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CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. Property Tax Revenue Recognition (Continued) 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 1, 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 commercial/industrial. real property to various taxing authorities..within the defined metropolitan area. The valuation "shared" is a portion of commercial/industrial property. va I uation growth since 1971. Property taxes paid `to the City through this formula for 2013. totaled $5,730.. Receipt of property taxes from. this "fiscal disparities pool" does not increase or decrease total tax revenue. 1. Special Assessment Revenue Recognition Special assessments are levied against benefited properties for the cost or a portion of the cost of special. assessment improvement projects in accordance with state statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue.. Collection of annual installments (including interest) is handled 4y the County Auditor in the same manner as property taxes.. Property owners are allowed. to (and often. do) prepay future installments without interest. or prepayment penalties.. Within the fund financial statements, the revenue from special assessments is recognized by the. City when it becomes measurable and available to .finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by :the City are recognized as revenue for the current year. Special assessments are collected by the County and. remitted by December 31 (remitted to the City the. following January).and are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments receivable in governmental funding are completely offset by deferred inflows of resources. Deferred inflows of resources in governmental activities. is susceptible to full accrual on the government -wide statements. (20)