HomeMy WebLinkAbout2002-054 2003 Annual Property Tax Levy Increase ORDINANCE A
ORDINANCE NO. 2002- 54
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 in property tax revenues; and
WHEREAS, pursuant to RCW 84.55.120 and the City Charter, on November 5, 2002,
upon due and proper legal notice, the Yakima City Council held a public hearing to consider
the City's general government budget, general revenue requirements for the 2003 calendar
year, and the total levy amount pertaining to 2003 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 5, 2002, 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 2002 was $11,526,460 for
general government purposes; and
WHEREAS, the discretionary increase in property tax levied for collection in 2003 shall
be in the amount of $115,265, 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 2003
can only be estimated due to the absence of final values to be provided by the Yakima County
Assessor, now, therefore,
(Ik)ord /property taxes /property tax levy 2 2001 1%/rlp
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
2003:
A. A discretionary increase of $115,265, which is a percentage increase of
one percent (1 %) over the amount levied for collection in 2002; plus
B. An estimated increase of $1,141,224 for recent annexations; plus
C. An estimated increase of $171,737 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 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.
l'Z
ATTEST: EST: Place, Mayor
ei<02A-
City Clerk
Publication Date: 11 - - 2002
Effective Date: 11 -5 -2002
(lk)ord /property taxes /property tax levy 220011 % /rlp
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. b
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
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:
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 - (Annual Property Tax Levy)
Ordinance B passed. ORDINANCE NO. 2002 - (Ad Valorem Tax)
LegaUBD
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 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:
O The maximum increase for "substantial need" allowed in Referendum 47 -- 6%
o 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 /BO