HomeMy WebLinkAbout2019.10.28 Council Special Meeting PacketSpecial Meeting
AGENDA
PASCO CITY COUNCIL
7:00 p.m.
October 28, 2019
Page
1. CALL TO ORDER:
2. ROLL CALL:
(a) Pledge of Allegiance
3. HEARINGS AND COUNCIL ACTION ON ORDINANCES AND
RESOLUTIONS RELATING THERETO:
2 - 24 (a) 2020 Ad Valorem Tax Levy
CONDUCT PUBLIC HEARING
MOTION: I move to adopt Ordinance No. 4466, providing for an increase
in the regular property taxes of the City for levy in 2019 and collection in the
2020 tax year; preserving levy capacity for future years; and providing for
related matters and, further, authorize publication by summary only.
4. ADJOURNMENT:
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AGENDA REPORT
FOR: City Council October 15, 2019
TO: Dave Zabell, City Manager Special Meeting: 10/28/19
FROM: Richa Sigdel, Director
Finance
SUBJECT: 2020 Ad Valorem Tax Levy
I. REFERENCE(S):
2020 Property Tax Levy Ordinance
Exhibit A
General Fund Revenue Overview
2020 Property Tax Presentation
II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS:
CONDUCT PUBLIC HEARING
MOTION: I move to adopt Ordinance No. ________, providing for an increase in the
regular property taxes of the City for levy in 2019 and collection in the 2020 tax year;
preserving levy capacity for future years; and providing for related matters and, further,
authorize publication by summary only.
III. FISCAL IMPACT:
No impact to 2019-2020 Biennial Budget.
IV. HISTORY AND FACTS BRIEF:
As part of the annual budget process, per RCW 84.55.120, cities are required to
conduct a public hearing on General Fund revenue sources for the coming year's
budget, including possible increases in Property Tax revenues. Following the revenue
hearing, Council may choose to pass an ordinance at the same meeting authorizing the
Property Tax Levy for the ensuing year, consistent with statutory limitations.
State statue limits the Property Tax rate the City can levy to $3.60 per $1,00 0 of
assessed valuation. Other General Fund revenue includes sales tax, fees and charges,
utility taxes, fines and forfeitures, and transfers. Property Tax, however, requires a
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public hearing and vote separate from the budget and is the primary focus of th is
narrative.
Revenues generated through the City Property Tax Levy represent a major source of
funding for essential government services such as Police, Fire, Parks, Community
Development, Finance, Administration, as well as a significant portion of streets and
other services deemed necessary by the Council through the budget process.
In 2001, the voters approved Initiative 747 (I-747) limiting the amount taxing districts
could increase the total Property Tax Levy over the previous year by the lesser of 1%
or the Implicit Price Deflator (IPD) without voter approval. In November 2007, that
initiative was challenged and ruled unconstitutional by the Washington State Supreme
Court; the Court's ruling returned the limit to the lesser of 6% or IPD. The Legislature
subsequently placed into law those limits suggested by I-747. The current legal limit is
the lesser of 1% or IPD, meaning that the City could increase the total property tax levy
for 2020 by as much as 1% over 2019.
The IPD differs significantly from a regional Consumer Price Index (CPI) in that,
unlike the CPI, the IPD is not based on a fixed basket of goods and services in a region.
The IPD basket spans the nation and is based on changes from year to year with
people's consumption and investment patterns. The IPD figure for the 2020 tax
calculation is 1.0%.
As final tax levy data has yet to be issued by the Franklin County Assessor’s Office,
including information on any increases to State-assessed utilities, the calculations
provided herein are estimates. Furthermore, because the Assessor’s Office is not
allowed to set the levy to exceed what is shown in the City’s budget, the information
provided for both the estimated calculations and the rounded amount will be utilized
for presentation in the budget.
V. DISCUSSION:
CITY PROPERTY TAX LEVY OPTIONS FOR 2020
For 2020, the Franklin County Assessor has provided a preliminary City assessed
valuation of $6,051,973,736, which will be used as the basis to calculate the 2020
Property Taxes. This amount includes new construction of $199,557,200 and an
estimated State-assessed utility of $10,000.
Please refer to Exhibit A for a chart regarding the options below.
Option A reflects an estimated increase of $397,024 over the 2019 levy amount. The
proposed increase is derived mostly from an increase in assessed valuation due to new
construction in 2019. This option forgoes the statutorily allowed 1.0% increase in the
City Property Tax Levy, an increase of $106,673, and instead would bank the capacit y
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for future needs. The effect of the new construction adds to the overall assessed
valuation of the City, which in turn serves to reduce the levy rate for 2020 by $0.111
from the $1.939 per $1,000 of assessed valuation in 2019 to $1.828 in 2020.
Option B depicts the amount the City would collect if the Council chose to adopt the
statutorily allowed 1.0% increase, plus an estimated increase due to new construction
and annexation in 2019. This alternative would decrease the levy rate for 2020 by
$0.094 per $1,000 of assessed valuation from $1.939 in 2019 to $1.846 in 2020.
The 2019-2020 Adopted Budget was prepared using an estimated property tax levy of
$10,987,008. account to levy tax estimated for lower is amount This than
delinquencies.
Council has historically based Property Tax Levy decisions on current and future
needs. In 2019, the Council chose to use tax levy capacity banked from prior years to
fund major capital infrastructure investments like Fire Stations 83 and 84 and a
Community Center. The 2019-2020 adopted budget assumes $10,987,008 as 2020
Property Tax revenue and Staff expects the City to meet the adopted budget revenue
for the General Fund during the same year.
STATUTORY DEADLINE FOR PROPERTY TAX DETERMINATION
For the Franklin County Assessor to levy property taxes, the City is required to certify
property tax levies with the County by November 30th of each year.
Staff presented the options to the Council in detail, alongside the General Fund revenue
overview. In cons aboveof ideration the -conditions, and factors noted Staff
recommended that the Council select Option A; forgoing the statutorily allowed 1%
increase in the City's Property Tax Levy and instead banking that capacity for potential
use in the future.
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-1-
ORDINANCE NO. ________
AN ORDINANCE of the City of Pasco, Washington, providing for an increase in the
regular property taxes of the City for levy in 2019 and collection in the 2020 tax year;
preserving levy capacity for future years; and providing for related matters.
THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON DO ORDAIN
AS FOLLOWS:
§1. Findings and Determinations. The City Council (the “City Council”) of the City of Pasco,
Washington (the “City”), makes the following findings and determinations:
(a) RCW 84.55.120(1) provides that the City Council must hold a public hearing on
revenue sources for the following year’s current expense budget and that the hearing must include
consideration of possible increases in property tax revenues and must be held prior to the time the City
levies the taxes.
(b) RCW 84.55.120(3) provides that the City may not authorize an increase in property tax
revenue from the previous year except by adoption of a separate ordinance or resolution, pursuant to
notice, specifically authorizing the increase in terms of both dollars and percentage.
(c) Pursuant to proper notice, the City Council held a public hearing on October 28, 2019
(the “Hearing”), to consider the City’s 2020 current expense budget and its revenue sources, along with
consideration of possible increases in property tax revenues.
(d) The City’s actual levy amount from the previous year was $10,667,334.
(e) The City has a population that is greater than 10,000.
(f) The City Council, after the Hearing and after duly considering all relevant evidence
and testimony presented, determined that the City requires 0% in allowable increase in property tax
revenue from the previous year, in addition to revenue resulting from the addition of new construction
and improvements to property, newly constructed wind turbines, solar, biomass and geothermal
facilities, if the facilities are not state assessed, any increase in the value of state-assessed property,
any annexations that have occurred and any refunds made, in order to discharge the expected expenses
and obligations of the City and in its best interest.
§2. Property Tax Increase Authorized. An increase in the regular property tax levy of the
City is authorized for the levy to be collected in the 2020 tax year. The dollar amount of the increase
over the actual levy amount from the previous year is $0.00 (zero dollars), which is a percentage
increase of 0% (zero percent) from the previous year. This increase is exclusive of additional revenue
resulting from new construction, improvements to property, any increase in assessed value due to
construction of wind turbine, solar, biomass and geothermal facilities, if the facilities are not state
assessed, any increase in the value of state assessed property, any annexations that have occurred and
any refunds made.
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-2-
§3. Transmittal. The City Clerk is authorized and directed to transmit a certified copy of this
ordinance to the Franklin County Assessor on or before November 30, 2018.
§4. General Authorization and Ratification. The City Manager, the Finance Director of the
City, the City Clerk and other appropriate officers of the City, and each of them acting alone, are
authorized and directed to take any action and to execute any document as in their judgment may be
necessary or desirable to effectuate the provisions of this ordinance. All prior actions in furtherance of
and consistent with the terms of this ordinance are ratified and confirmed.
§5. Effective Date. This Ordinance takes effect five (5) days after passage and publication.
Adopted by the City Council of the City of Pasco this ___ day of ____________, 2019.
_____________________________
Matt Watkins
Mayor
ATTEST: APPROVED AS TO FORM:
_____________________________ ___________________________
Debra Barham Eric Ferguson
City Clerk City Attorney
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OPTION A OPTION B2019 Levy $10,667,334 $10,667,334 $10,667,334Implict Price Deflator (IPD) $106,673Increase in State Utility AV (Estimate) $10,000 $10,000New Construction $387,024 $387,024Total Levy Amount$10,667,334 $11,064,358 $11,171,031Tax Levy Rate 1.939 1.828 1.846Rate Change from Current 2019 Levy- (0.111) (0.094) Cost per $1,000 on a $230,000 AV Home $446 $420 $425Net Change ($26) ($22)General Fund Levy OptionsCurrent 2019 Tax LevyNo Increase + New Construction 1.0 (IPD) Increase + New Construction Page 7 of 24
2019 Adopted
Budget 2019 Estimate
2020 Adopted
Budget
2020 Proposed
Amended Budget
General Property Tax 10,561,963 10,606,963 10,987,008 10,987,008
Retail Sales Tax 15,352,183 15,500,000 15,771,026 15,771,026
Utility Tax 9,583,525 9,590,000 9,725,394 9,725,394
Other Tax 1,216,350 1,178,882 1,221,400 1,221,400
Sub-Total Taxes 36,714,021 36,875,845 37,704,828 37,704,828
Fees & Charges
Administrative Charge Back 3,102,166 3,100,000 3,252,344 3,252,344
Engineering Services 1,500,000 1,500,000 1,500,000 1,500,000
Public Safety Services 1,347,089 1,374,000 1,373,239 1,373,239
Zoning, Plan Check & Sepa Fees 417,500 418,000 417,500 417,500
Other Misc Revenues 1,078,041 1,078,000 1,081,139 1,081,139
Municipal Court 174,000 150,000 174,000 174,000
Sub-Total Fees & Charges 7,618,796 7,620,000 7,798,222 7,798,222
Intergovernmental Revenues
State & County 801,000 820,000 808,000 825,000
Liquor Board Profits 600,494 600,500 604,949 604,949
Liquor Excise Tax 378,253 389,000 397,516 397,516
Federal Direct Grants 504,164 504,000 373,464 373,464
Criminal Justice 104,499 104,000 110,129 110,129
Other 27,700 27,700 27,700 27,700
Sub-Total Intergovernmental Revenues 2,416,110 2,445,200 2,321,758 2,338,758
Licenses & Permits
Business Licenses 636,000 680,000 636,000 700,000
Building Permits 1,350,000 1,470,000 1,350,000 1,400,000
Animal Licenses 222,000 220,000 222,000 222,000
Other 21,500 23,000 21,500 24,000
Sub-Total Licenses & Permits 2,229,500 2,393,000 2,229,500 2,346,000
Fines & Forefeits
Traffic & Non Traffic Penalty 800,000 740,000 800,000 900,000
Other 105,600 107,650 105,600 105,600
Sub-Total Fines & Forefeits 905,600 847,650 905,600 1,005,600
Other Sources
Bond Proceeds 17,250,000 17,250,000 - -
Rent 319,350 320,000 320,550 320,550
Transfer in 227,600 228,600 227,600 227,600
Interest 200,000 263,000 210,000 310,000
Other* 72,750 830,500 73,150 73,150
Sub-Total Other Sources 18,069,700 18,892,100 831,300 931,300
Total General Fund Revenue 67,953,727 69,073,795 51,791,208 52,124,708
Revenue Excluding Bond Proceeds 50,703,727 51,823,795 51,791,208 52,124,708
*Other category includes $645K revenue from sale of assets.
Summary - General Fund Revenue Sources by Category
2%
19%
30%
21%
0%
1%
2%
3%
3%
6%
0%
0%
1%
1%
1%
2%
0%
0%
3%
1%
0%
2%
0%
0%
0%
1%
0%
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10/18/2019
1
2019 Mid Biennium Adjustment2019 Mid Biennium Adjustment
Property Tax Levy
and General Fund
Revenue
Ad Valorem Tax
•Under state law, no local government may increase its property tax levy more than 1% in a given year, and
local governments with a population of 10,000 or more are limited to the lesser of 1% or the rate of inflation
(Implicit Price Deflator)
•Implicit Price Deflator (IPD) for 2019 is 1.396%
•IPD is an economic metric that accounts for inflation by converting output measured at current prices into
constant-dollar GDP. This specific deflator shows how much a change in the base year's GDP relies upon
changes in the price level
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10/18/2019
2
Assessed Valuation Trend
Banked Capacity
• Banked capacity is accrued when local governments forego yearly increases to property taxes
• If no current need, City has historically banked its levy capacity for future purposes
• City used all of its banked capacity in 2019 to fund major infrastructure investments like relocation of Fire
Station
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10/18/2019
3
OPTION A OPTION B
2019 Levy $10,667,334 $10,667,334 $10,667,334
Implict Price Deflator (IPD) $106,673
Increase in State Utility AV (Estimate) $10,000 $10,000
New construction $387,024 $387,024
Total Levy Amount $10,667,334 $11,064,358 $11,171,031
Tax Levy Rate 1.939 1.828 1.846
Rate Change from Current 2019 Levy - (0.111) (0.094)
Cost per $1,000 on a $230,000 AV Home $446 $420 $425
Net Change ($26) ($22)
General Fund Levy Options
Current 2019
Tax Levy
No Increase +
New
Construction
1.0 (IPD)
Increase + New
Construction
Comparison (2019 Data)
General Rate Total Rate* Tax Collection
City of Richland 2.436$ 2.721$ 18,921,267$
City of Kennewick 1.989$ 1.989$ 13,190,307$
City of Pasco 1.939$ 1.939$ 10,667,334$
*Includes voted bonds
Cost per $1,000 on a $230,000 AV Home
City of Richland 560$
City of Kennewick 458$
City of Pasco 446$
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10/18/2019
4
Property Tax Trend – Option A
Property Tax Trend – Option B
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10/18/2019
5
General Fund Revenue Sources
2019 Adopted
Budget 2019 Estimate
2020 Adopted
Budget
2020 Proposed
Amended Budget
General Property Tax 10,561,963 10,606,963 10,987,008 10,987,008
Retail Sales Tax 15,352,183 15,500,000 15,771,026 15,771,026
Utility Tax 9,583,525 9,590,000 9,725,394 9,725,394
Other Tax 1,216,350 1,178,882 1,221,400 1,221,400
Sub-Total Taxes 36,714,021 36,875,845 37,704,828 37,704,828
2%
19%
30%
21%
General Fund Revenue Sources – Property Tax
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10/18/2019
6
Where does your
property tax go?
General Fund Revenue Sources – Sales Tax
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10/18/2019
7
Sales Tax Rates
Breakdown of Sales
Tax Rate 2019 Rates
State 6.5%
City/County (85%/15%) 1.0%
Transit 0.6%
Public Safety* 0.3%
Criminal Justice** 0.1%
Juvenile Detention 0.1%
Total 8.6%
*RCW 82.14.450; 60% is retained by counties, remaining 40% is allocated to cities on a per capita basis
**RCW 82.14.340; County receives 10% of tax proceeds; remaining 90% is distributed to cities and unincorporated areas based on population
Where do Your Sales Tax Come From?
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10/18/2019
8
General Fund Revenue Sources – Utility Tax
General Fund Revenue Sources
2019 Adopted
Budget 2019 Estimate
2020 Adopted
Budget
2020 Proposed
Amended Budget
Fees & Charges
Administrative Charge Back 3,102,166 3,100,000 3,252,344 3,252,344
Engineering Services 1,500,000 1,500,000 1,500,000 1,500,000
Public Safety Services 1,347,089 1,374,000 1,373,239 1,373,239
Zoning, Plan Check & Sepa Fees 417,500 418,000 417,500 417,500
Other Misc Revenues 1,078,041 1,078,000 1,081,139 1,081,139
Municipal Court 174,000 150,000 174,000 174,000
Sub-Total Fees & Charges 7,618,796 7,620,000 7,798,222 7,798,222
0%
1%
2%
3%
3%
6%
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10/18/2019
9
General Fund Revenue Sources – Administrative Services
General Fund Revenue Sources – Engineering Services
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10
General Fund Revenue Sources – Public Safety Services
General Fund Revenue Sources – Intergovernmental
2019 Adopted
Budget 2019 Estimate
2020 Adopted
Budget
2020 Proposed
Amended Budget
Intergovernmental Revenues
State & County 801,000 820,000 808,000 825,000
Liquor Board Profits 600,494 600,500 604,949 604,949
Liquor Excise Tax 378,253 389,000 397,516 397,516
Federal Direct Grants 504,164 504,000 373,464 373,464
Criminal Justice 104,499 104,000 110,129 110,129
Other 27,700 27,700 27,700 27,700
Sub-Total Intergovernmental
Revenues 2,416,110 2,445,200 2,321,758 2,338,758
1%
1%
1%
2%
0%
0%
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11
General Fund Revenue Sources – Public Utility District
(PUD) Privilege Tax
General Fund Revenue Sources – Liquor Board Profits &
Excise Tax
Page 19 of 24
10/18/2019
12
General Fund Revenue Sources – Grants
General Fund Revenue Sources – Licenses & Permits
2019 Adopted
Budget 2019 Estimate
2020 Adopted
Budget
2020 Proposed
Amended Budget
Licenses & Permits
Business Licenses 636,000 680,000 636,000 700,000
Building Permts 1,350,000 1,470,000 1,350,000 1,400,000
Animal Licenses 222,000 220,000 222,000 222,000
Other 21,500 23,000 21,500 24,000
Sub-Total Licenses & Permits 2,229,500 2,393,000 2,229,500 2,346,000
0%
0%
3%
1%
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13
General Fund Revenue Sources – Building Permit
General Fund Revenue Sources – Business License
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14
General Fund Revenue Sources – Animal License
General Fund Revenue Sources – Fines & Forfeits
2019 Proposed
Budget 2019 Estimate
2020 Proposed
Budget
2020 Proposed
Amended Budget
Fines & Forefeits
Traffic & Non Traffic Penalty 800,000 740,000 800,000 900,000
Other 105,600 107,650 105,600 105,600
Sub-Total Fines & Forefeits 905,600 847,650 905,600 1,005,600
0%
2%
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15
General Fund Revenue Sources – Fines & Forfeits
General Fund Revenue Sources
*Other category includes $645K revenue from sale of assets.
2019 Adopted
Budget 2019 Estimate
2020 Adopted
Budget
2020 Proposed
Amended Budget
Other Sources
Bond Proceeds 17,250,000 17,250,000 - -
Rent 319,350 320,000 320,550 320,550
Transfer in 227,600 228,600 227,600 227,600
Interest 200,000 263,000 210,000 310,000
Other* 72,750 830,500 73,150 73,150
Sub-Total Other Sources 18,069,700 18,892,100 831,300 931,300
0%
0%
0%
1%
0%
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16
Summary
•City’s assessed valuation has increased by 54% since 2016
•Staff recommends Council reserve 1% property tax levy for future purposes
•The recommended option results in property tax rate of $1.828 per $1,000 Assessed Valuation
•Review of major General Fund revenue sources
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