HomeMy WebLinkAboutAgenda Packet 11/01/2011 (2)Property Taxes
Council Meeting, November 1, 2011
Presented by Yvonne Ziomkowski, Finance Director
Property Taxes
What is Property Tax?
Basic Misconceptions & Facts
Laws and Limitations
2012 Options
Let’s Play Jeopardy
Topics:
What is Property Tax?
Property Tax is a tax on real and personal
property
Real Property Includes:
Land
Buildings
Improvements attached to the land
Personal Property Includes:
Machinery and equipment (used in
business)
Furniture and fixtures in commercial use
Supplies and materials that are not for
sale
Leased equipment and some leasehold
improvements
What property is not taxable?
Property owned by federal, state, and local
governments
Church-owned property used for church
purposes
Low income housing owned by public
corporations (e.g. Housing Authorities)
Privately owned schools and colleges
Personal property owned by individuals, such as
vehicles, stocks, bonds, and household goods.
What is Property Tax Levy?
A property tax levy is
the amount a taxing
jurisdiction (City)
collects from its property
owners to pay for the
general cost of
government
There are two different levies a
jurisdiction may impose:
Regular levy
Excess levy (approved by
voters)
Regular Levy
Pays for routine city expenses, such as
Fire, Police, Parks, etc.
Excess Levy
Amount of money to pay off debt service
on bonds approved by voters for specific
purpose or project, e.g. Senior Center,
Library, Fire Hall.
Myth #1
When my property value goes up I pay
more taxes.
Fact
If this statement was true, it would mean
that when property value goes down,
homeowner’s pay less taxes. The
individual property tax assessment does
not depend on property value alone.
How is the amount of Property
Tax Allocated to Individuals?
City has no control over how property taxes will
be allocated to individual properties
Amount of property tax is allocated based on an
individual’s share of assessed valuation (AV)
An individual’s share of property tax is calculated
by dividing individual AV by citywide AV
AV is established by the Clallam County Assessor’s
Office
Myth #2:
As property values rise the City receives
more property tax revenue.
Fact:
The amount of property tax revenue a City
receives does not depend on property
value.
If this statement was true, the City would
receive less taxes when property values
go down (last three years).
Amount of Property Taxes
Depends on Four Factors:
1.Amount of taxes set by City Council
within the statutory limits
2.New construction:
3.Annexation:
4.Voters: Amount approved by voters for
bonds and/or levy lid lift (over 1% limit)
Myth #3:
If the City Council approves a 1% increase
in property taxes, then an individual’s
property tax bill should increase also by
1%
An individual property tax bill
does not rise in the same
proportion as an increase in
the levy amount
Fact:
An individual property tax bill is a
function of two components:
Change in assessed valuation relative to
all other properties
The amount of property tax levy
How does this Work?
Individual AV
Citywide AV X
Levy amount
= Individual property tax bill
% of individual’s
share of AV
Comparison of AV to Property
Tax Rate
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
0
500
1,000
1,500
2,000
2,500
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Assessed Value Property Tax Rate
City Property Tax - $550
Assessed Value
$200,000
DiGiulio
2011 – Property Tax Levy $3,850
City Property Tax - $550 City Property Tax - $550 City Property Tax - $550
City Property Tax - $550 City Property Tax - $550 City Property Tax - $550
Perry Kidd
Collins Mania Nelson
Assessed Value
$200,000
Assessed Value
$200,000
Assessed Value
$200,000
Assessed Value
$200,000
Assessed Value
$200,000
Assessed Value
$200,000
•Amount of Property Tax Levy - $3,850 (set by Council)
•Total Assessed Value ($200,000 x 7) = $1,400,000 (determined by Assessor)
•Total Assessed Value per $1,000 - ($1,400,000/$1,000) = $1,400
•Property Tax Rate ($3,850/$1,400) = $2.75
•Taxes paid on each home - $200 x 2.75 = $550
Downie
2012 Assumptions –
City of Council
Decrease in AV approximately 10%
Total AV $1,260,000 for City of Council
Total AV per $1,000 (set by Council)
$1,260,000/1000 = $1,260
2011 Rate ($2.75) vs. 2012 rate
Rate
Assessed
Value
What does this mean to
homeowners in the City
of Council?
City Property Tax - $550
Assessed Value
$180,000
DiGiulio
2012A – Property Tax Levy - $3,850 (No increase)
City Property Tax - $550 City Property Tax - $550 City Property Tax - $550
City Property Tax - $550 City Property Tax - $550 City Property Tax - $550
Perry Kidd
Collins Mania Nelson
Assessed Value
$180,000
Assessed Value
$180,000
Assessed Value
$180,000
Assessed Value
$180,000
Assessed Value
$180,000
Assessed Value
$180,000
•Amount of Property Tax Levy - $3,850 (No increase - set by Council)
•Total Assessed Value ($180,000 x 7) = $1,260,000 (determined by Assessor)
•Total Assessed Value per $1,000 - ($1,260,000/$1,000) = $1,260
•Rate of Property Tax ($3,850/$1,260) = $3.06 (an 11% increase)
•Amount of Taxes paid on each home - $180 x $3.06 = $550
Downie
City Property Tax - $556
Assessed Value
$180,000
DiGiulio
2012B – Property Tax Levy - $3,888 (increase of 1%)
City Property Tax - $556 City Property Tax - $556 City Property Tax - $556
City Property Tax - $556 City Property Tax - $556 City Property Tax - $556
Perry Kidd
Collins Mania Nelson
Assessed Value
$180,000
Assessed Value
$180,000
Assessed Value
$180,000
Assessed Value
$180,000
Assessed Value
$180,000
Assessed Value
$180,000
•Amount of Property Tax Levy - $3,888 (1% increase over 2011 - set by Council)
• Total Assessed Value ($180,000 x 7) = $1,260,000 (determined by Assessor)
•Total Assessed Value per $1,000 - ($1,260,000/$1,000) = $1,260
•Property Tax Rate ($3,888/$1,260) = $3.09 (a 12% increase)
•Taxes paid on each home - $180 x 3.09 = $556 (a 1% increase)
Downie
City Property Tax - $926
Assessed Value
$300,000
DiGiulio
2012C – Property Tax Levy - $3,888 (increase of 1%)
City Property Tax - $462 City Property Tax - $555 City Property Tax - $617
City Property Tax - $309 City Property Tax - $448 City Property Tax - $571
Perry Kidd
Collins Mania Nelson
Assessed Value
$150,000
Assessed Value
$180,000
Assessed Value
$200,000
Assessed Value
$185,000
Assessed Value
$145,000
Assessed Value
$100,000
•Amount of Property Tax Levy - $3,888 (1% increase over 2011 - set by Council)
•Total Assessed Value ($180,000 x 7) = $1,260,000 (determined by Assessor)
•Total Assessed Value per $1,000 - ($1,260,000/$1,000) = $1,260
•Property Tax Rate ($3,888/$1,260) = $3.09 (still a 12% increase in the rate)
•Taxes paid on the each home now varies as shown – some up, some down
Downie
Assessed Value Varies
DiGiulio,
$926, 24%
Kidd,
$555, 14%
Mania,
$448, 11% Collins,
$309, 8%
Nelson,
$571, 15%
Perry,
$462, 12%
Downie,
$617, 16%
Property Tax Distribution
Where Do Property Taxes Go?
Myth #4:
City of PA receives all property tax dollars
that are paid by a property owner located
within the city limits
Fact:
Only 23% of total property taxes paid are
collected by the City of PA as a regular levy
Less than 4% of property taxes go to pay voted
bonds on Senior Center, Library, and Fire Hall
and
Where do the property taxes
paid by City residents go?
In 2011, City property owners
paid $10.233 per $1,000 AV to all
taxing districts.
This is $1,842 on
$180,000 house
How Much Comes to the City?
In 2011, the City received $ 2.356 per
$1,000 AV of regular property taxes,
$0.396 per $1,000 for the excess levy
Total $495 on a
$180,000 house
and
Property Tax Terminology
Tax Levy: Actual Amount of money being requested
(levied) by jurisdiction
Assessed Value (AV): Value placed on a piece of property by
the County Assessor
Tax Rate: Rate used to calculate what a taxpayer
pays per $1,000 of AV
Tax Rate calculation: Tax Levy ÷ AV = Tax Rate
Tax Paid: Actual $ amount paid by taxpayer
IPD (Implicit Price Deflator) Price index used for measuring inflation by
using current personal consumption at
current prices.
2011 Property Taxes
and Rates
Levy Amount Rate
Regular Levy $4,090,073 $2.36
Special Levy $ 672,000 $0.39
$4,762,073 $2.75
2012 Property Taxes
Levy Options
Limitations
The lesser of the
following items:
Needs, as specified in
budget
Highest lawful levy as of
1985, plus 1%
Previous actual levy
plus 1%
Previous actual levy
plus Implicit Price
Deflator (IPD)
Rate limitation per
$1,000 AV:
City max. rate not to
exceed $3.60 less
Library rate (usually this
means $3.10 for City),
and
$5.90 Aggregate limit for
local regular levies, and
Constitutional limit of
$10 for all regular
property tax rates
and
Voters may increase the 1% limit (levy lid lift)
IPD as of July 2011 – 2.755
Available Options
0% increase and bank it
1% increase
1% plus banked amount
Property Taxes
Option 1:
No Increase
2011 Regular Levy
$4,090,073
2012 Regular Levy
Zero Increase
$4,090,073
2011 Special Levy
$672,000
2012 Special Levy - $408K
Sr. Ctr. - $121,600
Library -$286,400
For simplicity, new construction not included
2011 Regular and Special Levies: $4,762,073
2012 Regular and Special Levies – Option 1: $4,498,473
Total Decrease in Regular and Special Levies - ($264K)
Property Taxes
Option 2:
1% Increase
2011 Regular Levy
$4,090,073
2012 Regular Levy
1% Increase = $40,900
$4,130,973
2011 Special Levy
$672,000
2012 Special Levy - $408K
Sr. Ctr. - $136,600
Library -$286,400
2011 Regular and Special Levies: $4,762,073
2012 Regular and Special Levies – Option 2: $4,539,373
Total Decrease in Regular and Special Levies - ($223K)
For simplicity, new construction not included
Banking Capacity
In 2010 the City banked $40,020
If the had City levied a 1% increase in 2010,
now this amount would be $40,824
As a result of difference in calculation of
actual levy vs. highest lawful levy and
refund levy, the amount in the bank
available for the City’s use is only $25,703
Property Taxes
Option 3:
1% Increase + banked 0.6%
2011 Regular Levy
$4,090,073
2012 Regular Levy
1.6% Increase = $66,604
$4,156,677
2011 Special Levy
$672,000
2012 Special Levy - $408K
Sr. Ctr. - $136,600
Library -$286,400
2011 Regular and Special Levies: $4,762,073
2012 Regular and Special Levies – Option 3: $4,565,077
Total Decrease in Regular and Special Levies - ($197K)
For simplicity, new construction not included
Property Tax Options
$180K House Option 1 Option 2 Option 3
What does this mean
for the homeowner
No Change $4.24
per year
$6.91
per year
Change in rate per
$1,000
$0 $0.024 $0.038
Change in overall tax
rate (Reg. & Special
levies) per $1,000 AV
($0.151) ($0.128) ($0.114)
What does this mean
for the homeowner
($27.33)
per year
($23.09)
per year
($20.43)
per year
*Assumes no change in AV Assumes no change in AV
Summary
Regular & Special Levies
2011 Property
Taxes
$4,762,073
2012 Options
1. $4,498,473
2. $4,539,374
3. $4,565,077
Change in
Total Levy
for Average
Home
Change in
Regular
Property Tax
Levy and
Rate
Property Tax
Decrease for
Average
Home
PROPERTY TAX DECREASE
FOR ASSESSED VALUE OF
$180K
ZERO INCREASE
DECREASE OF $29
OR $466
1% INCREASE DECREASE OF $24
OR $471
1.6% INCREASE DECREASE OF $22
OR $473
Property tax rate is per $1,000 of Assessed Valuation (AV)
2012
1. $466
2. $471
3. $473
2011
$495
What Is In The Budget?
No increase
$10,000,000 in new construction or
$23,561
Preliminary amount for new construction is
$2,665,348 or $6,280 (Information
provided by County Oct. 27th)
This means $17,281 shortfall
Other Needs not Funded in
the Budget
Police – technology increases $23,842
Street operation and maintenance $20,000
Departmental requests
Agencies requests
Jail and court costs
Future Considerations
2012 ($249K) Sr. Center
2013 ($156K) Fire Hall
2015 ($286K) Library
Total ($691K)
Questions