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Meridian finance director outlines why 3% property tax lever won’t cover rising public-safety costs
Summary
City finance staff reviewed Meridian’s November quarterly on property taxes, explaining state-controlled limits (3% allowable increase and other statutory rules), how new-construction revenue and exemptions affect collections, and why rising payroll costs mean a 3% increase no longer fully preserves service levels.
Todd, the city’s finance presenter, told the City Council during its Nov. 19 work session that most elements of Meridian’s property-tax picture are set by state and county rules and that the only routine local lever is the statutory 3% allowable increase. "We can only increase our property taxes by 3% state mandates that," he said, and cited state code sections used in the calculation.
He walked the council through four revenue components the city uses to plan: base property taxes (historically the highest amount collected during the prior three years), the allowable 3% increase, new-construction revenue, and annexation receipts. He said the city maximized the 3% allowable increase for fiscal 2025, yielding about $1.4 million, and reported the county approved a $50.7 million collection request on Meridian’s behalf.
Todd demonstrated how the county’s valuation has a larger effect on individual levy rates than local percentage decisions: with Meridian’s assessed taxable value reported near $24.9 billion, the county-calculated levy rate for the coming year comes to about 0.00203, a year-over-year reduction, he said. That decline in the levy rate can offset local levy changes for many taxpayers, he explained.
Council members pressed whether taking the 3% increase preserves services in the face of inflation and payroll growth. Todd replied that, "there's no way 3% covers our cost of doing business anymore," noting that payroll for public safety alone is larger than the city’s stated property-tax figure. He said that recent years have moved the city into a phase where some ongoing costs exceed the revenue generated solely by the 3% lever.
On new-construction revenue, he summarized how the county’s assessment of newly added property creates new ongoing dollars that the city typically uses to fund additional personnel and service needs associated with growth. He also flagged the role of state-mandated exemptions, which reduced Meridian’s net collectible amount: "Your $500,000 got approved. They just reduced that number because they have exemptions they do every single year," Todd said.
Todd closed by previewing the next quarterly update, which will focus on budget-to-actual performance for FY24, changes to fund balance, and the city’s top five revenue and expense sources. Several council members asked for follow-up materials breaking down cost-recovery assumptions and longer-term projections for new-construction revenues and maintenance obligations.
The council did not take any immediate formal action on tax levies during the Nov. 19 meeting; Todd’s presentation was a written-and-oral update to inform the FY25 budget posture and forthcoming quarterly reporting.
