Revenues. Property Tax

Transcription

1 Property Tax Property Tax has historically been the largest revenue source for the City s General Fund. During fiscal year the local real estate market appears to rebound from the recession resulting in a projected increase in property tax receipts for Fiscal Year Also included in the property tax projections are Affected Taxing Entity (ATE) payments from the former Redevelopment Agency (RDA). As a result of the dissolution of the RDA, ATE payments are received by the City as part of the Recognized Obligations Payment Schedule (ROPS) process. The ATE payments are the City's proportionate share of funds remaining in the Redevelopment Property Tax Trust Fund (RPTTF) after ROPS requirements have been met. The City has taken a conservative approach and assumed minor increases in property tax revenues during the current budget cycle. Property Tax Revenue vs. Assessed Valuations Property Tax Revenue Assessed Valuations $30,000,000 $16,000,000,000 $25,000,000 $14,000,000,000 $12,000,000,000 $20,000,000 $10,000,000,000 $15,000,000 $8,000,000,000 $10,000,000 $6,000,000,000 $4,000,000,000 $5,000,000 $2,000,000,

2 Educational Revenue Augmentation Fund (ERAF) Loss History ERAF is the mechanism by which the State of California uses local entity property tax revenue to meet the State s statutory requirement to fund education. The City is anticipating additional ERAF losses of close to $7.6 million in each of the fiscal years covered in the current Financial Plan. The cumulative loss of property tax revenue to the City of Livermore since the inception of ERAF in fiscal year is a staggering $124 million with additional ERAF losses of the former Redevelopment Agency totaling $2.8 million. City of Livermore ERAF Takeaways by the State Combined City ERAF Losses $10,000,000 $7,500,000 $5,000,000 $2,500,

3 Sales Tax Sales Tax revenue is anticipated to become the General Fund s largest individual revenue source in FY Sales tax revenue is volatile and fluctuates with economic trends. The City receives a 1% share of all taxable sales generated within its borders. Sales taxes are imposed on the total retail price of tangible personal property and are authorized under the Constitution, Article XIII 29, Cal. 7200, The State Board of California Equalization, under the 1955 Bradley-Burns Uniform Local Sales and Use Tax Law, administers sales taxes. On March 2, 2004 California Voters approved Prop 57, the California Economic Recovery Bond Act. The measure authorized $15 billion in state bonds, which would be repaid without an increase in taxes. This was implemented via the "Triple Flip" of sales taxes and reduced the City's sales tax rate by 1/4 of one cent as of July 1, In turn, these monies would be returned, or "backfilled", to the City by Alameda County through the Sales and Use Tax Compensation Fund (SUTCF). A consequence of this change is that 1/4 of the sales taxes, remitted to the City, occurs in a different time frame from the 3/4 base amount because the SUTCF payment is estimated a year in advance by the State Department of Finance (DOF). When the State Board of Equalization (SBOE) reports the actual sales tax revenue generated, a "trueup" payment (or reduction) occurs. The City anticipates strong future growth in sales tax revenue due the stabilizing economy coupled with the growing sales tax base anticipated to occur with additional phases of the El Charro Specific Plan development. Sales and Use Tax and SalesTax Comp Fund Sales and Use Tax Sales Tax Comp Fund $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,

4 Garbage Franchise Fee Waste Management, also known as the Livermore Dublin Disposal Company, was the City s service provider through June The City received 10% of gross revenues. In July 1, 2010 the City entered into a new franchise agreement with Livermore Sanitation Inc. The new agreement increased franchise fees from 10% to 11% of gross revenue in FY In addition, since July 1 st, 2010, rate increases have resulted in an increase in Garbage Franchise Fee revenues. Garbage Franchise Revenue $2,500,000 $2,000,000 $1,500,000 $500,

5 Cable Television Franchise Fee Prior to January 2007, the City of Livermore was the local franchising authority for cable television. With the passage of the Digital Infrastructure and Video Competition act of 2006 (DIVCA), the California Public Utilities Commission became the sole cable television franchising authority. AT&T and Comcast both now hold franchise agreements for City of Livermore cable television services with the state. DIVCA still requires both franchise holders to pay the City 5% of their gross revenues on a quarterly basis from providing services in the City. FY contains a one-time adjustment of $403,170 to reflect GASB 33 revenues for the January June 2001 period. FY also contains an audit finding of $15,386 resulting for the change of ownership change of AT&T to Comcast. $1,400,000 $1,200,000 $800,000 $600,000 $400,000 $200,000 Cable Franchise Revenue 202

6 Electric and Gas Franchise Taxes For general law cities, the Broughton Act restricts city collection of franchise payments to 2% of gross annual receipts. The Franchise Act of 1937 has a 2% cap, but includes a minimum fee of.5% for electric franchises or 1 % for gas franchises operating within the city limits. Pacific Gas and Electric (PG&E) is the City of Livermore service provider. These Franchise Taxes remain a stable revenue source for the City. Electric and Gas Franchise Electric Gas $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,

7 Business License Tax The recent downturn in the economy has had a negative impact on business license tax revenue the past few years. Additionally, fiscal year is being impacted by the loss of one of the City s traditionally larger business license tax generators which have moved out of the City. The City is anticipating future increases in business license tax in the coming years due to the expansion of the Livermore Premium. Business License Revenue vs. Number of Licenses Business License Revenue Number of Licenses $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $500,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,

8 Tax on Residential Construction (TORC) / Industrial Construction (TOIC) In 1982, the TORC tax was imposed under LMC upon the construction of residential units in the city. The tax rate is 1.75% of the cost of construction and not less than $650/unit. In 1995 a refund of four prior years of revenues was made in the amount of $1,428,887 in settlement of a lawsuit by developers based on violations of the special tax provisions of the California Constitution. In 1984, the TOIC tax was imposed under LMC upon the construction of industrial units in the city. The tax rate is 1.75% of the cost of construction. Development of residential and industrial properties has been severely impacted by the economy resulting in much lower revenue levels since the height of the real estate market. Although development has begun to increase during the past fiscal year, the City does not anticipate a return to historical levels. 205

9 Transient Occupancy Tax (TOT) This tax is imposed on persons staying 30 days or less in a lodging facility. The tax is authorized under Revenue and Taxation Code The tax rate in Livermore is 8% and was changed from 6.5% on October 1, No new rooms have been added since the fiscal year. The economic recovery coupled with special events hosted within the Tri-Valley had a positive impact on this revenue source in which should continue in future years, but a slower pace. Hotel/Motel Tax vs. Number of Rooms Hotel/Motel Number of Rooms $2,500,000 1,400 $2,000,000 1,200 1,000 $1,500, $500,

10 Documentary Transfer Tax The Documentary Transfer Tax is imposed on any real estate transfer of ownership and is authorized under the Revenue and Taxation Code These taxes are collected by Alameda County at the rate of $1.10 per $1000 of valuation. As a general law city, Livermore receives one-half of the amounts collected and the County keeps the other half. The large increase in FY was due to the California housing boom occurring at that time and also includes the effects of increased local building, as well as increased sales prices of existing properties. This revenue source has stabilized during the past three years and is anticipated to remain relatively flat at the current level for the remainder of this budget cycle. Documentary Transfer Tax Revenue $1,200,000 $800,000 $600,000 $400,000 $200,

11 Motor Vehicle License Fee The State Revenue and Taxation code imposes an annual license fee of 2% of the market value of motor vehicles in lieu of a local motor vehicle property tax. Due to the State budget act of 2004, the timing of the payments and the method of calculation has changed dramatically. The majority of the Motor Vehicle In-Lieu Tax revenue was replaced by Property Tax In-Lieu of Vehicle License Fee revenue, although for reporting purposes, it is still considered Motor Vehicle In-Lieu Tax revenue. Most recently, in an effort to balance their budget, the State of California passed SB89 which, effective July 1, 2011, eliminates the allocation of the non-property Tax In-Lieu portion of Vehicle License Fee revenue to Cities. This results in a reduction of revenue for the City of approximately $450,000 per year. Vehicle License Fee (VLF) and VLF Comp Fund VLF VLF Comp Fund $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,

12 Water Revenue Water services for the entire City of Livermore are provided by two water retailers. The City of Livermore Municipal Water serves approximately one-third of the City and the California Water Service Company serves the remainder of the City. The City of Livermore purchases water from the Zone 7 Water Agency and then distributes the water to the customers in the City of Livermore Municipal Water service area. The City has a combined residential and commercial customer base of just under 10,000 water accounts. Each water bill consists of a flat rate meter service charge based on the size of meter that is located at the property, a pass-through wholesale water charge, and a consumption charge for water used at the property. Residential customers are billed for consumption based on three tiers, while the commercial accounts are billed for consumption based on two tiers. The City of Livermore also provides recycled water that can be used for irrigation. Recycled water is billed based on 80% of the tier 2 residential rate as set by Council policy. Recycled water sales are expected to increase in the coming years as Pleasanton now purchases recycled water from the City. In FY13-14, the governor of California declared a state-wide drought. Drought measures are in place by the City of Livermore including increasing water rates to stage 3 rates for the length of the drought. Municipal Water Revenue vs. Number of Active Accounts Municipal Water Revenue Number of Active Accounts $14,000,000 12,000 $12,000,000 10,000 $10,000,000 8,000 $8,000,000 6,000 $6,000,000 $4,000,000 4,000 $2,000,000 2,

13 Sewer Sewer revenues are generated for the collection, treatment, and disposal of wastewater generated by the residents and businesses in the City of Livermore. Residential service charges are collected as part of the Alameda County Property Tax Roll. Residential sewer charges are set as a flat rate. Single family homes pay $ per year as part of the property tax bill. This charge equates to $40.75 per month. Condominium and Multi-Family residential rates are $27.60 per month and $22.65 per month, respectively. Commercial accounts are charged for sewer service based on the amount of water that flows through their water meter. Commercial service charge rates vary from $4.00 per 100 cubic feet of water to $9.00 per 100 cubic feet of water based on user classification. The City also collects fees from customers needing special permits for sewer discharge and treatment. Sewer rates have not changed since July 1, Historical Sewer Revenue Sewer Revenue $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,

14 Airport Airport revenues consist of mainly rents of hangar space and outside tie-down space for customer aircraft. There are 393 total hangar units located at the Airport along with another 249 outside spaces available for aircraft tie-downs. All the available hangars are occupied and there is a waiting list to rent the hangars. There are over 500 aircraft based at the Livermore Municipal Airport. Some rent is received from non-aviation businesses located on Airport property. As part of the El Charro Outlet project, the Federal Aviation Administration reviewed Airport land use which resulted in higher rents being recognized beginning in Fuel sales account for a large portion of the Airport revenue as well. However fuel sales are expected to drop in FY 14/15 when the full-service Fixed Base Operator (Five Rivers Aviation) to take over fuel sales in about mid-year and then fuel sales will be entirely out of our budget by FY15/16. As the Fixed Base Operator takes over the responsibility of fuel sales, fuel sales revenue and fuel related expenditures will both be reduced leaving the Airport with a positive cash flow. $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $500,000 Historical Airport Revenue Rent $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $500,000 Historical Airport Revenue Fuel Sales 211