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GOVERNMENTAL FUNDS OVERVIEW <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 include the General, special revenue, debt service, and capital project 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 /> PROPERTY TAXES <br /> Minnesota cities rely heavily on local property tax levies to support their governmental fund activities. <br /> For the 2014 fiscal year, local ad valorem property tax levies provided 39.0 percent of the total <br /> governmental fund revenues for cities over 2,500 in population, and 35.5 percent for cities under 2,500 in <br /> population. Property tax levies certified by Minnesota cities for 2015 increased about 4.0 percent over <br /> 2014, compared to an increase of 1.6 percent the prior year. A one-year levy limit imposed on cities over <br /> 2,500 in population for the 2014 levy year was lifted for the 2015 levy year. <br /> The total market value of property in Minnesota cities increased about 8.5 percent for the 2015 levy year, <br /> following a modest increase of 1.1 percent for levy year 2014 and a four-year trend of declining market <br /> values for levy years 2010 through 2013. Market values showed increases across all property categories <br /> for 2015, with gains in the market values of residential homestead properties (10.0 percent) and <br /> non-homestead residential properties (9.7 percent) outpacing the market value gain of <br /> commercial/industrial properties (2.2 percent). Because the assessed valuation used for levying property <br /> taxes is based on values from the previous fiscal year (e.g., the market value for taxes payable in 2015 is <br /> based on estimated values as of January 1, 2014), market value improvement has lagged behind recent <br /> upturns in the housing market and the economy in general. <br /> The City's taxable market value decreased 0.6 percent for taxes payable in 2014 and increased <br /> 12.8 percent for taxes payable in 2015. The following graph shows the City's changes in taxable market <br /> value over the past 10 years: <br /> Taxable Market Value <br /> $2,500,000,000 <br /> $2,000,000,000 <br /> $1,500,000,000 <br /> $1,000,000,000 <br /> $500,000,000 <br /> 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 <br /> -4- <br />