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<br />-4- <br />GOVERNMENTAL FUNDS OVERVIEW <br /> <br />This section of the report provides you with an overview of the financial trends and activities of the City’s <br />governmental funds, which includes the General, special revenue, debt service, and capital project funds. <br />These funds are used to account for the basic services the City provides to all of its citizens, which are <br />financed primarily with property taxes. The governmental fund information in the City’s financial <br />statements focuses on budgetary compliance and the sufficiency of each governmental fund’s current <br />assets to finance its current liabilities. <br /> <br />PROPERTY TAXES <br /> <br />Minnesota cities rely heavily on local property tax levies to support their governmental fund activities. <br />For the 2017 fiscal year, local ad valorem property tax levies provided 41.1 percent of the total <br />governmental fund revenues for cities over 2,500 in population, and 37.4 percent for cities under 2,500 in <br />population. Total property taxes levied by all Minnesota cities for taxes payable in 2018 increased <br />6.2 percent from the prior year, and total certified levies payable in 2019 are projected to increase by <br />5.6 percent. <br /> <br />The total market value of property in Minnesota cities increased about 5.6 percent for the 2017 levy year <br />(state-wide market value information for the 2018 levy year was not available at the time this report was <br />issued). The market values used for levying property taxes are based on the previous fiscal year <br />(e.g., market values for taxes levied in 2018 were based on assessed values as of January 1, 2017), so the <br />trend of change in these market values lags somewhat behind the housing market and economy in general. <br /> <br />The City’s estimated market value increased by 2.5 percent for 2017 and increased 7.4 percent for taxes <br />payable in 2018. The following graph shows the City’s changes in estimated market value over the past <br />10 years: <br />$– <br /> $200,000,000 <br /> $400,000,000 <br /> $600,000,000 <br /> $800,000,000 <br /> $1,000,000,000 <br /> $1,200,000,000 <br /> $1,400,000,000 <br />2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 <br />Estimated Market Value <br />