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HomeMy WebLinkAbout2001-061 2002 Ad Valorem Taxes } ORDINANCE B ORDINANCE NO. 2001- 61 AN ORDINANCE fixing and levying the amount of ad valorem taxes necessary to balance estimated revenue with estimated expenditures for the 2002 Budget for the City of Yakima. WHEREAS, the City Council finds that the total net amount of $12,421,648 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 2002 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 $12,421,648 for the following purposes: General Government Levy Operating Funds $10,296,368 Firemans' Relief & Pension Fund 1,289,280 Amount of tax levy for General Government Purposes (1) $11,585,648 Special Purpose Tax Levy 836,000 Total Levy Amount (1) $12,421,648 (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, 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. 2»1 �- c ATTEST: Mlace, Mayor City Clerk Publication Date: 11/16/ 01 Effective Date: 11/13/01 (1k)ord /ad valorem taxes 2001 /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: —I 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 property 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 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 City's property tax revenues. Figure 6 Property Tax Allocation by Function 2002 General Levy Property Tax Total—S11,238,450 Fire and Police General Fund Pensions $3,003,757 $2,429512 26.73% o 21.62 k ' � �f I �brary • $1,245,211 „ . 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 53,854,312 53,931,361 $3,991,861 $4,143,989 3.8% Library' 1,183,568 1,208,139 1,208,139 1,245,211 31% 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. 59,284,055 59,513,000 S9,573,500 59,949,170 3.9% Firemen's Relief and Pension 1,227,000 1,264,000 1,264,000 1,289,280 2.0% Total 510,511,055 510,777,000 510,837,500 511,238,450 3 (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 - N -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 ill any government purpose and some revenue is restricted in use to a specific fund(s) P or a and / 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 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) mange 510,317,870 $10200,000 - 1.14% 510,100.000 24.88% (5100.000) -0.98% General Sales Tax d $52,000 L29% x,000 16.67% Crim. Justice Sales Tax' $524,963 5450,000 -14.28 Property Tax 9,284,055 59,573,500 3.12% $9,949,170 24.51% 375,670 3.92% 7,537,463 $7,824,338 3.81% 58,204,000 20.21 % 379,662 4.85% Franchise for U Taxes 0.65% $4,353,025 10.72% 87,541 205% Charges for Services 4,237,998 $4265,484 . State Shared Revenue 2,279,027 52,637,591 15.73% 52,525,179 6.22% (112.412) -4.26% Fines and Forfeitures 1,608,584 $1,472,090 -8.49% 51,511,590 3.72% 39,500 268% 233% (126,555) -11.80% Other Revenue 1,264,6 51,072.455 -1520% 5945,900 Other Taxes 866,857 5890,650 274% 5890,650 2.19% 0 0.00% 768,139 $759,750 -1.09% $806,250 1.99% 46,500 6.12% Transfers from other Funds 1.11% % (65,040) -2260% Other Intergovernmental 423,514 5516 ,395 21.93% 5451,355 -462% Licenses and Permits 331,191 5346,400 4.59% 5330.400 0.81% (26,000) Total Revenue S39,444,330 $40'008'653 1.43% $40592,519 100.00% $583,866 1.46% Beginning Fund Balance $5,767,515 $6249,506 836% 55,325,450 (5924,056) - 14.79% 41 Total Resources $45 211845 I 546258,159 231% 545.917,969 (5340,190) -0.74% • Some Criminal Justice Sales Tax is allocated to the Law and Justice capital Fund (a non - general Government Fund) for capital needs. ( See section IV lb. for details.) 2001 Year -End Estimate and Year 2002 Budget General Government Resources :.: $10.625,000 Sales Tax/Crim. Justice Sales Tax - - -- - - _ - - - -. _.... _ - ...... . $9.949.170 Property Tax !IIII $8,204.000 Franchise & Util. Taxes t Charges for Services $4,353.025 2002 vs. 2001 Est. Decrease in Total Resources State Shared Revenue 52.525,179 Amount (5340,190) Percent (.74 %) Fines and Forfeitures $1,511.590 Other Revenue $945,900 1 j ❑ 2001 Y/E Estimate ® 2002 Budget Other Taxes $890,650 ; I Transfers from other Funds $806.250 Other Intergovernmental n5451.355 Licenses and 'Permits in $330,400 ,450 Beginning Fund Balance (1) , $0 52,000,000 54,000,000 $6,000,000 $8,000,000 $10,000,000 512,000,000 TB-III 2002 PrelimBudg.doc C - IV -3 November 1, 2001 1138 AM ATTACHMENT III i ► Property Tax as a Percentage of Total Fund Revenue Year 2002 Budget 100% ve/ re v/er v/777/ - .., . 0 i'zio0 "'IA • , . 70% 1 . 60% .., ., , ...._...__, 50/ ® i �z 98% ® ■. -j, % - ■ • � 3 0 /® ,�' o �5 t 50% 20% A ...,... 1:: .. _ , , , , i ., , it,,,i.„.„...a ,. 1 I% 16% , , 0% . General Parks Streets Fire Fund ' ension le Property Tax r A Other Revenue 0 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 ) ) 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 S51 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 $350 T $333 ; ,5300 - Yakima's per capita property 5290 tax is $151, which is $51 LESS 5273 u than the average city property $258 . o $250 tax of $202. 8210 8203 - o $200 $190 ri c Yakima $1 $166 R $150 ■ a, 8121 $135 ■ - 0, v ■ G. ■ . L $100 - 598 ■ m E. A u ..x a ■ , E ■ .cc . $50 - 3 pp G E. O . C u• ■ G m m v 0 E cs $0 . ' Data compiled from the State Auditor's Local Government Comparative Statistics- 12/31/99. III . . . • 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 S1,016 per capita taxes is $571 below the average of 51,587 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 prop ams to its citizens. Figure 10 Comparable Cities between 25,000 and 85,000 PER CAPITA TOTAL REVENUES 52,500 T (This includes state and federal grants, taxes and charges for 52,335 • j services, and excludes debt proceeds.) i $2,002 $2,007 total revenue 51,930 51. �■, III 1 52,000 Yakima 's per capita �- is $1,016, which is 5571 T P S than the average city per capita $1 643 d = revenue of $1,587. a .s ° t 73 $1,500 $1,382 $1,391 $' Yakima $1,016 I Ems- —• 1 $ 1,052 es c c. " $1,000 T$914 A �^ V "0 sr 0 d D Cr L $500 - v E G G C e0 G c O L E G V L G G 6J >-, y ../ v F. v > o — F+ Data compiled from the State Auditor's Local Government Comparative Statistics - 12/31/99. . • Ill ___. TB-IIl 2002 PrelimBudg.doc C - IV -16 November 1, 2001 11:38 AM ATTACHMENT VI City of Yakima, Washington il 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 $3.2469 $10,247,395 24.0% � EMS Levy $0.2489 5785,542 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.