| ITEM #: 20. DATE: 06/24/2024 AI #:1787 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | PRIMARY AND SECONDARY PROPERTY TAX LEVIES FOR FY2025 |
| STAFF PRESENTER(S): | Ryan Bittle, Finance Manager |
SUMMARY
Adopt the primary and secondary property tax levies for FY2025.
STRATEGIC PLAN ALIGNMENT
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RECOMMENDATION
ADOPT ORDINANCE NO. 2024-1612 LEVYING UPON THE ASSESSED VALUATION OF THE PROPERTY WITHIN THE CITY OF GOODYEAR, SUBJECT TO PRIMARY AND SECONDARY TAXATION A CERTAIN SUM UPON EACH ONE HUNDRED DOLLARS ($100.00) OF VALUATION SUFFICIENT TO RAISE THE AMOUNTS ESTIMATED TO BE REQUIRED IN THE ANNUAL BUDGET FOR THE PURPOSE OF PAYING FOR VARIOUS EXPENSES; TO RAISE THE AMOUNT ESTIMATED TO BE RECEIVED FROM OTHER SOURCES OF REVENUES; PROVIDING FUNDS FOR VARIOUS BOND REDEMPTIONS, FOR THE PURPOSE OF PAYING PRINCIPAL AND INTEREST UPON BONDED INDEBTEDNESS; ALL FOR FISCAL YEAR ENDING THE 30TH DAY OF JUNE 2025 AND DIRECTING THE CITY CLERK TO RECORD A COPY OF THIS ORDINANCE. (Ryan Bittle, Finance Manager - Budget)
FISCAL IMPACT
The primary and secondary property tax levies are a part of an overall finance strategy that provides funding for the city's budget.
The adopted FY2025 Budget totals $818,096,600 dollars, of which $28,377,885 is funded by these property tax levies.
Adopting these property tax levies is the final step in the process of establishing the FY2025 budget.
If approved, $15,140,885 will be generated from the primary property tax levy to support General Fund ongoing operations and $13,237,000 will be generated from the secondary property tax levy to pay debt service on voter approved General Obligation (G.O.) Bond debt.
The adopted FY2025 Budget totals $818,096,600 dollars, of which $28,377,885 is funded by these property tax levies.
Adopting these property tax levies is the final step in the process of establishing the FY2025 budget.
If approved, $15,140,885 will be generated from the primary property tax levy to support General Fund ongoing operations and $13,237,000 will be generated from the secondary property tax levy to pay debt service on voter approved General Obligation (G.O.) Bond debt.
BACKGROUND AND PREVIOUS ACTIONS
Budget Process: The FY2025 budget process began in calendar year 2023 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 by the executive team. In an October work session, Council was presented a 3-year Strategic Plan proposal by City Leadership spanning FY2025-FY2027, which was later adopted in November 2023. 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.
City Council was provided an initial General Fund five-year forecast in January 2024 as part of the City Council Retreat, which included risks and budget priorities. Those discussions, coupled with direction given by City Council as outlined in our Strategic Plan, served as the basis for the recommended budget.
The City Manager presented a sustainable recommended budget on April 8th and April 15th, 2024, which 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.
On May 20, 2024, 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 $6.5 million to $7.2 million. This policy calls for annual review and the $7.2 million was based on the average of the lowest five years in the prior ten of General Fund construction sales tax collections.
Any subsequent changes from the City Manager's recommended budget work session were summarized as part of our Tentative budget presented to and adopted by Council on May 20, 2024. The approved tentative budget was published in the Arizona Republic West Valley Edition on May 25, and June 1, 2024, consistent with requirements of state law. Further, state required budget forms are posted on the website, where they must remain for five years, and are also available at the library and City Clerk's Office.
Property Tax Levy Process: 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 Arizona Republic West Valley Edition (a local newspaper of general circulation) on May 24th and May 31st, 2024, as well as in a press release on May 22nd, 2024.
Further, state required budget forms are posted on the website, where they must remain for five years, and are also available at the library and City Clerk's Office.
A public hearing was held on June 10, 2024, prior to final adoption of the FY2025 budget and for the Truth-In-Taxation requirements associated with the Primary Property Tax levy.
On June 10, the City Council also adopted the Truth-In-Taxation increase of $277,689 that is included in the primary property tax levy presented for approval today.
City Council was provided an initial General Fund five-year forecast in January 2024 as part of the City Council Retreat, which included risks and budget priorities. Those discussions, coupled with direction given by City Council as outlined in our Strategic Plan, served as the basis for the recommended budget.
The City Manager presented a sustainable recommended budget on April 8th and April 15th, 2024, which 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.
On May 20, 2024, 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 $6.5 million to $7.2 million. This policy calls for annual review and the $7.2 million was based on the average of the lowest five years in the prior ten of General Fund construction sales tax collections.
Any subsequent changes from the City Manager's recommended budget work session were summarized as part of our Tentative budget presented to and adopted by Council on May 20, 2024. The approved tentative budget was published in the Arizona Republic West Valley Edition on May 25, and June 1, 2024, consistent with requirements of state law. Further, state required budget forms are posted on the website, where they must remain for five years, and are also available at the library and City Clerk's Office.
Property Tax Levy Process: 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 Arizona Republic West Valley Edition (a local newspaper of general circulation) on May 24th and May 31st, 2024, as well as in a press release on May 22nd, 2024.
Further, state required budget forms are posted on the website, where they must remain for five years, and are also available at the library and City Clerk's Office.
A public hearing was held on June 10, 2024, prior to final adoption of the FY2025 budget and for the Truth-In-Taxation requirements associated with the Primary Property Tax levy.
On June 10, the City Council also adopted the Truth-In-Taxation increase of $277,689 that is included in the primary property tax levy presented for approval today.
STAFF ANALYSIS
The primary property tax levy for FY2025 of $15,140,885 is expected to create a primary property tax rate of $0.9257 per $100 of assessed valuation. As a part of the general fund revenue, the primary property tax levy supports general fund activities, including police and fire protection, operations and maintenance, and many other general governmental functions. This levy amount is consistent with City Council adopted financial policy to maximize the primary property tax.
The secondary property tax levy of $13,237,000 is expected to create a secondary property tax rate of $0.8093 per $100 of assessed valuation and will be used to fund the principal, interest, and redemption charges on voter-approved general obligation bonds.
The FY2025 overall combined property tax rate of $1.7350 would equate to a city property tax payment of $173.50 for a home with an assessed value of $100,000.
The secondary property tax levy of $13,237,000 is expected to create a secondary property tax rate of $0.8093 per $100 of assessed valuation and will be used to fund the principal, interest, and redemption charges on voter-approved general obligation bonds.
The FY2025 overall combined property tax rate of $1.7350 would equate to a city property tax payment of $173.50 for a home with an assessed value of $100,000.