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Home My WebLink About2005-068 2006 Ad Valorem Taxes ORDINANCE B ORDINANCE NO 2005 - 68 AN ORDINANCE fixing and levying the amount of ad valorem taxes necessary to balance estimated revenue with estimated expenditures for the 2006 Budget for the City of Yakima. WHEREAS, the City Council finds that the total net amount of $14,362,594 in revenue must be raised by ad valorem taxes on real and personal property within the corporate limits of the City of Yakima to balance estimated revenues and expenditures for the 2006 Budget for the City of Yakima, now therefore, BE IT ORDAINED BY THE CITY OF YAIOMA. Section 1. There is hereby fixed to be raised by general property taxes upon real and personal property within the City of Yakima the amount of $14,362594 for the following purposes: General Government Levy Operating Funds $12,563,699 Firemans' Relief & Pension Fund 1,498,895 Amount of tax levy for General Government Purposes (1) $14,062594 Special Purpose Tax Levy 300,000 Total Levy Amount (1) $14,362,594 (1) Includes an additional $100,000 to provide for final adjustments in State assessed, new construction and annexation values. Section 2. The City Clerk is directed to transmit and file a certified copy of this ordinance with the Board of Yakima County Commissioners and the Yakima County Assessor on or before November 30, 2005. Section 3 Pursuant to Article VI, Section 2 of the Yakima City Charter, this ordinance shall take effect on November 15, 2005. PASSED BY THE QTY COUNCIL, signed and approved this 15th day of November, 2005 67 4, ATTEST Paul P George, Mayor City Clerk Publication Date: 11 -18 -2005 Effective Date: 12 -18 -2005 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. �O For Meeting Of 11/15/05 ITEM TITLE: - Public Hearing on Revenue Sources and Consideration of Legislation pertaining to Ad Valorem Taxes to be levied for collection in Fiscal 2006 Year SUBMITTED BY Dick Zais, City Manager "Q Rita M. Anson, Finance Direr o Cindy Epperson, Financial Services Manager C . CONTACT PERSON/TELEPHONE: Dick Zais / 575 - 6040 Rita M. Anson / 575 -6070 Ray Paolella / 575 -6030 Cindy Epperson / 575 -6070 SUMMARY EXPLANATION: Background Current law, based on Initiative 747, requires several administrative and legal steps to establish the property tax levy Your package includes two (2) separate ordinances. Ordinance A and B are management's recommendation for the property tax levy for collection in 2006. Exhibit I details these calculations. Ordinance purposes are: Ordinance A identifies Council's intent to authorize an increase in the tax levy over 2005 levels. This ordinance requires a simple majority to pass. It is required by RCW 84.55.120. This is Ieoally necessary to increase the 2006 to collections by any amount over 2005 levels. CONTINUED Resolution Ordinances A. B Other (Specify) Exhibit 1. Attachments 1-5 Funding Source (� APPROVED FOR SUBMITTAL \�� J • City Manager STAFF RECOMMENDATION. City Management is recommending a 1% increase in the property tax levy for collection in the year 2006; and that ordinances °Afl and "B' be enacted by the City Council. BOARD /COMMISSION RECOMMENDATION. COUNCIL ACTION: Ordinance passed. ORDINANCE NO. 2005-67 Ordinance passed. ORDINANCE NO. 2005-68 Ordinance ® fixes the tax levy for collection by the City in 2006. It is virtually the same as in previous years' ordinances. This ordinance includes not only the regular tax but also special levy taxes for bond repayments. This ordinance complies with RCW 35 33 135 and !e uires a simple maiority vote to pass. General Government Revenue Discussion In reviewing General Govemment revenue, there are 4 revenues that each make up roughly one- fourth of the total —i.e. there are four "legs" that support General Govemment operations. Sales Tax (including the new 0.3% Criminal Justice Sales Tax) represents about 28% of the total; Property Tax as proposed is about 25%, Utility Taxes as presented in the Preliminary Budget represents dose to 20 %, and all other revenue comprise the remaining 27%. (See Attachment 1 for a summary of total General Govemment revenues.) Over the past several years, Sales Tax, the City's largest single revenue source has declined in constant dollars (Le. in comparison to inflation rates) even after growth by annexation has been considered. Property tax, as constrained by Initiative 747, is only demonstrating growth as a result of the major annexations. (New construction has been running between one and two percent annually, therefore the total levy has grown between two and three percent —below the rate of inflation.) Utility tax revenue has been the only major revenue source that has shown steady growth in relation to the CPI, with much of this attributable to the annexation areas. Property Tax Discussion The total 2006 City of Yakima recommended property tax levy includes the 101% levy. levies for voted bond issues, and amounts for annexations and new construction. The budget currently includes an estimated revenue of $13,835,224 for the regular levy, an increase of $335,103 over the 2005 year -end estimate of $13,500,121 The increase includes the 1% adjustment and an estimate for new construction. (See Attachment 1 for distribution of the estimated levy.) The voted levy debt is budgeted to be $300,000, the same as the 2005 budget, based on scheduled debt service for the 1995 voted Fire bond issue. The total operating tax rate for next year is estimated to be $3.32 per $1,000, down from the 2005 rate of $3.44. (The statutory limit is $3.60) – the bond rate is estimated to be $0.071 per $1,000, down from $0.076 in 2005. The passage of Initiative 747 on November 6, 2001 established a new maximum tax levy of 101% in future years. Any increase up to this maximum can be approved by Council —any levy above 101% would need a vote of the people to enact The 1% adjustment will generate approximately $136,600 in additional property tax resources for 2006. The 2006 budget was prepared and balanced assuming the tax levy was estimated at 101%. In comparison to other economic indices, the 1% increase is less than: • The November 2005 Construction Cost Index – 4.3% • The June Seattle Consumer Price Index (CPI) (All Urban Consumers)– 2.3% • The July Implicit Price Deflator stipulated in Ref 47 and !nit 747- 2.54% • The 2005 increase in assessed valuation over 2004- 4.6% We believe this modest increase is justified by the following conditions: (1) The Yakima economy continues to be distressed which has resulted in marginal growth of the City's other critical revenues. General Govemment revenue is estimated to increase by 3.4% overall. However, if the new Criminal Justice Sales Tax is removed from the calculation, the percentage increase is 2.1%. (This new tax is dedicated to be used for new programs, and is not available to be used for general inflationary costs.) Major revenues are not growing as quickly as the economic indices mentioned above. (See Attachment 1)