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<br />-4- <br />GOVERNMENTAL FUNDS OVERVIEW <br /> <br />This section of the report provides you with an overview of the financial trends and activities of the City’s <br />governmental funds, which includes the General, special revenue, debt service, and capital projects funds. <br />These funds are used to account for the basic services the City provides to all of its citizens, which are <br />financed primarily with property taxes. The governmental fund information in the City’s financial <br />statements focuses on budgetary compliance and the sufficiency of each governmental fund’s current <br />assets to finance its current liabilities. <br /> <br />PROPERTY TAXES <br /> <br />Minnesota cities rely heavily on local property tax levies to support their governmental fund activities. <br />For the 2022 fiscal year (the most recent comparative state-wide data available), local ad valorem <br />property tax levies provided 44.1 percent of the total governmental fund revenues for cities over 2,500 in <br />population, and 35.2 percent for cities under 2,500 in population. Total property taxes levied by all <br />Minnesota cities for taxes payable in 2024 increased 7.5 percent compared to the prior year, and <br />7.7 percent for taxes payable in 2025. <br /> <br />The taxable net tax capacity value of property in Minnesota cities increased about 8.4 percent for the 2024 <br />levy year. The tax capacity values used for levying property taxes are based on the assessed market values <br />for the previous fiscal year (e.g., tax capacity values for taxes levied in 2024 were based on assessed <br />market values as of January 1, 2023), so the trend of change in these tax capacity values lags somewhat <br />behind the housing market and economy in general. <br /> <br />The City’s estimated market value increased 11.5 percent for taxes payable in 2023 and 4.1 percent for <br />taxes payable in 2024. The following graph shows the City’s changes in estimated market value over the <br />past 10 years: <br />$– <br /> $200,000,000 <br /> $400,000,000 <br /> $600,000,000 <br /> $800,000,000 <br /> $1,000,000,000 <br /> $1,200,000,000 <br /> $1,400,000,000 <br /> $1,600,000,000 <br /> $1,800,000,000 <br />2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 <br />Estimated Market Value <br /> <br />