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CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED.). E. Cash and Investments (Continued). The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advar:cing. fund in the governmental fund financial statements, and an interfund payable in, the fund with the deficit, until adequate resources are received. These interfund payables are eliminated for statement of net position presentation. Investments are stated at. fair value as of the balance sheet date. Interest earnings are . accrued at the balance sheet date. For purposes of the statement of cash flows. the. Proprietary Fund considers all highly liquid investments with a maturity of three.months or less when purchased to be cash equivalents.. All of the cash and investments allocated to the proprietary fund types have original maturities of 90 days or less. Therefore, the entire balance in such fund types is considered cash equivalents. F. Prepaid Expenses Certain. payments to vendors. reflect costs :applicable to future. accounting periods and are recorded as 'prepayments. Prepaid items are reported. using the consumption method and recorded as an expensb or expenditure at the time of consumption. That .portion of the relevant funds' Balances 'equal to material prepaid items has been 5egregated. as nonspendabie. G. Property Tax Credits Property taxes . o:n 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. Thes® credits are. recognized as revenue by the City at the time of collection. H. Property Tax Revenue: 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 h.illing 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 1.5 of the same year. Delinquent collections for November and December are received the following January. The City has. no ability to enforce payment of property .taxes by property owners. The County possesses. this authority.