CITY OF BURIEN AGENDA BILL

Transcription

1 CITY OF BURIEN AGENDA BILL Agenda Subject: Staff Presentation on the 2016 Property Tax Levy Meeting Date: November 2, 2015 Department: Finance Department Contact: Kim Krause, Finance Director Telephone: (206) Attachments: 1. Resolution Ordinance 626 Fund Source: General Fund Activity Cost: N/A Amount Budgeted: $73,000 Revenue Unencumbered Budget Authority: N/A PURPOSE/REQUIRED ACTION: The purpose of this agenda item is to receive a staff presentation on Resolution No. 369 finding Substantial Need for increasing the Property Tax Levy up to 1% and Ordinance No. 626 setting the 2016 Property Tax Levy. BACKGROUND (Include prior Council action & discussion): As part of the budget process, Council establishes an annual property tax levy. By law, the annual amount of increase is limited to the lesser of 1% or the inflation metric required by state law (Implicit Price Deflator). This year inflation was 0.251% which results in a property tax levy increase of approximately $18,000. A 1% property tax levy increase would result in approximately $73,000. To choose the 1% level, a majority of the Council plus 1 must adopt a resolution establishing substantial need. As outlined in the attached resolution, labor cost increases grow at a faster pace than the City s tax revenue and in particular, property tax revenue, due to the limits in State law. The table below shows the property tax levy options based on the 1% increase versus the inflationary increase. The 2015 levy rate was $ per $1,000 of assessed valuation. Using the 1% Limit Assuming a finding of Substantial Need Using Implicit Price Deflator (0.251%) $7,289,414 Levy Basis for Calculation $7,289, x Limit Factor $7,362,308 = Levy $7,307,710 $63,138 + New Construction Levy $63,138 $7,425,446 Burien Limit Factor Levy $7,370,848 $ Levy Rate based on Allowable Levy $ Staff recommends that the City declare substantial need and adopt a 1% levy increase. The rounded up amount of the 2016 Property Tax Levy is $7.6 million. The Assessor s Office will not levy more than the City is eligible to receive. The Property Tax Levy must be adopted by November 30, OPTIONS (Including fiscal impacts): Adopt Resolution No. 369 establishing substantial need. Adopt Ordinance No. 626, setting the 2016 Property Tax Levy at 1% more than the 2015 levy. Do not adopt Resolution No. 369 establishing substantial need. Adopt Ordinance No. 626, setting the 2016 Property Tax Levy Rate at 100% plus inflation or IPD. The budget ordinance will be amended to reflect the reduction. Administrative Recommendation: Staff presentation only. Place on the November 16 th agenda for discussion and action. Suggested Motion: N/A Submitted by: Kim Krause, Finance Director Administration City Manager Today s Date: October 21, 2015 File Code: \\File\records\CC\Agenda Bill 2015\110215ad-3 Property Tax Levy.docx

2

3 CITY OF BURIEN, WASHINGTON RESOLUTION NO. 369 A RESOLUTION OF THE CITY OF BURIEN, WASHINGTON, MAKING A DECLARATION OF SUBSTANTIAL NEED FOR PURPOSES OF THE SETTING THE LIMIT FACTOR FOR THE PROPERTY TAX LEVY FOR 2016 WHEREAS, RCW provides that a taxing jurisdiction may levy taxes in an amount not more than the limit factor multiplied by the highest levy plus additional amounts resulting from new construction, improvements to property, newly constructed wind turbines, any increase in the value of state-assessed utility property, any annexations that have occurred and refunds made; and WHEREAS, under RCW (2)(c), the limit factor for a taxing jurisdiction with a population of 10,000 or over is the lesser of 101 percent or 100 percent plus inflation; and WHEREAS, under RCW (1) defines inflation as the percentage change in the implicit price deflator for personal consumption expenditures for the United States as published for the most recent 12-month period by the Bureau of Economic Analysis of the federal Department of Commerce in September of the year before the taxes are payable; and WHEREAS, inflation the second quarter of 2015 is percent, meaning the limit factor for the 2016 property tax levy is % plus the amount levied for new construction, improvements to property, newly constructed wind turbines, any increase in the value of stateassessed utility property, any annexations that have occurred and refunds made; and WHEREAS, RCW provides for use of a limit factor of 101 percent with a finding of substantial need by a Council majority plus one council member; and WHEREAS, the largest component of the City s budget is labor including the contract for police with the King County Sheriff s office; and WHEREAS, the contract with the King County Sheriff s Office for 2016 is 4.3% or $466,000 more than 2015; and WHEREAS, using a 1% limit factor is approximately $73,000 in additional revenue while the inflationary limit factor of 0.251% is approximately $18,000; and WHEREAS, property tax is the second largest revenue source in the General Fund and comprises 29% of General Fund revenue; and WHEREAS, the City s financial policies establish that the property tax levy will be at least

4 1% more than levied in the prior year plus the amount received as a result of new construction; and WHEREAS, a 1% limit factor is necessary to partially fund increased labor costs; and WHEREAS, the Burien City Council has determined that, due to necessary operational expenses, there is a substantial need authorizing the use of a limit factor of 101 percent for the property tax levy for 2016; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BURIEN, WASHINGTON, DOES RESOLVE AS FOLLOWS: Section 1. A finding of substantial need is made under RCW , which authorizes the use of a limit factor of 101 percent for the property tax levy for Section 2. Effective Date. This resolution shall take effect immediately upon approval. ADOPTED BY THE CITY COUNCIL OF THE CITY OF BURIEN, WASHINGTON, AT A REGULAR MEETING THEREOF THIS th DAY OF NOVEMBER, CITY OF BURIEN Lucy Krakowiak, Mayor ATTEST/AUTHENTICATED: Monica Lusk, City Clerk Approved as to form: Soojin Kim, City Attorney Filed with the City Clerk: November, 2015 Passed by the City Council: November, 2015 Resolution No. 369 R:/CC/aaa resolutions preliminary/res369 substantial need

5 CITY OF BURIEN, WASHINGTON ORDINANCE NO. 626 A ORDINANCE OF THE CITY OF BURIEN, WASHINGTON, LEVYING THE GENERAL TAXES FOR THE CITY OF BURIEN IN KING COUNTY FOR THE FISCAL YEAR COMMENCING JANUARY 1, 2016, ON ALL PROPERTY BOTH REAL AND PERSONAL, IN SAID CITY WHICH IS SUBJECT TO TAXATION FOR THE PURPOSE OF PAYING SUFFICIENT REVENUE TO CARRY ON THE SEVERAL DEPARTMENTS OF SAID CITY FOR THE ENSUING YEAR AS REQUIRED BY LAW. WHEREAS, the City Council of the City of Burien has met and considered its budget for the 2015 and 2016 calendar years; and, WHEREAS, the City Council held a final public hearing on November 2, 2015, to consider revenue sources and expenditures for the second year of its biennial budget; and, WHEREAS, the City of Burien s actual levy amount from the previous year was $7,302,093; and, WHEREAS, the population of the City of Burien is more than 10,000; and, WHEREAS, the City Council adopted Resolution No. 369, establishing substantial need pursuant to RCW NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BURIEN, WASHINGTON, DOES ORDAIN AS FOLLOWS: Section Levy Rate. There shall be and hereby is levied on all real, personal, and utility property in the City of Burien, in King County, current taxes for the year commencing January 2016, in the amount specified below: Regular Tax Levy of $7,600,000 The dollar amount of the increase over the actual levy amount from the previous year shall be $60,215 which is a percentage increase of 0.82% from the previous year. This increase is exclusive of additional revenue resulting from new construction, improvements to property, newly constructed wind turbines, any increase in the value of state assessed property, any annexations that have occurred and refunds made. The said taxes herein provided for are levied for the purpose of payment upon the general bonded indebtedness of the City of Burien, for the construction of capital facilities and for the

6 maintenance of the departments of the municipal government of the City of Burien for the fiscal year beginning January 1, Section 2. Notice to King County. This ordinance shall be certified to the proper County officials, as provided by law, and taxes herein levied shall be collected to pay to the Finance Director of the City of Burien at the time and in the manner provided by the laws of the State of Washington for the collection of taxes for noncharter code cities. Section 3. Effective Date. This ordinance shall be in full force five days after publication of this ordinance or a summary thereof in the official newspaper of the City, as provided by law. Section 4. Severability. Should any section, paragraph, sentence, clause or phrase of this Ordinance, or its application to any person or circumstance, be declared unconstitutional or otherwise invalid for any reason, or should any portion of this Ordinance be pre-empted by state or federal law or regulation, such decision or pre-emption shall not affect the validity of the remaining portions of this Ordinance or its application to other persons or circumstances. ADOPTED BY THE CITY COUNCIL AT A REGULAR MEETING THEREOF ON THE TH DAY OF NOVEMBER, 2015, AND SIGNED IN AUTHENTICATION OF ITS PASSAGE THIS TH DAY OF NOVEMBER, CITY OF BURIEN Lucy Krakowiak, Mayor ATTEST/AUTHENTICATED: Monica Lusk, City Clerk Approved as to form: Soojin Kim, City Attorney Filed with the City Clerk: November, 2015 Passed by the City Council: November, 2015 Ordinance No. 626 Date of Publication: November, 2015 R:/CC/AAA Ordinances/Ord615 Property Tax Levy for 2015.docx -2-