Consideration and Adoption of Ordinance No 2014-12: 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, 2015

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 17, 2014.

The City of Flagstaff is proposing a flat primary property levy on existing properties for the FY2014-2015 base levy of $5,520,173 plus the new construction levy of $41,567 for a total levy of $5,561,740. The primary property tax rate to support this levy is $0.8418 per $100 of assessed valuation.

The City of Flagstaff proposing a flat tax rate for secondary property taxes for FY2014-2015 for a total levy of $5,611,045. The proposed secondary property tax rate is $0.8366 per $100 of assessed valuation.

 

Effective governance

• December Budget Retreat on December 4, 2013
• Mini Budget Retreat on January 23, 2014
• February Budget Retreat  on February 10, 2014
• Council Budget Meetings on April 23, 24 and 25, 2014.
• Tentative Budget Adoption on June 3, 2014
• Final Budget Adoption on June 17, 2014

• 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, 2014.

The City has budgeted a total of $5,435,325 in FY2014-2015 primary property tax, an approximate 1.5% increase over the FY2013-2014 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 2% in bad debt.

Statutorily, the maximum allowable primary property levy for FY2014-2015 is $5,901,999. The City can capture this additional levy in future budget years if Council so directs.

The City has budgeted a total of $5,611,045 in FY2014-2015 secondary property tax, an approximate 1.46% increase over the FY2013-2014 budget.  The increase is directly related to the increased assessed valuation and new construction.   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 2010-2011	FY 2011-2012	FY 2012-2013	FY 2013-2014	FY 2014-2015 Proposed
Primary	$0.6479	0.6917	0.7131	0.8429	0.8418
Secondary	0.8366	0.8366	0.8366	0.8366	0.8366
Total	$ 1.4845	1.5283	1.5497	1.6795	1.6784

Primary property taxes account for 10.4% of the General Fund revenues budgeted for FY2014-2015.

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 5, 2014 and June 12, 2014 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 17, 2014 for both the final budget adoption and the property tax levy is open for public comment and allows citizens to provide input.