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Provide Direction for FY21-22 Budget <br />March 16, 2021 <br />Page 4 <br />Adoption of the proposed Policy would result in: <br />1. A slight increase in the minimum General Fund Reserve requirement, from 17.67% <br />(16.67% Operating + 1 % Economic Uncertainty) to 18% of annual recurring <br />revenue; and <br />2. The proposed Budget and Reserve Policy replacing the 2017 Budget and Financial <br />Policies. <br />Cost -Based Fees <br />The City charges fees to recover its cost of providing service to an individual (e.g. building <br />permit). Each year staff reviews fees to ensure they are compliant with state law, and <br />proposes changes as needed. As part of the review process, staff typically proposes an <br />overall increase by the Consumer Price Index (CPI) in an attempt to keep pace with the <br />increasing cost of the City's workforce. The CPI increase for FY 2021-22 miscellaneous <br />fees would be 1.67%, estimated to generate up to $200,000 of revenue. <br />Over the last 8 years, the CPI increase has averaged 3.17%. The last low CPI was 1.55% <br />in 2011, when the region was still feeling the effects of the Great Recession. Considering <br />the impact the pandemic has had on household income and business activity in the City, <br />the City Council may elect to refrain from a fee increase for FY 2021-22. <br />Estimated Impacts to FY 2021-22 General Fund Revenue <br />The following provides an early snapshot of expected FY 2021-22 revenue increases. <br />Expected <br />Change to FY <br />2021-22 budget <br />Comments <br />One -Time Items <br />$(500,000) <br />Remove one-time receipts from FY 2020- <br />21 estimated revenue, to arrive at a <br />recurring revenue baseline <br />Sales Tax Bradley <br />$2,378,900 <br />Based on latest "conservative" estimate <br />Burns <br />from sales tax consultant <br />Sales Tax Measure X <br />$1,762,400 <br />Based on latest "conservative" estimate <br />from sales tax consultant <br />Property Tax <br />$800,000 <br />Based on 1.036% CPI increase to <br />property assessments released by state <br />Hotel Visitors Tax <br />$2,200,000 <br />Based on statewide partial recovery <br />expected by League of California Cities <br />Principal Fiscal Policy Advisor <br />Business Tax <br />$1,800,000 <br />Based on a partial recovery of pandemic <br />decrease <br />Jail Revenue <br />$621,000 <br />Assumes third module opens by end of <br />2021, and we collect revenue for an <br />additional 30 inmates at the rate of $115 <br />per day for 180 days in the second half of <br />FY 2021-22 <br />