Notes to Financial Statements

of the financial statements also requires management to make a number of estimates and assumptions related to the reported amounts of revenues and expenditures during the period. Actual results could differ from those estimates.

Budgetary Information

Budgets and Budgetary Accounting

Budgets have been adopted by City Council for all City funds. Capital projects costs are budgeted in the year they are anticipated to be obligated. In subsequent years, the unused budget is reappropriated until the project is completed. Proprietary funds are budgeted on a basis consistent with GAAP, except capital and debt related transactions are based upon cash receipts and disbursements. The annual budgets serve as the legal authorization for expenditures. Expenditures cannot legally exceed the total amount budgeted for each fund. The City Council must approve all interim budget changes, which change the legally adopted total appropriation for a fund. Authority to transfer budget is delegated to the Budget Manager. If during the fiscal year, additional revenues become available for appropriation in excess of those estimated in the budget, City Council may make a motion via the interim budget change process to increase spending authority up to the amount of the excess. Appropriations lapse at fiscal year end.

Assets, Liabilities, Deferred Inflow/Outflow of Resources, and Net Position or Equity

Cash, Cash Equivalents and Investments

The City considers cash to represent demand deposits and cash on hand. Some of the cash resources of the individual funds are combined to form a pool of cash for cash management purposes except those whose cash and investments must be segregated due to legal or other restrictions. In addition, the City considers short-term, highly liquid investments, such as the Idaho Local Government Investment Pool (LGIP), that are both readily convertible to cash and so near their maturity that any changes in interest rates would cause only immaterial risk of change in value, as cash equivalents. The LGIP is invested in accordance with Section 67-1210 and Section 67-1210A Idaho Code. The State Treasurer is a custodian of the LGIP and no other regulatory oversight for the pool is established. The City’s monies placed with the LGIP for participation in the State’s investment pool represent an interest in the pool rather than ownership of specific securities and are recorded at fair value.

Interest earned on pooled cash is allocated to the various funds based on the average daily balance of pooled cash of each fund. The City reports all investments at fair value except for money market investments with a remaining life to maturity at time of purchase of less than one year which is recorded at amortized cost. For purposes of the Statements of Cash Flows, the City considers cash and equity in pooled cash and investments (unrestricted and restricted) to be considered cash and cash equivalents. Restricted cash equivalents are defined differently than unrestricted cash equivalents because they are restricted by an outside source.

The City has entered into a custodial agreement with a financial institution for the purpose of providing safekeeping and custody of certain investments owned by the City. Idaho Code provides authorization for the investment of funds as well as specific guidelines as to what constitutes an allowable investment. The City’s policy is consistent with these guidelines.

Accounts Receivable

Idaho Code provides taxing entities the ability to levy property taxes for the current or ensuing year. The City levies property taxes, as most entities do, for the ensuing year. This results in the tax collections being received in the fiscal year they are budgeted for and used to pay expenditures of that period.

In proprietary funds, accounts receivable are shown net of an allowance for uncollectible amounts which generally is equivalent to the receivables that are 16% of the receivable balance in the Water Renewal and Solid Waste funds.

Lease Receivable

A lease is defined as a contractual agreement that conveys control of the right to use another entity’s

Notes to Financial Statements

nonfinancial asset, for a minimum contractual period of greater than one year, in an exchange or exchangelike transaction. The City is the lessor on a significant amount of nonfinancial assets such as land, building and equipment. The related lease receivables are presented in the amounts equal to the present value of lease receipts, during the remaining lease terms. As a lessor, a lease receivable and the associated leases deferred inflow of resources is recognized on the government-wide Statement of Net Position.

Interfund Receivables/Interfund Payables

During the fiscal year, the City has activity between funds for various purposes. Any outstanding balances between funds at year end are reported as interfund receivables or interfund payables. Any residual balances outstanding between the governmental activities and business-type activities are reported in the governmentwide financial statements as interfund balances.

Inventory

Inventories that consist of materials and supplies are stated at cost by using the first-in, first-out method. The cost of inventory items is recognized as expenditures in governmental fund financial statements and as expenses in government-wide and proprietary fund financial statements when used (consumption method). Inventories reported within the governmental funds are classified as non-spendable fund balance.

Property Held for Resale

Property held for resale consists of real-estate holdings which the City intends to sell.

Prepaid Items

Some payments to vendors represent costs applicable to future accounting periods and are recorded as prepaid items in the financial statements. Governmental funds account for prepaid items based on the purchases method and proprietary funds account for these items using the consumption method.

Restricted Assets

Cash and cash equivalents held to meet bond reserve and debt service requirements for the debt service and enterprise funds, deferred compensation amounts held for the benefit of employees, and cash from Passenger Facility Charges are classified as restricted assets since applicable bond indenture provisions, trust agreements, and federal regulations limit their use.

Capital Assets

Capital assets include artwork, property, buildings, major equipment, vehicles, intangible assets, and service lines (infrastructure assets). Service lines are defined as public domain capital assets such as sewer lines, runways, and similar assets that are immovable and of value only to the City. Capital assets are reported in the applicable governmental or business-type activities columns in the government-wide financial statements, as well as the proprietary fund financial statements. The City’s capitalization threshold for capitalizing property, plant, and equipment is an individual cost of $10 ($5 for assets purchased with federal grant funds) and an estimated useful life of at least three years. Capital assets are recorded at historical cost. Donated capital assets are valued at their acquisition value. When an asset is disposed of, cost and related accumulated depreciation is removed. Any gain or loss arising from the disposal is credited or charged back to operations.

Financial Section