HomeMy WebLinkAbout11/29/2011 02A Utility Tax Increase to Support General Government Services - Public Hearing BUSINESS OF THE CITY COUNCIL
• YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. '
For Meeting of: November 29, 2011
ITEM TITLE: Public Hearing on an Increase of up to 6% in Utility Tax (i.e. Wastewater,
Water, Refuse, and Stormwater) to support General Government services.
SUBMITTED BY: Don Cooper, City Manager,
Rita DeBord, Finance and Technology Directo
Cindy Epperson, Deputy Director of Accounting and Budgeting
CONTACT PERSON/TELEPHONE: Cindy Epperson / 576 -6771
SUMMARY EXPLANATION:
At the November 8, 2011 Budget Workshop, City Council directed that a Public Hearing be
held to elicit citizen input on increasing utility taxes charged to wastewater, water, refuse, and
stormwater in order to support General Government services.
The 2012 General Government budget as presented on November 1, 2011 was balanced by
including a reduction of $1.4 million primarily by eliminating 13 positions (currently vacant). In
order to supply options for Council consideration, an additional $700,000 of supplemental
• reductions were presented. This included the elimination of 8 positions, 5 of which are filled,
and 3 which would be vacant after planned retirements.
Since November 1s estimated revenues have been reduced because: 1) Sales Tax trends
have demonstrated a slight weakening, so that this major source was reduced by $100,000;
and 2) The State's revenue forecast has been lowered, and the Governor's proposal includes a
major reduction in state- shared revenues, estimated to be slightly over $0.5 million in 2012
(growing to $1.0 million in 2013). Additionally, an alternate funding source was found for the
Community and Economic Development Office Administrator, so the modified reduction
proposal only includes 4 filled positions. These revenue reductions required the implementation
of the supplemental budget reduction options. Council recognized the severity of the resulting
decline in service levels and requested that a Public Hearing be held to consider the restoration
of these services by increasing the tax on Wastewater, Water, Refuse and Stormwater utilities
by up to 6 %. The attached material explains the proposal in more detail.
Resolution _ Ordinance _ Other X (Specify Report, attachments
Contact Person: Phone:
Funding Source:. Wastewater, Water, Refuse, and,Storrnwater customers
APPROVED FOR SUBMITTAL: '. /? City Manager
STAFF RECOMMENDATION: Conduct Public Hearings and provide direction to staff.
BOARD /COMMISSION RECOMMENDATION:
• COUNCIL ACTION:
City of Yakima
• REPORT TO COUNCIL
REGARDING PROPOSED INCREASE IN UTILITY TAX RATES
(November 29, 2011)
The following information was prepared for Council and the public to assist in their
review and discussions regarding a proposed Revenue Increase as an Alternative to
2012 Budget Reductions.
Current 2012 General Government Budget Status:
The 2012 budget as presented to Council in October, included reductions of $1.4 million
(allocated to division services based on the Priorities of Government (POG) model) and
the elimination of 13 (vacant) positions. Due to volatility of the City's sales tax revenues
and the Governor's proposal to reduce state shared revenue allocations for local
governments, at their November 8, 2011 meeting City Council authorized additional
(supplemental) budget reductions of $757,000. These reductions were not allocated
based on the POG model, but rather produced much deeper budget cuts in the
Resource Management and Economic Development budget priority categories, and
® include the elimination of four (4) Filled positions.
➢ For reference, the 2009 amended budget was $62.2 million —the proposed
budget for 2012 (after removal of the supplemental reductions) is $57.1 million.
This is an absolute reduction of 8.2 %. Factoring inflation from January 2009
through October 2011, the reduction in service delivery would be more than
15 %, if the budget is adopted as currently authorized by Council.
Because the General Government budgets have been severely reduced over the past 3
years, Council set a public hearing to accept comments on a proposed increase in the
"utility tax" on City utilities, which could then be used to minimize the 2012 budget
reductions.
Tax Proposal — 6% increase in "in- lieu" tax on utilities:
The current tax on city -owned utilities is 14% on Water and Wastewater; 9% on City
Refuse; additionally there is a 10% utility tax on Yakima Waste and 14% on Nob Hill
Water (there is currently no utility tax on Stormwater). Of these taxes, 3.5% is dedicated
for Parks operations, and 0.5% for Police capital. The remainder supports General Fund
operations.
➢ A 1% increase on these utilities would generate about $350,000 annually;
4 including the imposition of a 6% tax on the Stormwater utility, which is
expected to generate approx. $20,000 annually. A 6% increase would generate
approx. $2,100,000 annually.
➢ Note: if the full 6% tax were imposed, the revenues would be utilized to
eliminate the budget reductions, as identified in Attachment #3; unless
otherwise authorized by City Council.
The increase to a typical household for the full 6% would be about $63 per year, approx.
$5.25 per month; see attached charts for breakdown of this calculation. This calculation is
made assuming a 96- gallon can for Refuse; yard waste for 9 months out of the year; and
1,700 cubic foot consumption (i.e.: 17 units of consumption) for Water/Wastewater.
(Note: The average UOC for single family residential customers (approx 4 people) is 16.9, so we
rounded up to 17 for costing this proposal.)
Authorization: City Council has the authority to increase this tax without sending it to a
public vote. Under the Charter, the Council could also refer it for voter consideration in
a special election.
Additional Information: Refer to the attachments as noted below:
1. Attachment #1:
a. Current utility tax rates and revenues, and estimated revenues generated
from a 1% increase in the rate;
b. Estimated increase in a "Typical" single - family residential household
2. Attachment #2:
a. Reflects the 2012 budget reductions, by Council's Budget Priority
Categories, for both the initial POG reductions and the additional
Supplementary Reductions;
b. Allocation options for utility tax revenues, should rate increase be
approved.
3. Attachment #3: A detailed list of the 2012 Budget reductions as currently
presented to and approved by City Council (this includes the original POG
model reductions and the additional supplemental reductions).
4. Attachment #4: Seven (7) Year General Government Revenue Comparisons
5. Attachment #5: Comparison of Utility taxes imposed by various Cities within the
State; (Statewide, the trend is that cities without a Business and Occupation tax have
higher utility taxes. Regionally, many cities have significant taxes on these utilities,
with the exception of Union Gap, which has a larger than average sales tax per capita
because of its retail base.)
Attachment 1
City of Yakima
Wastewater, Water, Refuse, Stormwater In Lieu Utility Tax Analysis
110
Current 2011 2012 Value of
Total Tax Revenue by Utility Rates Estimate Budgeted 1% tax
Internal
Water 14% $960,000 $990,000 $70,714
Wastewater 14% 2,000,000 2,150,000 153,571
Refuse 9% 430,000 440,000 48,889
Stormwater (new tax) 0 20,200
Subtotal City Utilities 3,390,000 3,580,000 293,374
Outside
Nob Hill Water 14% 330,000 330,000 23,571
Yakima Waste 10% 330,000 330,000 33,000
Totals $4,050,000 $4,240,000. $349,945
Revenue Generated by 6% Increase $2,099,670
Rate Change in the Bi- Monthly Bill
"Typical" Residential Account
Current Increase 6%
• Rates 1% 6% Annual
Wastewater - 17 UOC (1) $77.41 $0.77 $4.64 $27.87
Water -17 UOC 37.71 0.38 2.26 13.58
Refuse
96 Gallon Cart 33.39 0.33 2.00 12.02
96 Gallon Yard Waste 25.11 0.25 1.51 6.78
Billed by City Utilities $173.62 $1.74 $10.42 $60.24
Stormwater -1 Equivalent Residential Unit
Billed Annually on Property Tax Statement $43.00 $0.43 $2.58 $2.58
Total Annual Increase: "Typical" Household $62.82
Average per Month $5.24
Per Bi- Monthly Bill $10.47
(1) 17 Units of Consumption (UOC) is the average usage for single - family residential households.
`®
0 ® •hment2
City of Yakima
Priorities of Government Allocation Summary
2012 General Government Budget
Original Budget Proposal Supplemental Budget Proposal Options using $2.1 new revenue
(1) (2) (3) (4) (5) (6) (8) (9) (10) (11)
Current Modified Restore New Maintain Orig
Budgeted Proposed Original Supp. Proposal POG ' Reductions POG Orig. POG % POG
Reductions POG% Proposal Reductions (3.4) Percent - (1 +4 +5) % (Revenue X Col. 2) %
Revenue $57,841,185 $616,500 $57,224,685 $59,324,685 $59,324,685
Priority of Government
Public Health & Safety $1,188,100 68.8% $39,817,433 ;i $107,600 $39,709,833 69.5% i.. $41,005,533 69.2% $40,820,480 68.8%
Resource Management 26,100 14.6% 8,425,527 437,400 7,988,127 14.0% i i 8,451,627 14.3% 8,637,776 14.6%
Economic Development 80,100 5.2% 2,983,803 ;r. 162,000 2,821,803 4.9% 3,063,903 5.2% 3,058,968 5.2%
Quality of Life 50,100 7.0% 4,050,111 50,000 4,000,111 7.0% : 1 4,100,211 6.9% 4,152,138 7.0%
' Customer Service & Comm. 67,300 3.4% 1,983,292 0 1,983,292 3.5% 2,050,592 3.5% 2,033,253 3.4%
Strategic Partnerships 0 1.0% 606,784 0 606,784 1.1% 606,784 1.0% 622,070 1.0%
Total $1,411,700 100.0% $57,866,950 $757,000 $57,109,950 100.0% $59,278,650 100.0% $59,324,685 100.0%
Estimated Increase /(Decrease) in Cash $25,765 $114,735 $46,035 $0
Estimated Beginning Cash Balance 5,612,257 5,612,257 5,612,257 5,612,257
E stimated Ending Cash Balance $5,638,022 $5,726,992 $5,658,292 $5,612,257
?ercent of 2012 Annual Expenditure Budget in Reserve 9.74% 10.03% 9.55% 9.46%
` Includes the 2012 Budgeted Reductions in column #(1)
Attachment 3
• CITY OF /'ttlt
• 2012 BUDGET REDUCTION OPTIONS
• 2012 BUDGET OPTIONS - POG BUDGETED REDUCTIONS
POG Reductions
Priority of Government Personnel FTE's Non -Pers Total
Public Health Sr Safety
Police
6 (vacant) Patrol Officers $530,000 6.00 $0 $530,000
Close Airport Substation 0 19,000 19,000
1 (vacant) Crime /Int Analyst 63,700 1.00 0 63,700
Fire
Transfer 1 Position - EMS Fund 80,000 0 80,000
1 (vacant) Firefighter - YVTech Program Elimination 80,000 1.00 0 80,000
Overtime Adjustment 80,000 0 80,000
Municipal Court
Eliminate Overtime for Courtroom Security 10,000 0 10,000
Finance & Technology
Reduce 099 Transfer (for Dispatch) 0 50,000 50,000
Community & Economic Development - Code Admin.
Transfer .70 Code Inspector to Stormwater 50,000 0 50,000
Eliminate Contribution to Vehicle Replacement 0 1,400 1,400
1 (vacant) CED Office Administrator (split allocation) 18,600 1.00 0 18,600
1 (vacant) Permit Technician 61,200 1.00 0 61,200
Street & Traffic Operations
Reduce Operating Supplies /Signals 0 5,000 5,000
Reduce Contract Labor /Signals 0 2,500 2,500
• 2 (vacant) Sign Specialists 121,700 2.00 0 121,700
Reduce Professional Services Traffic Studies 0 15,000 15,000
1,095,200 12.00 92,900 1,188,100
Resource Management
City Management - Human Resources
Reduce Misc. Operating Costs - Human Resources 0 5,300 5,300
Community & Economic Development
Engineering allocation CED Office Admin. (see Pub. Saf.) 12,200 0 12,200
City Hall allocation CED Office Admin. (see Pub. Saf.) 8,600 0 8,600
20,800 0.00 5,300 26,100
Economic Development
Community & Economic Development - Planning
Transfer .40 Asst. Planner - Parks 26,400 0 26,400
Planning allocation CED Office Admin. (see Pub. Saf.) 23,700 0 23,700
Street & Traffic Operations
Reduce Operating Supplies (Street Maintenance) 0 29,000 29,000
Reduce Prof. Services (Large Tree 0 500 500
Reduce Small Tools 0. 500 500
50,100 0.00 30,000 80,100
Quality of Life
Parks
1 (vacant) Admin Assoc/Move Planning Assoc. (net) 50,100 1.00 0 50,100
Customer Service /Communications
City Management - City Clerk
II Reduce Public Records Clerk - Months 67,300 0.00 0 67,300
Grand Total $1,283,500 13.00 $128,200 $1,411,700
Attachment 3, cont.
CITY OF Ldid az
2012 BUDGET REDUCTION OPTIONS
2012 BUDGET OPTIONS - SUPPLEMENTAL REDUCTIONS
- Supplementary Reductions -
Priority of Government Personnel FTE's Non -Pers Total
Public Health & Safety
Community & Economic Development
1 (filled) Fire Code Inspector $67,600 1.00 F $0 $67,600
City Manager / Legal
1 (filled) Legal Assistant (split allocation) 31,500 1.00 F 0 31,500
Temp. Le gal Assistant (split allocation) 8,500 0 8,500
107,600 2.00 0 107,600
Resource Management
Finance
1(filled) Financial Services Specialist 62,000 1.00 F 0 62,000
City Management
Asst. City Mgr /Reinstate CED Director (vacant) 118,500 1.00 V 0 118,500
1 (filled) Executive Assistant - City Manager 84,300 1.00 F 0 84,300
1 (vacant) Specialist - Human Resources 58,200 1.00 V 0 58,200
Legal Assistant (split allocation) 31,500 0 31,500
Temp. Legal Assistant (split allocation) 8,500 0 8,500
Community & Economic Development
1 (filled) Construction Inspector 74,400 1.00 F 0 74,400
437,400 5.00 0 437,400 0
Economic Development .
Community & Economic Development - Planning
1 (vacant) Comm. Development Specialist 28,400 1.00 V 0 28,400
Modify Sup. Planner - Sr. Planner 33,600 0 33,600
Street & Traffic Operations
Reduce Vehicle Replacement 0 100,000 100,000
62,000 ' 1.00 100,000 162,000
Quality of Life
Parks
Reduce Tree Maintenance 0 7,500 7,500
Reduce Small Tools Replacement 0 1,000 1,000
Reduce Maintenance Temporaries 8,000 0 8,000
Reduce Fertilization 0 3,000 3,000
Reduce Overtime for Maintenance 2,000 0 2,000
Reduce Afte rschool Program 6,000 1,000 7,000
Reduce Parks Movies 500 1,000 1,500
Reduce Summer Playground Program 5,000 1,000 6,000
Reduce Overtime for FPGC 2,000 0 2,000
Reduce Franklin Pool Temporaries 5,500 0 5,500
Reduce Ball Field Maintenance 6,500 0 6,500
35,500 0.00 14,500 50,000
Grand Total $642,500 8.00 $114,500 $757,000
® AtInent 4 •
City of Yakima
General Government Revenue
Seven Year Comparison
•
2006 2007 2008 2009 2010 2011 2012
Proposed
Source Actual Actual Actual - Actual Actual Estimate Budget
General Sales Tax $12,698,230 $13,423,269 $13,719,058 $12,623,990 $12,653,993 $12,650,000 $12,550,000 .
Crim. Justice Sales Tax 2,290,157 2,378,160 2,605,242 2,521,881 2,553,893 2,588,000 2,575,500
Property Tax 12,580,094 12,678,715 13,457,989 13,889,500 14,231,526 14,607,000 14,968,000
Franchise & Util. Taxes 10,662,519 10,534,541 11,099,995 12,093,883 12,035,789 11,742,000 11,986,000
Charges for Services 4,903,679 5,360,155 5,729,397 5,648,396 6,076,139 6,297,948 6,241,655
State Shared Revenue 2,664,433 3,000,203 3,021,705 3,084,952 2,933,636 2,975,659 2,322,900
Fines and Forfeitures 1,309,431 1,420,275 1,582,815 1,631,592 . 1,658,467 1,636,344 1,645,700
Other Taxes 1,964,259 1,666,492 1,499,292 1,492,626 1,394,441 1,395,500 1,392,000
- Other Revenue 1,235,017 1,393,657 1,446,639 942,937 652,103 677,257 656,400
Transfers from other Funds 1,055,105 1,063,126 1,086,360 1,198,701 1,230,565 1,185,000 1,234,000
Other Intergovernmental 847,945 1,056,731 1,193,758 1,450,423 1,272,580 959,247 1,085,830
Licenses and Permits 741,492 982,084 993,122 711,835 768,469 619,200 616,700
Total Revenue $52,952,361 $54,957,408 $57,435,372 $57,290,716 $57,461,601 $57,333,155 $57,274,685
3.79% 4.51% -0.25% 0.30% -0.22% -0.10%
Beginning Fund Balance 6,375,430 6,935,112, 8,186,216 8,622,738 6,413,707 5,954,903 5,612,257
Total Resources $59,327,791 $61,892,520 $65,621,588 $65,913,454 $63,875,308 $63,288,058 $62,886,942
cje 11/23/2011 1:06 PM 11- 15 -11Gen Gov Resources 2006- 2012.xlsx
Attachment 5
Comparative In -Lieu Utility Tax Rates - 2010
Top 23 Cities - Washington State
Water Wastewater Refuse Stormwater
Granger 36% 36% 36%
Wapato 33% 33% 33%
Almira 25% 25% 25%
Grandview 24% 6% 40%
Toppenish 23% 23% 23%
Sprague 20% 4% 4%
Ephrata 20% 20% 8%
Port Townsend 20% 20% 20% 20%
Vancouver 20% 20% 20% 20%
Davenport 18% 18% 18%
Medical Lake 17% 17% 17%
Battle Ground 16% 16% 10% 16%
Seattle 16% 12% 12% 12%
Winthrop 15% 15% 6%
Creston 14% 14% 14%
Yakima 14 %. 14% 9%
Kennewick 14% 7% 7% 1%
Brewster 12% 12% 12%
Kittitas 12% 12% 6%
III
Deer Park 12% 12% 12%
Olympia \/ 12% 7% 10% 10%
Harrah 12% 12%
Prosser 12% 14%
Yakima Valley Cities
Water Wastewater Refuse
Granger 36% 36% 36%
Wapato 33% 33% 33%
Grandview 24% 6% 40%
Toppenish 23% 23% 23%
Yakima 14% 14% 9%
Moxee - 6% . 6% 6%
Naches 6% 6%
Tieton 6% 6% 5%
Selah 6% 6% 6%
Union Gap Not levied
Source: 2010 AWC Tax and User Fee Survey