Bulletin 16 of 2017 Inflation Rate Multiplier October 30, 2017

Transcription

1 5102 (Rev ) RICK SNYDER GOVERNOR STATE OF MICHIGAN DEPARTMENT OF TREASURY LANSING NICK A. KHOURI STATE TREASURER TO: FROM: Assessors and Equalization Directors State Tax Commission Bulletin 16 of 2017 Inflation Rate Multiplier October 30, 2017 RE: Inflation Rate Multiplier for use in the 2018 capped value formula and the Headlee Millage Reduction Fraction (MRF) formula Note: The Calculation of the Inflation Rate Multiplier is set in statute. MCL d states: (l) "Inflation rate" means the ratio of the general price level for the state fiscal year ending in the calendar year immediately preceding the current year divided by the general price level for the state fiscal year ending in the calendar year before the year immediately preceding the current year. (f) "General price level" means the annual average of the 12 monthly values for the United States consumer price index for all urban consumers as defined and officially reported by the United States department of labor, bureau of labor statistics. Based on this statutory requirement, the calculation for 2017 is as follows: 1. The 12 monthly values for October 2015 through September 2016 are averaged. 2. The 12 monthly values for October 2016 through September 2017 are averaged. 3. The ratio is calculated by dividing the average of column 2 by the average of column 1. The specific numbers from the US Department of Labor, Bureau of Labor Statistics are as follows: Oct Oct Nov Nov Dec Dec Jan Jan Feb Feb Mar Mar Apr Apr May May Jun Jun Jul Jul Aug Aug Sep Sep Average Ratio % Change 2.1% P.O. BOX LANSING, MICHIGAN

2 Page 2 Local units cannot develop or adopt or use an inflation rate multiplier other than in It is not acceptable for local units to indicate to taxpayers that you do not know how the multiplier is developed. Inflation Rate Multiplier Used in the 2018 Capped Value Formula The inflation rate, expressed as a multiplier, to be used in the 2018 Capped Value Formula is The 2018 Capped Value Formula is as follows: 2018 CAPPED VALUE = (2017 Taxable Value LOSSES) X ADDITIONS The formula above does not include 1.05 because the inflation rate multiplier of is lower than Inflation Rate Multiplier Used in 2018 Headlee Calculations The inflation rate multiplier of shall ALSO be used in the calculation of the 2018 Headlee Millage Reduction Fraction required by Michigan Compiled Law (MCL) d.The formula for calculating the 2018 Headlee Millage Reduction Fraction (MRF) is as follows: 2018 MRF = (2017 Taxable Value LOSSES) X Taxable Value ADDITIONS The following is a listing of the inflation rate multipliers used in the Capped Value and "Headlee" calculations since the start of Proposal A:

3 MBOR Red Update for Season FY2019 3/21/18 Black Updated- Season FY2018 MBOR FY19 PROPOSED BUDGET vs. MBOR PROPOSED BUDGET FORECAST FORECAST PROPOSED BUDGET Change Tax Year Tax Year Tax Year Tax Year Tax Year Tax Year Tax Year Tax Year Tax Year Tax Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Property Taxable Property Taxable Property Taxable Property Taxable Property Taxable Property Taxable Property Taxable Property Taxable Property Taxable Property Taxable Property Classifications Values * Values * Values * Values * Values * Values * Values * Values * Forecast Notes Values * Values * Residential $1,494,285,985 $1,518,215,789 $1,554,402,595 $1,569,415,409 $1,610,417,859 $1,673,949,909 $1,724,168,406 $1,775,893,458 3% per year $1,671,918,046 $2,031,863 Commercial 770,994, ,768, ,087, ,568, ,536, ,837, ,639, ,619, % per year 785,075,237 1,761,844 Industrial 369,937, ,094, ,541, ,286, ,760, ,411, ,411, ,411,417 No Growth 410,402,494 8,923 PPT will be supplemented with a SOM reimbursement TBD-Minus EMPP Ad Personal (Ad Valorem TxV) 497,617, ,338, ,898, ,574, ,652, ,839, ,636, ,436,577 valorem estimates $266,441,150 ($602,000) Utilities 55,249,100 95,589, ,912, ,841, ,213, ,585,664 3% per year $123,841,500 $0 Sub-Total $3,188,084,819 $3,209,416,826 $3,256,930,745 $3,073,433,555 $3,121,279,860 $3,260,879,057 $3,324,069,152 $3,388,946,348 Ad Valorem Personal Property (TxV) -Pre-MBOR Assessor forecast as of $3,183,324,273 $77,554,784 Effective Abated Real Opra Frozen - 14,021,650 10,944,800 1,269,800 1,269,800 1,269,800 1,269,800 1,269,800 Detail from Assessor 1,269,800 - Real Opra Rehab 12,175,000 12,265,000 12,476,890 12,579,909 12,675,000 12,476,890 - Real IFT 1/2 rate 30,879,975 24,592,625 21,566,325 4,066,325 4,066,325 4,066,350 3,450,000 3,300,000 Real IFT 1/2 rate adjusted for expiring abatements 4,066,350 - Real IFT Rehab Frozen 2,500,000 2,400,000 2,400,000 2,400,000 2,400,000 2,400,000 2,400,000 2,400,000 2,400,000 - New in TY17 for Carhartt SEV, AV and TxV of $3,500,850 millage rate applied to Personal IFT On Commercial Class - - 1,750,425 1,532,150 3,000,000 2,500,000 effective AV (1/2 the AV). Assume full costs for 2018 per Assessor. 1,532,150 - Personal IFT 1/2 rate 195,741, ,170, ,131,025 80,464,600 71,648,400 41,611,200 30,719,421 27,607,420 Adjusted per Nov 25, 2017 Assessor forecast. Eff AV 41,611,200 - Personal IFT Rehab Frozen 7,040,300 4,198,700 4,198,700 4,198,700 4,198,700 4,198,700 4,198,700 4,198,700 No Change-Frozen Value 4,198,700 - Real-Land Bank 3,146,950 3,105,198 2,500, , , ,023 Wayne County Land Bank 1% increase per year 762,501 - Total Effective Abated $ 239,309,175 $ 260,489,098 $ 271,740,850 $ 104,574,425 $ 97,598,650 $ 68,317,591 $ 58,412,903 $ 54,753,943 Includes Real & Personal OPRA, IFT, IFT Rehab, & Land Bank $ 68,317,591 $ - - Total Taxable Value $ 3,427,393,994 $ 3,469,905,924 $ 3,528,671,595 $ 3,178,007,980 $3,218,878,510 $3,329,196,648 $ 3,382,482,055 $ 3,443,700,291 $3,251,641,864 $77,554,784 Total Personal Property Ad Valorem and Abated $755,649,050 $809,708, ,228,425 $462,826, ,162, ,022, ,767, ,328, ,624,700 (602,000) Special Act Personal Property (Effective TxV) 84,716,475 71,648,400 41,611,200 37,918,121 34,306,120 Per Nov 25, 2017 Assessor forecast 41,611,200 - Personal IFT Rehab Frz 4,198,700 4,198,700 4,198,700 4,198,700 4,198,700 4,198,700-80,517,775 67,449,700 37,412,500 33,719,421 30,107,420 37,412,500 - PPT Reimbursement TxV Calculation 700,399, ,237, ,499, ,649, ,554, ,242, ,251,050 (602,000) $ - Value of 1 Mill $3,427,394 $3,469,906 $3,528,672 $3,178,008 $3,218,879 $3,329,197 $3,382,482 $3,443,700 $3,251,642 $77,555 Real including Abated $2,726,994,044 $2,660,197,599 $2,692,443,170 $2,810,770,230 $2,880,378,810 $3,017,547,598 $3,080,927,267 $3,144,457,594 $2,939,390,814 $78,156,784 Personal including Abated 700,399, ,708, ,228, ,237, ,499, ,649, ,554, ,242, ,251, ,000 Total SummaryTaxable Value $3,427,393,994 $3,469,905,924 $3,528,671,595 $3,178,007,980 $3,218,878,510 $3,329,196,648 $3,382,482,055 $3,443,700,291 $3,251,641,864 $77,554,784 Percentage Percentage Percentage Percentage Percentage Percentage Percentage Percentage Percentage Percentage Residential 46.87% 47.31% 47.73% 51.06% 51.59% 51.33% 51.87% 52.40% 52.52% -0.93% Commercial 24.18% 22.89% 22.85% 24.00% 24.24% 24.13% 24.03% 23.92% 24.66% -0.42% Industrial 11.60% 11.31% 10.95% 12.63% 12.39% 12.59% 12.35% 12.11% 12.89% -0.50% Personal 15.61% 18.49% 18.48% 9.19% 8.41% 8.15% 8.02% 7.89% 8.37% 0.04% Total 98.26% % % 96.88% 96.63% 96.20% 96.27% 96.32% 98.44% -1.81% Proposal "A" CPI % 2.40% 1.60% 1.60% 0.90% 1.00% 2.00% 2.00% 2.00% FY2018 anticipates gasoline price decline impact on State CPI 2.00% -1.00% % Change Residential 0.05% 1.58% 2.33% 0.96% 2.55% 3.80% 2.91% 2.91% Commercial -4.66% -4.93% 1.25% -0.88% 2.51% 3.85% 1.48% 1.48% Industrial -0.37% -1.88% -1.84% 8.18% -0.39% 5.76% 0.00% 0.00% Personal Ad valorem -5.45% 16.13% 1.42% % -7.58% 1.20% 0.30% 0.30% Total Personal Property Taxable Value 3.28% % -3.82% -1.83% -1.89% -0.57% Total Taxable Value -9.94% 1.29% 3.43% 1.60% 1.81% Summary Real $ 2,635,218,019 $ 2,616,078,126 $ 2,655,032,045 $ 2,695,269,905 $2,753,714,660 $ 2,871,198,407 $ 2,933,219,460 $ 2,996,924,107 Personal $ 497,617,700 $ 593,338,700 $ 601,898,700 $ 282,574,450 $ 262,652,600 $ 265,839,150 $ 266,636,667 $ 267,436,577 Abated (effective) 239,309, ,489, ,740, ,574,425 97,598,650 68,317,591 58,412,903 54,753,943 Total $ 3,372,144,894 $ 3,469,905,924 $ 3,528,671,595 $ 3,082,418,780 $ 3,113,965,910 $ 3,205,355,148 $ 3,258,269,031 $ 3,319,114,627 % Real 78.15% 75.39% 75.24% 87.44% 88.43% 89.58% 90.02% 90.29% % Personal 14.76% 17.10% 17.06% 9.17% 8.43% 8.29% 8.18% 8.06% Abated (effective) 7.10% 7.51% 7.70% 3.39% 3.13% 2.13% 1.79% 1.65% % Change Real -1.37% -0.73% 1.49% 1.52% 2.17% 4.27% 2.16% 2.17% % Change Personal -5.17% 19.24% 1.44% % -7.05% 1.21% 0.30% 0.30% Abated (effective) -7.13% 8.85% 4.32% % -6.67% % % -6.26% % Change Total -2.38% 2.90% 1.69% % 1.02% 2.93% 1.65% 1.87% Actual Growth/Loss TY 1994 Prop"A" Base Year What if 3% Per Year Growth S:\Accounting\Accountants\Annual \FY2019\Workpapers\000 Cross Funds\Tax Info\Taxable Value History Assessor TV v3-assessor MBOR.xls Prepared by: Finance Department

4 $2,000,000,000 City of Dearborn Property Taxable Values $1,800,000,000 $1,600,000,000 $1,610,417,859 $1,673,949,909 $1,400,000,000 $1,200,000,000 Taxable Value $1,000,000,000 $800,000, ,536, ,837,081 $600,000,000 $400,000, ,760, ,411, ,652, ,839,150 $200,000,000 $97,598,650 $68,317,591 $ Source: Assessor Board of Review Review (effective land bank) Fiscal Year Forecasts Residential Commercial Industrial Personal (Ad Valorem TxV) Total Effective Abated Taxable Value History Assessor TV v2-assessor update xls Prepared By : Finance Department

5 City of Dearborn Property Taxable Value by Property Classification $5,000,000,000 $4,500,000,000 $4,000,000,000 $3,500,000,000 $3,000,000,000 $2,500,000,000 $2,000,000,000 $1,500,000,000 $1,000,000,000 $500,000,000 $ Fiscal Year Total Effective Abated Industrial Commercial Residential Personal (Ad Valorem TxV) Actual Taxable Value History Assessor TV v2-assessor update xls Taxable Property Value by Class Prepared By : Finance Department

6 City of Dearborn ary Tax Revenue Calcuation & Comparison FY2019 (TY2018) Reflects MBOR Estimate MBOR 2018 to 2019 Fiscal Year: Difference % Taxable Value 4,637,775,727 4,404,137,430 4,046,229,516 3,634,455,748 3,454,202,582 3,427,393,994 3,469,905,924 3,528,671,595 3,178,007,980 3,218,878,510 3,329,196, ,318, % At Risk Estimate (36,000,000) (55,000,000) (75,000,000) (60,000,000) (30,000,000) (30,000,000) (30,000,000) (20,000,000) (12,600,000) (12,700,000) (10,000,000) 2,700, % TV for 4,601,775,727 4,349,137,430 3,971,229,516 3,574,455,748 3,424,202,582 3,397,393,994 3,439,905,924 3,508,671,595 3,165,407,980 3,206,178,510 3,319,196, ,018, % Notes: The taxable value decline from 2009 to 2019 is 28.0%, therefore 1.28 mills today is equivalent to 1 mill in 2009 (exclusive of cost inflation loss). Operating Millage Garbage Millage sub-total Operations % Library Millage (0.0900) -5.06% - Center Debt CSO Debt sub-total Debt % Total City Tax Rates (0.0900) -0.34% Tax $ Operating & Garbage $ 67,496,545 $ 64,367,234 $ 59,568,443 $ 72,168,262 $ 69,922,217 $ 69,340,811 $ 71,446,846 $ 72,489,155 $ 65,397,329 $ 65,438,103 $ 67,744,804 $ 2,306, % Tax $ Library Fund ,424,203 3,397,394 5,297,455 5,403,354 5,634,426 5,706,998 5,609,442 (97,555) -1.71% Tax $ Debt Funds 9,445,145 11,742,671 18,188,231 18,622,914 16,641,625 15,254,299 14,757,196 14,911,854 13,452,984 13,626,259 14,106, , % Total $ 76,941,690 $ 76,109,905 $ 77,756,674 $ 90,791,176 $ 89,988,044 $ 87,992,504 $ 91,501,498 $ 92,804,364 $ 84,484,739 $ 84,771,360 $ 87,460,832 $ 2,689, % Tax Bill City Tax Rates Only 2018 to 2019 Fiscal Year Difference % Estimated Home Value $138,296 $129,324 $112,832 $102,400 $93,132 $93,178 $94,688 $96,951 $99,268 $101,641 $104,070 2, % Average Taxable Value $69,148 $64,662 $56,416 $51,200 $46,566 $46,589 $47,344 $48,476 $49,634 $50,820 $52,035 1, % Tax Bill (full city rate only) $1,156 $1,132 $1,105 $1,300 $1,224 $1,207 $1,259 $1,282 $1,325 $1,344 $1, % Percent Change -0.98% -2.13% -2.38% 17.73% -5.90% -1.40% 4.37% 1.81% 3.32% 1.43% 2.04% Cummulative Change 2009 to 2019 Tax Bill (city rate only) $1,156 $1,371 $ % Tax Bill (excluding debt) $1,014 $1,150 $ % Tax Bill (city rate only) 10 Yr Yrly Avg 1.86% Tax Bill (excluding debt) 10 Yr Yrly Avg 1.34% Prepared by : Finance Department

7 $3,800,000 City of Dearborn Tax Revenue from 1 Mill Full Taxable Value $3,600,000 $3,400,000 $3,200,000 Tax Revenue $3,000,000 $2,800,000 $2,600,000 $2,400,000 $2,200,000 $2,000,000 Note: Starting Value Fiscal Year Tax Revenue from 1 Mill Adopted Proposed Taxable Value History Assessor TV v2-assessor update xls Prepared By: Finance Department

8 City of Dearborn Tax Millage Rate DRAFT City City Operating Garbage Combined CSO City Tax Fiscal Charter and Operating Library Debt Combined Year Year Millage Rubbish Millage Millage Millage Millage Headlee Rollback Max tbd: 1 or 2 n/a Operating Charter Millage Maximum Levy = 18.5 mills. Fiscal year are the Proposed Rates. The Voted 3.5 Operating Mills was voter approved in the 2016 election. Tax Rate History-needs update.xls Prepared by: Finance Department

9 Sewer Fund Utility Rates FY2018 Adopted FY2019 Proposed Effect on Rates Sewer Fund Capital Projects FY2019 Proposed Rates 1 By Percent C N02019 Sewer Rehabilitation & Joint Grouting 2,000,000 Capacity % N66318 Sanitary Sewer Interceptor Cleaning & Inspections 25,000 Commodity % Q74040 Street, Curb, Catch Basin, Sidewalk Repair & Replace 191,700 X05300 Document Automation 75,000 Estimated Usage (Mcf) 547, , % N12000 Sewer Capital Reserve (176,450) N95601 Colson, Palmer (Phase 2B) 520,000 Expenditures Capital Projects Supported by Rates 3 2,635,250 Personnel and Benefits $ 2,605,295 $ 2,625, % - Personnel Additions 2 128, , % Great Lakes Water Authority x 20,324,400 19,562, % Other Operating Items 3,939,278 4,287, % Debt Service 383, , % Capital Projects 3 2,021,658 2,635, % Total Expenditures 29,402,253 29,634,835 Less Non-Rate Revenues Other Sources 1,344,160 1,569, % Revenue Required from Rates $ 28,058,093 $ 28,065, % - 1) The change in the rates is mostly influenced by the shift from 25% fixed and 75% variable to 40% fixed and 60% variable. Additionally, the rates are impacted by the decrease in estimated usage. 2) The Sewer Personnel Additions is for two Water & Sewer Tech II for CSO Operations. S:\Accounting\Accountants\Annual \FY2019\Workpapers\500 Enterprise Funds\59X Water and Sewer Funds\W&S Rates Presentation

10 Water Fund Utility Rates FY2018 Adopted FY2019 Proposed Effect on Rates Water Fund Capital Projects FY2019 Proposed Rates 4 By Percent C L20010 DPW Yard/Complex Repair & Maintenance 2,000 Capacity % P02019 Water Main Replacement 1,800,000 Commodity % Q74015 Major Street Reconstruction West Dearborn 400,000 Q74036 Asphalt Street Resurface & Water Main Replace 2,100,000 Estimated Usage (Mcf) 580, , % Q74037 Asphalt Street Resurface & Water Main Replace (BG) 900,000 Q74040 Street, Curb, Catch Basin, Sidewalk Repair & Replace 191,700 Expenditures X05300 Document Automation 50,000 Personnel and Benefits $ 3,389,006 $ 3,766, % P12000 Water Capital Reserve (519,045) Personnel Additions 5 227,118 55, % Capital Projects Supported by Rates 7 4,924,655 Great Lakes Water Authority 6 9,652,000 11,053, % - Other Operating Items 2,582,353 2,375, % Debt Service 71,845 75, % Capital Projects 7 4,402,877 4,924, % Total Expenditures 20,325,199 22,250,551 Less Non-Rate Revenues Other Sources 1,113,340 1,123, % Revenue Required from Rates $ 19,211,859 $ 21,127, % - 4) The change in the rates is mostly influenced by the shift to 40% fixed and 60% variable and the removal of the billing rate, which impacts larger meter sizes. Additionally, the rates are impacted by the increase in required revenue and the decrease in estimated usage. 5) The Water Personnel Additions is for a Water & Sewer Utility Manager (0.5 FTE). 6) The increase in the GLWA water rates is due to the Black & Veatch audit recommendation for an increased water leakage factor, phased in over two years. This change accounts for about 70% of the water rate increase. S:\Accounting\Accountants\Annual \FY2019\Workpapers\500 Enterprise Funds\59X Water and Sewer Funds\W&S Rates Presentation