Recommended FY 2022-2024 Operating Budget and CIP

Major Revenue Assumptions (continued)

Sales Tax The sales tax revenue for the FY 22-23 budget is expected to remain flat at $12.5 million compared to FY 21-22 level as most, if not all, pent-up demand has been resolved, fuel prices stabilize, and continued supply chain and raw material interruptions could disrupt some sales, especially with the auto sector which makes up about 23% of the City’s sales tax revenue. Sales tax revenue for FY 23-24 is estimated to come in at $12.7 million.

Street Fund (202) The Street Fund is a special revenue fund used to account for the receipt and disbursement of State and Federal gas tax and grant monies, and other monies that are to be used for the maintenance, repair, and design of streets. State gas tax funds are distributed to cities based on population from gas taxes collected at the point of sale. The use of gas tax funds is restricted to street expenditures by State and Federal laws. Revenues for street maintenance are realized in this fund and are then transferred to the General Fund. In FY 22-23 and FY 23-24, gas tax revenues are expected to grow moderately to approximately $0.9 million and about $1.0 million, respectively. The five year forecast assumes a growth rate of 5% annually in the out-years. Development Services Fund (206) The COVID-19 global pandemic has had an adverse impact to development services related revenue. However, the impact was mostly due to the restrictions imposed by the public safety health order that was subsequently lifted. Development activities resumed in earnest to meet the growing demand. However, with costs continuing to outgrow the revenue, staff engaged a consultant to conduct an updated fee study of Planning and Land Development Engineering to update the fees which were last

Transient Occupancy Tax As for City’s Transient Occupancy Tax (TOT), or hotel tax, based on the current occupancy estimates and the projection of occupancy and daily rates to remain below pre-pandemic levels for months to come, the City’s hotel tax collection will remain low compared to pre pandemic levels. It is estimated that current year hotel tax revenue will come in at a reduced budget amount of $2.2 million. The estimates for FY 22-23 and FY 23-24 are $2.6 million and $2.8 million, respectively. The cumulative impact for the four fiscal years is approximately $4.8 million. Similar to recreation services revenue, staff does not expect TOT to return to the pre-pandemic levels until FY 24-25.

The five-year forecast period assumes steady growth of 3 percent in future years.

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