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FY 2010 -11 Mid -year review and budget adjustments February 22, 2011 Property Taxes ( +S100, 000) Property Taxes revenues declined last fiscal year — a direct result of the economy and real estate downturn. The FY 2010 -11 Adopted Budget reflects a conservative estimate based on this decline. Staff received a statement from the Alameda County Auditor - Controller dated February 7, 2011 that provides current projections for property tax receipts based on revenues received to- date by the County for the countywide 1 % tax levy. Based on this new information, the year -end projection for property tax revenues is relatively flat over the original projections. Staff is projecting a modest $100,000 increase based on anticipated correction and delinquent payments (based on prior year trends). Sales Tax ( +$1.66M) Sales Taxes represents San Leandro's largest General Fund revenue source. The State significantly reduced the City's sales tax Triple Flip backfill amount last year to reconcile overpayments in prior years. The current year budget conservatively projected these revenues at the lower FY 2009 -10 level. Recent data from the State Board of Equalization regarding a true - up of the City's Triple Flip backfill revenue adjusts this portion of the sales tax revenue back to the normal base. This results in an increase in FY 2010 -11 of $1.66 million (a one -time adjustment of $660,000 and a recurring base increase of about $1 million). Therefore, staff has adjusted Sales Tax projections for the current year from $17.85 million to $19.5 million (9.3 %). While new sales tax revenues from the passage of Measure Z are anticipated for next fiscal year (at about $3.8 million in new annual revenue), revenues related to this sales tax increase are unknown for this fiscal year. The new .25 cent transaction and use tax rate commences on April 1. 2011, and revenues will not actually be received by the City until after August 2011. Based on this timing, staff is not sure if we can accrue these revenues to FY 2010 -11 and therefore, staff has not included any additional revenue in the revised projections. Utility Users Tax (UUT) ( +$163, 000), 911 Tax & Other Taxes ( +$165, 000) UUT revenues are comprised of taxes on energy and cable /telecom usage. San Leandro experienced a decline in these revenues last year and the Adopted Budget reflects a conservative revenue estimate. Staff is increasing revenues for FY 2010 -11 by about $ 163,000 UUT revenue over the adopted revenue projections. Based on current trends, staff is also projecting an increase in annual revenue from the 911 Tax of $100,000 and an increase of $65,000 in several other small tax revenues. Other Revenues ( -$665, 000) We are reducing revenue estimates for several other revenue sources. o The category of "Use of Money & Property" includes interest income, which staff is reducing by $161,000 due to the current earnings rate. o Revenue from Other Agencies is reduced by $96,000 to correct budgeted federal grant revenue that the City will not receive this fiscal year. The State modified the structure of city sales tax revenues, effective July 1, 2004, when they enacted legislation from a voter - approved deficit financing bond measure. This measure included a reduction of the local Bradley - Burns sales tar .share from I% to . 75 %, routing the .25% to other State funding needs. The .25% was fully replaced with property tax revenues (sales tax back -fill) to make cities whole. This shuffle of revenues is commonly referred to as the "Triple Flip." 3