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CITY OF ROSEVILLE NOTES TO FINANCIAL STATEMENTS DECEMBER 31. 1993 Note 7- Sumnarv ot Sianiticant Accountinq Policies (Continued) The goverrvnent reports deferred revenue on its canbined balance sheet. Deferred revenues arise when a potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise uhen resources are received by the government before it has a Legal ctaim to them as uhen grant monies are received prior to the incurrence of quatifyin9 expenditures. In subsequent periods uhen both revenue recognition criteria are met or uhen the goverrvnent has a tegal ctaim to the resources the liability for deferred revenue is removed from the combined balance sheet and revenue is recognized. Expenditures are generaLly reco9nized under the modified accrual basis of accounting when the related tund tia6ility is incurred except for principat and interest on general long-term debt uhich is�recognized uhen due and accun�lated unpaid vacation and compensatory time off uhich are recognized uhen paid. E. Budgets and Budgetary Accounting The City adopts an annuat budget for the General and Speciat Revenue furxis uhich are prepared on the modified accr�at �basis of accountin9. The adopted budget indicates the amount that can be expended by each fund based on detailed budget estimates for individual expenditure accounts. Management may make iwdget modifications ui4hin Yhe fund level. Ail budget revisions at the fund tevel must be authorized by the City Councit at the request of the City Manager. The Council under Minnesota State Statutes Section 472.73i can modify or amend the budget if unappropriated funds are availabte. Budget modification at the fund level was necessary in 1993. The general fund uas amended upward by the amount of 5134,105. AlL supplemental appropriations uere financed either by transfers from the Contingency Section of the General Fund budget or by revenues received in excess of the bud9eted amounts. All budget amounts lapse at the end ot the year to the extent they have not been expended. The level which expenditures may not legally exceed appropriations is at the fund level. F. Assets, Liabilities and Fund Equity Investments - City investments are carried at cost, uhich approximates market. ( See note 3 for disclosures relating to cash management and investments.) Investments reported in ihe deferred compensation plan are reported by the plan's trustees at market value. Prooertv Taxes - Property tax tevies are set by the City Council in December each year and are rertified to the County for collection the follouing year. In Minnescea, counties act as rotlection agents for all property taxes. The County spreads the levies over all taxable property in the City. Such taxes become receivables of the City as of January 1. Property taxes are payabte in equat installments by property ouners to the County as fotlous: Personal property - February 28 and June 30 Reat property - May 75 and October 15 The County remits the cotlections to the City and other taxing districts four times a year, on or before Jancary 20, April 79, JULy 5, and December 4. Property tax revenue is recorded uhen it becomes measurable and available. Taxes due from Ramsey County on December 37, 1993, are included in 1993 revenue. Unpaid taxes at December 31 become tiens on the respective property end are classified in the financiat statements as delinquent taxes receivable. The receivable is fulLy offset by deferred revenue as it is not avaitable to finance current expenditures. Taxes payable on homestead property (as detined by State statutes) ere partially reduced by a homestead and agricultural aid (HACA). This aid is paid to the City by the State in lieu of taxes levied against homestead property. The State remits this aid in to equal installments in July and December each year. Fixed Assets - General fixed assets are not cepitatized in the funds used to acquire or construct them. Instead, capital acquisition and construction are reflected as expenditures in goverrmental funds, and the related assets are reported in the generat fixed assets account group. All purchased fixed assets are valued at cost where historicat records are available and at an estimated historical cost uhere no historical records exist. Do�ated fixed assets are vatued at their estimeted fair market vatue on the date received. 33