The City of Scottsdale will adopt the final property tax levy and/or tax rate for Fiscal Year 2017/18 for the City and the Municipal Streetlighting Improvement Districts (SLIDs) listed in ‘Attachment A’ hereto. Notice is hereby given that the ad-valorem property taxes levied by the City to support its budget expenditures may increase. A SLIDs Public Hearing and a Property Tax Truth in Taxation Hearing is scheduled for Tuesday, June 13, 2017 at 5:00 p.m. at Scottsdale City Hall, 3939 N. Drinkwater Boulevard, Scottsdale, Arizona.
The Public Hearing and Truth in Taxation Hearing will be followed with a formal adoption of the SLIDs ordinance and Property Tax levies on June 27, 2017 at 5:00 p.m. at Scottsdale City Hall, 3939 N. Drinkwater Boulevard, Scottsdale, Arizona.
City of Scottsdale’s Written Report in Support of the Proposed Increase in the FY 2017/18 Property Tax Levies
The City of Scottsdale, as part of its FY 2017/18 budget, proposes to levy a primary property tax up to $28,243,736, an amount up to $802,680 greater than the prior year’s levy. The proposed primary levy amount will decrease the City’s primary property taxes on a home at least $1.15 per each $100,000 of taxable assessed value. The primary property tax levy supports General Fund activities such as police and fire protection, operation and maintenance of parks and libraries, and many other general governmental functions and the tort recovery of approximately $1.0 million will support the Risk Management Fund. The primary property tax rate is estimated to decrease by at least $0.0115 from $0.5071 to $0.4956.
The Arizona Constitution, beginning with the 1980 tax year, divided property tax levies into a primary property tax levy and a secondary property tax levy. A secondary property tax may only be levied to pay the principal and interest charges on voter approved General Obligation bonds/loans. The primary property tax levy is for all other purposes. There are no limits on the amount of secondary property taxes, while there are strict limits placed on the primary property tax.
The primary property tax levy is limited to an increase of 2% over the previous year’s allowable levy (base levy being the FY 1979/80 levy, if the community had a primary property tax levy in FY 1979/80) plus an increased dollar amount due do to a net gain in property not taxed the previous year. The Arizona State Legislature in 2006 enacted HB 2876 which changed the primary property tax levy’s legal limit calculation. The FY 2006/07 legal levy was limited to the lesser of a 2% increase over the prior year’s levy, or the Arizona Constitutional legal limit. Further, in November 2006, the voters elected to reset the “base year” from which the legal limit is calculated from FY 1979/80 to FY 2005/06.
Any city or town which wants to initiate a primary property tax must submit the proposed amount to be raised from the tax to the voters at an election to be held on the third Tuesday in May. The amount approved by the voters will constitute the base on which future limitations on levies will be determined. If the voters approve the levy, the city or town council may levy the tax in the fiscal year immediately following the election. The cities or towns currently have no authority to override the limit once it is established.
The Property Tax Oversight Commission was formed in 1988 to review the primary property tax levy limitations of each city, town, county and community college district in the State. The county assessor is required to transmit and certify to the Property Tax Oversight Commission and the city or town council the values necessary to calculate the levy limit. Those values are to be transmitted on or before February 10 of the tax year. Each city or town is required to notify the Property Tax Oversight Commission in writing within ten days of its agreement or disagreement with the final levy limit. After adoption of the levy, the Property Tax Oversight Commission will review the primary property tax levy to determine the adequacy of compliance.
The Arizona State Legislature, in a 1996 special session on property taxes, approved the Truth in Taxation (TNT) legislation requiring cities to hold a public hearing, publish a notice of that hearing, and have a roll call vote if the city’s proposed primary property tax levy, excluding amounts attributable to new construction, is greater than the property tax levied the year before. The TNT provision does not change the Arizona Constitution’s legal levy limit. TNT requires the above stated Council actions, if cities or towns wish to adopt the Arizona Constitutional primary property tax levy limit.
The City of Scottsdale, as part of its FY 2017/18 budget, proposes to levy a primary property tax less than the amount authorized by the Arizona State Constitution. The proposed primary levy amount is $3,433,605 less than the TNT amount. The proposed primary levy amount will decrease the City’s primary property taxes on a home at least $1.15 per each $100,000 of taxable assessed value and the primary property tax rate is estimated to decrease by at least $0.0115 from $0.5071 to $0.4956.