Title
ORDINANCE 2996: ADOPT FISCAL YEAR 2016-2017 PROPERTY TAX LEVY (ORDINANCE)
Staff Contact and Presenter: Vicki Rios, Interim Director, Finance and Technology
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Purpose and Policy Recommendation
This is a request for City Council to waive reading beyond the title and adopt an ordinance setting the primary property tax rate at $0.4792 per $100 of assessed valuation for FY2016-2017 (FY16-17) and the secondary property tax rate at $1.6698 per $100 of assessed valuation for FY16-17. The total property tax rate will decrease from $2.1965 to $2.1490.
Background
Arizona state law requires that Council set the property tax levy by the third Monday in August. Arizona’s property tax system consists of two tiers - Primary and Secondary. The primary property tax levy has state mandated maximum limits; however, it can be used by a city for any purpose. The primary property tax revenue is included in the General Fund’s operating budget. The secondary property tax levy is not limited; however, it can be used only to retire the principal, interest, and related fees on voter authorized bonds used to finance the city’s capital improvement plan.
Prior to FY2015-2016 (FY15-16), the primary property tax levy was based on the limited cash value of each property and the secondary property tax levy was based upon the full cash value of the property. Due to the passage of Proposition 117, FY15-16 was the first fiscal year in which the both the primary and the secondary property tax levy are based on the limited property value of Glendale properties.
Analysis
The recommended primary property tax rate for FY16-17 is $0.4792 per $100 of assessed valuation. This is a decrease from $0.4898 per $100 of assessed valuation for FY15-16. At this rate, the primary levy will generate approximately $5,621,452 which will be used to support services paid for by the city’s General Fund.
The recommended secondary property tax rate is $1.6698 per $100 of assessed valuation which is a decrease from the $1.7067 rate for FY15-16. This proposed secondary property tax rate would increase the total levy from $19,268,783 million to $19,587,858. The $319,075 increase in the levy amount is due to the value of new construction added to the property tax rolls during the previous year. Funds generated from the secondary property tax levy will be used to pay the principal and interest on the city’s general obligation bonds. If approved, the total property tax rate will decrease from $2.1965 to $2.1490 and the total levy, primary and secondary, will total approximately $25,209,310.
Previous Related Council Action
On June 14, 2016 City Council adopted a resolution formally approving the FY16-17 Final Budget and Property Tax Levy. Council also gave notice of the date for the June 28th Property Tax Adoption.
City Council adopted a resolution formally approving the tentative operating, capital, debt, and contingency appropriation budget at the May 24, 2016 voting meeting.
On May 3, 2016 a Budget Workshop was held to discuss follow up items and receive policy guidance on outstanding budget issues.
On April 19 and 21, 2016, Budget Workshops were held to present and review the city’s FY16-17 Operating Budget requests. A financial plan for the General Fund and proposed changes to the Capital Improvement Program were also presented.
On March 15, 2016 a Budget Workshop was held to present and review the city’s 10-year Capital Improvement Plan. Council guidance was sought on various policy items relative to the FY16-17 budget development.
On February 16, 2016, a Budget Workshop was held reviewing various items including the budget calendar, legal requirements, major budget components, what constitutes a balanced budget, property tax revenue, and future discussion items.
On December 15, 2015, the General Fund and Major Operating Funds Five-Year Financial Forecast was presented at Council Workshop and initiated the FY16-17 budget process.
Community Benefit/Public Involvement
The community benefit of the City’s budget process, policy direction, and budgetary decisions demonstrates sound financial decisions are made through a transparent and public process where ultimate budgetary decisions align with the strategic direction of the City and provide the public with information on service provided and Council priorities.
Budget and Financial Impacts
At the recommended rate, the primary levy will generate approximately $5,621,452 which will be used to support general city services paid for by the city’s General Fund and the secondary levy will generate approximately $19,587,858 which will be used to pay the principal and interest on the city’s general obligation bonds.