| AGENDA ITEM #: 4. DATE: 06/07/2021 AI #:116 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | PUBLIC HEARING FOR FY2022 TRUTH-IN-TAXATION AND FINAL BUDGET ADOPTION AND APPROVAL OF TRUTH IN TAXATION INCREASE BY ROLL CALL VOTE |
| STAFF PRESENTER(S): | Doug Sandstrom, Finance Director |
OTHER PRESENTER(S):
None
SUMMARY
The City Council will hold a public hearing to receive a staff report and public comment on the increase in the primary property tax levy and the final budget to be adopted for fiscal year 2021-2022 (FY2022).
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 FY2022 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 24, 2021 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 FY2022 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 24, 2021 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
- Conduct a public hearing on the proposed increase of $229,434 in the primary property tax levy and Resolution No. 2021-2161 which adopts the final estimates by the city of Goodyear for the fiscal year beginning July 1, 2021, and ending June 30, 2022.
- Approve the Truth-in -Taxation increase of $229,434 for FY2022 by a roll call vote. (Doug Sandstrom, Finance Director)
FISCAL IMPACT
The FY2022 Budget totals $568,473,400. It is balanced for the General Fund and within resources for Asset Management, Enterprise, Special Revenue, Capital, and Debt Service funds. The use of utility revenue, impact fee and excise tax, and/or property tax supported bond funding is anticipated for capital projects and to provide upfront financing for impact fee projects that must be constructed prior to the full revenue stream.
The primary property tax levy, including the $229,434 increase to capture the permitted 2% growth in the levy, is used in the balanced FY2022 General Fund budget.
The primary property tax levy, including the $229,434 increase to capture the permitted 2% growth in the levy, is used in the balanced FY2022 General Fund budget.
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.
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 18, and May 28, 2021 and in a press release also on May 18th.
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.
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 18, and May 28, 2021 and in a press release also on May 18th.
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.
Because the City proposes to maximize the primary property tax levy by including that two percent increase over the previous year’s maximum allowable primary levy, the Truth-in-Taxation notification steps outlined above were required. Of the planned primary property tax levy, $229,434 is the 2% growth that is above the Truth In Taxation levy limit of $11,476,766. The total primary property tax levy will be $11,706,200.
Final action to set the primary and secondary property taxes for the City of Goodyear is scheduled for June 21, 2021, during a regular meeting of the City Council.
Because the City proposes to maximize the primary property tax levy by including that two percent increase over the previous year’s maximum allowable primary levy, the Truth-in-Taxation notification steps outlined above were required. Of the planned primary property tax levy, $229,434 is the 2% growth that is above the Truth In Taxation levy limit of $11,476,766. The total primary property tax levy will be $11,706,200.
Final action to set the primary and secondary property taxes for the City of Goodyear is scheduled for June 21, 2021, during a regular meeting of the City Council.
Attachments
- State Budget Forms
- Truth-in-Taxation hearing notice of tax increase
- Truth-in-Taxation press release
- Truth-in-Taxation analysis
- Presentation