HomeMy WebLinkAbout2020.10.05 Council Remote Workshop PacketRemote Workshop Meeting
AGENDA
PASCO CITY COUNCIL
7:00 p.m.
October 5, 2020
Page
1. REMOTE WORKSHOP INSTRUCTIONS:
(a) The Pasco City Council Workshops are broadcast live on PSC-TV
Channel 191 on Charter/Spectrum Cable in Pasco and Richland and
streamed at www.pasco-wa.gov/psctvlive and on the City’s Facebook
page at www.facebook.com/cityofPasco.
Call-in information to GoToWebinar for "listen-only" mode is:
(213) 929-4212 and use access code 555-318-622.
2. CALL TO ORDER:
3. ROLL CALL:
(a) Pledge of Allegiance
4. ITEMS FOR DISCUSSION:
2 - 38 (a) 2021 Ad Valorem Tax Levy and General Fund Revenue Review
5. ADJOURNMENT:
Page 1 of 38
AGENDA REPORT
FOR: City Council September 30, 2020
TO: Dave Zabell, City Manager Remote Workshop Meeting:
10/5/20
FROM: Richa Sigdel, Director
Finance
SUBJECT: 2021 Ad Valorem Tax Levy and General Fund Revenue Review
I. REFERENCE(S):
Exhibit A
General Fund Revenue Overview
2021 Property Tax Presentation
II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS:
Discussion
III. FISCAL IMPACT:
Sets the City share of the Property Tax rate. The impact to the General Fund is
dependent on the option selected.
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 $1,000 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
public hearing and vote separate from the budget and is the primary focus of this
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
Page 2 of 38
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 2021 by as much as 1% over 2020.
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 2021 tax
calculation is 0.602%.
As final tax levy data has yet to be issued by the Franklin Coun ty 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.
Council reviews other General Fund revenues that complement the revenues received
from property taxes.
V. DISCUSSION:
CITY PROPERTY TAX LEVY OPTIONS FOR 2021
For 2021, the Franklin County Assessor has provided a preliminary City assessed
valuation of $6,685,121,095, which will be used as the basis to calculate the 2021
property taxes. This amount includes new construction of $214,829,300 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 $398,312 over the 2020 levy amount. The
proposed increase is derived mostly from an increase in assessed valuation due to new
construction in 2020. This option forgoes the statutorily allowed 0.602% increase in
the City property tax levy, an increase of $66,554, and instead would bank the capacity
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 2021 by $0.093
Page 3 of 38
from the $1.808 per $1,000 of assessed valuation in 2020 to $1.715 in 2021.
Option B depicts the amount the City would collect if the Council chose to adopt the
statutorily allowed 0.602% increase, plus an estimated increase due to new
construction and annexation in 2020. This alternative would decrease the levy rate for
2021 by $0.083 per $1,000 of assessed valuation from the $1.808 per $1,000 of
assessed valuation in 2020 to $1.725 in 2021.
The 2021-2022 proposed budget was prepared using an estimated property tax levy of
$11,240,022 (for 2021). This amount is lower than the estimated tax levy to account for
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 the Animal
Control Shelter. Whereas in 2020, the Council chose to bank the tax levy capacity for
future needs.
STATUTORY DEADLINE FOR PROPERTY TAX DETERMINATION
Finally, 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.
RECOMMENDATION
In consideration of the above noted factors and conditions, staff will be recommending
that the Council select Option A; forgoing the statutorily allowed 0.602% increase in
the City's property tax levy and instead banking that capacity for potential use in the
future.
Page 4 of 38
OPTION A - RecommendedOPTION B2020 Levy $11,064,358 $11,064,358 $11,064,358Implict Price Deflator (IPD) $66,554Increase in State Utility AV (Estimate) $10,000 $10,000New construction $388,312 $388,312Total Levy Amount$11,064,358 $11,462,670 $11,529,224Tax Levy Rate 1.808 1.715 1.725Rate Change from Current 2020 Levy - (0.093) (0.083) Cost per $1,000 on a $300,000 AV Home $542 $514 $517Net Change ($28) ($25)2020 Comparison2020 General Rate 2020 Total Rate* Tax CollectionCity of Richland 2.301$ 2.491$ 19,202,179$ City of Kennewick 1.859$ 1.859$ 13,603,769$ City of Pasco 1.808$ 1.808$ 11,064,358$ *Includes voted bondsCost per $1,000 on a $300,000 AV HomeCity of Richland 747$ City of Kennewick 558$ City of Pasco 542$ General Fund Levy OptionsCurrent 2020 Tax LevyNo Increase + New Construction (IPD) Increase + New Construction Page 5 of 38
Taxes 2017-2018 Actual
2019-2020
Estimate
2021-2022
Proposed Budget
General Property Tax 16,316,052 21,648,971 22,947,637
Retail Sales Tax 30,689,223 34,800,209 33,890,746
Utility Tax 18,274,879 21,680,677 22,584,924
Other Tax 2,543,719 1,747,750 1,722,780
Sub-Total Taxes 67,823,873 79,877,606 81,146,087
Fees & Charges
General Government 6,580,680 7,283,756 7,022,743
Public Safety 3,151,421 3,486,411 3,384,632
Culture & Recreation 494,161 446,051 410,727
Economic Environment 3,992,239 4,085,000 4,272,511
Sub-Total Fees & Charges 14,218,501 15,301,218 15,090,613
Intergovernmental
PUD Privilege Tax 1,358,200 1,365,000 1,198,267
Liquor Board Profits & Excise Tax 1,904,019 1,981,212 2,011,037
Grants 523,883 4,140,128 998,743
Other 58,852 45,000 55,400
Sub-Total Intergovernmental 3,844,954 7,531,339 4,263,447
Licenses & Permits
Building Permit 2,948,409 3,199,999 3,684,978
Business License 692,285 1,395,540 1,376,709
Animal License 463,069 381,156 381,551
Other 43,498 53,843 43,000
Sub-Total Licenses & Permits 4,147,262 5,030,539 5,486,238
Fines & Forefeits
Traffic 1,393,109 1,258,125 1,345,632
Non Traffic 234,667 784,348 1,115,602
Court 104,019 75,484 85,120
Sub-Total Fines & Forefeits 1,731,794 2,117,958 2,546,354
Other Sources
Rent 657,534 555,582 639,900
Transfer in 474,333 369,200 455,200
Interest 507,182 572,778 410,000
Other 1,125,024 1,357,611 118,700
Sub-Total Other Sources 2,764,072 2,855,170 1,623,800
Total General Fund Revenue 94,530,456 112,713,830 110,156,539
Summary - General Fund Revenue Sources by Category
2%
21%
31%
21%
4%
0%
3%
6%
0%
1%
2%
1%
0%
0%
1%
3%
0%
1%
1%
0%
0%
0%
1%
Page 6 of 38
July
August
Aug/Sep/Nov
Nov/Dec
Department Request
Budget Hearing
Budget Kickoff
Capital Improvement Plan
Analysis & Meetings
Budget Adoption
Biennial Budget
NovemberSeptember
Council Goals
Assessed Valuation from
Franklin County
Ad Valorem Levy Hearing
& General Fund Revenues
October
Page 7 of 38
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 2021 is 0.60152%. City needs to adopt resolution of substantial need in order to received full 1% increase as allowed by statute.
•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
Page 8 of 38
Assessed Valuation Trend
Page 9 of 38
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 Stations
•City banked statutorily allowed 1% in 2020. City currently has
$139,041 in banked capacity. Page 10 of 38
OPTION A -
Recommended OPTION B
2020 Levy $11,064,358 $11,064,358 $11,064,358
Implict Price Deflator (IPD)$66,554
Increase in State Utility AV (Estimate)$10,000 $10,000
New construction $388,312 $388,312
Total Levy Amount $11,064,358 $11,462,670 $11,529,224
Tax Levy Rate 1.808 1.715 1.725
Rate Change from Current 2020 Levy - (0.093) (0.083)
Cost per $1,000 on a $300,000 AV Home $542 $514 $517
Net Change ($28)($25)
General Fund Levy Options
Current 2020
Tax Levy
No Increase +
New
Construction
(IPD) Increase +
New
Construction Page 11 of 38
Comparison (2020 Data)
2020 Comparison 2020 General Rate 2020 Total Rate*Tax Collection
City of Richland 2.301$ 2.491$ 19,202,179$
City of Kennewick 1.859$ 1.859$ 13,603,769$
City of Pasco 1.808$ 1.808$ 11,064,358$
*Includes voted bonds
Cost per $1,000 on a $300,000 AV Home
City of Richland 747$
City of Kennewick 558$
City of Pasco 542$ Page 12 of 38
Property Tax Trend –Recommended
Page 13 of 38
General Fund Revenue Sources -Taxes
2017- 2018
Act ual
2019- 2020
Est i mat e
2021- 2022
Pr oposed
Budget
Gener al Pr oper t y Tax 16, 316, 052 21, 648, 971 22, 947, 637
Ret ai l Sal es Tax 30, 689, 223 34, 800, 209 33, 890, 746
Utility Tax 18, 274, 879 21, 680, 677 22, 584, 924
Ot her Tax 2, 543, 719 1, 747, 750 1, 722, 780
Sub- Tot al Taxes 67, 823, 873 79, 877, 606 81, 146, 087
2%
21%
31%
21%Page 14 of 38
General
Fund
Revenue
Sources –
Property Tax
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
Property Tax 16,316,052 21,648,971 22,947,637
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Page 15 of 38
Where does
your
property tax
go?
SCHOOL DISTRICT,
37%
STATE PROPERTY
TAX, 29%
CITY OF PASCO, 18%
COUNTY, 12%
PORT OF PASCO & OTHERS, 4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Page 16 of 38
General
Fund
Revenue
Sources –
Sales Tax
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
Sales Tax 30,689,223 34,800,209 33,890,746
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
Page 17 of 38
Sales Tax Rates
Breakdown of Sal es
Tax Rat e 2020 Rat es
State 6. 5%
Ci t y/ Count y ( 85%/ 15%)1. 0%
Tr ansi t 0. 6%
Publ i c Saf et y*0. 3%
Cr i mi nal Just i ce**0. 1%
Juveni l e Det ent i on 0. 1%
Tot al 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
Page 18 of 38
Where do Your Sales Tax Come From?
Retail Trade
53%
Wholesale Trade
9%
Construction
15%
Manufacturing
5%
Other
11%
Accommodation and
Food Services
7%Page 19 of 38
General
Fund
Revenue
Sources –
Utility Tax
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
Utility Tax 18,274,879 21,680,677 22,584,924
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Page 20 of 38
General Fund Revenue Sources –Fees & Charges
2017- 2018
Act ual
2019- 2020
Est i mat e
2021- 2022
Pr oposed
Budget
Fees & Charges
Gener al Gover nment 6, 580, 680 7, 283, 756 7, 022, 743
Publ i c Saf et y 3, 151, 421 3, 486, 411 3, 384, 632
Cul t ur e & Recr eat i on 494, 161 446, 051 410, 727
Economi c Envi r onment 3, 992, 239 4, 085, 000 4, 272, 511
Sub- Tot al Fees & Char ges 14, 218, 501 15, 301, 218 15, 090, 613
4%
0%
3%
6%Page 21 of 38
General Fund
Revenue
Sources –
General
Government
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
General Government 6,580,680 7,283,756 7,022,743
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Page 22 of 38
General
Fund
Revenue
Sources –
Public Safety
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
Public Safety 3,151,421 3,486,411 3,384,632
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Page 23 of 38
General Fund
Revenue
Sources –
Economic
Environment
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
Economic Environment 3,992,239 4,085,000 4,272,511
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Page 24 of 38
General Fund
Revenue
Sources –
Culture &
Recreation
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
Culture & Recreation 494,161 446,051 410,727
-
100,000
200,000
300,000
400,000
500,000
600,000
Page 25 of 38
General Fund Revenue Sources –Intergovernmental
2017- 2018
Act ual
2019- 2020
Est i mat e
2021- 2022
Pr oposed
Budget
I nt er gover nment al
PUD Pr i vi l ege Tax 1, 358, 200 1, 365, 000 1, 198, 267
Li quor Boar d Pr of i t s & Exci se Tax 1, 904, 019 1, 981, 212 2, 011, 037
Gr ant s 523, 883 4, 140, 128 998, 743
Ot her 58, 852 45, 000 55, 400
Sub- Tot al I nt er gover nment al 3, 844, 954 7, 531, 339 4, 263, 447 0%
1%
2%
1%Page 26 of 38
General Fund
Revenue
Sources –
Public Utility
District (PUD)
Privilege Tax
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
PUD Privilege Tax 1,358,200 1,365,000 1,198,267
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
Page 27 of 38
General Fund
Revenue
Sources –
Liquor Board
Profits & Excise
Tax
2017-2018
Actual
2019-2020
Estimate
2021-2022
Proposed
Liquor Board Profits & Excise
Tax 1,904,019 1,981,212 2,011,037
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Page 28 of 38
General
Fund
Revenue
Sources –
Grants
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
Grants 523,883 4,140,128 998,743
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Page 29 of 38
General Fund Revenue Sources –Licenses & Permits
2017- 2018
Act ual
2019- 2020
Est i mat e
2021- 2022
Pr oposed
Budget
Li censes & Permi t s
Bui l di ng Per mi t 2, 948, 409 3, 199, 999 3, 684, 978
Busi ness Li cense 692, 285 1, 395, 540 1, 376, 709
Ani mal Li cense 463, 069 381, 156 381, 551
Ot her 43, 498 53, 843 43, 000
Sub- Tot al Li censes & Permi t s 4, 147, 262 5, 030, 539 5, 486, 238
0%
0%
1%
3%Page 30 of 38
General Fund
Revenue
Sources –
Building
Permit
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
Building Permit 2,948,409 3,199,999 3,684,978
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Page 31 of 38
General Fund
Revenue
Sources –
Business
License
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
Business License 692,285 1,395,540 1,376,709
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
Page 32 of 38
General Fund
Revenue
Sources –
Animal
License
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
Animal License 463,069 381,156 381,551
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Page 33 of 38
General Fund Revenue Sources –Fines & Forfeits
2017- 2018
Act ual
2019- 2020
Est i mat e
2021- 2022
Pr oposed
Budget
Fi nes & For ef ei t s
Traffic 1, 393, 109 1, 258, 125 1, 345, 632
Non Tr af f i c 234, 667 784, 348 1, 115, 602
Cour t 104, 019 75, 484 85, 120
Sub- Tot al Fi nes & For ef ei t s 1, 731, 794 2, 117, 958 2, 546, 354
0%
1%
1%Page 34 of 38
General Fund
Revenue
Sources –
Fines &
Forfeits
2017-2018 Actual 2019-2020 Estimate 2021-2022 Proposed
Fines & Forefeits 1,731,794 1,761,199 2,546,354
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Page 35 of 38
General Fund Revenue Sources -Other
2017- 2018
Act ual
2019- 2020
Est i mat e
2021- 2022
Pr oposed
Budget
Ot her Sour ces
Rent 657, 534 555, 582 639, 900
Tr ansf er i n 474, 333 369, 200 455, 200
I nt er est 507, 182 572, 778 410, 000
Ot her 1, 125, 024 1, 357, 611 118, 700
Sub- Tot al Ot her Sour ces
2, 764, 072 2, 855, 170 1, 623, 800
0%
0%
0%
1%Page 36 of 38
Summary
City’s assessed valuation has increased by 70% since
2016
Staff recommends Council reserve 0.602% property tax
levy for future purposes
The recommended option results in property tax rate of
$1.715 per $1,000 Assessed Valuation
Review of major General Fund revenue sources –A
draft of currently proposed. Expected to be revised if
new economic information impacts projections
between now and adoptionPage 37 of 38
Page 38 of 38