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City of Redwood City 6.1.D. - Page 67 <br />Notes to the Basic Financial Statements <br />For the fiscal year ended June 30, 2016 <br />NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />G. Inventories and Prepaid Items <br />Inventories are stated at moving average cost. The cost is recorded as expenditure at the time an <br />individual inventory item is consumed. As inventories must be maintained at a certain level, an amount <br />for inventories is recorded as non -spendable in the general fund balances. Consequently, these non - <br />spendable fund balance amounts are not available for appropriation. <br />General fund inventories consist of stationery. Equipment services fund inventory consists of tires, <br />batteries, testing equipment, automotive parts, and small tools. <br />Under the consumption method, certain payments to vendors reflect costs applicable to future <br />accounting periods and are recorded as prepaid items in both government -wide and fund financial <br />statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than <br />when purchased. <br />H. Property Taxes <br />Property taxes attach as an enforceable lien on property as of January 1, and are collected for a 12 month <br />period effective July 1 by the San Mateo County tax collector. Taxes are billed once a year in late October <br />and are payable in two equal installments due by December 10 and April 10 of the following year. The <br />taxes not paid by those dates are subject to a penalty of 10%. <br />In September of 1993, the County of San Mateo Board of Supervisors adopted the "Teeter Plan" for <br />secured property taxes. Under the Teeter Plan, the state law allows the county to advance to the cities all <br />property taxes billed, regardless of whether the taxes have been paid. The county then is entitled to keep <br />all penalties and interest accruing on delinquent taxes. Property taxes on unsecured taxable property are <br />not affected by this change. <br />Under Proposition 13, adopted by the voters in a statewide ballot in 1978, assessed value is increased by <br />the cost of living index, not to exceed 2% as of January 1 each year except for those properties that have <br />changed ownership during the 12 -month period since the lien date. City property tax revenues are <br />recognized when levied to the extent that they result in current receivables. <br />I. Unbilled Service Receivables <br />In the water and sewer utilities, residential customers are billed bi-monthly and all commercial and <br />industrial customers monthly. Revenue is recorded as billed to customers on a cyclical basis. No accrual <br />is made for unbilled services. There were no unbilled services in Port, parking, Docktown Marina, or <br />internal service funds as of June 30, 2016. <br />There is no accrual for unbilled water services as of June 30, 2016; revenues cannot be recognized since <br />water meters are not read at such date. Management believes that the revenue from unbilled services <br />does not have a material effect on total revenue. <br />.s <br />