Yavapai College officials are inviting everyone to attend a Truth in Taxation hearing at 10 a.m. Tuesday at 831 E. Sheldon St. in Prescott regarding a proposed 8.4-percent tax increase .
According to College Director of Finance Terry W. Bowmaster, the college budgeted its primary property tax rate for the upcoming fiscal year at the same rate as the current year, $1.5330 per $100 net assessed valuation.
However, primary assessed values increased from $1,181,301,019 in fiscal year 2000-01 to $1,280,521,700 in fiscal year 2001-02, an 8.4-percent increase.
With the same tax rate as the current year, this increase in primary assessed values produces an increase in the primary tax levy for the college of $1.52 million.
The secondary tax levy, which would pay for this summer's initial bond issue supporting the $69.5 million master plan of expansion and building renewal, would rise from 8.75 cents to about 44.49 cents per $100 assessed valuation, Bowmaster said.
That means the combined tax levy for the roughly $76 million preliminary budget would come to $1.9779 per $100 of net assessed valuation, or 35.74 cents more than this year.
"This is 14 cents per week less than the tax rate estimate used in the master plan, due to actual assessed values increasing 8 percent compared to the 3 percent assumption used in the master plan," Bowmaster said.
State law requires a taxing entity wanting to increase its primary property tax levy above a specified amount to hold a public hearing. That amount includes increased tax levy dollars for new construction.
Bowmaster maintained, though, that the Truth in Taxation concept does not include increased tax levy dollars for improvements to existing properties or other increases in assessed values on existing properties.
"If Yavapai College were to use the Truth in Taxation calculated rate for fiscal year 2001-02, that rate would be $1.4819 and would produce an increase in primary property tax levy of $866,416, $654,347 less than the proposed levy," he said.
Further, Truth in Taxation does not provide for two important factors: inflation and growth. The cost of most things the college buys is rising. This year, there are especially high increases in health insurance and energy costs, Bowmaster noted. Also, enrollment and demand for college services are growing along with the county's population.
"If the same concept as Truth in Taxation were applied to sales taxes, and both prices and volume of sales increased each year, taxing entities such as the city and county would either be required to lower the sales tax percentage each year or to hold Truth in Taxation hearings to explain the increase in sales taxes, even though the sales tax percentage remained the same," Bowmaster said.
Primary property taxes, along with state appropriations, tuition, fees and other revenues, pay for the college's operating budget. The primary tax levy rate is separate from the secondary rate, which goes to support capital items.
The amount of annual principal and interest on any voter-approved general obligation bonds determines the secondary rate, Bowmaster said.
This year's secondary rate is $0.4449, or $0.0171 less than college officials projected at the November 2000 election on the bond proposal.
However, they can't determine next year's actual secondary tax levy rate until they sell the first issue of bonds on July 31. Because interest rates have dropped substantially in the past several months, the college anticipates that there will be a further reduction in the secondary property tax rate.
Based on current interest rates, the savings to taxpayers could be as much as $300,000, cutting the secondary tax rate an additional $0.022, Bowmaster said.
The good news is, if interest rates don't go up much between now and July 31, the total reduction in the college's secondary property tax rate could be about four cents for next year, meaning a savings of $4 a year for a home assessed at $100,000.