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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 assets <br />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. For <br />the 2021 fiscal year (the most recent comparative state-wide data available), local ad valorem property tax <br />levies provided 44.0 percent of the total governmental fund revenues for cities over 2,500 in population, <br />and 35.5 percent for cities under 2,500 in population. Total property taxes levied by all Minnesota cities for <br />taxes payable in 2023 increased 4.2 percent compared to the prior year, and 7.5 percent for taxes payable <br />in 2024. <br /> <br />The taxable net tax capacity value of property in Minnesota cities increased about 17.7 percent for the 2023 <br />levy year. The tax capacity values used for levying property taxes are based on the assessed market values <br />for the previous fiscal year (e.g., tax capacity values for taxes levied in 2023 were based on assessed market <br />values as of January 1, 2022), so the trend of change in these tax capacity values lags somewhat behind the <br />housing market and economy in general. <br /> <br />The City’s taxable market value increased 2.2 percent for taxes payable in 2022 and 3.7 percent for taxes <br />payable in 2023. The following graph shows the City’s changes in taxable market value over the past <br />eight years: <br /> <br />$– <br /> $20,000,000 <br /> $40,000,000 <br /> $60,000,000 <br /> $80,000,000 <br /> $100,000,000 <br /> $120,000,000 <br /> $140,000,000 <br /> $160,000,000 <br />2016 2017 2018 2019 2020 2021 2022 2023 <br />Total Market Value <br /> <br /> <br />