| AGENDA ITEM #: 10. DATE: 06/21/2021 AI #:118 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | SET THE PRIMARY AND SECONDARY PROPERTY TAX LEVIES FOR FY2022. |
| STAFF PRESENTER(S): | Doug Sandstrom, Finance Director |
SUMMARY
Adopt the primary and secondary property tax levies for FY2022.
Recommendation
ADOPT ORDINANCE NO. 2021-1506 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 PREEMPTIONS, FOR THE PURPOSE OF PAYING PRINCIPAL AND INTEREST UPON BONDED INDEBTEDNESS; ALL FOR FISCAL YEAR ENDING THE 30TH DAY OF JUNE, 2022. (Doug Sandstrom, Finance Director)
FISCAL IMPACT
If approved, $11,706,200 will be generated from the primary property tax levy to support General Fund ongoing operations and $8,604,100 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
The FY2022 budget process began in the fall with departments submitting their initial list of new capital project requests as part of the CIP budget process that stretched through January. In October, departments began preparing base budget estimates and updating existing CIP project costs and timelines if needed and by December had also submitted supplemental budget addition requests. 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 were also involved in reviews.
In November and in early February, the Council provided insight into initial budget priorities in discussions held as part of a retreat and also at a council budget work session. Revenue policy was also a topic at that session with no planned changes to tax rates and slight adjustments to our financial policies.
The first formal step in this budget process with the City Council, was the presentation of the five-year General Fund forecast during a work session held on February 1, 2021.
On February 8, 2021, the City Council approved the financial and public safety pension policies. The two key changes in the financial policies was the introduction of a spending hierarchy from most restricted to least restricted and the increase from $5.1 million to $5.6 million, the portion of construction sales tax treated as ongoing revenue. This policy calls for annual review and the $5.6 million was based on the average of the lowest five-years in the prior ten-years of General Fund construction sales tax collections. The public safety funding policies remained unchanged, but state statute requires annual Council approval including acceptance of the unfunded liabilities.
The City Manager presented a sustainable recommended budget on April 19, 2021 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. The changes to that recommended budget are summarized in this report.
Council adopted the Tentative Budget on May 24, 2021 and a summary of the approved tentative budget was published in the Southwest Valley Republic on May 28, and June 2, 2021 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. Truth In Taxation requirements were also followed.
A public hearing was held on June 7, 2021 prior to final adoption of the FY2022 budget and for the Truth-in-Taxation requirements associated with the Primary Property Tax levy. On June 7, the City Council also adopted the Truth-in-Taxation increase of $229,434 that is included in the primary property tax levy presented for approval today.
In November and in early February, the Council provided insight into initial budget priorities in discussions held as part of a retreat and also at a council budget work session. Revenue policy was also a topic at that session with no planned changes to tax rates and slight adjustments to our financial policies.
The first formal step in this budget process with the City Council, was the presentation of the five-year General Fund forecast during a work session held on February 1, 2021.
On February 8, 2021, the City Council approved the financial and public safety pension policies. The two key changes in the financial policies was the introduction of a spending hierarchy from most restricted to least restricted and the increase from $5.1 million to $5.6 million, the portion of construction sales tax treated as ongoing revenue. This policy calls for annual review and the $5.6 million was based on the average of the lowest five-years in the prior ten-years of General Fund construction sales tax collections. The public safety funding policies remained unchanged, but state statute requires annual Council approval including acceptance of the unfunded liabilities.
The City Manager presented a sustainable recommended budget on April 19, 2021 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. The changes to that recommended budget are summarized in this report.
Council adopted the Tentative Budget on May 24, 2021 and a summary of the approved tentative budget was published in the Southwest Valley Republic on May 28, and June 2, 2021 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. Truth In Taxation requirements were also followed.
A public hearing was held on June 7, 2021 prior to final adoption of the FY2022 budget and for the Truth-in-Taxation requirements associated with the Primary Property Tax levy. On June 7, the City Council also adopted the Truth-in-Taxation increase of $229,434 that is included in the primary property tax levy presented for approval today.
STAFF ANALYSIS
The primary property tax levy for FY2022 of $11,706,200 is expected to create a primary property tax rate of $1.0000 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 Council adopted financial policy to maximize the primary property tax.
The secondary property tax levy of $8,604,100 is expected to create a secondary property tax rate of $0.7350 per $100 of assessed valuation and will be used to fund the principal, interest, and redemption charges on voter-approved general obligation bonds.
The FY2022 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 $8,604,100 is expected to create a secondary property tax rate of $0.7350 per $100 of assessed valuation and will be used to fund the principal, interest, and redemption charges on voter-approved general obligation bonds.
The FY2022 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.