET POSITION Governmental Business-type Activities Activities Total 2016 2015 2016 2015 2016 2015Revenues: $ 8,214,902 $ 6,063,814 $ 1,643,297 $ 1,521,516 $ 9,858,199 $ 7,585,330Program : Charges for services 27,452,507 27,141,100 17,786 - 27,470,293 27,141,100 Operating grants Capital grants and 1,170,130 1,580,188 - 285,000 1,170,130 1,865,188 contributions 58,496,903 54,584,506 - - 58,496,903 54,584,506General: 970,858 3,538,970 65,378 Taxes - 1,036,236 3,538,970 Other 96,305,300 92,908,578 1,726,461 1,806,516 98,031,761 94,715,094Total Revenues 24,596,283 23,171,168 - - 24,596,283 23,171,168Program Expenses: General government 22,126,678 22,761,179 - - 22,126,678 22,761,179 Public safety 23,584,988 21,509,213 - - 23,584,988 21,509,213 Public works 22,598,603 22,181,053 - - 22,598,603 22,181,053 Health and welfare - - Culture and recreation 2,113,473 1,566,988 - - 2,113,473 1,566,988 Interes t - - 1,499,670 1,334,976 - - Solid waste - - 1,499,670 1,334,976Total Expenses 95,020,025 91,189,601 1,499,670 1,334,976 96,519,695 92,524,577Excess (Deficiency)Transfers 1,285,275 1,718,977 226,791 471,540 1,512,066 2,190,517 (86,064) (82,863) 86,064 82,863 - -Change in Net Position 1,199,211 1,636,114 312,855 554,403 1,512,066 2,190,517Beginning Net Position 418,220,824 416,584,710 7,105,674 6,551,271 425,326,498 423,135,981Ending Net Position $419,420,035 $418,220,824 $ 7,418,529 $ 7,105,674 $426,838,564 $425,326,498 B8

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016 GOVERNMENTAL REVENUESTotal governmental revenues for 2016 were $96.3 million (excluding transfers in) compared to $92.9million in 2015, an increase of 3.7 percent. The source of revenues is as follows: Governmental Revenues by Source 2016 Taxes $57,798,500 Intergovernmental 26,415,032 Charges for Services 8,813,210 Contributions 1,103,386 Investment Income 942,809 Other 1,228,210 Total $96,301,147 Contributions Investment Other 1.1% Income 1.3% 1.0%Charges for Taxes Services 60.0% 9.2%Intergovernmental 27.4%The County is heavily reliant on taxes and intergovernmental revenues to support governmentaloperations and capital improvements.Property taxes are the largest source of revenue with $46.7 million accounting for 48.5 percent of totalrevenues. Sales taxes of $8.7 million represent 9.0 percent of revenues.Intergovernmental revenues of $26.4 million represents 27.4 percent of the County’s total governmentalrevenues. This includes $16.5 million from the State for Human Services programs, $3.5 million from theState Highway Users Tax Fund for road and bridge purposes, $3.0 million from the Payment in Lieu ofTaxes (PILT), and $0.7 million in federal mineral severance taxes. B9

Garfield County, ColoradoManagement's Discussion and Analysis December 31, 2016 GOVERNMENTAL EXPENSESTotal governmental expenses for 2016 were $95.1 million compared with $91.3 million in 2015, anincrease of 4.2 percent. Expenses by classification are as follows:Governmental Expenses by Classification 2016Wages and Benefits $40,515,949Professional and Technical Services 10,071,324Purchase Property Services 1,723,523Other Purchased Services 4,760,635Supplies 4,326,334District Attorney Fees 2,127,096Grants 5,051,558R&B Property Tax Distribution and Treasurers Fees 560,585DHS Other Expenses 8,632,376Other Expenses 5,903,827Depreciation 11,346,818Sub-TotalInterfund Transfer Out $95,020,025 86,064Total $95,106,089B10

Garfield County, ColoradoManagement's Discussion and Analysis December 31, 2016 GOVERNMENT-WIDE – GOVERNMENTAL ACTIVITIES – FUNCTION/PROGRAM ANALYSISProgram revenues such as charges for services, operating and capital grants and contributions, cover38.8 percent of governmental activities expenses. This is a very high percentage and largely relates tothe social services grants and other grants mentioned above. This means that the government’staxpayers and the County’s other general governmental revenues fund 61.2 percent of the governmentalactivities. As a result, the general economy and the County businesses have a major impact on theCounty’s revenue streams.Total governmental activities expenses by function or program are as follows:Governmental Activities Expenses by Function/Program 2016General government $24,596,283Public safety 22,126,678Public works 23,584,988Health and welfare 22,598,603Culture and recreation 2,113,473Total $ 95,020,025Public works 24.8%Public safety Health and 23.3% welfare 23.8% General Culture andgovernment recreation 25.9% 2.2%The general government, public safety, public works, and health and welfare functions account for 97.8percent of governmental activities expenses. B11

Garfield County, ColoradoManagement's Discussion and Analysis December 31, 2016Each of these functions generates some form of revenue. The following table presents the net cost of thefunctions, i.e. the expenses less revenues generated by the activities. The net costs illustrate the financialburden placed on the County’s taxpayers by each of these functions.Net Cost of Governmental Activities by Function/Program 2016General government $ 16,268,676Public safety 20,827,813Public works 15,781,204Health and welfare 4,175,181Culture and recreation 1,129,612Total $ 58,182,486Public safety Public works 35.8% 27.1% General Health andgovernment welfare 7.2% 28.0% Culture and recreation 1.9% B12

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016Total net cost of governmental activities of $58.2 million is 61.2 percent of the total cost of governmentalactivities of $95.0 million. This means 61.2 percent of governmental activities are paid for with taxpayerdollars and 38.8 percent are funded with program revenues such as charges/fees for services, grantsand contributions.A comparison of the expenses on governmental activities and the net cost of governmental activities, byfunction, is as follows: Governmental Expenses and Net Cost of Governmental Activities $M by Function 2016 $30Millions of Dollars $25 $24.6 $22.1 $20.8 $23.6 $22.6 $15.8 $20 $16.3 $15 $10 $4.2 $5 Public safety Public works Health and $2.1 $1.1 Expenses welfare $- Culture and General recreation government Net cost of Services B13

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016 BUSINESS-TYPE ACTIVITIESThe Solid Waste Disposal Fund, which accounts for the activities of the landfill, is the only business-typeactivity of the County. In 2016, the fund accounted for an increase in the County’s net position of$312,855 primarily due to higher charges for services than expenses.Operating revenues of the fund were $1.7 million and operating expenses were $1.5 million. At 90.7percent, charges for services (tipping fees) accounted for the majority of revenues. Other revenuesincluded two items: 1) Sale of Capital Assets for $65 thousand; and 2) interfund transfer of $86 thousandfrom the General Fund for cost reimbursement.Wages and benefits accounted for 40.0 percent of expenses and the remaining 60.0 percent was forother operating expenses. ANALYSIS OF THE COUNTY’S GOVERNMENTAL FUNDSAs previously discussed, the County uses fund accounting to ensure and demonstrate compliance withfinance-related legal requirements. The focus of the County’s governmental funds is to provideinformation on near-term inflows, outflows and balance of resources. This information is useful inassessing the County’s financing requirements.Overall, governmental fund revenues totaled approximately $96.3 million in 2016, an increase of 3.8percent over the prior year. Taxes, primarily property tax, increased by 5.9 percent ($3.2 million) andintergovernmental revenues were down 8.7 percent ($2.5 million) mostly due to a decrease in statemineral severance taxes of $2.1 million and the remaining decreases was primarily in statereimbursements of human services programs. Charges for services increased by 31.3 percent ($2.1million) primarily due to a royalty one-time catch-up payment of $1.6 million. Investment Incomeincreased by 50.0 percent ($0.3 million). Modest increases and decreases took place in other revenuesources.In 2016, expenditures for governmental funds totaled $93.7 million, a decrease of 1.3 percent ($1.2million). A $0.2 million increase took place in General Government, a 0.7 percent increase mostly dueto higher capital expenditures. Public Safety decreased 5.8 percent ($1.3 million) primarily due to lowercapital expenditures. Public Works has a 2.6 percent decrease ($0.5 million) which reflects lessinvestment in road and bridge capital projects in 2016. Culture and recreation decreased 4.8 percent($0.1 million) caused by less capital investment in the County Fairgrounds in 2016.Information on the County’s major funds is as follows:General FundThe General Fund is the primary operating fund for the County and the largest source of day-to-dayservice delivery.The General Fund’s fund balance increased by 12.4 percent ($5.0 million) in 2016 to $45.4 million.Unassigned fund balance constitutes 91.0 percent ($41.3 million) of fund balance available for spendingin the coming year at the County’s discretion. As a measure of the General Fund’s liquidity, it may beuseful to compare both unassigned fund balance and total fund balance to total fund expenditures.Unassigned fund balance represents 88.1 percent of total General Fund expenditures and total fundbalance represents 96.8 percent of expenditures.In 2016, total revenues for the General Fund were $55.2 million (including interfund transfers in fromother funds), an increase of 26.6 percent over the prior year. Taxes generated more than half this B14

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016revenue, followed by charges and fees for services, and intergovernmental. The following representsGeneral Fund revenues by classification in 2016, which was similar to the prior year: General Fund Revenues 2016 Taxes $40,234,261 Charges for Services 7,775,180 Intergovernmental 3,759,974 Investment Earnings 835,560 Contributions 1,094,477 Interfund Transfers 800,000 Other Revenue 686,476 Total $55,185,928General Fund revenues were 2.4 percent over the amended budget in 2016. Property tax revenues were$6.0 million higher than last year due to increased ad valorem taxes from oil and gas industry.Intergovernmental taxes were higher by $3.2 million due to moving the Payment in Lieu of Taxes (PILT)to the General Fund from Oil & Gas Mitigation Fund. General Fund Revenues Budgetary ComparisonTaxes 2016 2016 2016 Amount %Charges for Services Adopted Amended Actual Over/(Under) Over/(Under)Intergovernmental BudgetInvestment Income Budget $40,234,261 Amended AmendedContributions $41,639,252 7,775,180 (3.4%)Interfund Transfers 5,713,163 $41,639,252 3,759,974 ($1,404,991) 34.9%Other Revenue 3,272,530 5,762,573 835,560 2,012,607 14.4% 672,329 3,287,760 1,094,477 472,214 24.3%Totals 672,329 800,000 163,231 13.0% 965,625 686,476 0.0% 800,000 968,625 125,852 (10.6%) 731,848 800,000 0 767,948 2.4% (81,472) $53,794,747 $53,898,487 $55,185,928 $1,287,441 B15

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016Total expenditures for the General Fund in 2016 (including interfund transfers to other funds) were $50.2million, a 3.3 percent decrease over 2015. A large part was due to a decrease of $3.0 million in interfundtransfers for capital to the Airport Fund.As mentioned previously, the General Fund is the County’s primary operating fund and consequently itcontains a total of eighteen elected official offices and departments. Wages and benefits, therefore, makeup 49.5 percent of total expenditures, while services provided for the County (professional and technicalservices, and purchased services) comprised 17.2 percent of the total. The following presents the totalGeneral Fund expenditures by classification: General Fund Expenditures 2016Wages & Benefits $24,859,372Professional and Technical Services 3,493,335Purchased Services 5,143,796Supplies 2,359,500Interfund Transfers 3,386,064Other Expenditures 10,997,733Total $50,239,800Interfund Transfers Other Exp. 6.7% 21.9% Supplies Wages & Benefits 4.7% 49.5%Purchased Services Prof & Tech Svcs. 10.2% 7.0%During 2016, there was a $0.4 million (0.8 percent) increase in appropriations between the adopted andamended budgets for General Fund expenditures. The majority of the increase was in both otherexpenditures of $0.2 million and services of $0.2 million.General Fund expenditures were 8.4 percent ($4.6 million) below the amended budget in 2016, whichis the normal trend the County has experienced in previous years. There was a multitude of costsavings across the board with all departments and offices coming under budget. Notable variancesinclude: lower than budgeted wages and benefits primarily due to vacancy savings of $1.4 million andlower health insurance costs of $559 thousand. In addition, the Sheriff’s office spent only 61 percent ofthe emergency management contingency and returned $477 thousand to fund balance. B16

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016 General Fund Expenditures Budgetary ComparisonWages & Benefits 2016 2016 2016 Amount % Over/Professional & Technical Adopted Amended Actual Over/(Under) (Under)Services Budget AmendedPurchased Services $26,842,203 Budget $24,859,372 AmendedSupplies $26,794,783 ($1,935,411) (7.2%)Interfund Transfers 3,999,183 3,493,335Other Expenditures 4,187,583 (694,248) (16.6%) 5,650,219 5,143,796 2,444,556 5,673,279 2,359,500 (529,483) (9.3%) 3,388,000 2,446,796 3,386,064 (87,296) (3.6%) 12,067,737 3,388,000 10,997,733 (1,936) (0.1%) 12,331,340 (10.8%) (1,333,607) (8.4%)Totals $54,391,898 $54,821,781 $50,239,800 ($4,581,981)Road and Bridge FundThe Road and Bridge Fund is used to account for the construction, maintenance, and snow removal onall County roads and bridges. The fund balance decreased by $0.7 million in 2016 and has $32.5 millionavailable for future spending at the year-end. In 2016, total revenues of $12.5 million in this funddecreased by 42.1 percent over 2015 and total expenditures of $13.2 million decreased by 1.5 percentover 2015. Road and Bridge Fund Revenues 2016 Taxes $8,026,444 Licenses and Permits 155,157 Intergovernmental 4,201,435 Contributions 7,469 Miscellaneous Revenue 83,597 Total $12,474,102 B17

Garfield County, ColoradoManagement's Discussion and Analysis December 31, 2016In 2016, the majority of the decrease in revenue were in property taxes of $6.3 million, in Federal MineralSeverance for $2.0 million and a non-interfund transfer in from Traffic Impact Fund for $0.7 million thatwere all under 2015. Revenue offsets were minimal.All expenditures in the Road and Bridge Fund are a public works function. Expenditures by classificationwere as follows: Road and Bridge Fund Expenditures 2016Wages and benefits $3,549,457Professional and technical services 4,055,636Purchased services 633,715Supplies 1,525,963Capital expenditures 2,826,421Other expenditures 573,976Total $13,165,168Supplies Capital Assets Other 11.6% 21.5% Expenses 4.3% Wages & Benefits 27.0%Purchased Services Prof & Tech 4.8% Services 30.8%Human Services FundThe Human Services Fund is used to account for a variety of State mandated social services includingpublic assistance, child support, and family service programs. These services are provided by theCounty’s Department of Human Services (DHS). In 2016, revenues in excess of expenditures causedthe Human Services fund balance to grow 15.2 percent from $15.8 million to $18.2 million. Whencompared to 2015, total revenues decreased by 0.3 percent ($0.1 million); property taxes increased by6.7 percent ($0.3 million); and intergovernmental revenues decreased by 2.6 percent ($0.4 million). Themajority of revenues (78.0 percent) in this Fund are from intergovernmental sources.Total expenditures increased by 0.2 percent ($46 thousand) compared with 2015, these were due toincreases in wages and benefits caused by federally mandated programs that required additional staff;the annual merit increases (up to 2.5 percent); and increases in health benefits. B18

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016All expenditures in the Human Services Fund are a Health and Welfare function. Expenditures byclassification were as follows: Human Services Fund Expenditures 2016Wages and benefits $7,847,761Professional and technical services 1,551,296Purchased services 382,901Supplies 152,099Capital expenditures 152,129Other expenditures 8,632,376Total $18,718,562 Other Wages & Expenditures Benefits 41.9% 46.2%Capital Assets Supplies Prof & Tech 0.8% 0.8% Services 8.3% Purchased Services 2.0%Of the $8.6 million categorized as other expenditures, $1.6 million was spent on Child Welfare BlockGrant programs, $5.7 million on the Food Assistance Benefits program, $0.8 million on the Old AgePension program, and $0.5 million on Child Care Assistance program.Capital Expenditures FundThe Capital Expenditures fund balance decreased by 33.8 percent from $7.1 million in 2015 to $4.7million in 2016.In 2016, there were $3.2 million in revenues due to taxes. B19

Garfield County, ColoradoManagement's Discussion and Analysis December 31, 2016 Total expenditures were $5.6 million, as follows: $ 35,454 190,834 Capital Expenditures Fund Expenditures 2016 40,091Land: 415,063 - Rifle 1115 Park Avenue, Land for Maintenance Storage - Rifle 1327 Howard Avenue, Land for Parking Lot 2,263,013 69,500Land Improvements: - Rifle 1327 Howard Avenue Parking Lot Preparations (CIP) 74,294 - Rifle 1241 & 1301 Howard Avenue Parking Lot 423,457Buildings: 26,185 - Rifle Administration Building (CIP) 122,110 - Rifle 1115 Park Avenue, Building for Maintenance Storage 632,016Building Improvements: 16,815 - GWS Public Health Mountain View Building Remodel - GWS Procurement 810 Pitkin Asbestos Remediation & Renovations 85,395 - Fairgrounds North and South Halls Fire Alarm/Suppression (CIP) 16,109 - Fairgrounds North Hall Kitchen Remodel (CIP) 19,980 - Rifle Shop Remodel/CNG Upgrade (CIP) 34,100 241,065Machinery and Equipment: 68,652 - Clerk and Recorder Microfilm Reader/Printer 55,000Computer Hardware: 9,405 - Sheriff’s Office Mobile Data Technology (MDT) for Patrol Cars-Hardware - Sheriff’s Office Finger Print Machine 19,100 - Sheriff’s Office Forensic Fred/FTK Upgrade in Computer Equipment - GWS IT Courthouse Disk Expansion Shelf and NIC’s – Storage Unit 19,170 - GWS IT Cisco UCX Project 458,007 - Annual Countywide Hardware Replacement (Computers) 7,500Computer Software: 125,000 - Rifle Criminal Justice Tribridge Software - Finance New World Systems (NWS) Unlimited Licenses 44,051 - IT Annual Software License Upgrade 39,615 28,782Furnishings: $5,579,763 - Coroner furniture for remodel - Rifle Admin Building furniture and fixturesIntangibles: - Vegetation Management’s CNHP Bio Inventory (CIP) - IT GIS Cooperative LiDAR Floodplain Mapping ProjectRolling Stock: - Sheriff’s Office Patrol CNT 2016 Ford Transit Van Outfitting (CIP) - Fairgrounds John Deere 5065E TractorMiscellaneous Countywide Capital Expenditures:TOTALB20

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016 CAPITAL ASSETS AND LONG-TERM OBLIGATIONSCapital AssetsAs of December 31, 2016, the County’s investment in capital assets (less accumulated depreciation) forgovernmental activities (including the motor pool fund) was $294.9 million. The investment in capitalassets activities (less accumulated depreciation) for business-type activities was $3.1 million.In 2016, major capital expenditures included:  Road & Bridge had eight projects totaling $1.8 million. Six projects were completed in 2016 and one was carried-over into 2017. One major road project was completed: CR113/SH82 Cattle Creek Intersection Acceleration/Deceleration Lanes for $918 thousand; two drainage projects were completed in Battlement Mesa for $491 thousand. Four bridge projects were completed or carried forward. They are as follows: three bridge scour protection projects completed on CR108, CR300 & CR311 for $325 thousand; and CR137 Canyon Creek Bridge Replacement for $87 thousand, which is being carried forward into 2017.  The Airport had two major and two minor capital improvement projects totaling $1 million, which were all completed in 2016: Airport Entrance Upgrade for $742 thousand; Fuel Farm (2015 carry forward) final payment for $138 thousand; Observation Shade Structure for $20 thousand; and Sheriff’s Impoundment Lot for $10 thousand.  Two land purchases in 2016 totaling $226 thousand: CDOT maintenance hut (across from the back of the Fairgrounds) for $35 thousand and property in proximity to the new Rifle administration building to be used for parking lot construction in 2017 for $191 thousand.  Design & Construction of a new administration building in Rifle. Design began in May 2015 and the construction was completed in June 2016 totaling $2.3 million. The total project expenditure totaled $4.6 million.  The Sheriff’s Office purchased Mobile Data Technology (MDT) computer hardware and software for Sheriff’s Office patrol cars costing $85 thousand; a finger print machine for the jail for $16 thousand; and replacement of six Sheriff’s Office vehicles totaling $287 thousand.  In the Motor Pool Fund: Community Development purchased a F150 CNG pick-up truck for $39 thousand; Criminal Justice Services purchased a Chevy 15 Passenger van for $31 thousand; and Road & Bridge purchased a replacement pick-up truck for $58 thousand.  Seven pieces of heavy equipment were purchased in 2016 by Road & Bridge totaling $1 million: two dump trucks for $386 thousand; a heavy haul tractor for $119 thousand; a motor grader for $280 thousand; a mower for $121 thousand; a Smithco Side Dump Semi Trailer for $52 thousand; and one Bobcat Skid Steer for $50 thousand.  The Landfill continued the development of the PCS Contaminated Soil Treatment facility and spent $61 thousand of the approximately $578 thousand project in 2016. The facility is to be used by energy industry for storage of contaminated soils. The project was completed in the first half of 2016.  Fairgrounds improvements included the completion of the North Hall remodel for $122 thousand of a $176 thousand project, and fire alarm/suppression of both North and South Halls for $26 thousand.  The Road and Bridge Shop Remodel/Motor Pool CNG shop upgrades still in process at the end of 2016 spent $632 thousand. The project is scheduled to be completed in 2017 for a total of $1.25 million. B21

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016Overall, the County saw a decrease of 0.6 percent in total capital assets. Note 3D Capital Assets onpages D11 and D12 provide additional information about changes in capital assets during the calendaryear. The following table provides a summary of capital asset activity: CAPITAL ASSETS Governmental Activities Business-type Activities Total 2016 2015 2016 2015 2016 2015Non-depreciable assets: $ 1,623,222 $ 3,620,085 $- $ 517,538 $ 1,623,222 $ 4,137,623 Construction in progress 16,177,723 15,951,435 300,000 $ 300,000 16,477,723 16,251,435 Land 817,538Total non-depreciable assets $ 17,800,945 $ 19,571,520 $ 300,000 $ 18,100,945 $ 20,389,058Depreciable assets: 60,240,279 58,768,252 1,803,946 1,225,624 62,044,225 59,993,876 Land improvements 61,017,402 56,344,045 768,258 768,258 61,785,660 57,112,303 Buildings 17,800 17,800 Building improvements 8,942,581 8,242,665 8,960,381 8,260,465 Machinery and equipment 27,475,700 26,027,968 2,297,043 2,660,126 29,772,743 28,688,094 Intangibles - - Infras tructure 2,747,657 2,385,025 - - 2,747,657 2,385,025 290,407,752 288,388,796 290,407,752 288,388,796Total depreciable assets 450,831,371 440,156,751 4,887,047 4,671,808 455,718,418 444,828,559Less accumulated depreciation 173,720,332 163,203,452 2,127,962 2,156,504 175,848,294 165,359,956Book value - depreciable assets 277,111,039 276,953,299 2,759,085 2,515,304 279,870,124 279,468,603Percentage depreciated 39% 37% 44% 46% 39% 37%Book value - all assets $ 294,911,984 $ 296,524,819 $ 3,059,085 $ 3,332,842 $ 297,971,069 $ 299,857,661At December 31, 2016, the depreciable capital assets for governmental activities were 39 percentdepreciated. This compares with 37 percent at December 31, 2015. The County’s business-typeactivities asset values were 44 percent depreciated by December 31, 2016, which compares to 46percent at December 31, 2015. During 2016, the County continued to replace its capital assets at aconsistent level and has accumulated another year’s worth of depreciation on its capital assets.Long-term ObligationsDuring 2016, the County has the following long-term obligations for landfill closure and post closure costsand compensated absences: Governmental Business-type Totals Activities Activities 2016 2015 2016 2015 2016 2015Landfill closure and post $ -$ - $1,346,615 $1,284,903 $1,346,615 $1,284,903closure care 1,915,863 2,166,843 1,883,008 26,739 32,855 2,193,582Compensated absences $3,200,766 $2,166,843 $1,883,008 $1,373,354 $1,317,758 $3,540,197TotalAdditional information about the County’s long-term obligations is available on page D14. B22

Garfield County, Colorado Management's Discussion and Analysis December 31, 2016 ECONOMIC OUTLOOK AND 2017 BUDGETGarfield County’s economy, largely dominated by agriculture, tourism, and natural resourcedevelopment, continued to show signs of improvement in 2016 in all sectors, except the energyindustry. This trend is expected to continue in 2017 with growth in the housing and job markets, risingincomes, and increasing retail, tourism, and related sales tax revenues. Property tax revenues areexpected to decrease in 2017 due to both a lower price and production of natural gas in 2015, the yearin which assessments are made for 2017 revenues.The County continues to experience strong demand for many of its services, especially HumanServices and Road and Bridge projects. With careful and prudent management and efficient use offunds, the County will continue to provide quality services and maintain operating expenditures in 2017.The operating budget is balanced with excess revenues of more than $150 thousand and is, therefore,balanced. The Board’s policy called for the adoption of a balanced operating budget and total fundbalances above $100 million. The 2017 adopted budget meets both goals.The 2017 adopted budget is $91,345,608 in revenues and appropriates $105,687,458 in expenditures.The difference of $14,341,850 is taken from fund balances and will be primarily be used for capitalprojects. Priorities for 2017 include replacement of two communication towers; construction of a Searchand Rescue and Coroner building in the Rifle Sheriff’s Office Annex Campus; construction of an AirportSnow Removal Equipment Facility; development of the Fairgrounds as a year round event center; andRoad and Bridge maintenance and capital projects.Overall, the 2017 budget and the policy-driven strategic plan enable Garfield County to continue toprovide high levels of service to its citizens; invest in prudent capital improvements; and supportmunicipalities with key infrastructure projects, while maintaining a strong financial position.REQUESTS FOR INFORMATIONThis financial report is designed to provide an overview of the County’s financial activities for all of thosewith an interest in the government’s finances. Questions concerning any of the information provided inthis report, or requests for additional financial information should be addressed to:Theresa WagenmanFinance Director108 8th Street, Suite 201Glenwood Springs, Colorado, 81601970/945-7284 ext. #[email protected] B23

BASIC FINANCIAL STATEMENTS

Garfield County, ColoradoStatement of Net Position December 31, 2016 Primary Government Governmental Business-type Activities Activities TotalAssets $ 130,077,002 $ 5,579,502 $ 135,656,504 Cash and investments 779,040 Due from other governments 779,040 - Accounts, taxes, and other receivables 32,449,212 Prepaids 32,311,877 137,335 39,960 Inventories Internal balances 39,960 - 303,287 Capital assets: - Capital assets not being depreciated 289,913 13,374 Capital assets - depreciable, cost Accumulated depreciation and amortization (111,508) 111,508Total Assets 17,800,945 300,000 18,100,945 450,831,371 4,887,047 455,718,418Liabilities (173,720,332) (2,127,962) (175,848,294) Accounts payable Accrued expenses 458,298,268 8,900,804 467,199,072 Unearned revenue Noncurrent liabilities: 3,348,909 73,672 3,422,581 Due within one year: 2,711,148 35,249 2,746,397 Accrued compensated absences Due in more than one year: 389,171 - 389,171 Accrued compensated absences Landfill closure and postclosure obligations 541,711 6,685 548,396Total Liabilities 1,625,132 20,054 1,645,186 - 1,346,615 1,346,615Deferred Inflow of Resources Property tax revenue 8,616,071 1,482,275 10,098,346Total Deferred Inflow of Resources 30,262,162 - 30,262,162 30,262,162 - 30,262,162Net PositionNet investment in capital assets 294,911,984 3,059,085 297,971,069Restricted for: 3,032,510 - 3,032,510 Public health 32,355,558 - 32,355,558 Road and bridge 17,982,325 - 17,982,325 Human services - Conservation trust 385,526 - 385,526 Emergency reserve 3,018,434 - 3,018,434 Grants - Capital projects 120,932 4,359,444 120,932Unrestricted 4,681,491 4,681,491 62,931,275 $ 7,418,529 67,290,719Total Net Position $ 419,420,035 $ 426,838,564The accompanying notes are an integral part of these financial statements. C1

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Garfield County Statement of For the Year Ended D Program ReFunction/Program Expenses Charges for Operating Governmental Activities Services and Contrib General government $ 24,596,283 Public safety 22,126,678 $ 5,824,156 $ 1,49 Public works 23,584,988 Health and welfare 22,598,603 542,513 72 Culture and recreation 2,113,473 95,020,025 825,403 6,84Total Governmental Activities 352,451 18,07 Business-type Activities: Solid waste 670,379 31Total 8,214,902 27,45 1,499,670 1,643,297 $ 1 $ 96,519,695 $ 9,858,199 27,47 General Revenues: Property taxes Sales taxes Specific ownership taxes Severance taxes Other taxes Investment earnings Gain on sale of capital assets Transfers Total General Revenues and T Change in Net Position Net Position Beginning of Year Net Position End of Year The accompanying notes are an integ C

y, Colorado ActivitiesDecember 31, 2016evenues Net (Expense) Revenue and Changes in Net PositionGrants Capital Grants Governmental Business-type Activitiesbutions and Contributions Activities Total98,560 $ 1,004,891 $ (16,268,676) $ - $ (16,268,676)29,086 - (20,827,813)40,408 27,266 (20,827,813) - (15,781,204)70,971 - (4,175,181)13,482 137,973 (15,781,204) - (1,129,612)52,507 - (58,182,486) - (4,175,181) - (1,129,612) 1,170,130 (58,182,486)17,786 $ - - 161,413 161,41370,293 1,170,130 (58,182,486) 161,413 (58,021,073)Transfers 46,744,301 - 46,744,301r 8,651,100 - 8,651,100 2,250,263 - 2,250,263 698,403 - 698,403 152,836 - 152,836 942,809 - 942,809 28,049 65,378 93,427 (86,064) 86,064 - 151,442 59,381,697 59,533,139 312,855 1,199,211 1,512,066 7,105,674 418,220,824 425,326,498 7,418,529 $ 419,420,035 $ $ 426,838,564gral part of these financial statements.C2

Garfield Coun Balance Governmen DecemberAssets General Road and Cash and investments, unrestricted Bridge Accounts receivable $ 47,712,106 Due from other governments 23,078,035 $ 32,361,640 Prepaids 253,811 35,953 Due from other funds 39,960 Inventories 62,642 467,424 - -Total Assets $ 71,146,554 83,492 106,828 $ 33,055,337Liabilities $ 1,559,012 $ 354,930 Accounts payable Accrued expenditures 1,386,149 211,064 Unearned revenue Due to other funds --Total Liabilities 354,938 26,957Deferred Inflow of Resources 3,300,099 592,951 Property tax revenue 22,486,820 -Total Deferred Inflow of Resources 22,486,820 -Fund Balances 39,960 106,828 Non-spendable Spendable: 3,018,434 32,355,558 Restricted 1,008,686 - Committed - Assigned - - Unassigned 41,292,555 32,462,386Total Fund Balances 45,359,635Total Liabilities, Deferred Inflow of $ 71,146,554 $ 33,055,337Resources, and Fund Balances The accompanying notes are an integ C

nty, Colorado Sheetntal Funds 31, 2016 Human Capital Total Total Services Expenditures Non-major Governmental$ 18,345,229 $ 5,218,019 Funds Funds 3,122,471 4,096,565 - - $ 21,949,285 $ 125,586,279 - - 1,976,348 32,309,372 - 394 57,805 779,040 - - - 39,960 40,170 186,698$ 21,467,700 $ 9,314,978 - 106,828 $ 24,023,608 $ 159,008,177$ 441,652 $ 203,328 $ 720,609 $ 3,279,531532,189 333,594 233,722 2,696,718 - - 389,171 389,17146,448 - 11,687 440,0301,020,289 536,922 1,355,189 6,805,4502,214,360 4,096,565 1,464,417 30,262,1622,214,360 4,096,565 1,464,417 30,262,162 - - - 146,78817,982,325 4,681,491 3,538,968 61,576,776 - - 17,665,034 18,673,720 - 250,726 - - 250,726 - - 41,292,555 4,681,49118,233,051 21,204,002 121,940,565 $ 21,467,700 $ 9,314,978 $ 24,023,608 $ 159,008,177gral part of these financial statements.C3

Garfield County, ColoradoReconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position December 31, 2016Total Governmental Fund Balances $ 121,940,565Amounts reported for governmental activities in the 293,118,818 Statement of Net Position are different because: -Capital assets used in governmental activities (excluding the Motor Pool Fund) 6,497,867 (2,137,215)are not financial resources and therefore not reported in the funds. 419,420,035However, in the Statement of Net Position the cost of these assetsare capitalized and expensed over their estimated lives throughannual depreciation expense:Cost of capital assets $ 462,309,299.00Less accumulated depreciation (169,190,481)Interfund receivables and payables between governmental funds are reportedon the fund Balance Sheet but eliminated on thegovernment-wide Statement of Net Position:Interfund receivables $ 440,030.00Interfund payables (440,030)An internal service fund is used by management to charge the costs of the motor pool to individual funds. The assets and liabilities of the internal service fund are included in governmental activities in the Statement of Net Position.Liabilities, including compensated absences, are not due and payable in the currentperiod and therefore are not reported in the funds but are reportedin the government-wide Statement of Net Position:Compensated absences $ (2,137,215)Net Position of Governmental Activities $The accompanying notes are an integral part of these financial statements. C4

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Garfield Count Statement of Revenues, Expenditure Governmen For the Year Ended DRevenues General Road and Taxes Bridge Licenses and permits $ 40,234,261 Intergovernmental 6,535 $ 8,026,4 Charges for services 155,1 Fines and forfeitures 3,759,974 Investment income 7,775,180 4,201,4 Contributions Miscellaneous 111,236 7,4 835,560 83,5Total Revenues 1,094,477 568,705 12,474,1ExpendituresCurrent 54,385,928 General government 21,479,939 13,165,1 Public safety 20,371,587 13,165,1 Public works Health and welfare 2,998,093 Culture and recreation 431,000Total Expenditures 1,573,117Excess (Deficiency) of Revenues 46,853,736Over (Under) Expenditures 7,532,192 (691,0Other Financing Sources (Uses)Sale of capital assets -Transfers in 800,000Transfers out (3,386,064)Total Other Financing Sources (Uses) (2,586,064)Net Change in Fund Balances 4,946,128 (691,0Fund Balances Beginning of Year 40,413,507 33,153,4Fund Balances End of Year $ 45,359,635 $ 32,462,3 The accompanying notes are an integ C