HomeMy WebLinkAbout11/01/2022 09. Public hearing and ordinances pertaining to Ad Valorem Taxes to be levied for collection in Fiscal Year 20231
ITEM TITLE:
SUBMITTED BY:
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 9.
For Meeting of: November 1, 2022
Public hearing and ordinances pertaining to Ad Valorem Taxes to
be levied for collection in Fiscal Year 2023
Bob Harrison, City Manager
Jennifer Ferrer -Santa Ines, Director of Finance and Budget
SUMMARY EXPLANATION:
This agenda item includes two (2) separate Ordinances.
Ordinance A identifies Council's intent to authorize an increase in the tax levy over 2022 levels. It
is required by RCW 84.55.120. This is legally necessary to increase the 2023 tax collections by
any amount over 2022 levels.
Ordinance B fixes the maximum tax levy for collection by the City in 2023. This Ordinance
complies with RCW 35.33.135 and in accordance with Article VI I, Section 2 of the City Charter,
requires a super -majority approval (i.e. a minimum affirmative vote of five members) by City
Council.
ITEM BUDGETED: Yes
STRATEGIC PRIORITY: Public Trust and Accountability
APPROVED FOR SUBMITTAL BY THE CITY MANAGER
RECOMMENDATION:
Pass Ordinances.
ATTACHMENTS:
Description
p Ordinance A
0 Ordinance B
p Memo
Upload Date
10/ 19/2022
10/ 19/2022
10/19/2022
Type
Cover Memo
Ordinance
Coker Memo
2
ORDINANCE A
AN ORDINANCE
ORDINANCE NO. 2022-
relating to the annual property tax levy; declaring the City Council's intent
to increase the City's 2023 regular levy up to 101% along with new
construction, annexation, refunds and growth in state -assessed property
values 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 1, 2022,
upon due and proper legal notice, the Yakima City Council held a public hearing to consider the
City's general government revenue sources for the 2023 current expense budget, and the total
proposed property tax levy amount pertaining to 2023 revenues from real and personal property
taxes; and
WHEREAS, RCW 84.55.120 provides that no increase in property tax revenue, other than
that resulting from the addition of new construction, improvements to property, and 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, RCW 84.55.005 sets the limit factor for the increase in the regular property
tax levy at the lesser of one hundred one percent or one hundred percent plus inflation, which is
defined as the percentage change in the implicit price deflator (IPD) for personal consumption
expenditures for the United States as published for the most recent twelve-month period by the
bureau of economic analysis of the federal department of commerce by September 25th of the
year before the taxes are payable; and
WHEREAS, the applicable percentage change in the Implicit Price Deflator was 6.457%;
and
WHEREAS, RCW 84.55.0101 allows a taxing district to use a limit factor of one hundred
one percent upon a finding of substantial need by the legislative authority by a majority vote; and
WHEREAS, the City Council, after the public hearing on November 1, 2022 and, 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, along with 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
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ORDINANCE A
WHEREAS, the maximum levy rate the City of Yakima can levy is $3.10/$1,000 assessed
valuation (AV) plus $0.225/$1,000 AV specifically for Firemen's Relief and Pension Fund and will
not change as a result of this ordinance; and
WHEREAS, property tax is a tax based on ownership of a piece of real estate. A "levied
property tax" is generally a tax imposed on property owners, based on the value of their property
and the municipal government's needs; and
WHEREAS, the city levy rate has decreased from $3.10/$1,000 AV to $2.34/$1,000 AV in
2022 and staff is projecting the levy rate for 2023 to be $1.98/$1,000 AV; and
WHEREAS, in order to bring the current levy rate to the maximum allowed, a levy lid lift is
required and the City of Yakima residents will need to approve such ballot measure; and
WHEREAS, the amount of property tax levied for collection in 2022 was $20,600,919 for
general government purposes; and
WHEREAS, the discretionary increase in property tax levied attributable to the inflation
factor for collection in 2023 shall be in the amount of $206,009, which is a percentage increase
of 1.0% from the previous year; and
WHEREAS, the non -discretionary increases in property tax levied for collection in 2023
can only be estimated due to the absence of final values to be provided by the Yakima County
Assessor, now, therefore,
BE IT ORDAINED BY THE CITY OF YAKIMA:
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 2023:
A. A discretionary increase of $206,009, attributable to the inflation factor
which is a percentage increase of 1.0% over the amount levied for
collection in 2022; plus
B. An estimated increase of $2,971 for recent annexations; plus
C. An estimated increase of $335,185 for new construction and
improvements to property; plus
D. An estimated increase of $114,304 for a refund levy; plus
E. 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 30, 2022.
Section 3. Pursuant to Article VI, Section 2 of the Yakima City Charter, this ordinance
shall take effect on November 1, 2022.
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ORDINANCE A
PASSED BY THE CITY COUNCIL, signed and approved this 1st day of November, 2022.
ATTEST: Janice Deccio, Mayor
Sonya Claar Tee, City Clerk
Publication Date:
Effective Date:
ORDINANCE B
AN ORDINANCE
ORDINANCE NO. 2022-
fixing and levying the amount of ad valorem taxes necessary to discharge
the expected expenses and obligations for the 2023 Budget for the City of
Yakima.
WHEREAS, the City Council finds that the total net amount of $21,759,389 in revenue
must be raised by ad valorem taxes on real and personal property within the corporate limits of
the City of Yakima to discharge the expected expenses and obligations for the 2023 Budget for
the City of Yakima, now therefore,
BE IT ORDAINED BY THE CITY OF YAKIMA:
Section 1. There is hereby fixed to be raised by general property taxes upon real and
personal property within the City of Yakima the amount of $21,759,389 for the following purposes:
General Government Levy
Operating Funds $20,959,389
Firemen's Relief & Pension Fund 800,000
Amount of tax levy for General
Government Purposes (1) $21,759,389
Special Purpose Tax Levy 0
Total Levy Amount (1) $21,759,389
(1) Includes an additional $500,000 to provide for final adjustments in State
assessed, refunds, new construction, and annexation 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 30, 2022.
Section 3. Pursuant to Article VI, Section 2 of the Yakima City Charter, this ordinance
shall take effect on November 1, 2022.
PASSED BY THE CITY COUNCIL, signed and approved this 1st day of November, 2022.
ATTEST: Janice Deccio, Mayor
Sonya Claar Tee, City Clerk
Publication Date: November 4, 2022
Effective Date November 1, 2022
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FINANCE
MEMORANDUM
TO: The Honorable Mayor and Members of City Council
Bob Harrison, City Manager
FROM: Jennifer Ferrer -Santa Ines, Finance Director
Kimberly Domine, Finance Division Manager
DATE: November 1, 2022
RE: 2023 Property Tax Levy
Staff respectfully recommends the approval of both Ordinances A and B, necessary to set the
2023 property tax levy.
Council Action to be Taken
Review and Approve Ordinance A and Ordinance B, attached.
Background
This agenda item includes two (2) separate ordinances, steps required by statute to establish the
property tax levy. Property tax is a tax based on ownership of a piece of real estate. A "levied
property tax" is a tax imposed on property owners, based on the value of their property and the
municipal government's needs.
Ordinances A and B will set the property tax levy for collection in 2023, based on the limit of a 1%
increase over the prior year base levy, plus new levies for construction and annexation. The law
defines the rate of inflation as measured by the Implicit Price Deflator (IPD) for consumer goods.
For this year, as confirmed by MRSC, the IPD increased to 6.457% which statutorily allows for
an increase of 1% if city council determines there is substantial need. The 2023 budget was
developed assuming a 1% increase in the overall levy.
• Exhibit I is the County Assessor's communication of assessed valuation.
• Exhibit II details the calculation of the property tax levy with a base of 101% of the prior
year using preliminary information obtained from the County Assessor's office. According
to state law, the certification of ad valorem taxes must be filed with the Board of Yakima
County Commissioners on or before November 30, 2022 or the City will receive no funding
from this source in 2023.
• Exhibit III is the County Treasurer's communication of prior year refunds.
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FINANCE
• Ordinance A identifies Council's intent to authorize an increase in the tax levy over 2022
levels. It is required by RCW 84.55.120. This is legally necessary to increase the 2023 tax
collections by any amount over 2022 levels.
• Ordinance B fixes the maximum tax levy for collection by the City in 2023. This ordinance
complies with RCW 35.33.135 and in accordance with Article VII, Section 2 of the City
Charter, requires a super -majority approval (i.e. a majority plus one or five members) by
City Council.
Discussion — Valuation and Property Tax
The maximum rate the City of Yakima can levy is $3.10/$1,000 assessed valuation (AV)
plus $0.225/$1,000 AV specifically for Firemen's Relief and Pension Fund. According to RCW
84.55.0101, a city can levy up to 101% plus new construction, annexation, and refunds. In order
to bring the current levy rate to the maximum allowed, a levy lid lift is required and the City of
Yakima residents will need to approve this ballot measure. If the City were to levy the maximum
rate (levy lid lift approved by City of Yakima residents), the estimated increase in property tax
revenue would be an additional $13,000,000.
The total 2023 City of Yakima proposed property tax levy includes the 101% levy, and amounts
for new construction and prior year refunds. The total operating tax rate for next year is estimated
to be $1.98 per $1,000 of Assessed Valuation (AV), a decrease of approximately $0.36 per
thousand of Assessed Valuation. The current rate is $2.34 per $1,000 of Assessed Valuation
(AV).