2007 FINANCIAL STATEMENTS - Laserfiche WebLink

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CITY OFF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER, 31, 2007 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 bath. 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 revenue because. it is. not available to finance current expenditures. Deferred revenue in governmental 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 47.3F. 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 commerciallindustrial property valuation growth since 1971. Property taxes paid to the City through this formula for 2007 totaled $7,281. Receipt of property taxes€rom 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 by 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 revenues. Deferred revenue in governmental activities is susceptible to full accrual on. the government -wide .statements. (1:9)