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CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31., 2015 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 Revenue Recognition The City Council annually adopts a tax levy and certifies it `to the County in ❑ecember (levylassessrhent date) of each year for collection in the following year. The County is responsible for billing and colleting 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 1,5`=af.: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 thle_ City on or before July 15 and December 15 of the. same year. Delinquent„collections. for November and December are received. the following January. The Cityi h:as no ability to enforce payment of property takes by property owners. The County,.possesses this authority, Within the goverrimental-fund financial statements, the City recognizes property tax. revenue when it becomes both;.mea " rable `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 eurrent.year: Taxes and crediits.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 government4ide 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 commercial/industrial real property to various taxing authorities within the defined metropolitan area. The valuation "shared" is a portion of :commercial/'industrial property valuation growth since 1971. Property taxes paid to .the City through this formula for 2015 totaled :$3,504. Receipt of property taxes from this "fiscal disparities pool". does not increase or decrease total tax revenue. (17)