Consideration and Adoption of Ordinance No. 2013-13:  AN ORDINANCE LEVYING UPON THE ASSESSED VALUATION OF THE PROPERTY WITHIN THE CITY OF FLAGSTAFF, ARIZONA, SUBJECT TO TAXATION A CERTAIN SUM UPON EACH ONE HUNDRED DOLLARS ($100.00) OF VALUATION SUFFICIENT TO RAISE THE AMOUNT ESTIMATED TO BE REQUIRED IN THE ANNUAL BUDGET, LESS THE AMOUNT ESTIMATED TO BE RECEIVED FROM OTHER SOURCES OF REVENUE; PROVIDING FUNDS FOR VARIOUS BOND REDEMPTIONS, FOR THE PURPOSE OF PAYING INTEREST UPON BONDED INDEBTEDNESS AND PROVIDING FUNDS FOR GENERAL MUNICIPAL EXPENSES, ALL FOR THE FISCAL YEAR ENDING THE 30TH DAY OF JUNE, 2014.

Arizona Revised Statute 42-17104 requires that an Ordinance to adopt property tax levies be passed after the adoption of the final budget.  The final budget is anticipated to be adopted on June 18, 2013.

The City of Flagstaff is proposing a flat primary property levy on existing properties for the FY2013-2014 base levy of $5,426,095 plus the new construction levy of $94,078 for a total levy of $5,520.173.  The  primary property tax rate to support this levy is $0.8429 per $100 of assessed valuation.

The City of Flagstaff proposing a flat tax rate for secondary property taxes for FY2013-2014 for a total levy of $5,530,453.  The proposed secondary property tax rate is $0.8366 per $100 of assessed valuation.

Effective governance

• Budget Retreats on November 14 & 15, 2012  & February 14, 2013
• Mini Budget Retreats on December 12, 2012, January 11 & 22, 2013 & February 4, 2013
• Council Budget Meetings on April 24, 25, and 26, 2013
• Tentative Budget Adoption on June 4, 2013
• Final Budget Adoption on June 18, 2013

• Adopt the primary and secondary property tax rates at the proposed amounts,
• Adopt the primary property levy up to the maximum statutory levy; adopt the secondary property tax rate at something greater than proposed above
• Adopt the primary and secondary property tax rates at something less than that shown above.

Both the State Constitution and State law specify a property tax levy limitation system.  This system consists of two levies, a limited levy known as the primary property tax levy and an unlimited levy referred to as the secondary property tax levy.  The primary levy may be imposed for all purposes, while the secondary levy in cities and towns may only be used to retire the principal and interest or redemption charges on general obligation bonded indebtedness.

The adoption of the property tax levy is the final step in the entire budget approval process.

The key dates for budget and property tax levy adoption have been determined and have been followed throughout this process.  The County adopts the property tax levy as proposed by the City on or about August 1, 2013.

The City has budgeted a total of $5,355,000 in FY2013-2014 primary property tax, an approximate 2.0% increase over the FY2012-2013 budget. This increase is due to new construction and reduced delinquencies. Primary property tax funds any general purpose use of the city government.  The budgeted amount is less than the levy as the City is allowing for approximately 3% in bad debt.

Statutorily, the maximum allowable primary property levy for FY2013-2014 is $5,742,768. The City can capture this additional levy in future budget years if Council so directs.

The City has budgeted a total of $5,530,453 in FY2013-2014 secondary property tax, an approximate 13.6% decrease over the FY2012-2013 budget.  The decrease is directly related to the decreased assessed valuation experienced in our community.   Secondary property tax funds general obligation debt and debt is issued to manage within the levy.

Five years historical data is shown below:

Property Tax Rates	FY 2009-2010	FY 2010-2011	FY 2011-2012	FY 2012-2013	FY 2013-2014 Proposed
Primary	$0.6547	0.6479	0.6917	0.7131	0.8429
Secondary	0.8366	0.8366	0.8366	0.8366	0.8366
Total	$ 1.4913	1.4845	1.5283	1.5497	1.6795

Primary property taxes account for 9.6% of the General Fund revenues budgeted for FY2013-2014. 

Primary property taxes support a number of City services including public safety, parks and recreation, other public works services, and general administrative and management functions within the city.

Secondary property taxes support the debt service payment on numerous city capital projects including: Aquaplex, Fire Stations, Open Space, numerous street/utility projects, Forest Restoration and the future Core Facility as well as many others.

Inform & Involve: Budget legal schedules were published in the June 6, 2013 and June 13, 2013 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. A public hearing on June 18, 2013 for both the final budget adoption and the property tax levy is open for public comment and allows citizens to provide input.