65A - RECIEVE AND FILE FY 2019-20 GENERAL FUND MIDYEAR

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Receive and file Fiscal Year 2019-20 General Fund Mid -Year Update February 18, 2020 Page 3 Sales Tax (Bradley Burns 1%): The second quarter revenues of $16.8 million represents sales tax received for the months of July through October. Sales Tax disbursements are received monthly, two months in arrears, and may include prior period adjustments or true -ups. Based on the sales tax consultant's current projections, staff increased the revenue estimate by $640,100. Sales Tax (Measure X 1.5%): The second quarter revenue of $21.9 million represents sales tax received for the months of July through October including $1.6 million related to the prior fiscal year, but not received until after August 31, 2019. Similar to the Bradley Burns Sales Tax, disbursements are received monthly, two months in arrears and may include prior period adjustments or true -ups. Based on the sales tax consultant's current projections, staff increased the revenue estimate by $1.1 million. It should be noted the City's sales tax consultant is currently projecting future annual increases of approximately 2.6% for both categories of sales tax revenue. However, the consultant does have recession scenarios that include a 4.3% reduction of revenue in the first year of a recession (roughly $5 million), and another 1.9% reduction in the second year of recession (another $2 million). In addition to the General Fund operating reserve of 16.67% of annual revenue, the City has a reserve for economic uncertainty equivalent to 1 % of annual revenue or approximately $3.2 million. During the next budget process, the City Council may want to consider using the excess General Fund balance to increase the reserve for economic uncertainty to at least 2% of annual revenue or $6.4 million. Property Tax and Property Tax in lieu of VLF: Total Property Tax collected for the second quarter is $20.2 million. This does not include the first payment (50%) of Property Tax in lieu of VLF which was received in January of $17.3 million. Based on current receipts and updated projections from the property tax consultant, staff's estimate has increased by $1.2 million. The updated revenue estimate represents a 3.6% increase from prior year actuals. Utility Users' Tax: Utility Users Tax remains steady overall with an increases to both electric and water utilities while the gas utility remains stable. Telecommunications continues to decline and is projected to decrease this fiscal year. Overall, staff anticipates total UUT revenue will meet budget projections. Santa Ana Residual Property Tax Allocation: As part of the dissolution of redevelopment, the City is one of the taxing entities receiving a residual allocation from the Redevelopment Property Tax Trust Fund (RPTTF). Due to savings from refinancing the tax allocation bonds in 2018 and the increase in assessed property values, this revenue source increased significantly in FY 2018- 19. For FY 2019-20, a recent payment of $6 million was received in January and the next payment is in May. With the updated information, staff increased this revenue estimate by $1.8 million. It should be noted the City's share of savings from the 2018 bond refinancing was structured to be received over a three-year period (FY 2018-19, FY 2019-20, and FY 2020-21). Beginning FY 2021- 22, this revenue source will decrease by approximately $1 million. 65A-3