HomeMy WebLinkAbout2012.11.26 Council Special Meeting PacketAGENDA
PASCO CITY COUNCIL
Special Meeting 7:00 p.m. November 26, 2012
1. CALL TO ORDER
2. ROLL CALL
(a) Pledge of Allegiance.
3, BUSINESS ITEMS
(a) 2013 Property Tax Levy.
1. Agenda Report from Dunyele Mason, Finance Manager dated November 5, 2012.
2. Assessed Value History Chart.
3. Tax Levy Rate History Chart.
4. Summary of Options.
5. Proposed Ordinance for the 2013 Ad Valorem Tax.
6. Proposed Ordinance Preserving Property Tax Levy Capacity.
CONTINUE PUBLIC HEARING
Ordinance No. , an Ordinance providing for the 2013 Ad Valorem Tax Levy, a levy
for the 1999 Unlimited Tax General Obligation Bonds and a levy for the 2002 Unlimited
General Obligation Refunding Bonds in the City of Pasco in accordance with state law.
MOTION: 1 move to adopt Ordinance providing for the 2013 Ad Valorem
Tax Levy, a levy for the 1999 Unlimited Tax General Obligation Bonds and the 2002
Unlimited Tax General Obligation Refunding Bonds.
-AND -
Ordinance No. , an Ordinance preserving the Property Tax Levy capacity in the City
of Pasco, Washington for fiscal years after 2012 in accordance with state law.
MOTION: I move to adopt Ordinance preserving Property Tax Levy capacity
for fiscal years after 2012 in accordance with state law.
4. ADJOURNMENT
FOR: City Council
TO: Gary Crutch 1 ld( C"t Manager
Rick Terway, 1 s tive & Comm rvices Director
FROM: Dunyele Mason, Pinan al Services Manager
SUBJECT: 2013 Property Tax Levy — Report
I. REFERENCE(S):
1. Assessed Value History Chart
2. Tax Levy Rate History Chart
3. Summary of Options
4. Proposed Ordinance for the 2013 Ad Valorem Tax
5. Proposed Ordinance Preserving Property Tax Levy Capacity
November 5, 2012
Workshop Mtg.: 11/13/12
Regular Mtg.: 11/19/12
Special Mtg.: 11/26/12
II. ACTION REQUESTED OF COUNCIL /STAFF RECOMMENDATIONS:
11/13 Discussion
11/19 CONDUCT A PUBLIC HEARING
11/26 CONTINUE PUBLIC HEARING
Motion: I move to adopt Ordinance No providing for the 2013 Ad
Valorem Tax Levy, a levy for the 1999 Unlimited Tax General Obligation
Bonds and the 2002 Unlimited Tax General Obligation Refunding Bonds.
Motion: I move to adopt Ordinance No. , preserving property tax levy
capacity for fiscal years after 2012 in accordance with State law.
III. HISTORY AND FACTS BRIEF:
The attached
information has been updated
from the November
13, 2012 workshop information
to reflect the
change in state assessed value
of utilities.
rate was near that number was in 1994. From 1994
The maximum
allowed levy rate, per State
statute, that the city can levy
(per $1,000 of assessed
value) is
$3.60.
The last time Pasco's levy
rate was near that number was in 1994. From 1994
through
1999,
the levy rate was reduced
by not levying any of the
allowable 6% increase
available at that time.
In November 1999, the legislature reduced the Motor Vehicle Excise Tax (MVET) to $30 per
vehicle. To compensate for this loss, Council elected to use most of the unused or banked levy
capacity. The levy rate for 2000 taxes was set at $3.07 per $1,000 of assessed value — still well
below the $3.60 maximum.
In 2001, the voters approved Initiative 747, limiting the amount taxing districts could raise the
property tax levy over the previous year by the lesser of 101% or the Implicit Price Deflator
(IPD), without voter approval. In November 2007, that initiative was challenged and ruled
unconstitutional in the Washington State Supreme Court; that decision returned the limit to the
lesser of 6% or IPD. Council chose not to increase the 2008 property tax levy rate by any
allowable legal limit.
In January 2008, the legislature placed into law those limits (suggested by I -747). The legal limit
was to be the lesser of 1% or IPD; this limit is still in effect today. IPD is a national inflation
indicator much like the Consumer Price Index. The IPD figure to be used for the 2013 tax
calculation is 1.295 %.
The preliminary budget document has
been prepared using an
estimated
property tax levy of
$6,400,000 which is less than Option I
and Option 2 as can be seen in the
attached Summary of
Options. Option 1 reflects an increase
of $63,279 allowed by
the 101%
limit while Option 2
3(a)
IV
retains 100% of the 2011 levy. Option 3 shows the maximum amount the City could collect if
Council chose to levy all prior property tax authority that has been preserved for future use
(according to the State Department of Revenue calculations).
Pasco has been holding steady and been buffered from the worst of the poor overall economic
conditions that affect other parts of the country. The State of Washington's economic challenges
could negatively affect 2013's outcomes if revenue sources from the state are sharply curtailed.
The 2013 budget anticipates cuts in certain state shared revenues and liquor tax distributions. It
includes the first full year of the Public Safety Tax which became effective April 2012. Overall
major tax revenues for 2013 are projected to hold steady with 2012 year end estimates.
Pasco has been fortunate in using conservative budgeting practices which has resulted in stable
fund balances to prepare the 2013 budget. Staff is projecting a $7.6 million beginning fund
balance and a $4.7 million ending fund balance in the General Fund for next year. The decreases
in fund balance in both 2012 and 2013 are predominately due to one -time investments in capital.
Notably the 2013 budget calls for a 2.3 million dollar cash payment of the Municipal Court
building project. Paying cash as compared to a 20 year debt service payment for the Municipal
Court project is estimated to save the Pasco citizens over 1 million dollars of interest payments.
The property tax levy for 2013 will be comprised of the following three elements:
1.
General Property Tax Levy
the 2011 (prior
year) rate of
2.
1999 Unlimited Tax General
Obligation
Fire Station/Library Bonds Debt Service
3.
2002 Unlimited Tax General
Obligation
Refunding (1993) Bonds Debt Service
The City is required to certify property tax levies with the County by November 30 of each year.
DISCUSSION:
The Franklin County Assessor has provided a preliminary assessed valuation of $3,316,066,032
which is used to calculate the 2013 property taxes. This amount includes new construction of
$99,251,700 and increase in the State assessed utilities values of $0. There were no annexations
of property before the cutoff date of March 31st. The Franklin County Assessor's Office now
re- assesses all properties in the County each year.
GENERAL PROPERTY TAX LEVY
Several gptions for setting the 2013 levy are outlined as follows:
Option 1:
Since the IPD of 1.259% is greater than 1 %, last year's levy would be increased by the allowed
1% of $63,279 plus the value of new construction, new annexations and any increases in State
Assessed Utility values at last year's rate and adding those numbers to last year's total levy.
• 2012 (prior year) Total General Property Tax Levy ................. .....................$6,327,851
• 1% increase in the levy rate based on the allowable maximum increase amount
(lesser of IPD or I%) ................................... ............................... ........................$63,279
■ New Construction
Values of $99,251,700 using
the 2011 (prior
year) rate of
$1.968362/$1,000
Assessed Value ............. ...............................
.......................$164,663
• New Annexation Values of $0 using the 2011 (prior year) rate of $1.968362/$1,000
Assessed Value ........................................ ...............................
...............0
• Increase in the State Assessed Utilities of $0 using the 2011 rate of $1.968362/$1,000
AssessedValue .............................................................. ............................... $0
Total Proposed 2013 Levy $6,5555792
A 2013 General Levy of $6,555,792 using the assessed value of $3,300,400,919 calculates to a
levy rate of $1.98636 per $1,000 of assessed value. Under this option, the 2013 levy rate would
remain virtually unchanged from the 2012 rate of $1.968362.
Option 2•
Council could choose not to assess the 1% allowed and there would be no increase from 2012 to
2013's levy except to add increased value related to new construction, annexations and the
changes in the value of State assessed utilities. This would set the levy rate at $1.96719 per
$1,000 of assessed value. The decrease in the levy rate of $0.0012 is a function of changes in the
assessed value between 2012 and 2013. Using Option 2, the 2013 total General Property Tax
Levy would be $6,492,514. Under Option 2, the 2013 General Property Tax "base" levy would
remain unchanged at $6,327,851 compared to the $63,279 increase as described in Option 1.
Option 3:
Beginning in 1993 and continuing through 2012, the City has preserved its accumulated taxing
capacity of $7,929,768. If the City was to levy all of the tax available in Option 3 and choose to
levy all the preserved levy capacity, the general levy would increase to $8,173,729. The levy
rate would calculate to $2.47659 per $1,000 of assessed value, still well below the maximum rate
allowed per State statute of $3.60 per $1,000 of assessed value. Selecting this option would
require a "super majority" vote of the Council, or five affirmative votes.
PRESERVING FUTURE LEVY CAPACITY
Preserved levy capacity, also referred to as "banked" levy capacity, is NOT money that has been
put into a bank account. It is merely capacity that has not been levied and, therefore, dollars left
in the pockets of the taxpayers. The purpose of RCW 84.55.092 allowing a governmental entity
to preserve future levy capacity is to "remove the incentive for a taxing district to maintain its tax
levy at the maximum level permitted under this chapter, and to protect the future levy capacity of
a taxing district that reduces its tax levy below the level that it otherwise could impose under this
chapter, by removing the adverse consequences to future levy capacities resulting from such levy
reductions." This simply means if the tax is not needed, a City does not have to set the levy at
the maximum amount. The City can reserve that resource for future use. Preserving any unused
levy capacity requires a "super majority" vote of the Council.
A preservation ordinance has been prepared should any unused levy capacity be available to
preserve. If council enacts Option 2, then the banked levy capacity for future years would be
$1,681,214 which is highest lawful levy amount of $8,173,728 less the actual levy amount of
$6,4925514.
1999 UNLIMITED TAX GENERAL OBLIGATION BOND DEBT SERVICE
The 2013 debt service requirement for the 1999 UTGO Bonds issued for the purpose of the
Library Remodel and Fire Station Relocation is $61,106 and $77,394, respectively. Staff
recommends the 1999 Unlimited Tax General Obligation Bond tax levy be set at those amounts.
The two numbers are not combined because they appeared on the official ballot separately when
voted upon. The county assessor's office requires we set these levies separately.
The estimated assessed value for properties subject to the tax is $2,848,137,479; this will result
in levy rates of approximately $0.0215 and $0.0271 respectively, or a combined levy rate of
$0.0486. The 2012 levy rates were $0.0229 and $0.0290, respectively, or $0.0519 combined.
The schedule of payments calls for principal payments of $100,000 each year. This will result in
decreased levy rates for the remaining payment schedule as the interest portion declines. The
final payment for these bonds occurs in December 2019.
2002 UNLIMITED TAX GENERAL OBLIGATION REFUNDING BONDS
The 2002 Unlimited Tax General Obligation Refunding Bonds were issued to refund the 1993
General Obligation Bonds to take advantage of lower interest rates available and save the
taxpayer's money. The debt service requirements in 2013 for the 2002 UTGO Refunding Bonds
is $379,600 and staff recommends the 2002 Unlimited General Obligation Refunding Bonds tax
levy rate be set at that dollar amount. The assessed value for properties subject to the tax is
estimated at $2,552,180,528. This equates to a levy rate of $0.1487 per $1,000 of assessed
value. This is a slightly lower rate compared to the 2012 levy rate of $0.1521. The final
payment for these bonds occurs December 1, 2013.
$2.8000
Assessed Value
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
PASCO PROPERTY TAX LEVY RATE HISTORY
(GENERAL FUND PORTION)
PER $1,000 OF ASSESSED VALUE
2.661700
$2.6000
$2.4000
$2.2000 - - - - --
$2.0000
- - .`
$1.8000 1.957896
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$3.500
$3.000
$2.500
_
$2.000
0
$1.500
$1.000
$0.500
$0.000
$2.8000
Assessed Value
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
PASCO PROPERTY TAX LEVY RATE HISTORY
(GENERAL FUND PORTION)
PER $1,000 OF ASSESSED VALUE
2.661700
$2.6000
$2.4000
$2.2000 - - - - --
$2.0000
- - .`
$1.8000 1.957896
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
ORDINANCE NO,
AN ORDINANCE PROVIDING FOR THE 2013 AD VALOREM
TAX LEVY, A LEVY FOR THE 1999 UNLIMITED TAX GENERAL
OBLIGATION BONDS AND A LEVY FOR THE 2002 UNLIMITED
GENERAL OBLIGATION REFUNDING BONDS IN THE CITY OF
PASCO IN ACCORDANCE WITH STATE LAW,
THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON DO ORDAIN
AS FOLLOWS:
§1. The City Council of the City of Pasco (the population of which is greater than 10,000)
has met and considered its budget for the calendar year 2012;
§2. The City Council of the City of Pasco after public hearing and after duly considering
all relevant evidence and testimony presented, determined that the City of Pasco requires a
regular levy in the amount of $6,492,514, which does NOT include any of the allowable
percentage increase in property tax revenues from the previous year, and does include amounts
resulting from the addition of new construction and improvements to property and any increases
in the value of state - assessed property, and amounts authorized by law as a result of any
annexations that have occurred and refunds made, in order to discharge the expected expenses
and obligations of the district.
RCW 84.55.120 requires a specific statement regarding the amount of any increase in
regular property tax from the previous year. The actual general levy amount from the previous
year (2012) was $6,327,851. The City Council of the City of Pasco hereby authorizes the
following increase in the regular property tax levy to be collected in the 2013 tax year. The
dollar amount of the increase over the actual levy amount from the previous year shall be $0
(ZERO) which is a percentage INCREASE of 0% (ZERO PERCENT) from the previous year.
This increase is exclusive of additional revenue resulting from the addition of new construction
and improvements, newly constructed wind turbines to property, any increase in the value of
state assessed property, and any additional amounts resulting from any annexations that have
occurred and refunds made.
The property tax from new construction to be included in the actual levy is calculated to
be $164,663. This number is the result of the amount of new construction and improvements to
property of $83,654,800, provided by the Franklin County Assessor's Office, multiplied by the
2012 (prior year) levy rate of $1.968362 per $1,000 of that value. There were no additional
amounts resulting from state assessed utilities as that valuation decreased from the prior year.
There was no additional amounts resulting from any annexations that have occurred or refunds
made.
§3. A tax for the following sums of money which includes new construction and
annexations to defray the expense and liabilities of the City of Pasco be and the same is hereby
levied for the purposes specified against all taxable property in the City for the fiscal year 2013:
General Expense, including Councilmanic Bond Debt Service $6,492,514
1999 Unlimited Tax General Obligation Bond/Library Remodel 619106
1999 Unlimited Tax General Obligation Bond /Fire Station 77,394
2002 Unlimited Tax General Obligation Refunding Bonds 3799600
$7,010,614
§4. This Ordinance shall take effect five (5) days after passage and publication.
Adopted by the City Council of the City of Pasco, on this 26th day of November, 2012.
City of Pasco:
Matt Watkins, Mayor
Attest:
Debra L. Clark, City Clerk
Approved As To Form:
Leland B. Kerr, City Attorney
ORDINANCE NO,
AN ORDINANCE PRESERVING THE PROPERTY TAX LEVY
CAPACITY IN THE CITY OF PASCO, WASHINGTON FOR FISCAL
YEARS AFTER 2012 IN ACCORDANCE WITH STATE LAW.
WHEREAS, to provide the property tax revenues required by the general operating
budget of the City for fiscal year 2013, City Council of the City of Pasco levied property taxes
on all taxable property in the City for collection in fiscal year 2013 in the total amount of
$6,492,514, which dollar amount is the sum of (a) $6,327,851which is the amount of property
taxes levied by the City in fiscal year 2012, plus (b) $0 of the allowable increase of the lesser of
1% or the Implicit Price Deflator (1.295 %), (c) $164,663 which is the amount of additional taxes
at the 2012 (prior year) levy rate of 1.96836 cents per $1,000 of assessed value resulting from the
addition of new construction and improvements to property in the City, plus (d) $0 relating to
property annexed into the City during fiscal year 2012, and (e) $0, which is the amount of
additional taxes at the 2012 (prior year) levy rate of 1.968362 cents per $1,000 of assessed value
resulting from no increase in value of State - assessed utility property in the City; and,
WHEREAS, the City Council of the City desires to preserve in accordance with State
law (including but not limited to Chapter 84.55 RCW) the capacity of the City to levy property
taxes in future fiscal years after 2012, calculated as if the City in fiscal year 2012 had levied the
full amount allowed by state law upon a finding of substantial need therefore; and
WHEREAS, upon a finding of substantial need and based upon limit factors of the lesser
of 101% or IPD (1.295 %) for the previous year and limit factors of 101% or 106% and IPD for
previous years as provided by RCW 84.55.0101 and $3.60 per $1,000 of assessed value by RCW
84.52.043 and 41.16.060, the City would be permitted to levy property taxes for fiscal year 2013
in a total amount of $8,173,729 (the "full amount allowed by law "), which dollar amount is the
sum of (a) $8,009,066 (the lesser of the amount calculated by multiplying the allowable 2012
property tax levy of $7,929,768 times the limit factor of 101% (the lesser of 101% or IPD or the
$3.60 per $1,000 statutory limitation), plus (b) $164,663, which is the amount of additional taxes
at the 2012 (prior year) levy rate of $1.968362 cents per $1,000 of assessed value resulting from
the addition of new construction and improvements to property in the City, plus (c) $0 for
property annexed into the City during fiscal year, and (d) $0, which is the amount of additional
taxes at the 2012 (prior year) levy rate of $1.968362 cents per $1,000 of assessed value resulting
from no increase in value of State assessed utility; and
WHEREAS, the full amount allowed by law for fiscal year 2013 of $8,173,729 is
$1,681,214 greater than the actual property tax levy of the City for fiscal year 2012 of
$6,492,514 and such excess represents the unused 2013 property tax levy capacity that the City
desires to preserve for future fiscal years after 2012;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PASCO,
WASHINGTON, DO ORDAIN AS FOLLOWS:
Section 1. The City Council of the City finds and determines that there is substantial
need for the City to preserve, for future fiscal years after 2013, the capacity to levy property
taxes on all taxable property in the City in the amount of $1,681,214, which is equal to the
unused levy capacity of the City for fiscal year 2013. This substantial need includes, without
limitation, the anticipated future requirements for additional property tax revenues that will be
needed for the construction and /or maintenance of roads, streets, bridges and other transportation
facilities of the City; to satisfy anticipated and unanticipated new regulatory requirements
applicable to the City; to provide for potential excess costs of capital facilities; and generally to
meet other substantial future financial requirements of the City.
Section 2. This ordinance shall take effect and be in force from and after its passage and
five days following its publication as required by law.
ADOPTED by the City Council by the affirmative vote of a majority plus one vote of the
members thereof and APPROVED by the Mayor of Pasco, Washington, at a regular open public
meeting thereof, this 26th day of November, 2012.
Matt Watkins, Mayor
Attest:
Approved As To Form:
Debra L. Clark, City Clerk Leland B. Kerr, City Attorney