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HomeMy WebLinkAbout2001-060 2002 Annual Property Tax Levy ORDINANCE A ORDINANCE NO. 2001- 60 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 13, 2001, 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 2002 calendar year, and the total levy amount pertaining to 2002 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 13, 2001, 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 2001 was $11,091,953 for general government purposes; and WHEREAS, the discretionary increase in property tax levied for collection in 2002 shall be in the amount of $110,920, 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 2002 can only be estimated due to the absence of final values to be provided by the Yakima County Assessor, now, therefore, (1k)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 2002: A. A discretionary increase of $110,920, which is a percentage increase of one percent (1 %) over the amount levied for collection in 2001; plus B. An estimated increase of $208,557 for recent annexations; plus C. An estimated increase of $99,218 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, 2001. Section 3. Pursuant to Article VI, Section 2 of the Yakima City Charter, this ordinance shall take effect on November 13, 2001. PASSED BY THE CITY COUNCIL, signed and approved this 13th day of November, 2001. /fdeC ATTEST: y Place, Mayor City Clerk Publication Date: 11/16/01 Effective Date: 11/13/01 (lk)ord /property taxes /property tax levy 2 20011 % /rlp BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. For Meeting Of 11/13/01 ITEM TITLE: Public Hearing and Consideration of Legislation pertaining to Ad Valorem Taxes to be levied for collection in Fiscal 2002 Year. SUBMITTED BY: Dick Zais, City Manager. Rita M. Anson, Finance Director Cindy Epperson, Accounting 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 Referendum 47, 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 2002. Exhibit I details these calculations. Ordinance purposes are: Ordinance A identifies Council's :intent to authorize an increase in the tax levy over 2001 levels. This ordinance requires a simple majority to pass. It is required by RCW 84.55.120. This is legally necessary to increase the 2002 tax collections by any amount over 2001 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 2002. BOARD /COMMISSION RECOMMENDATION: COUNCIL ACTION: A. ORDINANCE AUTHORIZING INCREASE IN AD VALOREM TAX LEVY Ordinance passed. ORDINANCE NO. 2001 -60 Legal/BD B. ORDINANCE FIXING & LEVYING AMOUNT OF AD VALOREM TAX FOR THE 2002 BUDGET Ordinance passed. ORDINANCE NO_ 2001 =61 Ordinance B fixes the tax levy for collection by the City in 2002. 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 2002 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 $11,238,450 for the regular levy, an increase of $400,950 over the 2001 year -end estimate of $10,837,500. (See Attachment I) The voted levy debt is budgeted to be $816,000, a decrease of $34,000 below the 2001 budget of $850,0000. The total operating tax rate for next year is estimated to be $3.52 per $1,000. (The statutory limit is $3.60) — the bond rate is estimated to be $0.26 per $1,000. The passage of Initiative 747 on November 6, 2001 will establish 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. In keeping with the spirit and intent of the initiative, City Management is recommending that 2002 property taxes be limited to the 1% increase as recently approved by the voters. The 1% adjustment will generate approximately $110,000 in additional property tax resources for 2002. The 2002 budget was prepared and balanced assuming passage of the initiative; and 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% • The June 2001 Construction Cost Index - 1.3% • The August Seattle Consumer Price Index (CPI) - 3.5% • The July Implicit Price Deflator stipulated in Ref. 47- 1.89% • The 2002 increase in assessed valuation over 2001- 1 % (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 a serious decline in the City's other critical revenues such as sales tax, and State- shared revenues resulting from the loss of motor vehicle excise tax through Initiative 695. Both 2001 and 2002 sales tax is presently estimated to be less than 1997 levels. Most other revenues are relatively flat with insignificant growth. (See Attachment II) (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 and into 2002. The year 2002 General Government Budget has been limited to an increase of only 2.5% above the 2001 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 Legal /BD 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 2002, 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 proper tax ranks $51 below the average of comparable Washington cities with populations of 25,000 to 85,000 in 1999, 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 $571 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 2002 levy is virtually the same rate per thousand as the 2001 levy — $3.5145 for 2001 and $3.5177 for 2002. 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 EXHIBIT I City of Yakima 101% Tax Limitation Calculation 2001 TAX 2002 ASSESSED RATE LEVY VALUES APPLIED DOLLARS Prior Year (2001) $3,156,055.363 $3.5145 $11,091,953 1% Increase $110,920 Base 101% $11,202,873 Valuation Increase $28,646.886 N/ A $0 New Construction $28,231.151 $3.5145 $99,218 State Assessed Value $3.5145 $0 Ref. 47 Tax Limit Before Annexations $3,212,933.400 $3.5177 $11,302,091 Add for Annexation $59,288.173 $3.5177 $208,557 Ref 49 Limit for Subsequent Years $3,272,221.573 $3.5177 $11,510,648 Plus Contingency $75,000 Total- ordinance $11,585,648 State of Washington Constitutional Limit Assessed Valuation $3,272,221.573 $3.6000 $11,779,998 Levy Margin $269,350 2001 Levy for Collection in 2002 $11,510,648 • a cje 11/08/2001 ATTACHMENT I Property taxes provide for 25% of all General Government revenue; which excludes the - Firemen's Relief and Pension costs. The graph below depicts the allocation of the Citv's property tax revenues. Figure 6 Property Tax Allocation by Function 2002 General Levy Property Tax Total— $11,238,450 Fire and Police General Fund Pensions $3,003,757 j $2,429512 26.73% o 21.62 % 1:00.; fr f fr ( r Library • $1245,211 Streets ' 11.08% $2,883,180 • 25.65% ' Parks _ $1,676,790 14.92% TABLE VI 2002 PROPOSED GENERAL PROPERTY TAX LEVY 2001 2001 2002 2001 2000 Amended Year -End Budget vs. Actual Budget Estimate Projection 2002 General $3,854,312 53,931,361 53,991,861 $4,143,989 3.8% Library 1,183,568 1,208,139 1,208,139 1,245,211 3.1% Parks 1,567,485 1,614,500 1,614,500 1,676,790 3.9% Streets /Traffic 2,678,690 2,759,000 2,759,000 2,883,180 4.5% Sub -Total — Gen. Gov't. $9,284,055 59,513,000 S9,573,500 $9,949,170 3.9% Firemen's Relief and Pension 1,227,000 1,264,000 1,264,000 1,289,280 2.0% Total $10,511,055 510,777,000 510,837,500 511,238,450 3,7%(1) • (1) Assumes an increase in the proposed levy of 1% growth; 1% new construction and 1.7% for new annexation (40th Avenue). TB -III 2002 PrelimBudg.doc C - IV -8 November 1, 2001 11:38 AM . 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) P or a specific ecific 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 Table V below along with a three year comparison of the amount of revenue received from each source. General Government Three Year Comparison 2002 vs. 2001 2000 2001 Percent • 2002 % of Increase Percent Source Actual Estimate Change Budget 2002 Total (Decrease) Change General Sales Tax 510,317,870 510,200,000 -1.14% 510,100,000 24.88% (5100,000) -0.98% Crim. Justice Sales Tax' 5524,963 5450,000 -14.28% 5525,000 1.29% 575,000 16.67% 9,28q 055 59,573,500 3.12% 59,949,170 2451 % 375,670 3.92% Property Tax 20.21 % 379,662 4.85% 7,537,463 57,824,338 3.81% 58,204,000 Franchiser Services Taxes 0.65% 54,353,025 10.72% 87,541 205% Charges for Services 4,237,998 $4.265,484 . State Shared Revenue 2,279,027 52.637,591 15.73% 52,525,179 6.=% (112,412) -4.26% 84 51,472,090 -8.49% 51,511,590 3.72% 39,500 2.68% Fines and Forfeitures 1,608,5 133% (126,555) - 11.80% Other Revenue 1264,669 51,072,455 -1520% 5945,900 Other Taxes 866,857 5890,650 274% 5890,650 2.19% 0 0.00% Transfers from other Funds 768,139 5759,750 -1.09% 5806,.-50 1.99% (4 ,0) 46,500 -12.60% Licenses 423514 5516,395 21.933% 5451,355 1.11% n Intergovernmental 4.59% $330,400 0.81% (16,000) -4.62% Lses and Permits 331,191 ` 5346,400 .. Total Revenue 539,444,330 540,008,653 1.43% 540,592,519 100.00% 5583,866 1.46% 8.36% 55,325,450 (5924,056) -14.79% • Beginning Fund Balance - $5,767511 56,249,506 -0.74% Total Resources 545,211,845 I 546,258.159 131% 545,917,969 ( $340,190 ) • Some Criminal Justice Sales Tax is allocated to the Law and Justice capital Fund (a non - general Government Fund) for capital needs. ( See section N lb. for details.) 2001 Year -End Estimate and Year 2002 Budget General Government Resources Sales Tax/Crim. Justice Sales Tax $9,949,170 Property Tax $8.204.000 Franchise & Util. Taxes riEilIllIll a " MIMIMIMMIMIMIMIII.MIMIMIII. $4,353,025 2002 vs. 2001 Est. Charges for Services Decrease in Total Resources $2.525,179 Amount (5340,190) State Shared Revenue Percent (.74 %) Fines and Forfeitures - � � $1.511,590 Other Revenue $945,900 i I 02001 Y/E Estimate ®2002 Budget Other Taxes $890,650 Transfers from other Funds $806,250 Other Intergovernmental n$451.355 • Licenses and Permits ® 5330,400 ,450 B eginning Fund Balance (1) $0 $2,000,000 54,000.000 $6,000,000 $8,000,000 $10,000,000 $12,000.000 TB-III 2002 PrelimBudg.doc C - 1V-3 November 1, 2001 11:38 AM . ATTACHMENT III • Property Tax as a Percentage of Total Fund Revenue Year 2002 Budget 100% ' F A/ w.f., 90% , / ,:, ee" A _ . 60% /III , 50% eZi, 98 ../ „ „ .. 0 30/® / 20% ' r 1O% 16/o i s 0®/® Gee leral Parks Streets Fire Fund Pe ision E 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 i ) compares the City's per capita property tax income for 1999 (the last year information • has been compiled). It shows the City of Yakima's property tax per capita is $151, which is $51 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). Figure 7 Comparable Cities between 25,000 and 85,000 PER CAPITA PROPERTY TAXES 5350 T • 5300 - Yakima's per capita property $290 • -x I z tax is $151, which is $51 LESS 5273 than the average city property $258 0 5250 tax of $202. u $210 o $203 .15200 $190 Yakima $ 51 $166 Lc $150 _ $121 $135 t 0. G $100 — $98 b u i ..s4 d C $50 E i. y C y i — v xi. >-, G ^CS C! C CU M. a G . p X p '' w w Data compiled from the State Auditor's Local Government Comparative Statistics - 12/31/99. • . . . • TB -III 2002 PrelimBudg.doc C - IV -9 November 1, 2001 11:38 AM 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 4.) 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 $1,016 per capita taxes is 5571 below the average of $1,587 based on 1999 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 vet provides similar or enhanced services and programs to its citizens. Figure 10 Comparable Cities between 25,000 and 85,000 PER CAPITA TOTAL REVENUES 82,500 T This includes state and federal grants, taxes and charges for $2,335 • services, and excludes debt proceeds.) Yakima's per capita tota revenue $ 1,930 81,9 • 52,002 82,007 Ya $2,000 - I is $1,016, which is $571 LESS ---,' 0 than the average city per capita $1643 CI) • = 1 r evenue of $1,587. c • Ts g3 $1,500 - $1,382 $1,391 8 ^ , 4 1 2 Yakima $1,016 0 E $1,052 Li o El. a. $1,000 (J TS914 L = Cr o Y $500 - d S C �v Y a - o A ez tit "al a. o V C 5 X G � `> E v" a C $0 Data compiled from the State Auditor's Local Government Comparative Statistics -12/31 9 . . ID • TB-I1I 2002 Prelimbudg.doc C - IV -16 November 1, 2001 1138 AM • ATTACHMENT VI City of Yakima, Washington III Property Tax Code Area #333 (Yakima Schools) Consolidated Levy and Rates 2000 Assessed Valuation -2001 Tax Year 2001 2001 Percent Property Tax Levy Rate/Thousand Levy Of Levy General Fund $1.3454 $4,246,314 Library $0.3828 $1,208,139 Parks & Recreation $0.5116 $1,614,500 Street & Traffic Ops. $0.8742 $2,759,000 Firemens Relief & Pen. $0.4005 $1,264,000 Total Operating Levy $3.5145 $11,091,953 26.0% Total Bond Levies $0.2809 $870,000 2.0% Total City Levy $3.7954 $11,961,953 28.0% Other Levies School District #7 32.1% Operation & Maintenance $2.5328 $7,898,068 Bond Redemption $1.8600 $5,800,066 Yakima County $1.7049 $5,380,758 14.0% Yakima County Flood Control $0.1000 $315,606 Juvenile Justice Bond $0.0891 $281,205 • State Schools EMS Levy $3.2469 $10,247,395 $785,542 24.O% $0.2489 1.9% Total Other Levies $9.7826 _ $30,708,640 72.0% Total Levy Code #333 $13.5780 $42,670,593 100.0% Sales Tax Rates Within the City Limits Rate % of Total City of Yakima (General Fund) 0.85% 10.7% Portion of local levy distributed to Yakima County (1) 0.15% 1.9% Yakima Transit 0.30% 3.8% State of Washington 6.50% 82.3% Yakima County Local Option Criminal Justice Tax 0.10% 1.3% Total Sales Tax Rate in City Limits 7.90% 100.00% (1) In Washington, counties receive 15% of each cities' sales tax collections. The City of Yakima General Fund actually receives only 10.7% of the 7.9% sales tax charged. S The balance (89.2 %) goes to the State of Washington, Yakima County, Yakima Transit and - - -- the Yakima County Local Option Criminal Justice Tax.