HomeMy WebLinkAbout1998-048 Ad Valorem Tax ORDINANCE A
ORDINANCE NO. 98 48
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 3, 1998,
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 1999 calendar year,
and the total levy amount pertaining to 1999 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 3, 1998, 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 1998 was $9,176,934 for
general government purposes; and
WHEREAS, the discretionary increase in property tax levied for collection in 1999 shall
be in the amount of $550,616, which is a percentage increase of six percent (6 %) from the
previous year; and
WHEREAS, the non - discretionary increases in property tax levied for collection in 1999
can only be estimated due to the absence of final values to be provided by the Yakima County
Assessor, now, therefore,
(Ik)ord /property tax levy2 98/rip •
BE IT ORDAINED BY THE CITY OFYAKIMA:
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
1999:
A. A discretionary increase of $550,616, which is a percentage increase of six
• percent (6 %) over the amount levied for collection in 1998; plus
B. An estimated increase of $54,447 for recent annexations; plus
C. An estimated increase of $114,714 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 13, 1998.
Section 3. Pursuant to Article VI, Section 2 of the Yakima City Charter, this
ordinance shall take effect on November 4, 1998.
PASSED BY THE CITY COUNCIL, signed and approved this 3 day of ,
1998.
/.� - – . •
ATTEST: John Puccinelli, Mayor
City Clerk Gip
Publication Date: 11— — 1
Effective Date: 1 1 — '�l
(lk)ord /property tax levy2 98 /rip
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
• AGENDA STATEMENT
Item No.
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 F' a & Budget
Cindy Epperson, Accounting ager (
Ray Paolella, City Attorney
•
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:
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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 constituta
a quorum. This is required by RCW 84.55.0101. Additionally, another change in the la\
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
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
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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 106% 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.
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