RES 00071A - Laserfiche WebLink

These significant revenue increases are the product of the increasing market rate for existing resale housing, continued housing construction in Ruby 11111, and new and resale commercial developments. As part of the Midyear 1999 -00 update, staff lowered sales tax projections for the year by $3 million, to $17.4 million. The resulting revenue projection is $2.5 million less than the amount received in the previous year (1998 -99), or about a 12.5% reduction. Similarly, for 2000 -01, the projection is being lowered by $2.5 million, to $18.5 million. In total, staff now expects $5.5 million less over the two budget years than was projected only a year ago. Without the current large increase in property taxes to temporarily offset this loss, the budget would have needed major reworking. If the down turn continues in the long term, there likely won't always be large increases in property taxes to offset the losses. The significant volatility we are now seeing in sales tax, even during the current economic boom, is not particularly surprising. The City is very susceptible to State allocation adjustments and the volatility of business to business transactions, which account for a third of our sales tax revenue. Some businesses record strong revenues one year, and little the next year. Corporate mergers often result in the sales headquarters being relocated somewhere else, even if there is some presence still in Pleasanton. In addition, growing competition from neighboring retail developments will continue to affect this revenue source, as will online shopping. Ultimate decisions to tax or not tax Internet sales could have a big impact on 2. Discussion of Major Revisions to General Fund Revenues Property Taxes According to early estimates by Alameda County, Pleasanton's secured property taxes will grow about 7% next year. However, for the last few years the County's preliminary estimates have been low, and staff has identified a number of commercial improvements which are not yet in the County's estimates. Therefore, staff projects an increase of 12% over fiscal year 1999 -00. Because fiscal year 1999-00 projections were also increased by more than 12% since the budget was first adopted a year ago, the base for calculating the new 2000 -01 revenue projections needs to be adjusted accordingly, thereby compounding the increases for fiscal year 2000 -01. Therefore, the projection for secured, unsecured, delinquent, and supplemental assessment property taxes combined is being revised from $19.3 million to almost $25 million, based on revised 1999 -00 projections, the County's initial projections for 2000- 01, and staff's best estimate of additional adjustments. Sales Taxes