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CITY OF GEM LAKE, MINNESOTA NOTES: TO BASIC FINANCIAL STATEMENTS DECEMBER 31., 2016 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) G. Property Tax Credits Property taxes on homestead: property (as defined by state statutes) are partially reduced by property tax credits. These credits are paid to the City by the state. in lieu of taxes levied against homestead property. The state remits these credits through installments.each .year. These credits are recognized as revenue by the City at the time of collection. H. Property Tax Reveriue Recognition The City Council annually adopts a tax levy and certifies it to the County in December (levylassessment date)of each year for collection in the following year. The County is responsible for Billing and collecting all. property taxes for itself, the City, the local. School District and other taxing authorities. Such taxes become. a lien on January 1 and are recorded as receivables by the City at that date, Real property taxes are payable (by property owners) on May 15 and October 15 of each calendar year. Personal property taxes are payable by taxpayers on February 28 and June 30 of each year. These. taxes :are collected by the County and remitted to the City on or before July 15 and December 15 of the same year. Del.inguent collections for November and December are received the following January. The City has: no agility to enforce payment of property taxes by property.owners. The County possesses this authority. Within the governmental fund financial statements, the City recognizes property tax revenue. when it becomes both measurable and available to finance expenditures of the current period. In practice, current and delinquent taxes and State credits received :by the City in July, December and the following January are recognized .as revenue for the current year. Taxes and credits not received at the year-end are classified as delinquent and due from County taxes receivable. The portion of delinquent taxes not collected by the City in January is fully offset by deferred inflows of resources because it is not available to finance current expenditures. Deferred inflows of resources in governmental activities is susceptible to full accrual on the government -wide statements. The City's property tax revenue includes payments from the Metropolitan Revenue Distribution (Fiscal Disparities Formula) per Minnesota Statute 473F. This statute .provides a means of spreading a portion of the taxable valuation of commerciallindustrial real property to various taxing authorities within the defined metropolitan area. The valuation "shared" is a portion of commerciallindustrial property valuation growth since 1971. Property taxes paid to the City through this formula for 2016 totaled $5,10D. Receipt of property taxes from this "fiscal disparities pool"°does not increase or decrease total. tax revenue: (17)