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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 assets <br />to finance its current liabilities. <br />PROPERTY TAXES <br />Minnesota cities rely heavily on local property tax levies to support their governmental fund activities. For <br />the 2022 fiscal year (the most recent comparative state-wide data available), local and valorem property tax <br />levies provided 44.1 percent of the total governmental fund revenues for cities over 2,500 in population, <br />and 35.2 percent for cities under 2,500 in population. Total property taxes levied by all Minnesota cities for <br />taxes payable in 2024 increased 7.5 percent compared to the prior year, and 7.7 percent for taxes payable <br />in 2025. <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 market <br />values as of January 1, 2023), so the trend of change in these tax capacity values lags somewhat behind the <br />housing market and economy in general. <br />The City's taxable market value increased 25.1 percent for taxes payable in 2023 and increased 9.1 percent <br />for taxes payable in 2024. The following graph shows the City's changes in taxable market value over the <br />past 10 years: <br />$5,000,000,000 <br />$4,000,000,000 <br />$3,000,000,000 <br />$2,000,000,000 <br />Taxable Market Value <br />$1,000,000,000 — <br />• <br />2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 <br />-4- <br />