AUBURN – The city has more cash on hand for emergency situations, according to the 2006 financial report.

Auburn increased its undesignated fund balance to $5.08 million, according to the financial report – about 8.42 percent of the city’s overall budget.

That’s a bull’s-eye, according to Finance Director Chris Trenholm. Councilors have been trying to build the balance to 8.3 percent for several years. Last year’s financial report put the balance at about 4 percent of annual spending.

“It represents one-twelfth of the city’s budget,” Trenholm said. “It means we are in a healthy position in case of unplanned events. We can continue operating without having to borrow money.”

It also saves money when it comes to capital projects. Bond-rating agencies like Moody’s and Standard and Poor’s favor cities with a rainy day fund.

Both gave the city high marks in October, Trenholm said. Standard and Poor’s rated Auburn an A, and Moody’s gave the city an A3 rating. Both are two steps away from the highest rating, and they could go up.

“Moody’s gave put us on a favorable watch list, because of the direction we’ve been going,” Trenholm said.

Auditor Kathy Tyson of South Portland accounting firm Runyon, Kersteen and Ouelette presented the report and her audit to City Council on Monday. Overall, the city has increased its net assets – including tax revenues, state shared revenues and physical assets like roads and buildings – by $15.5 million compared to last year. Better than half of that included capital improvement projects.