HomeMy WebLinkAboutFS 2009-09-22 Item 2C - Resolution - Opposing Initiative 1033 Limit Growth of RevenueCity of Tukwila
TO Mayor Haggerton
City Council
FROM Shawn Hunstock, Finance Director
DATE September 17, 2009
SUBJECT Resolution Opposing Initiative 1033
ISSUE
BACKGROUND
DISCUSSION
INFORMATIONAL MEMORANDUM
Jim Haggerton, Mayor
If passed, Initiative 1033 (1 -1033) would have a dramatic impact on the City's General
Fund revenue
Initiative 1033, scheduled to be on the ballot at the November 2, 2009 general election,
would limit the growth of state, county and city revenue to annual inflation and
population growth The Office of Financial Management (OFM) estimates that 1 -1033
would cause the state to loose an estimated $5 9 billion by 2015 They also estimate a
loss of $2 1 billion for cities and $694 million for counties
OFM's Fiscal Note includes an assumption that 1 -1033 will apply to all General Fund
revenue except grants, state shared revenue, charges for services performed,
enterprise activities, interdepartmental charges and investment earnings The estimated
base for 2009 is approximately $33 million
The estimated impact for Tukwila begins at just under $2 million annually, and continues
to grow each year as the property tax base erodes under the Initiative Any growth in
General Fund revenue above the inflation rate plus the population growth rate would be
remitted to the county for property tax relief in the following year
The effect of 1 -1033 would be to limit the City's ability to provide essential services at
their current level 1 -1033 would also be a disincentive to development and annexations,
particularly for areas with low population numbers Virtually any growth in City revenue
as a result of an annexation would be remitted to the county, unless the area has a
good deal of population density, and would not be available for the provision of services
in the annexation area Also, generally speaking, growth in City revenue from
development or redevelopment would be remitted to the county since such growth is not
associated with population increases Inflation right now is projected to be less than 1%
in the short -term, and less than 2% over the next few years The average growth in
INFORMATIONAL MEMO
Page 2
population for Tukwila for the last ten years is 0 50% This means there is little room for
growth in City revenue if this growth is limited to inflation or population increases
The two attached spreadsheets are based on a projection model developed by the
Association of Washington Cities (AWC) The first spreadsheet is the original AWC
model for 2009 -2015 It shows the impact would be $970,123 in 2015, and $1,772,246
in 2016 The second spreadsheet is the same model projected out to 2020 with similar
assumptions This page shows the impact on the City of 1 -1033 increases each year,
and it also shows the property tax base could deteriorate due to the "property tax relief"
payments made to the county
RECOMMENDATION
The Council is being asked to approve the attached Resolution opposing Initiative 1033
This item is scheduled to be discussed at the September 22, 2009 Finance and Safety
Committee meeting, the September 28, 2009 Committee of the Whole meeting and
subsequent October 5, 2009 Regular Meeting
ATTACHMENTS
Draft Resolution
Estimating Impacts of Initiative 1033 (AWC) 2009 to 2015
Estimating Impacts of Initiative 1033 (City) 2009 to 2020
H:11 nfoMemo 11033Res.doc
DRAFT
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUICWILA,
WASHINGTON, EXPRESSING THE CITY COUNCIL'S OPPOSITION TO
INITIATIVE 1033, TO BE PRESENTED TO THE ELECTORATE ON
NOVEMBER 3, 2009.
WHEREAS, Initiative 1033 will be presented to the voters at the general election on
November 2, 2009, with the following ballot title and description:
Initiative Measure No. 1033 concerns state, county and city revenue.
This measure would limit growth of certain state, county and city revenue to
annual inflation and population growth, not including voter approved revenue
increases. Revenue collected above the limit would reduce property tax levies.
Should this measure be enacted into law? Yes No and
WHEREAS, the City Council has determined that Initiative 1033 would limit the
City s ability to provide basic levels of service, create barriers to future growth and
inhibit redevelopment within the City. and
WHEREAS, the City Council finds that an expression opposing Initiative 1033 is
appropriate; and
WHEREAS, in accordance with RCW 42.17.130, the opportunity for public
statements and comments was afforded by the City Council,
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY RESOLVES AS FOLLOWS:
The City Council of the City of Tukwila expresses its opposition to Initiative 1033,
which will be presented to the electorate on November 3, 2009
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON,
at a Regular Meeting thereof this day of 2009
ATTEST/ AUTHENTICATED•
Christy O'Flaherty CMC, City Clerk
APPROVED AS TO FORM BY
Office of the City Attorney
W \Word Processing\Resolutions \Oppose Initiative 1033.doc
SH:ksn 9/16/2009
Joan Hernandez, Council President
Filed with the City Clerk:
Passed by the City Council.
Resolution Number.
Page 1 of 1
ESTIMATING IMPACTS OF INITIATIVE 1033 (2009 -2015)
Assumptions outlined by the Association of Washington Cities (see more on assumptions below)
Updated September 3, 2009
Shaded cells should be filled out by
depen¢m upon local conditions and forecas
CY 2009
CY 2010
CY 2011
CY 2012
CY 2013
CY 2014
CY 2015
AWC
NOTES
TUKWILA
NOTES
Population
IPD (March Growth GF Forecast
to March) Estimate* wlout 1 -1033
(Note 1) (Note 2) (Note 3)
050 /o i J 075 6075118
1.80%
1. 80%
1.80%
1.70%
1.70%
25 36,075,118'
25% 36,976,996
25% 37,901,421
0 25°!0 39,038,46a
0-25 40,209,617'
Q
0 5% 4 1,818,052
Forecasted
Growth in GF
Revenues*
(Note 3)
a 00%
t k
5Q%
2 ls
'3 00
4.0®°
Levy w /out
"Lower City
Property Tax
Account"
Transfer*
12283,
12,406,02
12,530,089
12,780,691
13,036,305
13,427,394
1,830,216
Growth in Prop
Tax w /out
"Lower City
Property Tax
Account"
Transfer
Estimated*
(Note 4)
Estimated
Actual GF
Revenues w /out
Limit
(Note 5)
36,075,118
36,075,118{
36,976,996E
37,897,403;.
39,026,798:
40,179,396:
41 747 767",
Gen Fund
Revenue w/ Limit
(Note 6)
36,075,118
36,346,132
36,816,281
37,646,488
38,419,936
39,209,273
39,975,520
Revenue and expenditure projections include assumed gradual increases in revenue and assessed valuations beginning in CY 2014.
Projected population increases conservatively estimated at 0.5% per year
Projected increases in property taxes includes increases in assessed valuations due to development, redevelopment, and annexation.
GF Revenue forecast for CY 2009 is the adopted budget for applicable revenue items as outlined in OFM Fiscal Note.
Inflation estimates for 2016 -2020 assume gradual increase in prices.
Lesser of GF
Revenue Limit Increase in
(J) or GF Gen Fund Limit
Actuals or Actual
growing at rate Revenues
in column F (I) (column k)
36,075,118
36,075,118 0.00%
36,816,281 2.05%
37,646,488 2.25%
38,419,936 2.05%
39,209,273 2.05%
39,975,520 1.95%
Amount
Over /Under
Revenue Limit (I
J)
271,014
160,715
250,915
606,862
970,123
1 772,246
Transfer to
"Lower City
Property Taxes
Account"
0
0
160,715
250,915
606,862
970,123
Property Tax After
"Lower City
Property Tax
Account" Transfer
(Note 7)
12,283,197
12,406,029
12,530,089
12,619,976
12,785,390
12,820,532
12,860,093
(1) IPD estimates for CY 2009 -CY 2011 are from the June 2009 Washington State Economic and revenue Forecast. Inflation estimates for CYs 2012 -15 are from the June 2009 HIS Global Insight forecast (OFM)
(2) Population growth estimates provided are based on OFM's forecasted population increases for cities in urban counties; cities should replace with own estimates
(3) General fund revenues and revenue growth should reflect current forecasts without 1 -1033
(4) Growth should reflect anticipated councilmanic increases plus increases due to new construction /improvements, annexation, electric generation wind turbine facilities and state assessed property
(5) CY 2010 revenue calculated as:(CY 2009 GF REV X GF forecasted growth) CY 2009 GF REV CY 2011 and subsequent years calculated as ((CY 2010 GF REV transfer to Lower City Property Tax Account) X GF forecasted
growth) CY 2010 GF REV For simplicity the same forecasted growth rate is assumed with or without passage of 1 -1033.
(6) CY 2010 revenue limit calculated as: CY 2009 GF REV X (1+ 2009 Change Pop) X (1+ 2009 Change IPD); CY 2011 and subsequent years limit calculated as: CY 2010 GF REV transfer X (1 2010 Change Pop) X (1
2010 Change IPD)
(7) Lower City Property Taxes Account is applied to previous year's full levy reflecting any limit factor increase (plus new construction/improvements, annexation, electric generation wind turbine facilities and state assessed property).
Reflects the amount of the levy set for collection in following year
ESTIMATING IMPACTS OF INITIATIVE 1033 (2009 -2020)
Assumptions outlined by the Association of Washington Cities (see more on assumptions below)
Updated September 3, 2009
*Shaded cells h ould be PIted out by junsdicti
s o'.
depending upon local conditions and forecasts;
AWC
NOTES
TUKWILA
NOTES
Population
IPD (March Growth GF Forecast
to March) Estimate* w /out 1 -1033
(Note 1) (Note 2) (Note 3)
CY 2009 0.50 0 25 °h ^36075,118,
CY 2010 1.80% 0.25°,( 36,075,118:
A
CY 2011 2.00% Q25% 36,976,996
CY 2012 1.80% r 0 25% 37,901,421
CY 2013 1.80% 39,038,463
CY 2014 1 70% 0 25'% 40,209,617
CY 2015 1 70% sf) 2 41,818,002
CY 2016 1.80° 43,490,722
CY 2017 1 80 Q S 45,665,258'
CY 2018 2.00% 47,948,521
t,kk� 50
CY 2019 2.00% tx 5 50,825,432
CY 2020 2 50°/ 0 0 53,874,958
Levy wlout
Forecasted "Lower City
Growth in GF Property Tax
Revenues* Account"
(Note 3) Transfer*
00% 12283,197
0 12,406,029:
50% 12,530,089
50 °l 12,780,691
0°! 13,036,305
0 13,427,394,1
13,830,216
14,383,424
14,958,761
15,706,700
16,492,034
17 481,557
Growth in Prop
Tax w /out
"Lower City
Property Tax
Account"
Transfer
Estimated*
(Note 4)
Estimated
Actual GF
Revenues w /out
Limit
(Note 5)
36,075,118
36,075,118,
36,976,996;
37,897,403;
39,026,798:
40,179,396:
41,747,767;
43,346,787:
45,384,6251
47,469,515
50,029,152
52,653,036:
Gen Fund
Revenue w/ Limit
(Note 6)
36,075,118
36,346,132
36,816,281
37,646,488
38,419,936
39,209,273
39,975,520
40,756,742
41,697,815
42,660,618
43,731,399
44,940,572
(1) IPD estimates for CY 2009 -CY 2011 are from the June 2009 Washington State Economic and revenue Forecast. Inflation estimates for CYs 2012 -15 are from the June 2009 HIS Global Insight forecast (OFM)
(2) Population growth estimates provided are based on OFM's forecasted population increases for cities in urban counties; cities should replace with own estimates
(3) General fund revenues and revenue growth should reflect current forecasts without 1 -1033
(4) Growth should reflect anticipated councilmanic increases plus increases due to new construction /improvements, annexation, electric generation wind turbine facilities and state assessed property
(5) CY 2010 revenue calculated as:(CY 2009 GF REV X GF forecasted growth) CY 2009 GF REV: CY 2011 and subsequent years calculated as ((CY 2010 GF REV transfer to Lower City Property Tax Account) X GF forecasted
growth) CY 2010 GF REV: For simplici
(6) CY 2010 revenue limit calculated as: CY 2009 GF REV X (1+ 2009 Change Pop) X (1+ 2009 Change IPD); CY 2011 and subsequent years limit calculated as: CY 2010 GF REV transfer X (1 2010 Change Pop) X (1
2010 Change IPD)
(7) Lower City Property Taxes Account is applied to previous year's full levy reflecting any limit factor increase (plus new construction /improvements, annexation, electric generation wind turbine facilities and state assessed property).
Reflects the amount of the levy set for collection in following year
Revenue and expenditure projections include assumed gradual increases in revenue and assessed valuations beginning in CY 2014.
Projected population increases conservatively estimated at 0.5% per year
Projected increases in property taxes includes increases in assessed valuations due to development, redevelopment, and annexation.
GF Revenue forecast for CY 2009 is the adopted budget for applicable revenue items as outlined in OFM Fiscal Note.
Modest population increases beginning in 2016, primarily from development of Tukwila South.
Inflation estimates for 2016 -2020 assume gradual increase in prices.
Lesser of GF
Revenue Limit Increase in
(J) or GF Gen Fund Limit Amount
Actuals or Actual Over /Under
growing at rate Revenues Revenue Limit (I
in column F (I) (column K) J)
36,075,118
36,075,118 0.00% 271,014
36,816,281 2.05% 160,715
37,646,488 2.25% 250,915
38,419,936 2.05% 606,862
39,209,273 2.05% 970,123
39, 975, 520 1.95% 1 772,246
40,756,742 1.95% 2,590,045
41,697,815 2.31% 3,686,809
42,660,618 2.31% 4,808,898
43,731,399 2.51% 6,297 753
44,940,572 2.77% 7,712,464
Transfer to
"Lower City
Property Taxes
Account"
0
0
160,715
250,915
606,862
970,123
1,772,246
2,590,045
3,686,809
4,808,898
6,297 753
Property Tax After
"Lower City
Property Tax
Account" Transfer
(Note 7)
12,283,197
12,406,029
12,530,089
12,619,976
12,785,390
12,820,532
12,860,093
12,611 178
12,368,716
12,019,890
11,683,137
11 183,803