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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 includes 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 2016 fiscal year, local ad valorem property tax levies provided 39.8 percent of the total <br />governmental fund revenues for cities over 2,500 in population, and 36.4 percent for cities under 2,500 in <br />population. <br />The total market value of property in Minnesota cities increased about 5.6 percent for the 2017 levy year, <br />which followed an increase of 5.7 percent for levy year 2016. The market values used for levying <br />property taxes are based on the previous fiscal year (e.g., market values for taxes levied in 2017 were <br />based on assessed values as of January 1, 2016), so the trend of change in these market values lags <br />somewhat behind the housing market and economy in general. <br />The City's taxable market value increased 4.5 percent for 2016 and 5.6 percent for taxes payable in 2017. <br />The following graph shows the City's changes in taxable market value over the past 10 years: <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 />Taxable Market Value <br />1 <br />2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 <br />-5- <br />