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Home My WebLink About1998-049 annual property tax levy 7 ORDINANCE B ORDINANCE NO. 98 49 AN ORDINANCE relating to the annual property tax levy; authorizing a limit factor of 106 percent for the regular levy for the 1999 calendar year. WHEREAS, the City Council of the City of Yakima is meeting and is considering the City budget for the calendar year 1999; and WHEREAS, the budget for 1999 includes a review of all available sources of revenue and proposed expenses and obligations dependent upon these revenues; and WHEREAS, in 1971, the state legislature imposed a statutory limit on regular property tax levy increases requiring that regular property taxes levied by a taxing district may not exceed 106 percent of the taxes levied by the district in the previous year (plus an amount to account for new construction and increases in the value of state - assessed property); and WHEREAS, Section 204 of Referendum Bill 47, RCW 84.55.0101, provides that a taxing district may use a property tax levy "limit factor" of 106 percent, or less, based upon a finding of substantial need by a majority vote plus one of the City Council; and WHEREAS, pursuant to RCW 84.55.0101, the City Council finds and determines that in order to maintain a solid revenue base to provide critical services to the citizens of the City of Yakima, there is a "substantial need" to increase the regular property tax levy above the "Implicit Price Deflator," now, therefore, BE IT ORDAINED BY THE CITY OF YAKIMA: Section 1. The limit factor for the regular levy for collection in calendar year 1999 shall be 106 percent of the highest amount of regular property taxes that could have been lawfully levied in the City of Yakima in any year since 1985. 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 13, 1998. Section 3. Pursuant to Article VI, Section 2 of the Yakima City Charter, this ordinance shall take effect on November 4, 1998. (lk)ord /property tax levy 98 /rip • PASSED BY THE CITY COUNCIL,`signed and approved this day of /161/- , 1998. ATTEST: ��//JJ John Puccinelli, Mayor /G�t - C IYi,L City Clerk Publication Date: 1(— Effective Date: 1 ( — • • (1k)ord /proper tax levy 98 /rlp BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. lC For Meeting Of 11/3/98 ITEM TITLE: Public Hearing and Consideration of Legislation pertaining to Ad Valorem Taxes to be collected for the Fiscal 1999 Year. SUBMITTED BY: Dick Zais, City Manager John Hanson, Director of Finarrc & Buffet Cindy Epperson, Accounting ��,,Ir�,ager Ray Paolella, City Attorney 1 _ 2 %/ CONTACT PERSON/TELEPHONE: Dick Zais / 575 -6040 John Hanson / 575 -6070 Ray Paolella / 575 -6030 Cindy Epperson / 576 -6644 SUMMARY EXPLANATION: Background As a result of the passage of Referendum 47, it is necessary to take several administrative and legal steps to establish the property tax levy. Your package includes three (3) separate ordinances. Ordinance A, B, and C are management's recommendation for the property levy for 1999. Ordinance purposes are: Ordinance. A identifies Council's intent to authorize an increase in the tax levy over 1998 levels. This ordinance requires a simple majority to pass. It is required by RCW 84.55.120. This is legally necessary to increase the '99 tax levy by any amount over 1998 levels. CONTINUED Resolution _'Ordinances A. B. C Contract _ Other (Specify) Attachments 1 thru 7 Funding Source APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Hold Hearing and pass Ordinances BOARD /COMMISSION RECOMMENDATION: COUNCIL ACTION: Legal /BD Agenda Ad Val 1 10/29/98 Ordinance B establishes the limit of 6% increase in the tax for the 1999 tax year. This ordinance requires the majority plus one of the Council members present which constitute - a quorum. This is required by RCW 84.55.0101. Additionally, another change in the lay created by Referendum 47 is that property taxes limited to below 6% in the past could be recouped in future years. Under Referendum 47 this is excluded. If you do not increase for the full 6% discretionary tax adjustment, it is "lost forever ". This ordinance provides for a determination of "substantial need" to increase the property tax levy above the "implicit price deflator" set in Referendum 47. Ordinance C fixes the tax levy for the City for 1999. 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 1999 City of Yakima recommended property tax levy includes the 6% levy, levies for voted bond issues, and amounts for annexations and new construction. The budget currently includes $9,794,107 for the regular levy and $1,300,000 for the voted levy. Preliminary data received from the Yakima County Assessor shows a combined increase of approximately $99.8 million or 3.6% in the assessed valuation or operating levy base of the City of Yakima, as a result of annexations, new construction and re- evaluations. At a 106% increase, the City will be limited to a regular increase of $550,616 or 6% above last year's Operating Levy. Additionally, the levy may be increased $114,714 for property taxes on new construction and an estimated $54,447 for property taxes on newly annexec areas. Thus, the increase amounts to a total of $719,777 in the amount of property taxes "W.. the City will be allowed to levy for basic services during the 1999 tax year. Based on present available estimates for 1999, the recommended operating tax levy for the City of Yakima would increase property taxes on a $100,000 home by $17.00 per year. If the implicit price deflator level were chosen, the property tax for a $100,000 home would decrease ($16.00) next year below the recommended 1999 level. This option would necessitate a reduction in General Government resources (General Fund, Parks, Streets, Library) of Fire Pension reserves of approximately ($475,000). The City has favored State property tax reform, and now with the passage of Referendum 47, continues to endorse the State limitation. The local government tax portion however, has previously been limited over the years. As we have stated previously, City management is respectfully recommending that the property tax levy be set at a 6% increase to maintain and preserve essential and vital services and resources. It is important to remember the City has already been under a twofold statutory limit -- the 6% limit and the $3.60 per $1;000 limit since the 1970's. Until the passage of Referendum 47, the State of Washington has not been limited to similar tax levy limits and have reaped a windfall as assess value increase has escalated at higher levels. The impact on the taxpayer of a local 6% levy as noted above to Yakima taxpayers, is minimal ($17 per year on an average $100,000 home), however, the cumulative impact, on the City Budget is approximately ($475,000) on vital General Government services. The Legal/BD Agenda Ad Val 2 10/29/98 confirmation of the levy at 6% is needed to preserve essential City resources, avoid reduction in municipal service levels. Already sales tax revenues are starting to flatten, and we are projecting only a 1% growth from 1998 year -end estimates. Because this major resource is slowing, the Preliminary Budget has already been reduced by some $400,000 to balance the budget. Indeed, despite a 10% increase in fixed, mandated and contractual expenses, the General Government budget for 1999 is projected to increase by only 2.5 %. If property tax is levied at the implicit price deflator (currently at 0.85 %, plus new construction and annexations) the additional reduction of $475,000 would be extremely harmful to basic municipal services of the City. In 1997, Council agreed that "substantial need" existed for, the 10 6% increase for the 1998 levy. In light of current economic circumstances, staff believes that the criteria for "substantial need" has again been met, and recommends levying property tax at the 106% level for 1999. Further, as reflected, the following Attachments 2 - 6 are excerpts from the Budget Forecast. Attachments 2 thru 4 reflect how the City uses the property tax, statutory limitations and Ref. 47 comparisons. Attachments 5 -6 portray per capita comparisons with other communities in Washington. They reflect that the City of Yakima's property tax and combined revenue per capita are nearly the lowest of comparable cities. In fact, most westside cities also impose a local option Business and Occupation Tax, together with development impact fees as part of their general revenues. The City of Yakima does not. Accordingly, the City's tax rates are a "good" deal for local homeowners and businesses. Attachment 7 describes all detailed general fund revenues. Finally, please note that potentially the levy ordinance is $152,000 higher than the amountshown in the Preliminary Budget and the Attachments. This procedure allows for final legally allowed adjustments in State assessed, new construction and annexation values. • • • Legal /BD Agenda Ad Val 3 10/29/98