Canyon Commission adopts 0.51181 tax rate, a 30% increase to cover bond debt and operations

The Canyon City Commission adopted Ordinance No. 12 40 on a 3-1 vote to set the city's 2025 ad valorem tax rate at 0.51181 per $100 of valuation.

City staff said the rate combines a maintenance and operations (M&O) rate of 0.3904 and an interest-and-sinking (I&S) or debt-service rate of 0.12141. Staff told the commission the combined rate will generate about $6,346,000 in property tax revenue for the 2025 tax year, about $1,413,000 more than the prior year.

The increase is driven primarily by debt service on recently issued general obligation bonds approved by city voters in May. Joel (staff member) told the commission the city sold Series 2025 general obligation bonds with a par/principal amount of $13,805,000 and that annual debt payments on that issue will be approximately $1,060,000 over the next 20 years. Joel said roughly 77% of the revenue increase is associated with servicing those bonds.

Why it matters: The tax increase funds both the new bond debt and additional recurring operating costs the city included in its adopted budget. City staff said roughly $4,794,000 of property tax revenue will support general fund operations and about $60,000 is related to tier funding adjustments; property taxes were projected to provide about 30% of the general fund's $15.9 million total.

Staff and bond background: The commission voted in February 2025 to place a bond proposition on the May ballot asking voters to approve general obligation debt of up to $14 million for public safety facility modifications and expansion. City communications ahead of the election included postcards, utility inserts, online materials and open houses. After bids were solicited by the city's financial adviser, Hilltop Securities, the high bid produced net proceeds sufficient to provide $14 million in usable funds when premiums and issuance costs are considered, while the bond's par amount came in at $13,805,000.

Staff presented detailed project cost estimates for the bond proceeds: $4,500,000 for renovation of the police station, $4,200,000 for remodeling Fire Station 1, $1,700,000 for a new fire training classroom and equipment, $1,000,000 to replace the main fire engine, $750,000 for annex additions for fire department physical training, $600,000 for a fire training burn house, $600,000 for command-staff office renovations, $400,000 for an animal-control shelter, and $250,000 for renovations to the former police station. Staff said those project figures sum to the bond program the voters approved.

Operational impacts: Beyond debt service, the M&O portion increases by about $299,976 to cover personnel and other operating costs the adopted budget included. Staff told the commission the budget adds costs for new or expanded positions and pay adjustments, including firefighter staffing to support 24-hour coverage, a multi-year transition to a step pay schedule for police, school resource officers funded in part by Canyon ISD, technology and records-management software, and a new trash truck payment.

Public hearing and votes: The commission opened and closed a public hearing on the proposed rate with no speakers. The commission took separate motions to approve (1) the M&O rate of 0.3904 and (2) the I&S rate of 0.12141, then a required record vote to adopt the combined rate of 0.51181. The final record vote was announced as 3-1, with the Mayor and Commissioner Potter recorded as voting yes and Commissioner Lyon recorded as voting no; one commissioner's recorded vote was not specified on the record excerpt provided.

What the record shows: The ordinance sets the tax rate to become effective as provided in the ordinance. Staff noted that the proposed rate is below the state's de minimis rate and does not require a new election under the tax code.

Next steps: The ordinance was adopted and staff will proceed with the budget and implementation actions described in the adopted fiscal-year 2025-26 budget.