RES 03081 - Laserfiche WebLink

Hotel taxes also fell sharply in 2001-02, .from a high of $4 million down to $3 million, and have yet to show any signs of recovery. Staff is projecting a gradual 5% growth each year, to $3.15 million in 2003-04 and to $3.3 million in 2004-05. 5.00 4.00 § 3.00 E 2,00 .c_ 1.00 Hotel Tax Revenue 0.00 99-00 00-01 01-02 02-03 03-04 04-05 As of January 1999, the State lowered the Vehicle License Fees (VLF), but backfilled the revenue to local agencies. This "backfill" (about 67% of the revenue) is being done in the form of a continuous appropriation from the State General Fund, which means it does not need annual reenactment by the Legislature, but the Legislature could take an affirmative action to terminate it. Staff is assuming that the backfill will remain in place during the two-year budget period. However, if the State is unable to resolve its budget problems, cities could be at risk for losing revenue, if not in the coming year, possibly in future years. As was mentioned before, the budget provides for a Temporary Recession Reserve of $2.4 million to help offset impacts from the economy and State Budget. The $2.4 million is about the equivalent of one year of VLF backfill. If the State stops funding the VLF, this extra reserve will then give the City time to react to any permanent budget change. Additionally, the City's share of the VLF is impacted by the entire State economy since the City receives an allocation of the State pool. Vehicle license revenue has been especially strong this year with dealer incentives and 0% financing, but staff is projecting it will fall slightly in 2003-04 and then remain flat in the following year. Vehicle License Fees 3.80 3.4o3'6° .~ 3.20 ._c 3.00 2.80 - 2.60 99-00 00-01 014)2 02-03 03-04 04-05 X