HomeMy WebLinkAbout2002-055 2003 Ad Valorem Tax • ORDINANCE B
ORDINANCE NO. 2002- 55
AN ORDINANCE fixing and levying the amount of ad valorem taxes necessary to balance
estimated revenue with estimated expenditures for the 2003 Budget for
the City of Yakima.
WHEREAS, the City Council finds that the total net amount of $13,374,687 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 2003 Budget for the
City of Yakima, now therefore,
BE IT ORDAINED BY THE CITY OF YAKIMA:
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 $13,374,687 for the following
purposes:
General Government Levy
Operating Funds $11,714,622
Firemans' Relief & Pension Fund 1,315,065
Amount of tax levy for General
Government Purposes (1) $13,029,687
Special Purpose Tax Levy 345,000
Total Levy Amount (1) $13,374,687
(1) Includes an additional $75,000 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 15, 2002.
Section 3. Pursuant to Article VI, Section 2 of the Yakima City Charter, this
ordinance shall take effect on November 5, 2002.
PASSED BY THE CITY COUNCIL, signed and approved this 5th day of
November, 2002.
A'1"1'EST: Ma lace, Mayor
City Clerk
Publication Date: 11 - - 2002
Effective Date: 11 - - 2002
(Ik)ord /ad valorem taxes 2001 /rlp
EXHIBIT I
City of Yakima
101% Tax Limitation Calculation
2002 TAX 2003
ASSESSED RATE LEVY
VALUES APPLIED DOLLARS
Prior Year (2002) $3,268,615.861 $3.5264 $11,526,460
1% Increase $115,265
Base 101% $11,641,725
Valuation Increase $46,808.607 N/A $0
New Construction $48,700.513 $3.5264 $171,737
State Assessed Value $3.5264 $0
101 % Tax Limit
Before Annexations $3,364,124.981 $3.5116 $11,813,462
Add for Annexation $324,987.019 $3.5116 $1,141,224
101 % Limit for
Subsequent Years $3,689,112.000 $3.5116 $12,954,687
Plus Contingency $75,000
Total - ordinance $13,029,687
State of Washington
Constitutional Limit
Assessed Valuation $3,689,112.000 $3.6000 $13,280,803
Levy Margin $326,117
2002 Levy for Collection in 2003 $12,954,687
cje 10/22/ 2002
• ATTACHMENT I
Property taxes provide for 24% of all General Government revenue, which excludes the
Firemen's Relief and Pension costs. The graph below depicts the allocation of the City's
property tax revenues. ,. ____ .,
.
)
Figure IV - 4 _______,
Property Tax Allocation by Function
2003
General Levy
Property Tax Total -- $11,546,019
Fire and Police
General Fund � Pensions
$3,153,107 / ` $2,419,827
27.31% /// / ///
' 20.96%
' 74-- //,,, X.- •:•: .••••,L"
/ /7 /i - . ..: 1 .?;''l �' ffff:Y •f :f f : l
1 • :: :: • • •l
.........::%•:-....:•:•.•:-:•:•:•:•:•.:•:•:•:•:•:•:•:•:-:•:-: :l ' :•::• •: : •
': r::• •:: {•:: •':ti:
•:: :•:
∎ . : f : :: :: :' :• :• :•: Library
-::.:::•: $1,270,115
Streets ' , 11.00% . :., )
$2,945,644 ;, /
25.51% '
. 1
Parks
- - . $1,757,326
15.22%
TABLE IV - 5 .
2002 PROPOSED
1
GENERAL PROPERTY TAX LEVY
2002 2002 2003 2002
2001 Amended Year -End Budget vs.
- . Actual Budget Estimate Projection 2003
General /Police Pension 4,051,748 4,143,989 4,173,989 4,257,869 2.0%
Library 1,208,139 1,245,211 1,245,211 1,270,115 2.0%
Parks & Recreation 1,690,515 1,676,790 1,726,790 1,757,326 _ 1.8%
Streets /Traffic • 2,841,500 2,883,180 2,883,180 2,945,644 2.2%
Sub - Total -- Gen. Gov't. $9,791,902 $9,949,170 $10,029,170 $10,230,954 2.0%
Firemen's Relief and Pension 1,301,500 1,289,280 1,289,280 ' 1,315,065 2.0%
Total $11,093,402 $11,238,450 $11,318,450 $11,546,019 2.0% tt„
TB -III 2003 Forecast.doc lV -8
October 24, 2002
ATTACHMENT II
IV - b. GENERAL GOVERNMENT CONDITION - Revenue Trends
_ The City receives revenue from many different sources; some revenue is available for
any government purpose and some revenue is restricted in use to a specific fund(s)
and /or a specific purpose. The sources of revenue that are available for use within the
General Government Funds (for general purposes or for a restricted purpose within
General Fund, Parks or Street Funds) are listed in Figure IV -1 below along with a three
year comparison of the amount of revenue received from each source (Table IV-4).
TABLE IV -4
General Government Three Year Comparison
2003 vs. 2002
2001 2002 Percent 2003 % of Increase Percent
Source Actual Estimate Change Budget 2003 Total (Decrease) Change
General Sales Tax $10,468,665 $10,550,000 0.78% $10,650,000 24.91% $100,000 0.95%
Crim. Justice Sales Tax` $352,765 $350,000 -0.78% $570,000 1.33% $220,000 62.86%
Property Tax 9,791,902 510,029,170 2.42% 510,230,954 23.93% 201,784 2.01%
Franchise & Util. Taxes 8,369,597 $8,505,467 1.62% $8.983.500 21.02% 478,033 5.62%
Charges for Services I 4,223,977 1 $4,268,327 1.05% $4,470,808 10.46 %I 202,481 4.74%
State Shared Revenue 2,421,556 $2,458,766 1.54% $2,055,000 4.81% (403,766) - 16.42%
Fines and Forfeitures 1,553,036 $1,586,290 2.14% $4,623,290 3.80% 37,000 2.33%
Other Taxes 988,018 $1,207,450 22.21% 51,262,450 2.95% 55,000 4.56%
Other Revenue 1,162,790 5844,045 - 27.41% 5881,600 2.06% 37,555 4•45%
Transfers from other Funds 790,097 $815,000 3.15% $855,000 2.00% 40,000 4.91 %
Other Intergovernmental 623,177 $1,034,681 66.03% $786,893 1.84% (247,788) - 23.95%
Licenses and Permits 408,689 $343,300 16.00% $375,900 0.88% 32,600 9.50%
Total Revenue 841,154,269 841,992,496 2.04% 842,745,395 100.00% 5752,899 1.79%
l Beg inni n g Fund Balance $6,249,506 $7,756,731 24.12%
g� g 84,591,882 (51,164,849) - 15.02%
Total Resources $47,403,775 $49,749,227 4.95% $49,337,277 ($411,950) -0.83%
* SomeCriminal Justice Sales Tax is allocated to the Law and Justice capital Fund (a non - general
Government Fund) for capital needs. ( See section IV 1b, for details.)
2002 Year -End Estimate and Year 2003 Budget Figure IV -1
General Government Resources
Sales Tax/Crim. Justice Sales Tax 11,220,000
• Property Tax $10,230,954
Franchise & Util. Taxes $8,983,500
• Charges for Services a $4,470,808 2003 vs. 2002 Est.
$2 Decrease in Total Resources
a State Shared Revenue ,055,000 I —, Amount ($411,950)
Fines and Forfeitures
$1,623,290 Percent (.83 %)
Other Taxes $1,262,450
Other Revenue $881 ,600 i 02002 Y/E Estimate ® 2003 Budget
i
Transfers from other Funds rc $855,000
Other Intergovernmental $786,893
Licenses and Permits $375,900
Beginning Fund Balance (1) 82
$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000
TB -III 2003 Forecast.doc IV -3
October 23, 2002
ATTACHMENT III
Property Tax as a ' erceuta a of
Total Fund '' eveuue
r�
Year 2013 I uet
100%® .2.-77-/.......4.4.; ._°... �....- r r -- .,. r �._v_.-_ .__., ...::
{ u.., A,-. f {` ; x f �i _ { �`,:{x'f';r`, . xr ? FI.F w...
'� .......-:5::::-; .......-:5::::-; x fr ° { . ? ��l1 f ? ?x` l.: r ,, • �, ' , 'x ,� �F' , '{f
80% 'r{ ,` { ' ?/- x r :'e; r Y x
70% ,
i / xt' rJ / /ef
+ {i!.°• f Ff ?F fxf°? f:• -.A'
?F
/® r {; {: � -- - 98%
�0% if ? r r F i r A '
{r
/® xi'4 •
....... 4: // / ?r 51 % 1
1
/0 1_6% 1
o a
• r
General Parks Streets Fire .
Fund Pension
Property Tax =% Other Revenue
ATTACHMENT IV
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 IV - 5) compares the City's per capita property tax income for 2001 (the last year
information has been compiled). It shows the City of Yakima's property tax per capita
is $148, which is $39 less than the average of all the comparable cities. Yakima ranks
fifth lowest in tax per capita of the 12 comparable cities (see chart below).
Figure IV - 5
Comparable Cities between 25,000 and 85,000 in population
f $400 - PER CAPITA PROPERTY TAXES
Ti
y Yakima's per capita property tax is $148, which is $39 LESS $337
o . $350 than the average per capita city property tax of $187 .
.1
aJ
4
$300 - $275
2, $257
a
a $250 -
Yakima $148 $211
1
1 N $201 $202
$200
H $169
a $150 - $132
E $109 $121 mU..S
i $86 a
$100 - ■
= . - a, ■ r
U m v r m c
$50 - ti O v ,.
u '771D E. a m _ E o
$o- -
Data compiled from the State Auditor's Local Government Comparative Statistics - 12/31/01
•
_ 2
TB -III 2003 Forecast.doc IV -9
October 21, 2002
ATTACHMENT V
The largest revenue source for the General Government Funds is sales tax. Yakima is
right in the middle in ranking of per capita sales tax compared with similar cities in the
State. (Refer to Figure IV - However, Yakima is in the lower 1/3 of rankings in all
other revenue comparisons per capita and is the second lowest out of the 12 cities
compared in combined per capita revenue. Yakima's $1,010 per capita taxes is $504
below the average of $1,514 based on 2001 actual data, as demonstrated in Figure 10,
below. The most important 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. It should be -
noted that when the Auditor's Office releases new figures for 2002, Yakima's position
• could slip further as a function of higher population figures and stagnant revenue
_._iL
gru W Ll t.
Figure IV -8
Comparable Cities between 25,000 and 85,000 in population , �)
PER CAPITA TOTAL REVENUES
(This includes state and federal grants, taxes and charges for services,
$2,500 and excludes debt proceeds.) $2,282
Yakima's per capita total revenue is $1,010, which is $1,991 $2,02.2
o $2,000 - $504 LESS than the average city per capita revenue of $1,909 •
$1,514.
$1,530 $1,592
Yakima $1,010
o $1,500 - $1,406
$1,316
tu
$978 $1,062 $1,070
$1,000 -
O
$500 v
-o
T
$0 -
Data compiled from the State Auditor's Local Government Comparative Statistics - 12/31/01
•
TB -III 2003 Forecast.doc IV -16
October 22, 2002
ATTACHMENT VI
Property Taxes: In 2002, a typical City resident pays approximately $13.40 per
thousand of assessed value on property taxes. Only $3.79, or about 28.3% goes to the
City, with the balance divided between the County, schools, and other special districts.
Property Tax Code Area #333 (Yakima Schools)
Consolidated Levy and Rates
2001 Assessed Valuation - 2002 Tax Year
2001 Percent of
Property Tax Levy Rate/Thousand 2002 Levy Levy
General Fund $1.3406 $ 4,381,999
Library $0.3810 $ 1,245,211
Parks & Recreation $0.5283 " $ 1,726,790
Street & Traffic Operations $0.8821 $ 2,883,180
Firemen's Relief & Pension $0.3944 $ 1,289,280
Total Operating Levy $3.5264 $11,526,460 26.6%
Total Bond Levies $0.2610 $ 836,000 1.9%
•
Total City Levy $3.7874 $12,362,460 28.5%
Other Levies
School District #7: 33.4%
Operation & Maintenance $2.7336 $ 8,646,000
Bond Redemption $1.8338 $ 5,800,056
State Schools $2.9020 $ 9,485,524 21.9%
Yakima County $1.7109 $ 5,592,275 14.3%
Yakima County Flood Control $0.1000 $ 326,862
Juvenile Justice Bond $0.0875 $ 286,004
EMS Levy $0.2498 $ 816,500 1.9%
Total Other Levies $9.6176 $30,953,221 71.5%
Total Levy Code #333 $13.4050 $43,315,681 100.0%
2002 Property Tax Distribution
2% ❑ City of Yakima
0
29% ® Yakima County
=� k ❑ Yakima School
District
Ei State of Washington
Schools
14% M Emergency Medical
33 0/ Services
o
TB -III 2003 Forecast.doc VII-2
October 24, 2002
•
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.
For Meeting Of 11/5/02
ITEM TITLE: Public Hearing and Consideration of Legislation pertaining to Ad
Valorem Taxes to be levied for collection in Fiscal 2003 Year.
SUBMITTED BY: Dick Zais, City Manager
Rita M. Anson, Finance Director
Cindy Epperson, Financial Services Manager OE
Ray Paolella, City Attorney
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 2003. Exhibit I details these
calculations.
Ordinance purposes are:
Ordinance A identifies Council's intent to authorize an increase in the tax levy over 2002 levels. This
ordinance requires a simple majority to pass. It is required by RCW 84.55.120.. This is legally
necessary to increase the 2003 tax collections by any amount over 2002 levels.
CONTINUED
Resolution Ordinances A, B Contract Other (Specify) Exhibit I , Attachments I -VI
Funding Source
APPROVED FOR SUBMITTAL: l
City Manager
STAFF RECOMMENDATION: City Management is recommending that a 101 % property tax levy
be authorized for collection in the year 2003.
BOARD /COMMISSION RECOMMENDATION:
COUNCIL ACTION: Ordinance A passed. ORDINANCE NO. 2002 -54 (Annual Property Tax Levy)
Ordinance B passed. ORDINANCE NO. 2002 -55 (Ad Valorem Tax)
Legal /BD
•
Ordinance B fixes the tax levy for collection by the City in 2003. 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.
Discussion
The total 2003 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 $11,546,019 for the regular levy, an increase of $227,569 over the 2002 year -end
estimate of $11,318,450. (See Attachment I) The voted levy debt is budgeted to be $345,000, a decrease
of $471,000 below the 2002 budget of $816,000, because debt issues approved by voters in the late
1980s for Street and Park improvements have been totally paid. The $471,000 decrease equates to )
approximately roximatel a 4% reduction in the property tax levy. The total operating tax rate for next year is
estimated to be $3.51 per $1,000, slightly less than the 2002 rate of $3.52. (The statutory limit is $3.60) -
- the bond rate is estimated to be $0.09 per $1,000, down from $0.26 in 2002.
The 2003 ad valorem levy includes $1,141,000 for the South 72nd /Congdon annexation area. At the
time the numbers were "frozen" for budget preparation, there was still uncertainty regarding the 2003
property tax because of the Supreme Court decision regarding the petition method of annexation.
Additionally, the plan to provide fire service to the area was in negotiation with West Valley Fire
District #12. Therefore, the property tax revenue and related General Fund expenses were not
budgeted. There is a policy issue for Council consideration to include these items in the final adopted
budget in December.
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 $115,000 in
additional property tax resources for 2003. The 2003 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 maximum increase for "substantial need" allowed in Referendum 47 — 6%
e The June 2001 Construction Cost Index - 1.3%
• The August Seattle Consumer Price Index (CPI) - 1.8%
• The July Implicit Price Deflator stipulated in Ref. 47 -1.16 %
• The 2003 increase in assessed valuation over 2002- 1.4%
(because of exemptions and economic constraints)
We believe this modest increase is justified by the following conditions:
(1) The Yakima economy continues to be distressed which has resulted in the flattening of the
City's other critical revenues such as sales tax. State - shared revenues have been reduced
because the legislature eliminated Initiative 695 (Motor Vehicle Excise Tax) "backfill" funding,
and shifted a portion of other Criminal Justice Funding to the State Patrol. The only factor that
caused most other revenues to show growth for 2003 is the volume added because of the major
annexation. (This annexation also resulted in a similar increase in expenses to adequately serve
the area.) Without estimates for the annexation, major revenues are demonstrating insignificant
growth. (See Attachment II)
Legal /BD
(2) In response to these economic conditions, the City has exercised responsible budgetary
restraint. City management has not asked for new taxes and has taken necessary cost
reduction measures to maintain essential services in 2000, 2001, 2002 and into 2003. The year
2003 General Government Budget has been limited to an increase of only 1.5% above the 2002
amended budget and is primarily driven by increased mandated and contractual costs.
(3) The property tax is needed to help meet mandates and contractual obligations such as Public
Safety pensions and the Regional Library's services. Attachment I demonstrates the amount of
property taxes dedicated to these areas.
(4) There is a continuing need to maintain the City's investment in repairing and rehabilitating
City streets. In the Street budget, property tax represents nearly 75% of all revenue in this
budget. (see Attachment III) 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
over 50% of all Parks revenue. Parks maintenance, the Senior Center and Aquatics is supported
in part by property tax and the cost to maintain and operate these facilities increases annually.
(Also see Attachment III)
(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 2003, the City is
budgeting conservatively and estimating a reduction of up to 4% 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 $39 below the average of comparable Washington cities
with populations of 25,000 to 85,000 in 2001, the most recent year this information has been
compiled. Yakima ranks 8th 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 $504 dollars less
than the average and ranks 11th out of the 12 cities. Our residents are currently taxed
substantially less than other similar size cities and enjoy a very favorable tax advantage. (see
Attachments IV & V)
(8) The 2003 operating levy is virtually the same rate per thousand as the 2002 levy — $3.5264 for
2002 and $3.5116 for 2003. Exhibit I also contains an estimated calculation of the rate per
thousand.
(9) Finally, the City's current property tax levy represents only 28% (approximately 1/4) of the
total property taxes paid by City residents. The State, local School District levies and County
government receive approximately 3/4 of all property taxes paid. (See Attachment VI)
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.
Legal/BD