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HomeMy WebLinkAboutResolution 09-107-CCBOARD OF COUNTY COMMISSIONERS Grant County, Washington A RESOLUTION OF THE GRANT COUNTY BOARD OF COUNTY COMMISSIONERS , MAHING A DECLARATION OF SUBSTANTIAL NEED FOR PURPOSES OF THE SETTING THE LIMIT FACTOR FOR THE PROPERTY TAX LEVY FOR 2010 RESOLUTION No. 09- o�CC � WHEREAS, RCW 84.55.010 provides that a taxing jurisdiction may levy taxes in an amount no more than the limit factor multiplied by the highest levy of the most recent three years plus additional amounts resulting from new construction and improvements to property, newly constructed wind turbines, and any increase in the value of state-assessed utility property; WHEREAS, under RCW 84.55.005(2)(c), the limit factor for a taxing jurisdiction with a population of 10,000 or over is ihe lesser of 101 percent or 100 percent plus inflation; WHEREAS, RCW 84.55.005(1) defines "inflation" as the percentage change in the implicit price deflator for personal consumption expenditures for the United States as published for the most recent 12-month period by the Bureau of Economic Analysis of the federal Department of Commerce in September of the year before the taxes are payable; WHEREAS, "inflation" for July 2009 is —0.848 percent and the limit factor is 99.152 percent, meaning the taxes levied in the Grant County Road Fund in 2009 for collection in 2010 will decrease except for the amounts resulting from new construction and improvements to property, newly constructed wind turbines, and any increase in the value of state-assessed utility property; WHEREAS, RCW 84.55.0101 provides for use of a limit factor of 101 percent or less with a finding of substantial need by two-thirds of the members when the board consists of four members or less, or a majority plus one approval of the board when the board consists of more than four members; WHEREAS, due to a decrease in sales tax and total revenues and due to substantial cuts in expenditures making it difficult to meet public demands. F:\BVasquez\Resolution-Ordinance\Substantial Needs of setting the limit factor for the property tax levy for 2010.doc Page 1 of 2 NOW, THEREFORE, THE GRANT COUNTY BOARD OF COUNTY COMMISSIONERS OF GRANT COUNTY, WASHIl�GTON, DOES RESOLVE AS FOLLOWS: Section 1. A finding is made of substantial need under RCW 84.55.0101, which authorizes the use of a limit factor of 101 percent for the property tax levy for 2010 for the Grant County Road Fund. `�� �(' ADOPTED this day of I`���; 2009. BOARD OF COUNTY COMMISSIONERS Yea Nay Abstain GRANT COUNTY, WASHINGTON ❑ ❑ ❑ _(� ..., .. � �..(� �/`�__- Cindy C rter, Chair _�— , A TTTC`IT � ❑ ❑ � Richard Stevens, Member m� ❑ ❑ (:��°i��%���!�'i'� Carolann Swartz, Member F:�BVasquez\Resolution-Ordinance\Substantial Needs of setting the limit factor for the property tax levy for 2010.doc Page 2 of 2 Departmenfi of � Y ���� Washing-ton State Levy Limit Factor Questions That Arise When the Implicit Price Deflator (IPD) is a Negative Value The following questions and answers are designed to help taxing districts and assessors determine the levy limit factor when the change in the implicit price deflator (IPD) is a negative value. Determining the Limit Factor Q. What is the levy limit factor? A. This is the percentage applied to a taxing district's maximum levy allowed by chapter 84.55 RCW to calculate the district's levy limit. Q. How is the levy limit factor determined? A. The levy limit factor is defined in RCW 84.55.005 and WAC 458-19-005: • For taxing districts with a population of less than 10,000 in the calendar year prior to the assessment year, the limit factor is �01 percent. • For taxing districts with a population of 10,000 or greater, the limit factor is the lesser of 100 percent plus inflation or 101 percent, • For taxing districts with a population of 10,000 or greater having made a finding of substantial need; the limit factor is the lesser of 101 percent or the limit factor contained in the resolution or ordinance of substantial need. Q. What is the 2010 tax year rate of inflation as used for property tax levy limits? A. The rate of inflation is based on the percentage change in the IPD, which for the 2010 tax year is -0.848 percent (negative), Q. Who determines the population of a taxing district? A. The taxing district is responsible for determining its population and providing that information to the county assessor. Q. Will the negative IPD result in a reduced levy amount? A. Probably not. In addition to an adjustment to the maximum levy allowed based on the ordinances or resolutions adopted by the taxing district, the levy limit is increased due to new construction and other allowable items. More than likely, this increase will exceed the negative IPD factor. Taxing Districts With a Population of Less Than 10,000 Q. How does the negative rate of inflation affect processes and levies made by taxing districts with a population of less than 10,000? October 2009 Page 1 of 3 � Department of � ��'evenue Washington 5[ute Levy Limit Factor Questions That Arise When the Implicit Price Deflator (IPD) is a Negative Value A. These smaller districts are not impacted by the negative rate of inflation. These districts continue to have a limit factor of 101 percent and must continue to adopt an ordinance or resolution if they intend to increase their levies, The ordinance or resolution must indicate the dollar and percentage increase, exclusive of increases due to new construction and certain other items, over the previous year's levy. if a district does not adopt an ordinance or resolution authorizing an increase, the district's levy is limited to 100 percent of the prior year's levy plus additional amounts for new construction and certain other items. (RCW 84.55.120) Taxing Districts With a Population of 10,000 or More Q. What limit factor will be used in the 2010 tax year levy calculations to levy the maximum levy allowed by law (chapter 84.55 RCW)? A. That depends on which ordinances or resolutions the taxing district adopts concerning property tax levies: • If no ordinances or resolutions are adopted by the district, the limit factor is 99.152%. • If one ordinance or resolution is adopted, the limit factor is 99.152%. • If the district adopts a second resolution finding a substantial need, the limit factor specified in the ordinance or resolution will be used. (RCW 84.55.0101) The limit factor can be greater than 99.152%, but cannot exceed 101 %. Q. Is a taxing district required to adopt an ordinance or resolution to increase its prior year's levy amount? A. Yes. The negative rate of inflation did not change this requirement. Q. What percentage of the taxing district's governing board must sign the resolutions or ordinances increasing the levy amount or establishing a limit factor? A. A simple majority is required to increase the levy from the prior year. Approval of the levy limit increase in the substantial need resolution or ordinance requires two-thirds of the members of a governing board of four members or less, and a majority plus one in governing boards made up of more than four members. For example: October 2009 Page 2 of 3 � Department of � �'�evenue Washington State Levy Limit Factor Questions That Arise When the Implicit Price Deflator (IPD) is a Negative Value Q. What information is required to be included in the resolution or ordinance increasing the district's levy? A. The ordinance or resolution must state both the dollar increase and percentage increase of the current budget request compared to the prior year's actual levy, exclusive of increases due to new construction and certain other items. The percentage increase in the document may be greater than 1% if the district is levying previously unused levy capacity (banked capacity). A resolution may look sornething like this example: WHEREAS, the Board of Gommissioners of Taxing District has met and considered its budget for the calendar year 2010; and, WHEREAS, the district's actual levy amount from the previous year was $100,000 and, WHEREAS, the population of this district is more than 10,000; now, therefore, BE IT RESOLVED by the governing body of the taxing district that an increase in the regular property tax levy is hereby authorized for the levy to be collected in the 2010 tax year. The dollar amount of the increase over the actual levy amount from previous year shali be $1,000 which is a percentage increase of 1%from the previous year. This increase is exclusive of additional revenue resulting from new construction, improvements to property, newly constructed wind turbines, any increase in the value of state assessed property, any annexations that have occurred, and refunds made. Q. What information is required to be included in the substantial need resolution or ordinance increasing #he districYs limit factor? A. The resolution or ordinance must include the reason for the substantial need and the limit factor (not to exceed one hundred one percent). For example: WHEREAS, the Board of Commissioners of Taxing District has determined that, due to general maintenance and operation expenses, the Board of Commissioners finds that there is a substantial need to set the levy limit at one hundred one percent. October 2009 Page 3 of 3 b ���, sTerg o� o pp, � � � � m � �y� �'� 7flB8 � STATE OF WASHINGTON DEPARTMENT OF REVENUE September 22, 2009 Dear County Assessors; What is the rate ai infl�ttion (IPD rate) for 2p10? The rate of inflatian (IPD rate) for properLy taxes due in 2010 is a negative 0.848 percent (-0.848%). What is the limit factor far 2010? The limit factor for pxoperty taxes due in 2010 is negcztive 0.848 percent (-0.848%) for the state and taxing districts with populations over 10,000. The limit factox for thes� districts is defined as lhe srnaller of the rate af xnflation or 1 percent. For fiaxing districts with populatians uncler 10,000, the limit factor for property taxes due in 2010 is 1 percent. How is the rate af inflation {IPD raie} calculatecl? T�he rate of' inflatic�n is th� perc�nt change in the implzcit price deflator for persanal consumption as publxshed in the Bureau of Economic Analysis' September Survey of Current B'usrnEss. However, this year the S�ptembez Survey of Curr�ent Business did nat include the implicit price deflator for personal cansumption du� to space constra�nts from the publicatian of the 2Q09 Comprehensive Revision statistics. Therafore, the Department ofReven�e cantacted the Bureau af Economic Analysis and received the implicit price de�aior �fox personal cansumptzon fram the 2009 Comprehensive Revision statistics. The Bureau of Economic �nalysis znd'zcated the zmplicit price deflator will be published in the Qctober Survey of C'urrent Business. The perce�t change is calculated by dividing the July 2009 number by the 3uly 2008 number, subtracting one, and then multiplying by 100. These numbers were updated as part of the Bureau of Economic Ai7aiysis' 2009 Compxehensive Revision to a base year of 2005. The values used in the calculation this year were as follows: July 2008 110.205 Ju1y 2009 109.270 If you have any questions, please contact me. Sincerely, Valerze L. Torres T� Policy Specialist Research Division P O Bax 4i459 t Olympia, �ashingtoli 98504-'�459 �(360) 570-GO$4 0 Fax (360) 664-0972 E-mail Address: ValerieT@dor.wa.gov April 22, 2009 Determining the Limit Factor for Increases in Property Tax Levies Question: What is the limit factor for local taxing districts' levy increases if deflation (negative "inflation") occurs? Answer: The limit factor for some local taxing districts may be less than 100%. Discussion: Under ch. 84.55 RCW, the growth of regular property tax levies is limited. For taxing disiricts with a population of less than 10,000, the limit factor is 101 %. The limit factor for local taxing districts with a population of 10,000 or more is the lesser of 101 % or 100% plus inflation. With a finding of substantial need, these larger taxing districts can adopt a limit factor that exceeds 100% plus the rate of inflation up to a maximum of 101%. RCW 84.55.005 defines "infiation" as the percentage change in the implicit price deflator (IPD) for personal consumption. The statute requires the use of data published in September of the year before the tax will be due in determining inflation. Because the limit factor for local taxing districts with a population of 10,000 or more is the lesser of 101% and 100% plus inflation, and inflation is defined as the percentage change in the IPD, a negative change in the IPD would result in a limit factor of less than 100%. For example, if the percentage change in the IPD were, say, -1.0%, the limit factor would be 100% - 1.0%, or 99%. What does this mean for local taxing districts? For taxing districts with a population of less than 10,000, the limit factor is 101 %, regardless of inflation or deflation, These smalier districts may continue to increase their regular property tax levies by 1% annually. For local taxing districts with a population of 10,000 or more, the limit factor would dip below 100% and property tax levies would not grow'. These larger districts could increase the limit factor to a maximum of 101% with a finding of substantial need. In order to increase the limit factor to 101 %, a resolution or ordinance must be adopted by the district's governing body. In districts with legislative authorities comprised of 4 or less members, two-thirds of the members must approve the ordinance or resolutiqn. In districts with legislative authorities comprised of more than 4 members, the ordinance or resolution must be approved by a majority plus one. The limit factor authorized by the ordinance or resolution is for one year only. Taxing districts of any size may also exceed the limit factor with the approval of a majority of the voters residing in the district. RCW 84.55.050 authorizes taxing dis#ricts to "lift the lid" and increase regular property tax levies by more than would be otherwise allowed. A lid lift allows a taxing district to exceed the limit factor for up to six consecutive years. The ballot measure must include the levy rate to be imposed in the firs# year following approval of the lid lift. If the lid lift allows the district to exceed the limit factor for more than one year, the baliot measure must also include the limit factor or a specified index to be used in determining the limit factor for each succeeding year. Questions: If you have questions or need additional information, please contact Diann Locke at (360) 570-5885 or DiannLCc�dor.wa.gov. 1 Taxing districts would still be entitled to levy additional amounts based on new construction, improvements to property, increases in state-assessed property, and the value of wind turbines as authorized in RCW 84,55.010. P.O. BOX 4747'1 OLYMPIA, WA 98504-7471 1.800.647.7706 HTTP://�OR.WA.GOV To inquire about tl�e availability of this document in an alternate format for the visually impaired, please call (360) 570-5900. Teletype (TTY) users, please call 1.800.q5'1.7985.