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CITY OF ROSEVILLE. MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) . DECEMBER 31, 1986 Note 1- Summacv of Si4nificant Accountin4 Policies (ContSnued) In Mlnnesota, counties act as coilection agents for all property taxes. The County spceads the levles over all taxable property in the City. Such taxes become receivables of the City as of January 1. Property taxes are payable in equal insGallments by property owners to the County as follows: Personal property - February 28 and June 30 Real property - May 15 and October 15 The County remits the collections to the City and other taxing districts four times a year, on or before January 20, April 19, July 5, and December 4. Property tax revenue Ss recorded when it becomes measurabie and availabie. Taxes due from ftamsey County on December 31, 1966, are included in 1986 revenue, Unpaid taxes at December 31 become liens on Che respective property and are classlfied in the financial statements as delinquent taxes receivable. The receivable is fully offset by deferred revenue as it is not available to� finance current expenditures. CiGies in Minnesota operate under a levy limitation law.which allows an Sncrease Sn Lhe tax levy each year equal to the Implicit Price DeElator increase or 5X, whichever is greater, further indexed by the percentage increase in households or populatlon, whlchever is greater. Levies for bonded indebtedness are not limited by the law. Taxes payable on homestead property (as defined by State statutes) are partially reduced by a homestead credit. This credlt is paid to the City by the State in lieu of taxes levied against homestead property. The State remits this credit in two equal Snstallments 1n July and December each year. Special Assessments - Special assessments are levled against the benefited properties for the assessable costs of special assessment improvement projects 1n accordance with State statutes. The City usually adopts the assessment rolls when the individual projects are compiete or substantially complete. The assessments are collectible over a term of years generally�consistent with the term of years of the related bond issue. Collection of annUal Snstallme�ts (lncluding Snterest) is handled by the County in the same manner as property taxes, Property owners are allowed to prepay total future installments without Snterest or prepayment penalties. Speclal assessment revenues are recognized when they become both measurable and available. In practice, special assessment principal and interest is recognized as revenue in the year when assessments are collected. Princlpal amounts of special assessments not yet due for collectlon are shown as�deferred special assessments on the balance sheet, Inventories - Inventories held by the Enterprise funds are stated at the lower of cost or market, using the first-in, first-out method.� The cost of inventory is recognized as expense at the time the Stems are sold or used. (r.onsumptlon method). Encumbrances - Encumbrances represent purchase commitments. Encumbrances outstanding at year-end are reported as reservations of fund balances since they do not constitute expenditures or liabilities. Vacation, Sick and Compensatory Time Off Pay - The City compensates employees upon termination for unused vacatSon and compensatory time off. Employees are not compensated for unused sSck pay upon termination of employment, except upon .cetSrement, at whSch time employees are entitled to one-half of their accumulated leave up to one month's pay. Vacation and compensatory Lime off are accrued when earned and sick pay is expensed when paymeni Ss made in the propcietary funds. Vacatlon, compensatory tim= o£f, and sick pay are recognized when payment is made in the governmental funds. Liability for the governmental fUnds Ss reflected in the General Long-Term Debt Accoant Group. Total Columns on Combined Statements - Total columns on the combined statements are captloned "Memorandum Only" to Sndicate they are presented only to facilitate -31-