| ITEM #: 15. DATE: 06/10/2024 AI #:1785 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | PUBLIC HEARING ON PROPOSED PROPERTY TAX LEVY FOR FY2025 (TRUTH-IN-TAXATION HEARING) AND ON PROPOSED FINAL BUDGET ADOPTION FOR FY2025 AND APPROVAL OF TRUTH IN TAXATION INCREASE BY ROLL CALL VOTE |
| STAFF PRESENTER(S): | Ryan Bittle, Finance Manager |
SUMMARY
The City Council will hold a public hearing to receive a staff report and public comment on the proposed final budget for fiscal year 2024-2025 (FY2025) as tentatively approved on May 20, 2024, and on the proposed increase in the primary property tax levy. The City Council will also consider a motion to levy proposed property taxes to be assessed on June 24, 2024. No changes from the May 20, 2024, 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).
STRATEGIC PLAN ALIGNMENT
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RECOMMENDATION
Conduct a public hearing on Resolution No. 2024-2381, which adopts the final estimates by the city of Goodyear for the fiscal year beginning July 1, 2024 and ending June 30, 2025 and on the proposed primary property tax levy increase of $277,689; and Approve the Truth-in-Taxation increase of $277,689 for FY2025 by a roll call vote. (Ryan Bittle, Finance Manager)
FISCAL IMPACT
The FY2025 Budget totals $818,096,600. 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 FY2025 General Fund budget.
BACKGROUND AND PREVIOUS ACTIONS
In addition to the city's internal processes, state law requires a number of steps to adopt the annual budget and property tax levy.
Annual 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.
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). The FY2025 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.
City Council adopted the Financial Policies, which 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, $277,689 is above the Truth In Taxation levy limit of $14,844,839. The total primary property tax levy will be $15,140,885.
Final action to set the primary and secondary property taxes for the City of Goodyear is scheduled for June 24th, 2024, during a regular meeting of the City Council.
Annual 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.
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). The FY2025 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.
City Council adopted the Financial Policies, which 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, $277,689 is above the Truth In Taxation levy limit of $14,844,839. The total primary property tax levy will be $15,140,885.
Final action to set the primary and secondary property taxes for the City of Goodyear is scheduled for June 24th, 2024, 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). City Council adopted Financial Policies, which call for levying the maximum allowable primary property tax, including this two percent increase, to support the ongoing General Fund operations.
Attachments
- Truth-in-Taxation Notice of Tax Increase
- Truth-in-Taxation Press Release
- Truth-in-Taxation Analysis
- FY2025 State Forms
- FY2025 Public Hearing TNT & Final Budget - Presentation