HomeMy WebLinkAboutFinancial predictions.draft 2[DRAFT 8/13/18]
Largest Seven Revenue
Sources:
2015-16
Actual
2016-17
Actual
2017-18
Projected
2018-19
Budget
2019-20
Forecast
2020-21
Forecast
2021-22
Forecast
2022-23
Forecast Goldberg's Comments & Forecasts
Property Tax 3.4% 5.3% 4.3% 3.4% 3.0% 3.0% 2.0% 2.0%Property taxes should continue to rise with home prices. Forecast: To be conservative, 3% near term, 2% thereafter
Sales and Use Tax -0.4% 3.6% 0.4% 0.0% 1.5% 1.0% 1.0% 1.0%
In June 2018, the City's Sale Tax consultant, HdL, projected increased local sales/use tax revenue of 1.9% in FY 18-
19 and 1.8% in FY 19-20 (per Public Record Act request 18-228). Forecast: 1.5% next year, 1% thereafter given
likelihood of inflation running higher.
Utility Users' Tax -4.3% -6.0% -0.1% 0.0% 0.0% 0.0% 0.0% 0.0% Flat is best we can expect due to technology changes. Forecast: 0%
Transit Occupancy Tax 8.5% 2.3% -1.1% 0.0% 2.0% 2.0% 1.0% 1.0%
The Budget projects a drop of 1.1% in FY 17-18 with no change in FY in 18-19. However, according to an April 2018
report in the OC Business Journal, OC room rates are up 5.8% year-over-year with occupancy up 2.6%. The current
budget projections are not consistent with the strength of the tourism industry. Forecast: 2% near term, thereafter,
1%
Licenses and Permits -8.4% 3.2% 9.2% 3.0% 3.0% 3.0% 2.0% 2.0%
The Council can raise these by amount of inflation or the increased cost of overhead on an annual basis. However,
the cost of business licenses, which represent a third of the revenue in this category, has not been raised since July
2016. Staff currently plans to do a cost allocation study to lay the foundation for higher cost recovery of licenses,
permits, and other fees for services. Thus, this source of revenue should keep pace, if not outpace, inflation in the
coming years. Forecast: 3% near term, 2% thereafter.
Charges for Services -6.8% 4.8% 1.9% 6.3% 1.5% 1.5% 1.0% 1.0%
See comments above for "Licenses and Permits." Note that 42% of this revenue category is for Refuse Services, and
annual increases are automatically determined by the increased refuse contract costs to City. Thus, Council-
directed increases in Charges for Services will impact only 58% of total revenue. Forecast: Increases at half the rate
of "Licenses and Permits," or 1.5% near term, thereafter, 1%.
Fines and Forfeitures -0.4% -0.7% -2.0% 27.3% 0.0% 0.0% 0.0% 0.0%
Large projected increase in FY 18-19 is due to anticipated increased revenue from parking citations. This is due to
implementation of the new enforcement technology. Given the otherwise flat trend in this category, future
increases are not clear. Additionally, the "return on investment" from the parking technology may not meet
expectations. Forecast: 0%
*Per FY 18-19 Budget, page 34
Change from Prior Fiscal Year*
Step #1: Enter Projected Annual Percent Increases for Selected Major General Fund Revenues Sources
Enter Your Projected Annual Increase for
the Next Four Fiscal Years
[DRAFT 8/13/18]
Budgeted
Amount
2019-20
Forecast
2020-21
Forecast
2021-22
Forecast
2022-23
Forecast Goldberg's Comments & Forecasts
Salary & Other Pay for
Full-Time Employees $8,496,600 3.0% 3.0% 2.0% 2.0%
O.C.F.A.$5,452,151 5.9% 4.5% 4.5% 4.5% The projected annual increases are from a letter sent to the City Manager on 5/31/18.
Pensions $2,944,200 15.6% 12.8% 10.0% 8.0%
General Liability,
Property, and Work
Comp Insurance
$1,812,100 10.0% 10.0% 7.5% 5.0%
Pension Obligation
Bond $1,199,200 --- --- --- ---
Employee Medical
Insurance $984,000 1.0% 2.5% 2.5% 2.5%
Retiree Medical
Insurance $449,700 1.0% 2.0% 3.0% 3.0%
Above Selected
Expenditures $21,337,951
Costs increases are caused by increases to the size of the City's workforce and annual cost-of-living adjustments (COLA) due to inflation. The current
police contracts provide a 2-3% COLA on July 2019. The July 2019 COLA for the civilian contracts will be negotiated in the spring, but it is highly likely
that it will match what has been promised to police. COLA's in 2020 and beyond for both civilians and police are subject to labor negotiations. Local
inflation was 3.9% from July 2017 to July 2018. Forecast: 3% short term, 2% longer term.
See "Pensions" tab for calculation of annual percent increases. Pensions costs are expected to rise due to factors mostly out of the City's control. The
only factors that the City can control are salary increases and the size of the workforce. Therefore, your projected increase for salaries will impact
pension increases, but only slightly.
This bond will be paid off in full by the end of FY 2018-19.
All employees are give monthly "flex dollars" to purchase medical insurance. The dollar amount is based on three levels of coverage: single,
employee + "1", employee + family. The civilian labor contracts, which expire on June 30,2019, provide for annual increases in monthly flex dollars to
equal the percentage increase in the cost of basic plans published by CalPERS. This has resulted in increases of 3.2% in January 2017, 2.2% in January
2018, and expected increase of 0.4% for January 2019. The police contracts, which expire in June 2020, provide for no increase in flex dollars in
January 2019 nor January 2020. Increases in January 2021 will depend on police labor contract negotiations. Forecast: For the next year, a very small
increase given the current police contract. For the later years, moderate increases.
Retiree Medical Insurance consists of two type of payments. The first is made of up of monthly checks sent from the City to current retirees for
reimbursement of some or all of their insurance premiums. These payments can rise with health insurance inflation. The second payment type is into
a trust account that is invested with CalPERS to fund the anticipated costs for future retirees. Consequently, the amount of this payment is partially
dependant on stock market returns. The total sum of both of these types of payments is referred to as the "Annual Required Contribution" or ARC.
The exact ARC amount is always determined in arrears by an actuarial study that the City commissions every two years. This is currently being
prepared for FY 17-18. In prior years, the ARC was $326,401 in FY 14-15, $449,709 in FY 15-16, and $426,076 in FY 16-17. Forecast: Near term, low
increases due to low health insurance inflation and good stock market returns. Longer term, plan on larger increases.
Insurance costs increased have accelerated in recent years: up 2.5% in FY 16-17, up 5.6% in FY 17-18, and up 29.3% in FY 18-19. While the pier fire
no doubt contributed to the increase in our property insuance premium, our premiums for general liability (trip and fall) and work comp insurance
have both gone up by even higher percentages over the last two years. Forecast: Would guess more bad news short term.
Enter Your Projected Annual Increase for the Next
Four Fiscal Years
Step #2: Enter Projected Annual Percent Increases for Selected Major General Fund Expenditures