65B - MID-YEAR BUDGET UPDATE - Laserfiche WebLink

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Fiscal Year 2018-19 Mid -Year Budget Update February 5, 2019 Page 3 Sales Tax The Sales Tax revenue estimate has been increased by $3.4 million and the budget will be adjusted accordingly. The updated estimate is largely a result of receiving $1.9 million of previously unprocessed tax returns related to the prior fiscal year, as well as an increasing trend In general retail sales, transportation sales, and construction and business sales. NEW Sales Tax — Measure X (1.5916 transactions and use tax) The City's Sales Tax consultant previously provided a revenue estimate of $60 million for annual revenue derived from Measure X. Staff has included $15 million in the adjusted budget for April through June 2019, as the new tax becomes effective April 1st. Staff will provide revenue estimate updates upon receipts of the first revenues expected to occur during June 2019. Utility Users Tax The City's Utility User Tax continues to fall short of budgeted projections specifically within the telecommunication, due to lower than anticipated sales and/or usage related to cellular and landline phones. As such, staff is adjusting the estimated revenue by $2.3 million to offset impact of reduced fees received from telecommunications sector. Business License Tax Business License tax revenue continues to remain steady and is slightly above second quarter projections. The majority of Business License collection occurs in March and April. Based upon activity to date, staff has increased the revenue estimate by $0.8 million for the current year. Hotel. Visitor's Tax Hotel Visitor's Tax (HVT) collections are projected to meet or slightly exceed last year's amount of $9.2 million. The City's hotels continue to experience increased occupancy rates. As a result, HVT's collections through December 31, 2018, approximately $4.0 million, mirror the first six months of the previous fiscal year (July 2017 -December 2017). Thus, the forecast for FY 2018- 19 will be increased by $0.8 million (from original budget of $8.5 million to $9.3 million). The forecast reflects the City's new hotel, Holiday Inn, which opened In September 2018 and recent closing of another operated hotel. Another new hotel is still in the preliminary stages and is more likely to impact FY 19-20. Santa Ana Residual Revenue from the Redevelopment Property Tax Trust Fund (update) Because of the refinancing of the former Redevelopment Agency Tax Bonds (2018 Refinancing), the City's is projected to receive up to $3.5 million in increased residual revenue over the next three fiscal years. This is the City's share of the revenue that was formerly tax increment, and is now distributed to taxing entities from the Redevelopment Property Tax Trust Fund. Less of the tax increment revenue is needed to pay for bond debt service; and therefore, more is available to distribute to the taxing entities. Staff has received a preliminary estimate that $1.0 million will likely be received during the next twelve months, but we do not yet have enough information to know if it will impact FY 18-19 or FY19-20. Staff is currently confirming the information with County of Orange. Upon receipt of more information, a report will be provided to City Council for L•