A stunning one-third of Payson’s assessed value has evaporated in the past three years, the Payson Town Council learned at a special budget meeting on Thursday.
As a result, the council adopted a budget for the fiscal year that starts in July that will boost the town’s property tax rate to near the legal limit.
The town’s property values have dropped from roughly $3 billion in 2008 to about $2 billion now — which includes a 17 percent drop in the past 12 months.
“Virtually every house in Payson has dropped significantly in value,” said Payson Mayor Kenny Evans.
The proposed increase in the town’s property tax rate will add about $4 to the tax bill for the average, $200,000 home, according to Evans.
The increase would have been much greater, but the town has also nearly finished paying off bonds issued to build Green Valley Park and the water treatment plant.
As a result, the drop in that “secondary” property tax rate will partially offset the 30 cents per $100 of assessed valuation increase in the basic rate. Without that offsetting decline, the property tax rate would have risen almost 20 percent.
Evans said that the town
remains vulnerable to “the vulgarities of the market place” when it comes to tax revenue. The increase in the property tax rate will only boost collections from $606,000 to $612,000, due to the decline in assessed values.
“In 2008, we were looking at historic numbers” for Payson property values. At that time, the town’s projections suggested property values would hit $3.3 billion by the end of the year. Instead, the recession hit, the construction industry died and home values plunged.
“Now we’re holding onto $2 billion by our fingernails,” said Evans.
Technically, the council on Thursday adopted the rough draft of a whopping $47.5 million budget. However, that includes about $20 million worth of grant-funded street and infrastructure projects the town probably won’t actually build.
The town’s “operations” budget actually pays for town services, like the water department, police, fire, planning, parks and other departments.
The operations budget will drop 1.4 percent to about $25 million. By contrast, in 2007-08, the operations budget stood at $27 million.
The budget includes a wafer-thin reserve fund, which came mostly from next year giving up on efforts to pave streets or repay a $1 million loan from the town’s own water department.