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07/16/2019 15 Discussion Regarding Potential Levy Lid Lift and Repeal of 2013 and 2014 Charter Amendments ti i..asxntntj kd d g$Ag aY �ae.. x°'naa.x,,4n BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 15. For Meeting of: July 16, 2019 ITEM TITLE: Discussion regarding potential Levy Lid Lift and Repeal of 2013 and 2014 Charter Amendments SUBMITTED BY: Steve Groom, Director of Finance and Budget SUMMARY EXPLANATION: At the July 2, 2019 Council meeting, Councilmembers directed staff to bring back a discussion item on the July 16, 2019 meeting regarding a potential levy lid lift and repeal of the City Charter amendments related to Parks and Streets. During the 2019 Budget process, and most recently on January 12, 2019, Council reviewed the levy lid lift and property tax capacity to decide: 1)whether or not to consider proposing a levy lid lift; 2)what amount to propose; 3)what election date to work towards. An update on the next property valuation assessment in September 2019 will be included in the 2020 budget study sessions. Also on January 12, 2019, Council discussed the process to repeal a Charter Amendment (minutes attached). No action was taken on either item. ITEM BUDGETED: NA STRATEGIC PRIORITY: Public Trust and Accountability APPROVED FOR SUBMITTAL: If City Manager STAFF RECOMMENDATION: Review and provide direction to staff. BOARD/COMMITTEE RECOMMENDATION: 2 ATTACHMENTS: Description Upload Date Type D levy lidUftarc charter repeals 7 2019 Gs‘cr Memo D 1 12 minutes 7 ar2019 Cover Memo 3 93995 N I xI FINANCE TO: Mayor and City Council Cliff Moore, City Manager FROM: Steve Groom, Finance DATE: July 8, 2019 RE: Potential for Levy Lid Lift/ Possible repeal of Charter Amendments of 2013 and 2014 A Levy Lid Lift and/or a repeal of Charter amendments of 2013 and 2014 could be opportunities to partially address the challenge of sustaining city service levels by enhancing the General Fund. Policy decisions for Council to decide are 1) whether or not to consider proposing a Levy Lid Lift and/or a repeal of the two Charter amendments, 2) if opting for a levy lid lift, what amount to propose, and 3) when and in what order to seek voter approval of these two opportunities? Staff provides an annual update to Council during the budget process following the Yakima County Tax Assessor's annual September valuation update. In September 2018, property valuations showed there was$2.1 M available in property tax levy capacity as summarized below: Property Tax Capacity Tax 3e99nne c- Value =Tax,3atef $£8,884 for every l-cent charge in Property Tax rate imat tvvy 11 5Assess', max$3:R ZO3.8. .$18,686,841 S6.241,111,833 x 1,CDO.:=.$ 2.93 Valve k: Tax Rate = Tax 3e5ertu Difference $6 888437,709:. $: 2.78 S 19,181,933 6, 407,709 0.05 2.83 29,528329 344,420 2019 Add i: 1% 186,8688 544,028,661 6; 407,709 0.10 2.Ss. 19,870,750 di3,841 New construmor1. 255,182. 98,586,215 6,sea 407,709 0.15- >2,93 20,2153170 1,033,261.. Arnesiatian 13,035 4,681 0013 6, ,407,709 0.20. 2.98 207559,531 377,682 6,i• 407,709.: 0.25: :3:03 20, Q11 1722,102 $L9,181,925 $5, ;AQ7,709 x 1;: $ 2.78 64:d,4073709 0.30 305 21,248431 2,.. ,522 6.8 ,4{17,709 (131 :3:C 21,317,315 135,406 �.: 3, 0.32 6aj t,407,709 0.32 ::310 21,354,064 2,172,155 The Levy Lid Lift opportunity was discussed during budget study sessions on October 11 and 18, 2018, business meetings on November 6 and 13 and December 4, 2018, and again during the January 12, 2019, strategic planning meeting. To date, Council has given no direction on the amount of or a target date for a levy lid lift; or about sequencing the two options. On about September 25, 2019, updated valuations will be provided by the County assessor; at that time staff will calculate the new property tax levy capacity during October study sessions. The 1% property tax cap and the Charter amendments have severely strained the general fund in recent years making it difficult to maintain services in areas such as public safety, streets, parks, planning, and code enforcement, reach a policy-level fund balance, while continuing to address inflationary factors such as CBA salary and benefit increases in particular. By definition, City revenue can accomplish three things: provide services, pay debt or build fund balance, the city's fiscal strength reserve. Property Tax is one of the primary funding sources for the General Fund services and related debt. It is an unrestricted fund source that can be spent for any government purpose. 4 N xI 1 FINANCE A motion to propose a Levy Lid Lift could generally be stated as follows: I move to propose a Levy Lid Lift Proposition for the (November 2020) election ballot in the amount of an additional(up to 32) cents per$1,000 assessed valuation, not to exceed $3.10 per$1,000 of assessed value. Staff is directed to prepare a resolution with ballot language expressing this intent for Council consideration and approval. A motion to propose a ballot measure repealing 2013 and 2014 Charter amendments could be stated as follows: I move to place a proposition before the registered voters of the City to repeal City Charter Article VI, Section 8, establishing a two million dollar street fund to be taken from General Fund revenue, and Section 9, establishing a seven hundred and fifty thousand dollar park and recreation fund to be taken from General Fund revenue. Staff is directed to prepare a resolution with ballot language expressing this intent for Council consideration and approval. Additional information: How could an unrestricted General Fund property tax increase benefit residents? A levy lid lift could contribute to sustaining service levels related to many general fund services and support functions that perennially plague the city's budgetary ability to address: • Fiscal sustainability, fund balance improvement, bond rating stabilization; • Keeping pace with CBA salary and benefit increases; • Public safety services, such as crime prevention, police patrol and investigations, fire suppression and prevention, emergency management and preparedness; • Parks & recreation services, such as parks maintenance, community center operations, senior recreation services, and special events; • Homelessness issues; • Street maintenance, snow and ice removal; • Vehicle and equipment replacement funding; • Code compliance services, planning, graffiti and illegal dumping mitigation. The annual budget would still be the city council's primary control point for allocating limited resources following a levy lid lift. Background - Property Tax Levy RCWs City of Yakima is effectively limited to a cap of$3.10 because: • The maximum regular property tax levy rate for most cities is $3.375/$1,000 assessed valuation (AV). • City of Yakima has a Firemen's Pension Fund so levies an additional $0.225/$1,000 AV. (RCW 41.16.06) • City of Yakima has a library district which takes $0.50. (RCW 27.12.05) • Nov. 2001 Initiative 747 constrained the allowable levy increase to the lesser of inflation or 1% (RCW 84.55.005) ���� n u����� YAKUMACUTY COUNCIL SPECIAL MEETING January 12. 2019 City Hall —Council Chambers � 9 a.m. - N1UNUTES � _ 1. Roll Call Council: Mayor Kathy Coffey, presiding,Assistant Mayor C>u|c8 Gutierrez, Council M8rnb8n8 HD|b Cou8enO' Kay Funk Brad MU|' and Jason White ! Staff: City Manager Moore, City Attorney Cutter,Assistant City Manager Cortez, Director ofFinance . and Budget Groom and City Clerk C|aarTea [ Absent: Council Member Conn*n Mendez(excused) Assistant City Manager Cortez suggested reversing the order ofthe oQend8, which was approved by Council consensus. 2. Review requests from Council during the 2019 budget prOCaS3 Assistant City Manager Cortez n8vi8VV8d C0UOCi| F8qU8StS from the 2019 budget process. Steve Groom, Budget and Finance Director, reviewed the levy lid lift and property tax capacity. Council / Member Funk stated she is supportive of the levy lid lift in addressing the problem that property tax revenue increases don't keep up with inflation for survival of City services. City Attorney Cutter briefed Council on the process to r8p88| 8 Charter amendment. It was Council consensus not to take any action on this issue at this time. Council members confirmed that with the elimination of the public education officer inthe Fire []mp@rtrnent, that no further budget reductions are necessary. K1c Groom reported briefly on the Regional Fire Authority. It was Council consensus for staff to create an executive summary onthis issue as on information item for Council. City Manager Moore reported on the Transportation Benefit District and noted an annual report will be corning to Council./\dditi0n8||}\ it was Council consensus to bring the levy lid lift forward and report quarterly On the budget to Council. 3. Review Economic Development Plan r Assistant City Manager Cortez provided o brief summary of the City's Economic Development Phan. 4. Review 2013 Downtown Master Plan Assistant City Manager Cortez provided G brief summary of the City'3 Downtown Master Plan. City ~ Manager yNoon8 provided an update on the Downtown K8a8bmr Plan action steps since 2014. 5. Review Strategic Plan Page 1 of 466 6 Council members discussed Strategic Priorities and agreed, by Council consensus, to change the priorities as follows: * Remove the YMCA aquatic facility * Replace the plaza with downtown destination Change MLK pool to City community facilities with pools and community centers as targets • Add Yakima Airport as an economic development engine • Add homelessness and affordable housing • Add long term fiscal sustainability—target: by 2022 meet 16.7% reserve level and in 2020 budget to meet reserves at 14.6-14.8% • Keep the remaining strategic priorities Additionally, it was Council consensus to bring the levy lid lift forward and bring quarterly budget reports to Council. 6. Adjournment MOTION: Gutierrez moved and Cousens seconded to adjourn to the next Council Business meeting on January 15, 2019, at 5:30 p.m. in the Council Chambers at City Hall. The motion carried by unanimous vote, Mendez absent. The meeting adjourned at 11:50 a.m. CERTIFICATION READ AND CERTIFIED ACCURATE BY ' - A ,e , ... - COUNCIL MEMBER D ,TE COUNCIL MEMBER DATE ATTEST: ( - ) , ... ..,,, .,, , . , CITYCLERK` :' , , N,,,,Iz m YOR \,.., VVASk‘\.; Page 2 of 2