| ITEM #: 14. DATE: 06/06/2022 AI #:807 |
 |
CITY COUNCIL ACTION REPORT
| SUBJECT: | PUBLIC HEARING ON PROPOSED PROPERTY TAX LEVY FOR FY2023 (TRUTH-IN-TAXATION HEARING) AND ON PROPOSED FINAL BUDGET ADOPTION FOR FY2023 AND APPROVAL OF TRUTH IN TAXATION INCREASE BY ROLL CALL VOTE |
| STAFF PRESENTER(S): | Ryan Bittle, Finance Manager |
OTHER PRESENTER(S):
None
SUMMARY
The City Council will hold a public hearing to receive a staff report and public comment on the proposed increase in the primary property tax levy and on the proposed final budget for fiscal year 2022-2023 (FY2023) as tentatively approved on May 23, 2022. The City Council will also consider a motion to levy proposed property taxes to be assessed on June 27, 2022.
State law requires a number of steps to adopt the annual budget and property tax levy. A two percent (2%) annual increase is allowable for the primary property levy, however additional steps including advertisements, press release, and this public hearing are required to adopt the increase. Maximizing the primary property tax levy to capture the two percent growth is part of an overall financial strategy and adopted policy that supports the City’s stable and diverse revenue sources.
The FY2023 primary property tax at the maximum levy is a planned revenue supporting general fund ongoing operations and maintenance activities including police and fire protection, parks and recreation, development services and other general government functions.
No changes from the May 23, 2022 tentative budget are included in the final budget or primary property tax levy. Adoption of the Final Budget will occur in a special meeting immediately following the regular meeting as prescribed by A.R.S. §42-17105(A)
State law requires a number of steps to adopt the annual budget and property tax levy. A two percent (2%) annual increase is allowable for the primary property levy, however additional steps including advertisements, press release, and this public hearing are required to adopt the increase. Maximizing the primary property tax levy to capture the two percent growth is part of an overall financial strategy and adopted policy that supports the City’s stable and diverse revenue sources.
The FY2023 primary property tax at the maximum levy is a planned revenue supporting general fund ongoing operations and maintenance activities including police and fire protection, parks and recreation, development services and other general government functions.
No changes from the May 23, 2022 tentative budget are included in the final budget or primary property tax levy. Adoption of the Final Budget will occur in a special meeting immediately following the regular meeting as prescribed by A.R.S. §42-17105(A)
Recommendation
1. Conduct a public hearing on the proposed increase of $233,835 in the primary property tax levy and Resolution No. 2022-2253 which adopts the final estimates by the city of Goodyear for the fiscal year beginning July 1, 2022 and ending June 30, 2023.
2. Approve the Truth-in-Taxation increase of $233,835 for FY2023 by a roll call vote.
2. Approve the Truth-in-Taxation increase of $233,835 for FY2023 by a roll call vote.
FISCAL IMPACT
The FY2023 Budget totals $650,431,700. It is balanced for the General Fund and within resources for Asset Management, Enterprise, Special Revenue, Capital, and Debt Service funds. The primary property tax levy is used in the balanced FY2023 General Fund budget.
BACKGROUND AND PREVIOUS ACTIONS
Budget Process
The FY2023 budget process began in calendar year 2021 and included departments submitting their initial list of new capital projects, preparing base budget estimates, preparing supplemental addition requests and updating existing CIP project costs and timelines as needed. All of these estimates and requests are reviewed by Budget and Research and with the executive team. In the case of capital projects; Engineering Project Management, Information Technology, and Procurement are highly involved in reviews to ensure that all elements of a project are captured within its scope/budget and that we have the organizational resources to deliver the projects proposed.
Council provided their initial FY2023 budget priorities in October 2021 at a retreat and these discussions were utilized in the development of this recommended budget. The first formal step in this budget process with City Council was the presentation of the five-year General Fund forecast on February 7th, 2022. On March 28, 2022, City Council approved the only change to our financial policy which was to increase our portion of construction sales tax treated as ongoing revenue from $5.6 million to $6.1 million. This policy calls for annual review and the $6.1 million was based on the average of the lowest five-years in the prior ten of General Fund construction sales tax collections.
Work sessions were held on both April 18, 2022 and April 25, 2022 to review the City Manager's recommended budget with Council which similar to the FY2022 budget focused on growth, continuing existing programs and services to a larger residential base, fair compensation for employees, meeting obligations, opening new capital facilities, and continuing the capital improvement program. Any subsequent changes from those work sessions were summarized as part of our Tentative budget presented to and adopted by Council on May 23, 2022.
The approved tentative budget was published in the Southwest Valley Republic on May 27, and June 1, 2022 consistent with requirements of state law. Further, state required budget forms are posted on the website, where it must remain for five years, and is also available at the library and City Clerk Office.
Property Tax Levy
In accordance with Arizona Revised Statute (A.R.S.) § 42-17107, when the municipal primary property tax levy, excluding any increases due to the value of new construction, is greater than the amount levied in the previous year, actions must be taken to inform residents. These notices and actions are referred to as Truth-in-Taxation and appeared in the Southwest Valley Republic (a local newspaper of general circulation) on May 20, and May 27, 2022 and in a press release also on May 18th.
The primary tax levy is limited to an annual increase of two percent over the previous year’s maximum allowable primary levy, plus an increased dollar amount attributable to a net gain in property not taxed in the previous year (i.e. new construction). Council adopted Financial Policies call for levying the maximum allowable primary property tax including this two percent increase to support the ongoing General Fund operations.
Because the City levies the maximum allowable primary levy, the Truth-in-Taxation notification steps outlined above were required. Of the planned primary property tax levy, $233,835 is above the Truth In Taxation levy limit of $12,630,552. The total primary property tax levy will be $12,882,853.
Final action to set the primary and secondary property taxes for the City of Goodyear is scheduled for June 27, 2022, during a regular meeting of the City Council.
The FY2023 budget process began in calendar year 2021 and included departments submitting their initial list of new capital projects, preparing base budget estimates, preparing supplemental addition requests and updating existing CIP project costs and timelines as needed. All of these estimates and requests are reviewed by Budget and Research and with the executive team. In the case of capital projects; Engineering Project Management, Information Technology, and Procurement are highly involved in reviews to ensure that all elements of a project are captured within its scope/budget and that we have the organizational resources to deliver the projects proposed.
Council provided their initial FY2023 budget priorities in October 2021 at a retreat and these discussions were utilized in the development of this recommended budget. The first formal step in this budget process with City Council was the presentation of the five-year General Fund forecast on February 7th, 2022. On March 28, 2022, City Council approved the only change to our financial policy which was to increase our portion of construction sales tax treated as ongoing revenue from $5.6 million to $6.1 million. This policy calls for annual review and the $6.1 million was based on the average of the lowest five-years in the prior ten of General Fund construction sales tax collections.
Work sessions were held on both April 18, 2022 and April 25, 2022 to review the City Manager's recommended budget with Council which similar to the FY2022 budget focused on growth, continuing existing programs and services to a larger residential base, fair compensation for employees, meeting obligations, opening new capital facilities, and continuing the capital improvement program. Any subsequent changes from those work sessions were summarized as part of our Tentative budget presented to and adopted by Council on May 23, 2022.
The approved tentative budget was published in the Southwest Valley Republic on May 27, and June 1, 2022 consistent with requirements of state law. Further, state required budget forms are posted on the website, where it must remain for five years, and is also available at the library and City Clerk Office.
Property Tax Levy
In accordance with Arizona Revised Statute (A.R.S.) § 42-17107, when the municipal primary property tax levy, excluding any increases due to the value of new construction, is greater than the amount levied in the previous year, actions must be taken to inform residents. These notices and actions are referred to as Truth-in-Taxation and appeared in the Southwest Valley Republic (a local newspaper of general circulation) on May 20, and May 27, 2022 and in a press release also on May 18th.
The primary tax levy is limited to an annual increase of two percent over the previous year’s maximum allowable primary levy, plus an increased dollar amount attributable to a net gain in property not taxed in the previous year (i.e. new construction). Council adopted Financial Policies call for levying the maximum allowable primary property tax including this two percent increase to support the ongoing General Fund operations.
Because the City levies the maximum allowable primary levy, the Truth-in-Taxation notification steps outlined above were required. Of the planned primary property tax levy, $233,835 is above the Truth In Taxation levy limit of $12,630,552. The total primary property tax levy will be $12,882,853.
Final action to set the primary and secondary property taxes for the City of Goodyear is scheduled for June 27, 2022, during a regular meeting of the City Council.
STAFF ANALYSIS
The primary tax levy is limited to an annual increase of two percent over the previous year's maximum allowable primary levy, plus an increased dollar amount attributable to a net gain in property not taxed in the previous year (i.e. new construction). Council adopted Financial Policies call for levying the maximum allowable primary property tax including this two percent increase to support the ongoing General Fund operations
Attachments
- State Budget Forms
- Presentation
- Truth-in-Taxation Notice of Tax Increase
- Truth-in-Taxation Press Release
- Truth-in-Taxation Analysis