HomeMy WebLinkAbout2005-067 2006 Annual Property Tax Levy ORDINANCE A
ORDINANCE NO 2005 67
AN ORDINANCE relating to the annual property tax levy; authorizing an increase in the
City's regular levy from the amount levied the previous year
WHEREAS, RCW 84.55 120 requires a taxing district that collects regular levies to hold
a public hearing on revenue sources for the district's following year's current expense budget,
including consideration of possible increases m property tax revenues; and
WHEREAS, pursuant to RCW 84.55 120 and the City Charter, on November 15, 2005,
upon due and proper legal notice, the Yakima City Council held a public hearing to consider
the City's general government revenue sources for the 2006 current expense budget, and the
total proposed property tax levy amount pertaining to 2006 revenues from real and personal
property taxes; and
WHEREAS, Section 209 of Referendum Bill 47 (RCW 84.55 120) provides that no
increase in property tax revenue, other than that resulting from the addition of new
construction and improvements to property in any increase in the value of state - assessed
property, may be authorized by a taxing district, except by adoption of a separate ordinance or
resolution, pursuant to notice, specifically authorizing the increase in terms of both dollars and
percentage; and
WHEREAS, the City Council, after the public hearing on November 15, 2005, and after
duly considering all relevant evidence and testimony presented, has determined that the City
requires an increase in property tax revenue from the previous year, in addition to the increase
resulting from the addition of new construction and improvements to property and any
increase in the value of state - assessed property, in order to discharge the expected expenses
and obligations of the City, and as being necessary and in the best interests of the citizens of
the City of Yakima, and
WHEREAS, the amount of property tax levied for collection in 2005 was $13,660,632 for
general government purposes; and
WHEREAS, the discretionary increase in property tax levied for collection in 2006 shall
be in the amount of $136,606, which is a percentage increase of one percent (1 %) from the
previous year; and
WHEREAS, the non - discretionary increases in property tax levied for collection in 2006
can only be estimated due to the absence of final values to be provided by the Yakima County
Assessor, now, therefore,
c{e /property - tax -ord 2006 1 % -ce 11/15/2005
ORDINANCE A
BE IT ORDAINED BY THE CITY OF YAKIMA.
Section 1. The following increases in the regular property tax levy, over the amount
of the previous year's levy, are hereby authorized to be cumulatively levied for collection in
2006
A. A discretionary increase of $136,606, which is a percentage increase of
one percent (1 %) over the amount levied for collection in 2005; plus
B An estimated increase of $740 for recent annexations; plus
C. An estimated increase of $164,615 for new construction and
improvements to property; plus
D An increase authorized by state law for state - assessed property 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 CITY COUNCIL, signed and approved this 15th day of November,
2005 '
(J V ..r
ATTEST Paul P George, May. r
City Clerk
Publication Date: 11 - 18 - 2005
Effective Date: 12 - 18 - 2005
cje /property- tax -ord 2006 1 %-ce 11/15/2005
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.
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
Rita M. Anson, Finance Dire
Cindy Epperson, Financial Services Manager ('.
CONTACT PERSON/TELEPHONE: Dick Zais / 575 -6040
Rita M. Anson / 575 -6070
Ray Paoiella / 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
managements 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 legally
necessary to increase the 2006 tax collections by any amount over 2005 levels.
CONTINUED
Resolution Ordinances A, 8 Other (Specify) Exhibit I , Attachments 1 -5
Funding Source (�
APPROVED FOR SUBMITTAL •
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 "A° and °B° be enacted by the
City Council.
BOARD /COMMISSION RECOMMENDATION.
COUNCIL ACTION. Ordinance passed. ORDINANCE NO. 2005
Ordinance passed. ORDINANCE NO. 2005-68
Ordinance B 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 requires a simple majority vote
to pass.
General Government Qevenue Discussion
In reviewing General Government revenue, there are 4 revenues that each make up roughly one -
fourth of the total —i.e. there are four " Iegsm that support General Government 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 (i.e. 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 Init. 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)
(2) In response to these economic conditions, the City has exercised responsible budgetary
restraint City management has taken necessary cost reduction measures to maintain
essential services, evidenced by an increase in the 2006 General Govemment Budget of only
2.0% more than the 2005 amended budget —less than the rate of inflation (if the new Criminal
Justice programs are not considered.) Therefore, increased mandated, contractual and
inflationary costs have been partially offset by other budget reductions.
(3) The property tax is needed to help meet mandates and contractual obligations, principally
Public Safety pensions/medical costs and the Regional Library's services_ Attachment 2
demonstrates the amount of property taxes dedicated to these areas. -
(4) In the Street budget, property tax represents nearly 66% of all revenue in this budget. (See
Attachment 3) Investing in maintaining and repaving the City streets has been a high Council
priority for several years.
(5) Property tax is also a key revenue source for the Parks and Recreation Division, representing
nearly 50% of all Parks revenue. Parks maintenance is supported entirely by property tax,
while other programs such as the Senior Center and Aquatics are supported in part by the
property tax. The cost to maintain and operate these facilities increases annually (Also see
Attachment 3)
(6) Again this year, the City is not expected to collect the full levy because of higher senior citizen
exemptions, delinquent taxes and other uncollectible accounts. For the year 2006, the City is
budgeting conservatively and estimating a reduction of up to 3% in actual collections from the
authorized levy offset by a portion of delinquent taxes that are predicted to be collected.
(7) Yakima's per capita property tax ranks $61 below the average of comparable Washington
cities with populations of 25,000 to 85,000 in 2003, the most recent year this information has
been compiled. Yakima ranks 9th out of 12 cities in this group Further, for these same cities,
Yakima's total per capita revenue collected from all taxes, fees and charges is $608 dollars
Tess than the average and ranks 12th out of the 12 cities. Our residents are currently taxed
substantially Tess than other similar size cities. (See Attachments 2 & 4)
(8) The 2006 operating levy results in a lower rate per thousand compared to the 2005 levy –
$3.4395 for 2005 and $3.3235 for 2006 Exhibit I also contains an estimated calculation of the
rate per thousand.
(9) Finally, the City's current property tax levy represents only 27% (approximately 1/4) of the total
property taxes paid by City residents. The State, local School District levies and County
govemment receive approximately 3/4 of all property taxes paid. (See Attachment 5)
Accordingly, based upon the above, we believe increasing the property tax to 101 % next year is
needed and respectfully request your serious consideration of this proposal.
Exhibit #1
City of Yakima
101% PROPERTY TAX LIMITATION CALCULATION
2005 Tax 2006
Assessed Rate Levy
Values Applied Dollars
Prior Year (2005) $3,971,667.847 $3 4395 $13,660,632
1% Increase $136,606
Base 101% $13,797,238
Valuation Increase $181,258.790 N/A $0
New Construction $47,860.288 $3 4395 $164,615
State Assessed Value $3.4395 $0
101% Tax Limit
Before Annexations $4,201,009 725 $3.3235 $13,961,854
Add for Annexation $222.800 $3.3235 $740
101% Limit for
Subsequent Years $4,201,232.525 $3.3233 $13,962,594
Phis Contingency $100,000
Total- ordinance $14,062,594
State of Washington Constitutional Limit
Assessed Valuation $4,201,232.525 $3.6000 $15,124,437
Levy Margin $1,161,843
2005 Levy for Collection in 2006 $13,962,594
Attachment #1
General Government Revenue
(Based on 2006 Budget of $50.2 Million)
28.3' 19.3' 6.2' 3.8'
Sales Tax Franchise & Iatergovemment & Other
Utility Tax State Shared Revenue Revenue
($14.2 Million) ($9 7 Million) ($3.1 Million) (1.9 Million)
1 �.
iil �. xia�si to ;,.
_...
. J - ' T le,t�tf.TMKF'flr1o4@: M11t<ii �{QaOOSQmIlGTM6liiY JDl1/Qf
? r _
A221 23565
)NI
i 235 &5A _
1<s 3f
_.
24.6 11.1' 6.7'
Property Tax Licenses, Permits Fines &
($12.3 Million) & Charges Other Taxes
for Services ($3.4 Million)
($5.6 Million)
I 1 1 1 1
0% 25% 50% 75% 100%
General Government Three Year Comparison
2006 vs. 2005
2004 2005 Percent 2006 % of Increase Percent
Source Actual Estimate Change Budget 2006 Total (Decrease) Change
General Sales Tax 811,447,827 811,92 ,000 4.12% 812,160,000 24.23% 8240,000 201%
Crim. Justice Sales Tax' 691,182 1,383,000 100.09% 2,048,000 408% $665,000 48.08%
Property Tax 11,900,238 12,094,342 1.63% 12,336,329 24.58% 241,987 2.00%
Franchise & Uti . Taxes 9,164,149 9,374,962 230% 9,672,400 19.27% 297,438 3.17%
Charges for Services 5,104,562 5,132,952 0.56% 4,990,989 9.94% (141,963) -277%
State Shared Revenue 2,275,327 2,433,175 6.94% 2,399,879 478% (33,296) -1.37%
Fines and Forfeitures 1,363,565 1,233,100 -9.57% 1,295,200 2.58% 62400 5.04%
Other Taxes 1,540,680 1,759,088 1418% 2,087,200 416% 328,112 18.65%
Other Revenue 875,401 1,022,711 16.83% 854,320 L70% (168,391) 46.47%
Transfers from other Funds 1,055,695 1,012,000 -414% 1,061,000 211% 49,000 484%
Other Intergovernmental 491 ,268 573,636 16.77% 693,580 1.38% 119,944 20.91%
Licenses and Permits 529,767 605,700 14.33% 592,000 1.18% (13,700) -226%
Total Revenue 546,439,661 548,544,666 4.53% 850,190,897 1 100.00% 81,646,231 3.39%
Beginning Fund Balance 7,581,188 6,796,302 40.35% 5,688,985 ($1,107,317) 46.29%
Total Resources 554,0 555,340,968 244% 855,879,882. 5538,914 0.97%
" Suuie Criminal Justice Sales Tax is allocated to the La and Justice capital Fund (a non-general
Government Fund) for capital needs. ( See section N lb. for details.)
Attachment #2
Property taxes provide for 25% of all General Government revenue in 2006, which excludes the Firemen's
Rehef and Pension costs. The graph below depicts the allocation of the City's property tax revenues
PROPERTY TAX ALLOCATION BY FUNCTION
2006 GENERAL LEVY
Property Tax Total — S13,835,224
Fire and Police
General Fund Pensions
$4,552,937 y� > � $2,811,851
32.9% "Vt4g1Z,Y4
�u 20.3%
-ur. ;
- t - -
y Library
J
$1,314,107 (1)
— = = 9.5%
Streets = = —
$3,314,344 �:.._
24 0% _ Parks
$1,841,985
13.3%
(1) Reflects 7% decrease from 2005
Attachment #2
(Page 2)
2006 PROPOSED
GENERAL PROPERTY TAX LEVY
2005 2006 2005
2004 YEAR -END BUDGET VS.
ACTUAL ESTIMATE PR ONC" 2006
General $5,558,502 $5,588,893 85,865,893 5 0%
Library 1,414,107 1,414,107 1,314,107 (7 1%)
Parks & Recreation 1,741,985 1,841,985 1,841,985 0 0%
Streets/Traffic 3,185,249 3,249,357 3,314,344 2.0%
Sub - Total — General Government 11,899,843 12,094,342 12,336,329 2.0%
Firemen's Relief and Pension 1,378,215 1,405,779 1,498,895 6.6%
Total 813,278,058 813,500,121 813,835,224 2.5%
The City has compiled data from the State Auditor's Office that identifies per capita property tax for comparable
cities throughout the State. The following chart (Figure III - 5) compares the City's per capita property tax
income for 2003 (the last year information is available) It shows the City of Yalama.'s property tax per capita is
$150, which is $61 less than the average of all the comparable cities. Yakima ranks fourth lowest in tax per
capita of the 12 comparable cities (see chart below)
Comparable Cities between 25,000 and 85,000 in population
2003 PER CAPITA PROPERTY TAXES
'. $400 -
$357
.° Yaldma's per capita property tax is $150, which is
$350 -
eu
$61 LESS than the average per capita city property
o
$300 - tax of $211.
5273 $ 278 $286
c 5245
o $250 - $215
n Yakima $150 5203
g $200 - 1 $175
v 5135
m $150 -
$108 5111
,
y
o $100 m 6 m
2. E $50 W c . g
to ,. i v T B
$0 -
Data compiled from the State Auditor's Local Government Comparative Statistics
Attachment #3
Property Tax as a Percentage of Total Fund Revenue
2005 Budget
Property Tax as a Percentage of
Total Fund Revenue
Year 2006 Budget
loo °io
/
90% d -'
, 4 - ze9 *:::::::: ,,,I,,,2#4.,
80 % k.
, :".,,,,,,,:q -,.. ,,,,, z., -
70%
0 4 . 0414
60%
50 /0 :rci
12
o;.;
40 /o :
7
o y 66%
3O% v - ,
° - 479'0 :: - ■
20% X,
10%
, Si ,
0% {
General Fund Parks Streets Fire Pension
® % Property Tax El % Other Revenue
Attachment #4
The largest revenue source for the General Government Funds is sales tax. Yakima is m the lowest third of per
capita sales tax compared with similar cities in the State. (Refer to Figure III -3) However, Yakima is also in
the lower 1/3 of rankings in all other revenue comparisons per capita and is the lowest out of the twelve cities
compared in combmed per capita revenue. Yalama's $990 per capita taxes is $608 below the average of $1,598
based on 2003 actual data, as demonstrated in Figure 8, below The most unportant conclusion from this
analysis is that the City of Yakima has a very limited revenue /tax base compared with most cities of its size in the
state, and yet provides similar or enhanced services and programs to its citizens.
Comparable Cities between 25,000 and 85,000 in population
2003 PER CAPITA TOTAL REVENUES
(This includes stale and federal grants, taxes and charges for services, and excludes debt proceeds.)
j 52,500 - $2,369
.a Yakima's per capita total revenue is $990, which is
1 $608 LESS than the average city per capita revenue $1,953 $2.018 $2,032
$2,000 of $1,598. $1,789
.
4 $1,625
S $1,497
j 51,500 _Yakima $990 $1,292 $1,376
1 $1,145
2 ,i $1,037
z $1,000 -
L:d al
a $500 a c
m 13
F do w c o
4
Data compiled from the State Auditor's Local Government Comparative Statistics
Attachment #5
PROPERTY TAXES — The total property taxes paid by property owners within the City of Yakima
includes taxes levied by several governmental entities; the State, School Districts, Special County wide voted
levies and the City's general and special voter approved levies. The percentage of the total property taxes levied
by, and allocated to, each individual governmental entity will change slightly from year to year The City's
portion is generally under 30% of the total amount collected. (Refer to the graph and chart below for how the
2005 property taxes were allocated between these governmental entities.)
2005 PROPERTY TAX DISTRIBUTION
Emergency
Medical
Yakima School District City of Yakima Services
.366 .27° .02
..__ .. .... � .
3 ,•„ �:aaa33F , a
- 3 21lmiGpQl l}t1 41fAT2MEMi: SAS m6N
L e= 06fS @l]L'I'YCIR4GY -
i s
` . A
A221235 &5
s
��, :u ::ti f i L !1 - '
r`�1,�256 -5�k
a - . Luc
State of Washington Schools Yakima County
.21 .140
0% 25% 50% 75% 100%
City of Yakima Property Tax — In 2005, a typical City resident pays approximately $13.30 per thousand of
assessed value on property taxes. Only $3.52, or about 27% goes to the City, with the balance divided between
the County, schools, and other special distracts.
Descnption of how property taxes are levied.
The followmg explanation is included to help the reader understand how property taxes are assessed to the
individual property owners. To aid m this explanation three commonly used terms must be understood, they are
Property Tax Levy, Property Tax Rate and Assessed Value.
Property Tax Levy — is the total amount of money that is authorized to be collected.
Assessed Value — is the total value, as determined by the County Assessor's Office, of all property within the
City
Attachment #5
(Page 2 )
Property Tax Rate — is the property tax amount that will be applied to every $1,000 of assessed value; the rate
is determined by supply dividing the levy amount by the total assessed value amount and dividing that number
by 1000
In other words, an increase m assessed value does not affect the total amount levied or collected by the
governmental entity Nor does it automatically affect the amount the property owner must pay The dollar
amount of the levy is restricted by law — the assessed value is supply the means to allocate the total dollars
among the property owners. A change in one property owner's assessed value will affect his/her property tax bill
only if the change is significant enough to change that property owner's percentage of the total assessed value of
all property within the taxing distracts. (Example• if the amount of property tax levied does not change from one
year to the next, and every property owner's assessed value goes up 3 %, there will be no change in the property
tax owed by any of the property owners. This is due to the fact that everyone's assessed value increase by the
same amount, therefore, every property owner's percentage of the total tax levy remained the same.)
PROPERTY TAX CODE AREA #333 (YAKIMA SCHOOLS) - CONSOLIDATED LEVY AND
RATES
2004 ASSESSED VALUATION - 2005 TAX YEAR
2004 PERCENT
PROPERTY TAX LEVY R USANDO 2005 LEVY OP LEVY
General Fund 51.4476 $5,749,404
Library 0.3560 1,414,107
Parks & Recreation 0 4638 1,841,985
Street & TraMc Operations 0.8181 3,249,357
Firemen's Relief & Pension 0.3540 1,405,779
Total Operating Levy $3.4395 513,660,632 26.4%
Total Bond Levies 50.0763 8300,000 0.6%
Total City Levy 83.5158 513,960,632 27.0%
Other Levies
School District #7 36 0%
Operation & Maintenance 2.9402 511,560,181
Bond Redemption 1.7966 7,063,813
State Schools 2.7364 10,868,072 21 0%
Yakima County 1.6717 6,639,437 14.2%
Yakima County Flood Control 0 0972 386,046
Juvenile Justice Bond 0 0772 306,613
EMS Levy 0.2440 969,087 2.0%
Total Other Levies $9.5633 537,793,249 73.0%
Total Levy Code #333 513.0791 551,753,881 100.0%