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i <br /> ing statements present increases (e.g., revenues) and decreases (e.g., <br /> expenses) in net total assets. <br /> The accrual basis of accounting is used by proprietary and nonexpend- <br /> able trust funds. Their revenues are recognized when they are earned, <br /> and their expenses are recognized when they are incurred. The Town <br /> has elected to apply to these funds accounting principles applicable to <br /> the private sector issued through November 30, 1989, unless those prin- <br /> ciples conflict with or contradict pronouncements of the Governmental <br /> Accounting Standards Board. <br /> D. Cash and Cash Equivalents <br /> Cash balances from all funds, except those required to be segregated by <br /> law, are combined to form a consolidation of cash. Cash balances are <br /> invested to the extent available, and interest earnings are recognized in <br /> the General Fund. Certain special revenue funds and fiduciary funds <br /> segregate cash, and investment earnings become a part of those funds. <br /> Deposits with financial institutions consist primarily of demand deposits, <br /> , <br /> certificates of deposits, and savings accounts. The Town maintains a <br /> cash and investment pool that is available for use by all funds. Each <br /> fund's portion of this pool is reflected on the combined financial state- <br /> ments under the caption "cash and cash equivalents". The interest <br /> earnings attributable to each fund type is included under earnings on <br /> investments. <br /> For purpose of the statement of cash flows, the proprietary funds and <br /> nonexpendable trust funds consider investments with original maturities <br /> of three months or less to be cash equivalents. <br /> i <br /> E. Investments Held by Others <br /> This balance represents the Town's deferred compensation account bal- <br /> ance. It is held by the ITT Hartford Group and is recorded at fair market <br /> value. <br /> i <br /> F. Property Tax Limitations <br /> Legislation known as "Proposition 2 1/2" limits the amount of revenue <br /> the Town can derive from property taxes. The prior fiscal year's tax <br /> levy limit is used as a base and cannot increase by more than 2.5 per- <br /> cent (excluding new growth), unless an override or debt exemption is <br /> voted. The actual fiscal year Town tax levy reflected an excess capacity <br /> of$ 315,560. <br /> 10 <br />