Public Hearing: FY 2020-2021 Budget and Property Tax Levy

This public hearing is being held to comply with law. Arizona budget laws require a public hearing on the proposed final budget and property tax levy, A.R.S. Section 42-17104.

Upon adopting the final FY 2020-2021 Budget, the City may commit and spend funds for community needs as described in the budget.  The budget is funded through numerous revenue sources, including property tax.

The FY 2019-2020 primary property tax levy was $6,892,243. The City is proposing a flat levy on existing property.  The total levy related to new construction is $60,474 for a total levy of $6,952,496 in FY 2020-2021. The primary property tax rate to support this levy is $0.7510 per $100 of assessed valuation.

The City is proposing a secondary property tax levy of $7,341,701 on existing properties, plus levy of $64,420 on new construction, for a total secondary property tax levy in FY2020-2021 of $7,406,121.  The proposed secondary property tax rate is $0.8000 per $100 of assessed valuation (less than prior fiscal year).

The FY 2020-2021 Budget is the financial plan of the City for the upcoming fiscal year.

The adoption of the Annual Budget and Financial Plan provides Council direction and financial resources to support the Council Goals, Regional Plan and Team Flagstaff Strategic Plans.

• September Priority Based Budget Retreat on September 24, 2019
• February Budget Retreat on February 3, 2020, and February 4, 2020
• Council Budget Work Session on April 23, 2020, and April 24, 2020
• Tentative Budget Adoption on June 2, 2020

1. Conduct the public hearing
2. Delay the public hearing

Budget adoption:
The budget was presented for tentative adoption on June 2, 2020. The tentative adoption established the maximum appropriation for the City for the FY 2020-2021 budget year. The budget legal schedules were published in the Arizona Daily Sun on June 4, 2020, and June 11, 2020.

Property tax levy:
Primary property taxes are accumulated in the General Fund and pay for general services which include but are not limited to public safety, parks and recreation, other public work services, and general administrative and management functions within the City.

Secondary property taxes support debt service payments on numerous city capital projects including the Aquaplex, fire stations, open space, street/utility projects, forest restoration, the core services facility and courthouse.

The current and proposed property tax rates are shown in the "Expanded Financial Consideration" section below.

Truth in Taxation legislation:
Every year, the Truth in Taxation legislation requires that the county assessor, on or before February 10, transmit to each city and town an estimate of the total net assessed valuation of the city, including new property added to the tax roll. If the proposed primary tax levy amount, excluding amounts attributable to new construction, is greater than the levy amount in the previous year, the City must go through the Truth in Taxation procedures. It is important to note that it is the levy amount and not the rate which triggers the Truth in Taxation procedure. The City of Flagstaff has not triggered the Truth in Taxation' notification and hearing for FY 2020-2021 and no additional notifications are required.

The adoption of the tentative budget set forth into motion a legally mandated time sequence of actions of which the Council must adhere to adopt a final budget and to levy property taxes. If this time sequence is not met as required by statute, the tentative budget adoption, the final budget adoption, the property tax levy actions, and related publications must be started over. The final budget adoption must occur after a public hearing and Council must convene into a Special Meeting to adopt the final budget. The budget must be adopted by the third week of July. The County will adopt the property tax levy the first week of August. The key dates in the process have been presented as part of the action summary.
 

The City is proposed a flat primary property tax levy in FY 2020-2021 of $6,952,496.  The maximum allowable primary property revenue under state law for FY 2020-2021 is $7,091,361. The primary property tax rate will decrease from $0.7933 in FY 2019-2020 to $0.7510 in FY 2020-2021 due to a total valuation of all existing properties which are increasing 5.6%.  Five years of historical data is shown below:
 

Property Tax Rates	FY 2016-2017	FY 2017-2018	FY 2018-2019	FY 2019-2020	FY 2020-2021 Proposed
Primary	$ 0.8121	0.8233	0.8334	0.7933	0.7510
Secondary	0.8366	0.8366	0.8366	0.8366	0.8000
Total	$ 1.6487	1.6599	1.6700	1.6299	1.5510

The budget process has allowed for public participation which is vital for the City Council in determining the current year goals and objectives. The budget translates the community's goals and objectives as determined by the City Council into fiscal reality. Timely budget adoption allows the City to commit expenditures as related to the FY 2020-2021 Budget as needed for ongoing operational consistency to the citizenry. The FY 2020-2021 Budget is balanced.

Inform/Involve: This is the public hearing in the budget adoption process and it is open to public comment on the property tax levy and the final budget adoption. Budget legal schedules were published in the June 4, 2020, and June 11, 2020, Arizona Daily Sun to allow for additional community review. In addition, the legal and other budget schedules were made available at City Hall, at both Flagstaff Public Libraries, and on the official city website. The final opportunity for community involvement for budget adoption is at this public meeting. The final opportunity for public input to the tax levy will be at the July 7, 2020, Council Meeting.