HomeMy WebLinkAbout12/03/2019 17 2020 City-Wide Ballot Proposition for Levy Lid Lift a\'4\lyy bxk ik 1
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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 17.
For Meeting of: December 3, 2019
ITEM TITLE: Resolution authorizing a 2020 City-wide ballot proposition for Levy
Lid Lift
SUBMITTED BY: Alex Meyerhoff, Interim City Manager
Steve Groom, Director of Finance and Budget
SUMMARY EXPLANATION:
Consideration of a Resolution stating the City of Yakima's support of a 2020 City-wide ballot
proposition for Levy Lid Lift as approved unanimously by the City Council on October 16, 2019.
The attached memo outlines the rationale and the purpose of the proposed lid lift. Deanna
Gregory, who regularly represents the City in bond proceedings and assists cities in levy lid lift
resolutions, will participate in the public discussion at this council meeting. Department heads
who can speak to service-delivery constraints will also be available for this discussion.
ITEM BUDGETED:
STRATEGIC PRIORITY:
APPROVED FOR SUBMITTAL BY THE CITY MANAGER
RECOMMENDATION:
ATTACHMENTS:
Description Upload Date Type
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D resolution 11/ 0/2019 r Me o
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FINANCE
TO: Mayor and City Council
FROM: Steve Groom, Finance
DATE: November 25, 2019
RE: Levy Lid Lift Resolution background
In response to council direction to seek voter approval, this is to recommend a resolution specific
to the current economics of Yakima, as discussed during the 2020 budget study sessions. The
Levy Lid Lift has presented an increasing opportunity to restore service levels, addressing some
of the city's financial belt-tightening challenges, by having a conversation with taxpayers through
the process of a lid lift ballot initiative.
This is to accompany, and provide a rationale for, a proposed resolution.
Current capacity. Staff provided an annual update to council during the budget process using
the Yakima County Tax Assessor's annual September valuations. In September 2018, valuations
that showed there was $2.1 million available; in September 2019 this grew to $3.0 million in
property tax levy capacity as summarized in the following two charts, presented annually:
2019 2018 2019 2019 2019 2019 2020 2020
Valuation Levy Valuation Levy Valuation Levy Valuation Levy
Beginning 5,957,929,341 $ 19,367,991 6,241,111,933 19,696,941 Beginning 6,241,111,933 $ 19,696,941 6,901,339,691 $ 19,419,144
Add'. Add'.
Existing 235,274,954 $ 183,680 544,029,661 186,868 Existing 544,029,661 $ 186,868 369,331,427 $ 194,181
New Constrt 49,009,539 $ 135,170 98,586,215 295,182 New Constrt 98,586,215 $ 295,182 97,446,349 $ 274,183
Annexation - $ - 4,691,000 14,016 Annexation 4,691,000 $ 14,016 - $
Total 6,241,111,933 $ 19,696,941 6,999,407,709 $ 19,182,907 Total 6,999,407,709 $ 19,182,907 7,369,116,466 $ 19,996,509 '..
$ 2.99 $ 279 $ 279 $ 270
LLL capacity $ 661,000 $ 2,171,000 LLL capacity $ 2,171,000 $ 2,955,000
10-year data. What these charts show is that property valuations have increased at a greater
rate than property tax levy due to the legislated 1% cap on existing properties. Shown another
way, on a 10-year trend basis, it is clear that the drop in levy rate is due to valuations increasing
at a greater pace than the annual levy:
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This revenue is such a large component of general fund services' funding that the effect of the
1% property tax increase cap on the city budget has been to reduce the general fund's ability to
keep pace with expenses.
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Lid Lift options. In considering a lid lift, the factors to consider involve the purposes that the city
would be trying to accomplish. There are different lid lift mechanisms available — combinations
of single-year and multi-year, temporary and permanent.
Temporary lid lifts would be for a one-time purpose. Were the city only desiring to catch up the
General Fund's fund balance, that option could be considered, however Yakima has other factors
to consider. Temporary lid lifts, both single-year and multi-year, reverts back to what it would
have been if the lid lift had not been exercised. Staff does not recommend either of these.
Permanent lid lifts serve the purpose of resetting the rate on a go-forward basis, which does fit
Yakima's increasing squeeze caused by mounting expenses. The salary and benefits increases
in recent years have outpaced revenues, and are likely to continue to do so. Vehicle purchases
have been deferred which has created both a backlog and a trajectory that fails to meet on-going
and future replacements. General liability insurance is a material expense that has outpaced
revenues as well. For these reasons, a permanent lid lift that would reset revenues, and remain
at that level subject to the 1% cap going forward, fit the purposes that fit the demand for city
services and the price of delivery of those services. MRSC's guidance on lid lifts illustrates it this
way:
Permanent Single-Year Lid Lifts
With a permanent single-year lid lift,the levy lid bumps up more than 1%in the first year,and then that amount is
used to calculate all future 101%Levy limitations.The measure never expires and the levy lid never reverts.However,
future annual increases may not exceed 1%without going to the voters for another Lid lift.
See below for a conceptual example
Single Year(One-Bump)Levy Ud Lift-Permanent
RCW 84.55.050W
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Alternatively, a permanent multi-year lid lift provides a mechanism for lifts of more than 1% each
year for up to six years. It does not revert to previous level and it continues into the future at that
level subject to the 1% cap going forward afterwards. MRSC's guidance on lid lifts illustrates it
this way:
Permanent Multi-Year Lid Lifts
Similarly,with a permanent multi-year lid lift the levy lid bumps up more than 1%each year(subject to the limit
factor)for up to six years.However,the lid hit does not revert and the maximum levy is then used as the base to
calculate all future 1%levy limitations.
See below for a conceptual example
Multi-Year Levy Lid Lift-Permanent
RCW 84,55.050(2)
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Because the nature of the circumstances of the City's need to catch up on General Fund reserves,
vehicle replacement and staffing positions that have been frozen or eliminated in the past, staff
recommends a Single Year lid lift to catch up and reset the trajectory of the levy.
Exemptions. Should city council so choose, RCW 84.36.384 authorizes exemption from the tax
increase for senior citizens, disabled veterans, and other people with disabilities as defined in
RCW 84.36.381, therefore exemption language may or may not be proposed as a part of the
proposition. Section 4 deleted at the discretion of city council.
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FAQ: What could an unrestricted General Fund property tax increase restore?
As already described, all services provided by the General Fund have been systematically
squeezed, meaning that new revenue provided by a lid lift would not be available for new services,
but rather to restore or maintain existing services.
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 Collective Bargaining Agreement 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; public safety priorities require dangerous, violent, urgent and
immediate issues take first priority;
• Street maintenance, snow and ice removal; February 2019 snow exceeded available
budget, necessitating deferral of street chip-seal projects; the November passage of 1-976
further reduced funding for street projects by an estimated $1.6 million annually;
• Vehicle and equipment replacement funding; deferred replacements in Police, Streets
and Parks have been required due to General Fund resource limitations;
• Code compliance services, planning, graffiti and illegal dumping mitigation.
While these are the perennial General Fund services that City Council weighs annually in the
annual budget process, each budget would still be the city council's primary control point for
allocating limited resources following a levy lid lift and prioritizing specific needs and demands.
Staff respectfully submits the attached resolution, that contains language appropriate to fund
existing service levels, restore the General Fund's fund balance, and provide for funding
replacement of existing vehicles and the maintenance and replacement of Streets and Parks
capital expenditures.
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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)
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RESOLUTION NO. R-2019-
RESOLUTION providing for the submission to the qualified electors of the City of Yakima
at an election to be held on February 11. 2020, of a proposition authorizing
the City to lift the levy limit established in RCW 84.55.010 in order to provide
funds to pay the costs of City operations and services, including public
safely, parks and recreation, addressing homelessness, street
maintenance, planning, code enforcement, graffiti removal and other City
services; and providing for severability and an effective date
WHEREAS, Washington State law limits the annual increase of a city's regular property
tax levy to 1% plus an allowance for new construction, unless the voters of a city approve a levy
lid lift permitting the collection of regular property taxes in a greater amount; and
WHEREAS, the City of Yakima's (the "City") regular property tax levy is a major source of
General Fund revenue paying for the costs of the City's general government services, including
public safety services, parks and recreation services, youth, family and senior services,
addressing homelessness, and others; and
WHEREAS, the costs of providing such basic City services have increased over time due
to economic inflation and growth in the City, yet the City's regular property tax levy has not kept
pace with inflation and growth; and
WHEREAS, existing constraints on the City's capacity to generate revenue for its General
Fund have resulted in cutbacks to some services and threaten the City's ability to provide basic
services into the future; and
WHEREAS, in order to continue to provide the current level of services being provided in
the City, it is deemed necessary that the City increase its regular property tax levy rate to $0.40
per$1,000 of assessed value for collection in 2021 and thereafter to use the resulting levy amount
as the basis for computing the limitations for subsequent levies as allowed by chapter 84.55 RCW;
and
WHEREAS, the City Council deems it necessary to submit to the voters of the City the
proposition of whether or not the City shall levy regular property taxes for collection in 2021 in
excess of the limit factor provided for in chapter 84.55 RCW;
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
Section 1. Findings. The City Council hereby finds the best interests of the residents of the
City require the City to provide additional funds to pay for the costs of City operations and services,
including but not limited to the following (the "City Services"):
• Public safety services, such as crime prevention, police patrol and investigations, fire
suppression and prevention and emergency management and preparedness;
• Youth, family and senior services, such as community-based and mental health services
and safety net services:
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• Parks and recreation services, such as park maintenance, community center operations,
senior recreation services and special events;
• Construction, maintenance and improvement of existing and new City facilities,
infrastructure and streets;
• Addressing homelessness through various means as are appropriate for City-level
interventions, such as crime prevention, code enforcement, and refuse removal;
• Equipment acquisition arid replacement, including City police, fire, streets and parks
vehicles;
• Street maintenance, including removal of snow and ice;
• Planning, code compliance and code enforcement;
• Mitigation of graffiti and illegal dumping; and
• Other City operations, maintenance, and services as determined to be necessary from
lime to lime.
The City Council shall determine the timing, order and manner of funding the City Services and
other uses of levy proceeds. The cost of all compensation, benefits, training, support services,
equipment, vehicles, infrastructure, facilities, and/or administrative expenses and other costs
incurred in connection with the City Services shall be deemed a part of the costs of such City
Services.
Section 2. Calling of Election Regarding the Levy of Additional Regular Property Taxes. It is
hereby found and declared the best interests of the City require the submission to the qualified
electors of the City of the proposition whether the City shall levy regular property taxes above the
levy limitations established in RCW 84.55.005 and RCW 84.55.010 for their ratification or rejection
at an election to be held on February 11, 2020. For the purpose of providing funds to pay the
costs of the City Services, the Yakima County Auditor, as ex officio supervisor of elections in
Yakima County, Washington, is hereby requested to call and conduct such election to be held on
such day and to submit to the qualified electors of the City for their approval or rejection a
proposition to increase the City's regular property tax levy by up to $0.40 per $1,000 of assessed
valuation (to a total rate not to exceed $3.10 per $1,000 of assessed valuation) for collection in
2021, as allowed by chapter 84.55 RCW. The 2021 levy amount will be used as the basis to
calculate subsequent levy limits.
Upon approval of the voters of the proposition hereinafter set forth, the City may use proceeds of
such levy to pay the costs of the City Services as more particularly described herein.
Section 3. Certification of Ballot Proposition. The City Clerk is hereby authorized and directed
to certify the following proposition to the Yakima County Auditor, as ex officio supervisor of
elections in Yakima County, Washington, in substantially the following form. The election shall
be held by all mail-in ballot.
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CITY OF YAKIMA
PROPOSITION 1
LEVY LID LIFT FOR PUBLIC SAFETY, PARKS AND RECREATION,
YOUTH, FAMILY AND SENIOR AND OTHER
CITY SERVICES AND OPERATIONS
The City of Yakima City Council adopted Resolution No.
concerning funding for City services and operations. This
proposition would provide funding to sustain City operations and
services, including public safety, parks/recreation, youth/family,
addressing homelessness, street and facilities maintenance, and
other services, by increasing the City's regular property tax levy by
$0.40/$1,000 to a maximum rate of $3.10/$1,000 of assessed
valuation for collection in 2021. The 2021 levy amount will be used
as the basis to calculate subsequent levies, consistent with RCW
84.55. [Seniors and other individuals qualifying under RCW 84.36
would be exempt ]
Should this proposition be approved?
YES
NO
The City Manager and City Attorney are authorized to make such minor adjustments to the
wording of such proposition as may be recommended by the Yakima County Auditor, provided
the intent of the proposition remains clear and consistent with the intent of this resolution.
JSection 4. Exemption. If the ballot proposition set forth herein is approved by the voters, as
authorized by RCW 84.36.381, senior citizens, disabled veterans, and other people with
disabilities (as defined in RCW 84.36.381) shall be exempt from the tax increase resulting from
such levy lid lift.][for discussion]
Section 5, Local Voters' Pamphlet Authorized. The preparation and distribution of a local
voters' pamphlet providing information on the foregoing ballot measure is hereby authorized. The
pamphlet shall include arguments advocating approval and disapproval of the ballot measure. In
accordance with RCW 29A.32.280, the arguments advocating approval and rejection of the ballot
measure shall be prepared by committees appointed by the City Council by resolution not later
than forty-five days before the publication of the pamphlet. Each committee shall be composed
of not more than three persons; however, a committee may seek the advice of any person or
persons. The committee advocating approval shall be composed of persons known to favor the
ballot measure, and the committee advocating rejection shall be composed of persons known to
oppose the ballot measure.
Section 6. Corrections by City Clerk. Upon approval of the City Attorney, the City Clerk and
the code reviser are authorized to make necessary corrections to this resolution, including the
correction of clerical errors; references to other local, state or federal laws, codes, rules, or
regulations; or resolution numbering and section/subsection numbering.
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Section 7. Severability. If any one or more section, subsection, or sentence of this Resolution
is held to be unconstitutional or invalid, such decision shall not affect the validity of the remaining
portion of this resolution and the same shall remain in full force and effect.
Section S. Effective Date. This resolution shall become effective immediately after its
adoption.
ADOPTED BY THE CITY COUNCIL this 3rd day of December, 2019.
CITY OF YAKIMA, WASHINGTON
Kathy Coffey, Mayor
ATTEST:
City Clerk
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CERTIFICATE
I, the undersigned, City Clerk of the City of Yakima, Washington, and keeper of the
records of the City Council, DO HEREBY CERTIFY:
1. That the attached Resolution is a true and correct copy of Resolution No. of
the City Council (the "Resolution"), as adopted at a regular meeting of the City Council held on
1, 2019, and duly recorded in my office.
2. That said meeting was duly convened and held in all respects in accordance with
law, and to the extent required by law, due and proper notice of such meeting was given; that
quorum of the City Council was present throughout the meeting, and a legally sufficient number
of members of the City Council voted in the proper manner for the adoption of said Resolution;
that all other requirements and proceedings incident to the proper adoption or passage of said
Resolution have been duly fulfilled, carried out and otherwise observed, and that I am authorized
to execute this certificate.
Dated this day of . 2019.
City Clerk