AUBURN – The city’s rainy day fund is full – and a year ahead of schedule, according to the 2007 annual report.

Auburn increased its undesignated fund balances from $5.08 million as of July 2006 to $7.89 million as of July 2007. That’s about 12 percent of the city’s budget and exactly where it needs to be, according to auditor Kathy Tyson of the South Portland accounting firm Runyon, Kersteen and Ouelette.

“That’s money for an emergency or to purchase equipment or to lower the tax rate,” she said. 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.

The undesignated fund balance represents money left over in the city budget. The city adopted a policy five years ago, agreeing to build a rainy day fund of between 8 and 12 percent of the annual budget. The city reached the 8 percent stage last year, and was expected to reach 12 percent by next year.

But reduced spending and better tax receipts caused the surplus to swell to 12 percent sooner than expected, Tyson said.

The city took in about $1.2 million more in property tax revenues than expected and spent about $700,000 less than budgeted.

The city also budgeted $2.8 million to pay for work on city streets and sidewalks, as well as $1 million to pay for technology and building repairs at Auburn schools.