HomeMy WebLinkAboutAgenda Report - February 17, 2004 B-01 SMAGENDA ITEM 501
CITY OF LODI
%IV COUNCIL COMMUNICATION
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AGENDA TITLE: Continued Discussion Regarding Phase III Budget Adjustmmnt
Options, Including Increasing the Transient Occupancy Tax (TOT),
Increasing Sales Tax by Y40, Reviewing In -Lieu of Tax Transfers to
General Fund and Provide Direction to Staff Regarding Such Matters
MEETING DATE: February 17, 2004
PREPARED BY: Deputy City Manager
RECOMMENDED ACTION: That Council continue discussions regarding Phase Ill Budget
Adjustment Options, including increasing the transient
occupancy tax (TOT), increasing sales tax by'/ 0,
reviewing In -Lieu of Tax transfers to General Fund and provide direction to staff regarding
such matters.
BACKGROUND INFORMATION:As with any budget review, it is incumbent to look not only at
reductions but to also consider possible revenue sources. As
Council will recall, the City's Transient Occupancy Tax
(TOT) was 9% until it went to the voters for a vote to adjust the rate to 10%. It was
subsequently rejected by the voters and it reverted to its current level of 6% due to
Proposition 218 requirements. Should a TOT increase be placed on the November
ballot to try once again to increase the level to 10%, it could increase revenues to the City
by approximately $266,500.
The City currently relies on sales tax revenue as one of its major revenue sources for the
General Fund. It comprises approximately 27% of the overall General Fund revenue and is
projected at approximately $9,105,000 for Fiscal Year 2004-05. If the sales tax in Lodi were to
increase by a '/ cent, then the additional revenue would be approximately $1,800,000 for the
General Fund.
As referenced on page H-5 in the City's 2003-05 Financial Plan and Budget, "The City imposes
an `in -lieu franchise tax' on City -owned utilities as provided in Section 6001 and 6201 of the
Public Utilities Code. This tax is administered by the City and applied to City -owned utilities
similar to privately owned utilities for the privilege of doing business in the City. Funds are
transferred from the Enterprise Funds to the City General Fund to the extent they exceed the
cost of services provided by general services. These taxes are levied based on prior years'
revenue ..."
APPROVED:
H. Dixon Flynn, City anager
Following is a short history of the In -Lieu of Tax transfers to the General Fund:
FUND:
FY95-96
96-97 97-99 99-01
01-03 03-05
Electric
Water
12%
12%
$6,059,180
$681,940
$504,932
$56,828
Electric
12%
12% 12% 12%
12% 12%
Water
20%
17% 17% 17%
17% 12%
Wastewater 20%
20% 20% 20% 20% 12%
To demonstrate the importance of the In -Lieu of Tax transfers to the General Fund, the Fiscal
Year 2004-2005 budgeted amounts have been listed below along with the impact of a 1%
decrease in the transfer:
Fund:
Percents -
Amount:
11% Decrease Amount:
Electric
Water
12%
12%
$6,059,180
$681,940
$504,932
$56,828
Wastewater 12%
$794,550 $66,213
The In -Lieu of Tax information noted above is provided to Council should Council wish to
discuss the transfers to the General Fund.
FUNDING: Not applicable.
444
Ja t S. Keeter
Deputy City Manager
JSK/sl
off
IncreaseTOT • 11 •' 1'
Sales Tax Increase
$1980000
'A0 x g`
Y
In -Lieu of Tax Transfer
=
1%
• electric
$5049932
f
Currently at 12%
• Water
$56,828
6 t
$66,213
P
k`
• Wastewater