09-11-1989 - Agenda Packet City Council - regular meeting

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Mote I CITY OF ORONO NOTES To FINANCIAL STATEMENTS (Continued) December 11, 1988 SUWARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Major revenue that is susceptible to accrual includes property taxes, special assessments, intergovernmental reveeue, charl;ps for services, and interest earned on Investments. Major revenue that Is not susceptible to accrual includes license% and permits, tees, and miscellaneous revenue. Such revenue is recorded only when received because it is not measurable until collected. Expenditures are recognized under the WJi fled accrual htsls of accounting when the related fund liability Is Incurred, except for principal •n� interest on general long-term debt which is recognized when due. 2) Accrual - The Proprietary Funds are accounted for using the "capital maintenance" measurement focus and the accrual basis of accounting. Their revenue is recognized when it is earned and expenses are recognized when they are incurred. Budgets Budgets are adopted on a bass- consistent with generally arcepted accounting principles. Annual appropriated budgets are adopted for the General and Special Revenue Funds. All annual appropriation., lapse at year-end; however, the City Council may approve carryover of specific amounts. The City does not use encumbrance accounting. .. Cash and Investments Cash balances trom all funds are combined au•. invested to the extent available in short-term investments. investments are stated at the lower of aggregate cost or market value. Earnings Can Investments are allocated to the individual funds based upon the average of m,•^t1,1y beginning Cash and Investment balance,. Assets of the deterred 0M- penesti3n plans are reported in an Agency Fund at market value. G. Property Taxes Property tax levies are met by the City Council in October :,f each year, and are certified to Hennepin County for ry 11- tinn in the following year. In Minnesota, counties act as roll.•rtion agents 1 CITY Note 1. SIAIIAgT OF SICNI►ICANT ACCOUNTINC POLICIES (continued) The County spreads all levies over taxable property. Such taxes become A lien on January I and are recorded as receivables by the City on that date. Revenue is accrual sod recognised in the year collect- ible. Taxes which remain unpaid at December 31 are classified as delinquent taxes receivable. Revenue from property taxes which is not collected within 60 days of year-end Is deferred since it to not available to Beet obligations of the current year. Real property telex may be paid by taxpayers in two equal installments May IS and October 15. 0. Fe Personal property taxes may be paid cn February 28 and June 70. The County provides tax settlements to cities and other taxing districts four times a year, in February, April, June, and November. Cities in Minnesota operate under a levy limltstion law which allows for an increase In the tam levy each year equal to the Implicit Price Deflator Increase or 7S, whichever Is greater, further Indexed by the I.ercentage llcrease in households or populatlor, whichever is greater. Levies for bonded Indebtedness are not limited by this tau. I,. Special Assessstnts Special assessments represent the financing for Public Improvements paid for by benefltting property owners. These assessments are recorded as receivables upon certification to the County. The corresponding revenue from the delinquent (unremitted) and deferred (certified but not yet levied) special assAsamen.a receivable is deterred smell the rear In which it becomes available (collected within 60 days of year-end). I. Inventories Inventories are stated at the lower of cost or market on the first -in. first -out basis. Property, Plant and Equipment Flied asset, rce stated at coat, estimated historical cost, or In the case o[ cuntrlbuttons, at fair market value at the time received. Infrastruc ore fixed Assets -- roads, bridges, curbs and gutters, streete and siuewslks, drainage systems. assets lighting system,, and •!collar -- are not Included in the Clty's accounting records. 1) Ceneral Fixed Assets Account Group - General fixed assets are not depreciated. The costs of property, plant, and equipment are accounted fax as current esisendit-mts of the Governmental fund Types In the year purchased.