Laserfiche WebLink
MEM <br />aim <br />Now <br />CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2005 <br />Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />E. LEGAL COMPLIANCE — BUDGETS (CONTINUED) <br />6. Legal debt obligation indentures determine the appropriation level and debt service tax levies for <br />the Debt Service Funds. Supplementary budgets are adopted for the Proprietary Funds to <br />determine and calculate user charges. These debt service and budget amounts represent general <br />obligation bond indenture provisions and net income for operation and capital maintenance and are <br />not reflected in the financial statements. <br />7. A capital improvement program is reviewed periodically by the City Council for the Capital <br />Project Funds. However, appropriations for major projects are not adopted until the actual bid <br />award of the improvement. The appropriations are not reflected in the financial statements. <br />8. Expenditures may not legally exceed budgeted appropriations at the total fund level. Monitoring <br />of budgets is maintained at the expenditure category level (i.e., personal services, supplies; other <br />services and charges; capital outlay) within each activity. <br />9. The City Council may authorize transfer of budgeted amounts between City funds. <br />F. CASH AND INVESTMENTS <br />Cash and investment balances from all funds are pooled and invested to the extent available in <br />investments authorized by Minnesota Statutes. Earnings from investments are allocated to individual <br />funds on the basis of the fund's equity in the cash and investment pool. <br />The City provides temporary advances to funds that have insufficient cash balances by means of an <br />advance from another fund shown as interfund receivables in the advancing fund in the governmental <br />fund financial statements, and an interfund payable in the fund with the deficit, until adequate resources <br />are received. These interfund payables are eliminated for statement of net assets presentation. <br />Investments are stated at fair value as of the balance sheet date. Interest earnings are accrued at the <br />balance sheet date. <br />For purposes of the statement of cash flows the Proprietary Fund considers all highly liquid investments <br />with a maturity of three months or less when purchased to be cash equivalents. All of the cash and <br />investments allocated to the proprietary fund types have original maturities of 90 days or less. <br />Therefore, the entire balance in such fund types is considered cash equivalents. <br />Permanently restricted cash and investments represents the principal portion of resources received that <br />must be retained in a permanent fund. Only earnings from these funds may be used for purposes that <br />support environmental maintenance and improvements. <br />G. PROPERTY TAX CREDITS <br />Property taxes on homestead property (as defined by State Statutes) are partially reduced by property <br />tax credits. These credits are paid to the City by the State in lieu of taxes levied against homestead <br />property. The State remits these credits through installments each year. These credits are recognized <br />as revenue by the City at the time of collection. <br />37 <br />