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CITY OF GEM LAKE, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2019 <br /> <br /> <br /> <br />(17) <br /> <br />NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />H. Property Tax Revenue Recognition <br /> <br />The City Council annually adopts a tax levy and certifies it to the County in December <br />(levy/assessment date) of each year for collection in the following year. The County is <br />responsible for billing and collecting all property taxes for itself, the City, the local School <br />District and other taxing authorities. Such taxes become a lien on January 1 and are <br />recorded as receivables by the City at that date. Real property taxes are payable (by <br />property owners) on May 15 and October 15 of each calendar year. Personal property <br />taxes are payable by taxpayers on February 28 and June 30 of each year. These taxes <br />are collected by the County and remitted to the City on or before July 15 and <br />December 15 of the same year. Delinquent collections for November and December are <br />received the following January. The City has no ability to enforce payment of property <br />taxes by property owners. The County possesses this authority. <br /> <br />Within the governmental fund financial statements, the City recognizes property tax <br />revenue when it becomes both measurable and available to finance expenditures of the <br />current period. In practice, current and delinquent taxes and state credits received by the <br />City in July, December and the following January are recognized as revenue for the <br />current year. Taxes and credits not received at the year-end are classified as delinquent <br />and due from County taxes receivable. The portion of delinquent taxes not collected by <br />the City in January is fully offset by deferred inflows of resources because it is not <br />available to finance current expenditures. Deferred inflows of resources in governmental <br />activities is susceptible to full accrual on the government-wide statements. <br /> <br />The City’s property tax revenue includes payments from the Metropolitan Revenue <br />Distribution (Fiscal Disparities Formula) per Minnesota Statute 473F. This statute <br />provides a means of spreading a portion of the taxable valuation of commercial/industrial <br />real property to various taxing authorities within the defined metropolitan area. The <br />valuation “shared” is a portion of commercial/industrial property valuation growth since <br />1971. Property taxes paid to the City through this formula for 2019 totaled $7,098. <br />Receipt of property taxes from this “fiscal disparities pool” does not increase or decrease <br />total tax revenue. <br /> <br />I. Special Assessment Revenue Recognition <br /> <br />Special assessments are levied against benefited properties for the cost or a portion of <br />the cost of special assessment improvement projects in accordance with state statutes. <br />These assessments are collectible by the City over a term of years usually consistent <br />with the term of the related bond issue. Collection of annual installments (including <br />interest) is handled by the County Auditor in the same manner as property taxes. <br />Property owners are allowed to (and often do) prepay future installments without interest <br />or prepayment penalties.