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A clear sky. Low 83F. Winds NW at 5 to 10 mph.
Updated: July 7, 2023 @ 7:31 pm
While city property taxes are on the verge on increasing, a “Notice of Property Tax Increase” illustrates that Scottsdale’s bite of the house-pie is relatively small. (City of Scottsdale)
While city property taxes are on the verge on increasing, a “Notice of Property Tax Increase” illustrates that Scottsdale’s bite of the house-pie is relatively small. (City of Scottsdale)
A dying character in “Romeo and Juliet” cries out, “A plague on both your houses!”
In Scottsdale – like other Arizona cities – the line reading is, “Two taxes on all your houses!”
At its Tuesday, June 13, meeting, Scottsdale City Council again will consider raising rates.
After increasing everything from swimming fees to garbage collection charges, the elected officials will be asked by city executives to raise primary and secondary property tax rates.
According to the agenda, the city will “solicit public testimony on the proposed fiscal year 2023-24 property tax levy, and by a roll call vote, approve a motion to levy the proposed property taxes, taxes to be assessed by ordinance on June 27.”
As the agenda explains, like other municipalities, Scottsdale imposes “a primary property tax levy and a secondary property tax levy.
“The primary property tax levy is imposed by cities and towns for all general municipal purposes, while the secondary tax levy is only used to retire the principal and interest or redemption charges on bond indebtedness.”
Also at the June 13 meeting, City Council is expected to give final approval on a $2.533 billion budget – loaded with both “general municipal purposes” and bond debt.
Needing to balance those huge payments, the city is looking for every possible dollar it can rake in.
As such, a modest increase in both property tax rates is on the table.
According to the council report, in the fiscal year beginning July 1, “the city’s total proposed primary property tax levy of $39.30 million is an increase of $2.88 million over the current year levy of $36.42 million.”
The current primary property tax rate of $0.497 per $100 of assessed valuation is projected to increase by $0.018 to $0.515, according to the report.
Scottsdale’s secondary property tax levy “is forecasted to increase $5.53 million from the fiscal year 2022-23 adopted budget of $30.06 million to $35.59 million.”
According to the report, the current secondary tax rate of $0.4101 is expected to increase by $0.0563 to $0.4664 per $100 of assessed valuation beginning July 1.
A “Notice of Tax Increase” states that a $100,000 Scottsdale home – if that exists – would pay a primary property tax of $51.50 – an increase of $3.03. A $500,000 home would be taxed an extra $15.15, up to $257.50.
Homeowners can roughly double the amount to determine the combined primary-secondary tax hit.
Not that the city is the only party taking a bite out of Scottsdale homes.
As the city notes, “About 10 cents of every dollar in property taxes paid by Scottsdale property owners goes to the city, the remaining 90 cents goes to public schools, Maricopa County, community colleges and various special taxing districts. And of the 10 cents of every dollar paid by Scottsdale property owners, 5 cents goes to support voter approved bond programs.”
The report notes, “The primary property tax levy also includes payment to the Risk Management Fund reserve of $2,201,944 for tort liability claim payments made during calendar year 2022.”
Responding to questions from the Progress, Judy Doyle, the city’s budget director, explained the $2.2 million total covers “a total of 13 claims paid ranging from $20,000 to $1.3 million.”
Doyle was asked why new construction did not bring down property tax rates by increasing the total taxable base.
“The city levies the maximum allowable primary tax, which is limited to an increase of 2% more than the previous year’s maximum allowable primary levy plus an increased dollar amount due to a net gain in property not taxed the previous year,” she said.
“In general, new construction in any given year does not generate significantly more property taxes to lower levy rates, rather the appreciation in assessed values of existing properties and the 2% constitutional limitation lowers our levy rates.”
City Manager Jim Thompson’s booming budget notes a bonus, of sorts: “$6.3 million from a projected increase in interest earnings due to higher anticipated rates of return on investments.”
Doyle explained the city has “a little over $1 billion in our investment portfolio,” which it invests in “U.S. Treasuries, federal agencies and corporate notes.”
The March 31, 2022, quarterly report showed a yield of 0.73%. That jumped to a portfolio yield of 2.59% in the first quarter of 2023.
“Based on our funding policies, 100% of interest earnings in the General Fund are transferred to our capital funds for capital projects,” she said. “Interest earnings do not affect property tax rates.”
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