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ITEM 19 |
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City Council Memorandum Management Services Memo No.
24-089
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| Date: |
June 27, 2024 |
| To: |
Mayor and Council |
| Thru: |
Joshua H. Wright, City Manager
Dawn Lang, Deputy City Manager - CFO |
| From: |
Matthew Dunbar, Budget and Policy Director |
| Subject: |
Ordinance No. 5095, Levying upon the Assessed Valuation of the Property within the City of Chandler, Arizona, Subject to Taxation a Certain Sum Upon Each One Hundred Dollars ($100) of Assessed Valuation Sufficient to Raise the Amount Estimated to be Required in the Annual Budget, less the Amount to be Received from Other Sources of Revenue; Providing Funds for Various Bond Redemptions, for the Purpose of Paying Interest Upon Bonded Indebtedness and Providing Funds for General Municipal Expenses, all for the Fiscal Year Ending the 30th Day of June, 2025 |
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| Proposed Motion: |
| Move City Council adopt Ordinance No. 5095, levying upon the assessed valuation of the property within the City of Chandler, Arizona, subject to taxation a certain sum upon each one hundred dollars ($100) of assessed valuation sufficient to raise the amount estimated to be required in the annual budget, less the amount to be received from other sources of revenue; providing funds for various bond redemptions, for the purpose of paying interest upon bonded indebtedness and providing funds for general municipal expenses, all for the Fiscal Year ending the 30th day of June, 2025. |
| Background: |
| State law requires the tax levy necessary for funding the adopted budget be established by ordinance and be adopted fourteen (14) days following the public hearing and the final adoption of the budget and not later than the third Monday in August (August 19, 2024). As this tax levy ordinance is an administrative method of setting apart funds necessary for use and maintenance, it does not require an extraordinary (3/4) vote to make it effective immediately. This determination is based on a Supreme Court decision and is fully explained in the Municipal Budget and Financial Manual provided by the League of Arizona Cities and Towns. |
| Discussion: |
The City received notification of Chandler’s 2024 tax values from the Maricopa County Assessor on February 11, 2024, as required by State law. The City’s total assessed valuation is $4,108,053,847, which is a 5.3% increase from the 2023 total assessed valuation, and includes valuation changes to existing property as well as the value of new growth. Based on a legislative change implemented July 1, 2015, property owners are now assessed on the Limited Assessed Value (LAV) versus Full Cash Value (FCV), and residential property values cannot increase more than 5% in a given year. For FY 2024-25, City Council has approved a $0.01 reduction in the primary property tax rate (from $0.2226 to $0.2126) and no change to the secondary property tax rate ($0.8700), bringing the combined property tax rate from $1.0926 to $1.0826 per $100 of assessed valuation. This action represents the ninth consecutive year the property tax rate has been reduced to help minimize the impact to the median value homeowner.
As part of the tax levy process, the County Assessor also establishes the maximum allowable primary property tax rate, which allows a 2% increase in the maximum tax levy each year. Chandler’s maximum primary property tax rate for Tax Year 2024 is $0.5927 per $100 of assessed value. The FY 2024-25 Adopted Budget sets the rate at $0.2126 per $100 of assessed valuation, which is significantly less than the maximum. In addition, the State Property Tax Oversight Commission establishes a maximum primary property tax rate that would require a Truth in Taxation notice, which requires special notice to citizens and a roll call vote to levy the increased property taxes. Since the City of Chandler rate for the FY 2024-25 Budget of $0.2126 per $100 of assessed valuation does not exceed the maximum primary property tax rate that would require a Truth in Taxation notice ($0.2126), the City is not subject to the Truth in Taxation provisions this year.
Ordinance No. 5095 follows the prescribed form recommended for adoption and establishes a tax levy of an estimated $44,473,791, as set forth in the FY 2024-25 Budget. In this ordinance, the Chandler City Council directs the County of Maricopa to levy the amount allowed by law. The total property tax rate will be $1.0826 per $100 of assessed valuation. The property value estimates received from the County Assessor's office are available for public inspection on the City’s website at www.chandleraz.gov/budget or by calling the Budget Division at (480) 782-2254.
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| Financial Implications: |
| The Tax Levies set the total FY 2024-25 levy rates and amounts to fund general operations of the City (funded by the primary property tax rate set at $0.2126 per $100 of assessed valuation), as well as funding debt service payments on outstanding general obligation bonds (funded by the secondary property tax rate set at $0.8700 per $100 of assessed valuation). |
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