City Council

CITY OF MOUNT VERNON STUDY SESSION AGENDA November 6, 2024, 7:00 p.m. Police Court Campus, 1805 Continental Place 1. Approval of Agenda 2. Public Comment 3. Public Hearing and Approval of Ordinance – 2025 Property Tax Levy (City staff is requesting approval of Ordinance 3899 Fixing the 2025 Property Tax Levy following a public hearing.) (required action –Ordinance) (staff contact – Doug Volesky) 4. Adjourn  AGENDA ITEM: A DATE: November 6, 2024 TO: Mayor Donovan and City Council FROM: Doug Volesky, Finance Director SUBJECT: PUBLIC HEARING ON THE 2025 CITY BUDGET REVENUE SOURCES RECOMMENDED ACTION: The City will hold a public hearing to present and take comment on the 2025 City Budget revenue sources. INTRODUCTION/BACKGROUND: A major part of the City’s budget process is establishing revenue estimates for the budgeted year. The City’s revenue policies include: 1. Current revenues will be sufficient to support current expenditures, 2. Calculated using an objective, analytical process, and will be neither overly optimistic nor overly conservative, 3. Estimates will be performed utilizing accepted analytical techniques and shall access the full spectrum of resources available to finance City programs and services. Estimated total revenue included in the 2025 Preliminary Budget is $90,291,802. This is a decrease of $23,634,328 or 20.7% from the City’s 2024 budgeted revenue amount. This decrease is due mainly to changes in funding for major capital projects including $33,783,324 for the Mount Vernon Library Commons project. Total taxes increased $930,582 from the budgeted 2024 revenue amounts. Per MRSC, “As part of the budget process, the taxing jurisdiction establishes the amount of property tax revenue needed to fund the budget. That amount needed to fund the budget is called the levy. It is the total amount to be collected from the taxpayers by a taxing district. In Washington, property tax increases are not based on the increasing value of properties. They are based on last year’s property tax levy, which is simply the amount of the property taxes that were assessed in the prior year. By November 30 of each year, the amount of taxes to be levied by taxing districts are certified to the county assessor in a dollar amount. In Mount Vernon, our tax levy amount in 2024 was $8,922,529. The county assessor calculates the levy rate necessary by dividing the total levy amount by the assessed value of taxable property in the district. By law, this number is expressed in terms of a dollar rate per $1,000 of valuation. For example, a rate of $0.00025 is expressed as 25¢ per $1,000 of assessed value. The formula for property tax collections is expressed as: Levy = Levy Rate x Assessed Value (AV)”. The City of Mount Vernon is required by law to hold a public hearing to review revenue sources for the coming year and also to set property taxes for the coming year. The City’s property tax increase is limited to the lesser of one percent (1%) or the implicit price deflator (IPD) for the year. Additionally, a City may capture 100% of all new construction and may take any “banked capacity” available to them. Some important facts to consider when setting the 2025 property tax include: 1. The implicit price deflator (IPD) for the year is 2.57%, so it is more than 1%, so tax districts will be allowed to levy 1% more than they collected in 2024. A 1% adjustment to the property tax levy is $93,291. This amount has been included in the 2025 Preliminary Budget. 2. Banked Capacity. As a result of the City of Mount Vernon not taking the maximum regular tax which could lawfully be levied in past years, the City has accumulated banked levy capacity of $406,527. The amount of banked capacity changes each year because the highest lawful levy and the actual levy are recalculated. Having banked capacity for one year does not guarantee the city will have the same amount the following year. The banked capacity balance of $406,527 is included in the 2025 Preliminary Budget. 3. The new construction value per the County Assessor’s Office is $17.5M which will generate $27,361 of new revenue to the City in 2025. The new construction has been included in the 2025 Preliminary Budget. The City was also notified by the Office of the Assessor that the full amount of the taxes levied for the prior year were not collected due to abatements and cancellations in the tax rolls. These refunds of $20,936.05 have also been included. FINDINGS/CONCLUSIONS: City staff recommends that City Council: - Set the property taxes in 2025 at 100% of the 2024 revenue amount plus the 1% allowed in the amount of $93,291. - Take $27,361 for all new construction allowed to the City as well as $20,936 of refunds. - Consider using $406,527 of banked capacity to help balance the 2025 Budget. - These recommendations would estimate the levy rate to be $1.5833 in 2025 which is an increase from the current rate of $1.5617 in 2024. - The impact for an average home cost of $565,000, would equate to an annual increase of $12.17 or $1.01 monthly, assuming a 0% change in assessed value. RECOMMENDATION: No action at this time is needed, but Council could adopt an ordinance to set the City’s 2025 property tax levy amount, or Council could choose to have further discussion and approve this ordinance at a later date. ATTACHED: Ordinance No. 3899 Fixing the Property Tax Levy for 2025  ORDINANCE NO. 3899 AN ORDINANCE OF THE CITY OF MOUNT VERNON, WASHINGTON, FIXING THE PROPERTY TAX LEVY FOR 2025 WHEREAS, the City Council of Mount Vernon, after hearing and after duly considering all relevant evidence and testimony presented, has met and considered its budget for the calendar year 2025; and, WHEREAS, the City of Mount Vernon’s levy amount from the previous year was $8,922,528.70; and, WHEREAS, the population of the City of Mount Vernon is more than 10,000; and, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOUNT VERNON, WASHINGTON, DO ORDAIN AS FOLLOWS: SECTION 1. An increase in the regular property tax levy is hereby authorized for the levy to be collected in the 2025 tax year. The dollar amount of the increase over the actual levy amount from the previous year shall be $499,818 which is a percentage increase of 5.60% from the previous year. In addition, the dollar amount increase from the previous year shall include the increase resulting from new construction, improvements to property, newly constructed wind turbines, solar, biomass, and geothermal facilities, and any increase in the value of state assessed property, any annexations that have occurred and refunds made. SECTION 2. Severability. If any section, subsection, sentence, clause, chapter, provision, or phrase of this ordinance or its application to any person or circumstance is found to be unconstitutional or invalid by a court of competent jurisdiction, such decision shall not affect the validity of the remainder of the ordinance or the application or the provisions to other persons or circumstances. SECTION 3. Effective Date: This ordinance shall take effect and be in full force five (5) days after its passage, approval and publication. PASSED AND ADOPTED this 6th day of November 2024. SIGNED AND APPROVED this 6th day of November 2024. ___________________________________ Peter Donovan, Mayor  Attest: ________________________________ Becky Jensen, City Clerk Approved as to form: ___________________________________ Kevin Rogerson, City Attorney Published ___________________________