10.B.
City Council Meeting - FINAL (AMENDED)
- Meeting Date:
- 06/20/2023
- From:
- Brandi Suda, Finance Director
Information
TITLE:
Public Hearing: Fiscal Year 2023-2024 Budget and Property Tax Levy
STAFF RECOMMENDED ACTION:
1) Hold the public hearing to receive citizen input
2) Convene Special Meeting
2) Convene Special Meeting
Executive Summary:
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.
Financial Impact:
Upon adopting the final Fiscal Year (FY) 2023-2024 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 City is proposing a flat primary property tax levy of $7,043,086 on existing properties, plus a levy of $25.448 on new construction, for a total primary property tax levy in Fiscal Year (FY) 2023-2024 of $7,159,580. The primary property tax rate to support this levy is 0.6634 per $100 of assessed valuation (lower than the prior fiscal year). The proposed levy is less than the maximum allowable primary property tax levy allowed for FY 2023-2024, which is $7,748,836.
The City is proposing a secondary property tax levy of $8,603,114 on existing properties, plus a levy of $30,688 on new construction, for a total secondary property tax levy in FY 2023-2024 of $8,633,802. The proposed secondary property tax rate is 0.8000 per $100 of net assessed valuation (same as the prior fiscal year).
The City is proposing a flat primary property tax levy of $7,043,086 on existing properties, plus a levy of $25.448 on new construction, for a total primary property tax levy in Fiscal Year (FY) 2023-2024 of $7,159,580. The primary property tax rate to support this levy is 0.6634 per $100 of assessed valuation (lower than the prior fiscal year). The proposed levy is less than the maximum allowable primary property tax levy allowed for FY 2023-2024, which is $7,748,836.
The City is proposing a secondary property tax levy of $8,603,114 on existing properties, plus a levy of $30,688 on new construction, for a total secondary property tax levy in FY 2023-2024 of $8,633,802. The proposed secondary property tax rate is 0.8000 per $100 of net assessed valuation (same as the prior fiscal year).
Policy Impact:
The FY 2023-2024 Budget is the financial plan of the City for the upcoming fiscal year.
Connection to PBB Priorities/Objectives, Carbon Neutrality Plan & Regional Plan:
The adoption of the Annual Budget and Financial Plan provides direction and financial resources to support the Key Community Priorities, Regional Plan and Team Flagstaff Strategic Plans.
Has There Been Previous Council Decision on This:
- January Budget Retreat on January 20, 2023
- February Budget Retreat on February 2, 2023 and February 3, 2023
- Capital Improvement Program Budget Retreat on April 7, 2023
- Council Budget Work Session on April 27, 2023 and April 28, 2023
- Tentative Budget Adoption on June 6, 2023
Options and Alternatives:
1. Conduct the public hearing; or,
2. Delay the public hearing
2. Delay the public hearing
Background and History:
Budget adoption:
The budget was presented for tentative adoption on June 6, 2023. The tentative adoption established the maximum appropriation for the City for the FY 2023-2024 budget year. The budget legal schedules were published in the Arizona Daily Sun on June 8, 2023, and June 15, 2023.
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, courthouse, infrastructure and housing projects.
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 2023-2024 and no additional notifications are required.
The budget was presented for tentative adoption on June 6, 2023. The tentative adoption established the maximum appropriation for the City for the FY 2023-2024 budget year. The budget legal schedules were published in the Arizona Daily Sun on June 8, 2023, and June 15, 2023.
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, courthouse, infrastructure and housing projects.
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 2023-2024 and no additional notifications are required.
Key Considerations:
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.
June 6, 2023 Tentative adoption of the budget by Council
June 20, 2023 Proposed budget and property tax levy public hearing
June 20, 2023 Final budget adoption (In a Special meeting)
June 20, 2023 First reading property tax ordinance
July 3, 2023 Final reading and adoption of the property tax ordinance
June 20, 2023 Proposed budget and property tax levy public hearing
June 20, 2023 Final budget adoption (In a Special meeting)
June 20, 2023 First reading property tax ordinance
July 3, 2023 Final reading and adoption of the property tax ordinance
Community Benefits and Considerations:
The City has proposed a flat primary property tax levy in FY 2023-2024 of $7,159,580. The maximum allowable primary property revenue under state law for FY 2023-2024 is $7,748,836. The primary property tax rate will decrease from a rate of 0.6954 in FY 2022-2023 to a rate of 0.6634 in FY 2023-2024 due to a total valuation of all existing properties which are increasing 4.8%. Five years of historical data is shown below:
| Property Tax Rates | FY 2019-2020 | FY 2020-2021 | FY 2021-2022 | FY 2022-2023 |
FY 2023-2024
Proposed
|
| Primary | 0.7933 | 0.7510 | 0.7186 | 0.6954 | 0.6634 |
| Secondary | 0.8366 | 0.8000 | 0.8000 | 0.8000 | 0.8000 |
| Total | 1.6299 | 1.5510 | 1.5186 | 1.4954 | 1.4634 |
The final budget adoption allows the City to commit and expend resources as determined to be needed through the FY 2023-2024 budget process. There have been no changes in the final budget recommended for adoption from that presented as the tentative budget. The recommended City of Flagstaff appropriation for FY 2023-2024 is $539,705,762.
Community Involvement:
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 Key Community Goals and Objectives into a fiscal plan. Timely budget adoption allows the City to commit expenditures as related to the FY 2023-2024 Budget as needed for ongoing operational consistency to the citizenry. The FY 2023-2024 Budget is balanced.
Expanded Options and Alternatives:
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 8, 2023, and June 15, 2023, 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 on the tax levy will be at the July 3, 2023, Council Meeting.