Comprehensive Annual Financial Report - City of Santa Monica
Comprehensive Annual Financial Report - City of Santa Monica
Comprehensive Annual Financial Report - City of Santa Monica
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CITY OF SANTA MONICA, CALIFORNIA<br />
Notes to Basic <strong>Financial</strong> Statements, Continued<br />
For the fiscal year ended June 30, 2008<br />
Unbilled service receivables are accrued for at year-end.<br />
Property Taxes<br />
Assessed property values are determined on an annual basis for the period July 1 to June 30 by the<br />
Los Angeles County Assessor as <strong>of</strong> January 1. Article XIIIA <strong>of</strong> the State Constitution (Proposition<br />
13, approved by voters in June 1978) limits the real property tax rate to 1% <strong>of</strong> the full market cash<br />
value plus rates imposed to fund indebtedness approved by the voters. Locally assessed property is<br />
appraised at the 1975-76 full cash value, the base year value, and is adjusted each year after 1975 by<br />
the change in the consumer price index, not to exceed an increase <strong>of</strong> 2%. Property is reappraised to<br />
current full value upon either a change in ownership or new construction. If property values decline<br />
below the base year value, the value is adjusted to reflect the lower value. Taxes are levied annually<br />
on July 1 and become a lien on real property at January 1. Taxes are due November 1 and February<br />
1 and are delinquent if not paid by December 10 and April 10, respectively, at which time<br />
applicable penalties and interest are assessed.<br />
Inventories and Prepaid Items<br />
All materials and supplies inventories are valued at cost using the average cost method. Inventory<br />
in the General Fund is recorded as expenditures when consumed rather than when purchased.<br />
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded<br />
as prepaid items in both government-wide and fund financial statements.<br />
Restricted Assets<br />
Certain proceeds <strong>of</strong> the <strong>City</strong>'s bonds, as well as certain resources set aside for their repayment, are<br />
classified as restricted assets on the balance sheet because they are maintained in separate bank<br />
accounts and their use is limited by applicable bond covenants.<br />
In the absence <strong>of</strong> specific statutory provisions governing the issuance <strong>of</strong> bonds, certificates or<br />
leases, these bond monies may be invested in accordance with the ordinance, resolutions or<br />
indentures specifying the types <strong>of</strong> investments its trustees or fiscal agents may make. These<br />
ordinances, resolutions and indentures are generally more restrictive than the <strong>City</strong>'s general<br />
investment policy. In no instance have additional types <strong>of</strong> investments been authorized that are not<br />
permitted by the <strong>City</strong>'s general investment policy.<br />
Capital Assets<br />
Capital assets, which include land, buildings and improvements, equipment, and infrastructure<br />
assets (e.g., roads, sidewalks, curbs and gutters and similar items), are reported in the applicable<br />
governmental or business-type activities columns in the government-wide financial statements.<br />
Capital assets are defined by the <strong>City</strong> as assets with an initial individual cost <strong>of</strong> $15,000 or more and<br />
an estimated useful life in excess <strong>of</strong> two years. The <strong>City</strong> defines buildings, improvements other<br />
than buildings, and infrastructure as assets with an individual cost <strong>of</strong> $100,000 or more and an<br />
estimated useful life <strong>of</strong> two years or longer. Such assets are recorded at historical cost. Donated<br />
capital assets are recorded at estimated fair market value at the date <strong>of</strong> donation. The cost <strong>of</strong> normal<br />
maintenance and repairs that do not add to the value <strong>of</strong> the asset or materially extend assets lives are<br />
not capitalized.<br />
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