FIN 2020-10-26 Item 1D - Ordinances - 2021 Tax Levy / Limiting Factor for Regular Property Tax Levy Above Rate of Inflation

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City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Vicky Carlsen, Finance Director BY: Aaron Williams, Fiscal Coordinator CC: Mayor Ekberg DATE: October 26, 2020 SUBJECT: 2021 Property Tax Levy ISSUE Approval of ordinances increasing the regular levy from the previous year and adopting the general and excess property tax levies for 2021 by November 30, 2020. BACKGROUND A Public Hearing for adoption of the 2021 property tax levy is required by RCW 84.55.120. The Hearing is scheduled for November 09, 2020. The City was notified on October 15, 2020 that the assessed value for Tukwila for 2021 is projected to be $7,835,011,635. State law allows the City to increase property taxes by 1% or the Implicit Price Deflator (IPD), whichever is less unless an additional ordinance showing substantial need is adopted by City Council. The ordinance showing substantial need must be approved by a majority plus one. The I PD for calculating the 2021 property tax levy is .006%, slightly less than 1 %. The allowable levy projected by King County and documented on the Preliminary Levy Limit Worksheet -2021 Tax Roll using the IPD is $16,830,303. The allowable levy using 1% is 16,896,624, representing additional property tax revenue of $66,321 if City Council approves the ordinance showing substantial need. The ordinance to set the general tax levy also includes the excess levy related to the Public Safety Plan that voters approved on the November 8, 2016 general election. The City sold $36.5 million of bonds in 2016 and debt service repayment began in 2017. The remaining voter -approved bonds were sold in October 2019. The excess levy for both bond issues will be assessed for as long as the bonds are outstanding; the final payment for the 2016 issue is scheduled for December 2036 and the final payment for the 2019 issue is scheduled for December 2039. The total excess levy requirement for 2021 is $3,602,975 with an approximate levy rate of $0.47 per thousand. DISCUSSION Levy Amount The assessed value and the allowable levy are subject to change until final levy rate determination. A levy amount of $17,500,000 will be used for the ordinance. If the final allowable levy is less than the ordinance amount, King County Department of Assessments will adjust the ordinance amount to the final allowable levy amount and no further action by the Council will be required. 37