RES 96032 - Laserfiche WebLink

Sales Tax is a very difficult revenue to project because information is so late in coming from the State, and because so many adjustments (often material) are made as a result of cities disputing sales tax allocations. In addition, much of the City's sales tax comes from sources other than retail establishments, such as business to business sales. These types of sales are very volatile, and much harder to project than sales at the mall and other store-front retailers. Appendix I (page 59) contains a sales tax update for the second quarter of the fiscal year. Staff will analyze the sales tax data in more depth with the next quarterly financial report, and recommend further changes, if necessary. Hotel/Motel Tax The City assesses a transient occupancy tax of 8% on all dwellings occupied less than 30 days. There are 1,300 hotel/motel rooms in the City. Revenue for the first two quarters is $1,000,000 compared to $900,000 in the same time period of the preceding year (or about a 11.5% increase). Staffs original projection for 1995-96 was $1.9 million, or 3.5% more than in 1994-95. Therefore, staff is recommending that the revenue projections be increased by $100,000 to $2 million. However, this revenue should be reviewed again in the third quarter, after the January-March receipts are known. The increase is likely the result of increased room rates as the hotel occupancy during the week has increased. Business License Tax Staff has just completed the renewal processing for business licenses this year, and no change in the original projection of $1 .3 million is being made at this time. This revenue also will be reviewed in the third quarter after the delinquency processing has occurred. Interest Income Interest income is money derived from investing the General Fund's idle cash. Staff was able to take advantage of a spike in two year treasury rates last winter, in order to lock in rates which are significantly higher than current rates. In addition, the 1994-95 ending fund balance is higher than originally projected, resulting in more cash being invested. Therefore, revenues are exceeding the original projections made in the spring of 1995. Staff is now projecting an additional $200,000 in interest income this year, bringing the total projection to $820,000. As the City clears out the Recessionary Reserve, less money will be invested, and therefore interest earnings are expected to decline. State Auto In-Lieu Auto in-lieu fees are a subvention received from the State in lieu of property taxes on motor vehicles. The subvention amount is determined by population. Based on the first six months actual receipts, staff is recommending that the revenue projection be increased by $176,000 to $2 million. This is in contrast to the last 2 or 3 years when actual receipts fell short of original projections. SR96:120 3