HomeMy WebLinkAboutDocuments_~
~~
FZtOPERTY TAX -Revenue Committee Meeting -March 20, 2003
Property tax is the City of Meridian's largest source of general fund revenue. Property tax is calculated by Ada
County based on State of Idaho code. The following is a brief summary of very complicated tax code that has
been changed many times since it inception. Idaho code limits the amount of property tax that cities can collect.
Starting in the late seventies and continuing through the nineties the Idaho Legislature passed numerous laws in
response to taxpayers concern with increases in property tax. Finally in 1995 the Idaho legislature enacted code
that limited property tax increases to 3% over the prior year. The first cap became effective in fiscal year 1997.
Later code revisions allowed cities to apply the levy rate to new construction and annexation.
Meridian has traditionally had a low levy rate. During the eighties cities had various opportunities to increase
the levy rate. Meridian, as a small town with few services, did not take advantage of them. Now, the only way
to increase the levy is with a 60% vote. The levy would be increased to .004 for one year.
The levy rate is the percentage of each dollar of the market value of a property that will be paid in property tax.
Each year the rate "levied" against the taxable value of all properties is recalculated.
Steps to calculate a levy percentage:
A. The amount of property tax collected the prior year is increased by 3%.
B. The taxable market value for the City is determined by Ada County.
A is divided by B to get the levy rate. This rate will be applied to homes and businesses to determine the
amount of property tax each property owner will pay.
For example:
Prior Year Property Tax Budget - $5,000,000 * 1.03 = $5,150,000
Taxable Market Value - $1,800,000,000
Levy Rate - $5,150,000 / $1,800,000,000 = .00286111
Individual home -Net Taxable Value (less homeowners exemption)
$75,000 * .00286111 = $242 property tax
The problem with this calculation is that when a city grows the levy rate actually goes down because the
numerator, the property tax budget, goes up slower than the denominator, the taxable market value.
For example:
Prior Year Property Tax Budget - $5,150,000 * 1.03 = $5,304,500
Taxable Market Value - $2,000,000,000
Levy Rate - $5,304,500/2,000,000,000 = .00265225 compared to .00286111 for the prior year
The following graph illustrates the actual and expected increase in net taxable property value in
Meridian.
City of Meridian -Ada County Assessed Valuation -Calendar Year
$4,000,000,000
$3,500,000,000
$3,000,000,000
$2,500,000,000
$2,000,000,000
$1,500,000,000
$1,000,000,000
$500,000,000
$0
,~ ._, ~ ~ F ~,.
~M
,r .,. ~ .
---
_,~
- ~ n ~
.
_~_
f ,~
ICS ~ ~ ,~" `" ~ ',y, ~~- ~` -,~ ~ w ~,~~°"~'*
~ ~~
_ x~, ~;,,
~. ~. ,, _~ ~ .,a .L ~ :
Yi ~ y _ w ~~ ! -)
. r _ ~F
`(
} ~ ~,
~.. Y. ~ A
~i y!. t F.
... ~ •' ^ _
_~. ~ ` +~ -
~~
~.
YY
1
.t ~ ~ S
~ • r~ y, -~
., _.
~,;
. a•
,: -
dam' .
Actual 99 Actual 00 Actual 01 Actual 02 Est 03 Est 04 Est 05 Est 06 Est 07 Est 08
The next chart illustrates how the levy rate is decreasing. Levy rates rounded to 6 decimal
places.
City of Meridian Levy Rates Levy Rates
0.004000 ~~'' ;ck^ ~ ~ faro. ~y " ' ~~
0.003500
w J' ~
'
~ ~~~~~ ~ ~
yy~ ~ ,
/~
0.003000 - : ~ '
~ 3~ ' ~ ~ ~ ::~. ~~ ~
'~ 3fl40 `'0'002 ~ 5.
Q
~ f1„s• 0
O 743
0.002500 ~ "~" ~ ~" `
0.002000 h' v
w .~ a;1 c,4 ~, '~~ ~ ~~ .. ~
~~~ r~ ~n c i ~,
~`~
'' '~a"'1~~
~rf~
rt
4 F,-. J N ~, .
it r ~
0.001500
i
; ~
~, , ~ ~ .
~ ~
~~ t~,
f 7i ~ ~
~,~,
~
n! d~ i
S 4
K ~ .~
0.001000
r s ~ ~ ` ~ ~`
y
~~
r' i l1
~~,
~'
p t
3+
s ~
~` ;
n
,, ~,
~
~
0.000500 ~;
, ~
~
~,
, ~ a
~~ ~
L
} ~
c~.
5
~~ Y~,
~. j
,s'N ",
~
'RNY
~ _.. .t
~ t F ~
a
'k ,1 ~ c .
[ , . ,,rr,
~
uj'Q_.~, l ~ ~,1ti5 a ~~,
0.000000
1g9j 1gg8 1gg9 2000 200 2002 20pg 2004 2005 ?006
The following table contains actual and forecasted property tax dollar collections.
Actual Actual Actual Actual Budget Projected Projected Projected
FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006
Tax -New Const Roll $349,155 $345,391 $411,416 $543,477 $403,538 $502,651 $533,287 $539,749
Tax -Annexation $13,477 $5,662 $17,665 $165,750 $79,779 $40,000 $40,000 $40,000
Base -Property Tax $3,262,270 $3,733,649 $4,207,246 $4,775,416 $5,648,566 $6,315,839 $7,064,245 $7,866,658
Total $3,624,902 $4,084,702 $4,636,327 $5,484,643 $6,131,883 $6,858,490 $7,637,532 $8,446,407
Bese Increase 3% 3% 3% 3% 3% 3% 3% 3%
Growth Increase 11 % 10% 11 % 15% 9% 9% 8% 8%
Totallncrease 14% 13% 14% 18% 12% 12% 11% 11%
Levy Rates 0.00332053 0.00334317 0.00324445 0.00318048 0.00304018 0.00296390 0.00274279 0.00274314
Actual Tax Collected $3,642,678 $4,239,026 $4,781,201 $5,563,270
Percentlncrease 10.99% 16.37' 12.79% 16.36•
Table Notes:
Total Property Tax number is based on County levy assessments and budgeted amount -actual collected may
vary slightly
Base property tax projection is based on a net market value trend formula using regression analysis
Annexation projection is based on an average of actual data
New construction projection is based on a trend formula using regression analysis