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CITY DF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2QD7 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (,CONTINUED) E. Cash and Investments. (Continued) The Gity provides. temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advancing 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 assets presentation. Investments are stated at fain 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 expense or. expenditure at the time of consumption. That portion of the relevant funds' balances equal to. material prepaid. items has been. reserved. 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 December (levy/assessment date) of each year for collection in the following year. The County is responsible for billing 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 1.5 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 15 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. 0 s)