Mayor and Council



   For the meeting on:

  February 27, 2017
   Department:   Finance
   Responsible staff:  Stacey Webster, Deputy Director of Finance
  phone: (240) 314 - 8407
  SWebster@rockvillemd.gov


Subject
Introduction of an Ordinance to Appropriate Funds and Levy Taxes for Fiscal Year 2018

Recommendation
Staff recommends that the Mayor and Council introduce the Ordinance to Appropriate Funds and Levy Taxes for Fiscal Year 2018.

Change in Law or Policy
Adoption of the operating and capital improvements program (CIP) budgets will require passage of the standard budget ordinance. This budget ordinance is scheduled to be introduced on February 27, 2017, with adoption scheduled for May 1, 2017.

Discussion
The draft ordinance (Attachment A) is provided for introduction purposes only. As in prior years, this ordinance will undergo changes prior to adoption in May. This ordinance includes proposed real and personal property tax rates, as well as appropriated amounts by fund for the FY 2018 operating budget and CIP.

General Fund Tax Rates and Tax Credits
The Mayor and Council establish the tax rates each year in order to finance General Fund activities. For FY 2018, the City’s real property tax rate is proposed to remain unchanged at $0.292 per $100 of assessed value. The personal property tax rate is proposed to remain unchanged at $0.805 for every $100 of assessed value. In FY 2018, total property taxes are budgeted to raise $40.9 million, or approximately 52 percent of the City’s General Fund budget.

Estimated FY 2018 property tax revenue includes the City's supplement to the State of Maryland's Homeowners' Property Tax credit program. The Homeowners' Tax Credit Program is a State administered program that provides real property tax credits to low- to moderate-income residents for property taxes due on their principal residence. For FY 2018, households with gross incomes up to $91,000 per year and a household net worth of less than $200,000 (not including the value of the home and qualified retirement savings) could qualify for tax relief on the first $495,000 of their home's assessed value. For low-income households, the credit could be several hundred dollars with the maximum credit totaling the City tax due on the first $495,000 of assessed value.

Constant Yield Tax Rate
In accordance with Maryland law, the constant yield tax rate is defined as the property tax rate that would yield the same tax revenue as the previous year. The constant yield tax rate calculation does not factor in new property assessments that are added to the City's taxable base during the year due to new construction.

For FY 2018, the constant yield rate was calculated by the State to be $0.2894 per $100 of assessed value, or slightly lower than the City's proposed property tax rate of $0.292. Since the constant yield tax rate is lower than the City's proposed tax rate, the City must hold a special public hearing in accordance with Maryland law. This public hearing is scheduled for April 3, 2017.

Parking District Tax Rate
In order to support the debt service costs of the three City owned garages in Town Square, the Town Center Parking District was formed in 2007. The Parking District is a special taxing district that levies a real property tax on the commercial properties within the Town Square boundaries. The FY 2018 Parking District tax rate is proposed to remain flat at $0.33 per $100 of assessed value.

Mayor and Council History
Past Mayor and Council actions related to the FY 2018 budget include:

Date
Action Item
September 12, 2016 Discussion of Operating Budget Process
September 19, 2016 Discussion of Capital Improvements Program (CIP) Budget Process
October 11, 2016 Distribution of Mayor and Council Budget Surveys
November 1, 2016 Budget Public Hearing
November 10, 2016 Mayor and Council Budget Surveys Due
December 12, 2016 FY 2018 Budget Survey Results and Discussion of Budget Priorities
January 9, 2017 FY 2018 Cost Allocation Plan (CAP) Presentation
February 13, 2017 Distribution of FY 2018 Proposed Budget

Public Notification and Engagement
The City held the first public hearing related to the FY 2018 budget on November 1, 2016. The remaining public hearings are scheduled for March and April 2017.

In addition to the budget public hearings, the public can submit written comments about the budget via an online form located on the City's website at www.rockvillemd.gov/budget. These comments will be distributed to the Mayor and Council at the close of the public comment period and will be included with the agenda materials for the final budget worksession.

The public comment period closes on April 7, 2017.

Boards and Commissions Review
The Financial Advisory Board will meet several times during the FY 2018 budget process to review the FY 2018 operating budget and CIP, and develop recommendations for the Mayor and Council. One or more members from the Financial Advisory Board will be available for at least one of the Mayor and Council's budget worksessions to present and discuss the Board's recommendations for FY 2018.

Fiscal Impact
The proposed real and personal property tax rates and the appropriated amounts by fund for the FY 2018 operating budget and CIP are included in the attached ordinance (Attachment A).

Next Steps
Future Mayor and Council actions related to the FY 2018 budget include:

Date *
Action Item
February 27, 2017 City Manager's Presentation of FY 2018 Proposed Budget;
Introduction of FY 2018 Budget Ordinance;
Introduction of FY 2018 Refuse Fee Resolution;
Introduction of FY 2018 Stormwater Management Fee Resolution
March 2, 2017 Mayor and Council Worksession
March 6, 2017 Public Hearing
April 3, 2017 Public Hearing;
Constant Yield Tax Rate Public Hearing;
Mayor and Council Worksession
April 7, 2017 Close of Budget Public Record
April 17, 2017 Mayor and Council Worksession
May 1, 2017 Adoption of FY 2018 Budget Ordinance;
Adoption of FY 2018 Refuse Fee Resolution;
Adoption of FY 2018 Stormwater Management Fee Resolution
* All dates are subject to adjustment by the Mayor and Council during the budget process.

Attachments
Attachment A - Ordinance
AttachA_BudgetOrdinance_Feb2017.pdfAttachA_BudgetOrdinance_Feb2017.pdf

Department Head:



Gavin Cohen, Chief Financial Officer
Approved on: 02/15/2017

City Manager:

Robert DiSpirito, City Manager
Approved on: 02/22/2017