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<br />-30- <br />NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br /> <br />I. Property Taxes <br /> <br />Property tax levies are set by the City Council in December of each year, and are certified to Ramsey <br />County for collection in the following year. In Minnesota, counties act as collection agents for all <br />property taxes. The county spreads the levies over all taxable property. Such taxes become a lien on <br />January 1 and are recorded as receivables by the City on that date. Real property taxes may be paid by <br />taxpayers in two equal installments on May 15 and October 15. Personal property taxes are due in full on <br />May 15. The county provides tax settlements to cities and other taxing districts three times a year: in <br />July, December, and January. <br /> <br />Property taxes are recognized as revenue in the year levied in the government-wide financial statements <br />and proprietary fund financial statements. In the governmental fund financial statements, taxes are <br />recognized as revenue when received in cash or within 60 days after year-end. Taxes which remain <br />unpaid on December 31 are classified as delinquent taxes receivable, and are offset by a deferred inflow <br />of resources in the governmental fund financial statements. <br /> <br />J. Special Assessments <br /> <br />Special assessments primarily represent the financing for public improvements paid for by benefiting <br />property owners. As previously mentioned under receivables, the City is also generally able to certify <br />delinquent amounts to the county for collection as special assessments. Special assessments are recorded <br />as receivables upon certification to the county. Special assessments are recognized as revenue in the year <br />levied in the government-wide financial statements and proprietary fund financial statements. In the <br />governmental fund financial statements, special assessments are recognized as revenue when received in <br />cash or within 60 days after year-end. Governmental fund special assessments receivable which remain <br />unpaid on December 31 are offset by a deferred inflow of resources in the governmental fund financial <br />statements. <br /> <br />K. Inventories <br /> <br />The original cost of materials and supplies has been recorded as expenses/expenditures at the time of <br />purchase for both the governmental and proprietary funds with the exception of water meters in the <br />Water Fund. These funds do not maintain material amounts of materials and supplies. The water meter <br />inventory in the Water Fund is stated at the lower of cost or market on the first-in, first-out method. <br /> <br />L. Prepaid Items <br /> <br />Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as <br />prepaid items in both government-wide and fund financial statements. Prepaid items are reported using <br />the consumption method and recorded as expenses/expenditures at the time of consumption. <br /> <br />M. Capital Assets <br /> <br />Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, <br />sidewalks, and similar items) are reported in the applicable governmental or business-type activities <br />columns in the government-wide financial statements. Such assets are capitalized at historical cost, or <br />estimated historical cost for assets where actual historical cost is not available. Donated assets are <br />recorded as capital assets at their estimated acquisition value on the date of donation. The City defines <br />capital assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of <br />one year. The costs of normal maintenance and repairs that do not add to the value of the asset or <br />materially extend assets lives are not capitalized.