HomeMy WebLinkAboutCC AG PKT 2009-08-10 #FAGENDA STAFF REPORT
DATE: August 10, 2009
TO: Honorable Mayor and City Council
THRU: David Carmany, City Manager
FROM: Robbeyn Bird, CPA
Director of Administrative Services
SUBJECT: Utility Users Tax (UUT)
SUMMARY OF REQUEST:
Staff recommends the City Council receive and file the Utility Users Tax report
and direct staff to report bi-annually during the budget adoption process as to the
feasibility of reducing the UUT.
~ACKGROUiV®:
On March 26, 1973, the City of Seal Beach adopted Ordinance Number 899
imposing a Utility Users Tax at the rate of 5% on telephone, gas, and electricity
services provided to residents. On May 24, 1993, the UUT was increased from
5% to 11 %.
The UUT is the second largest revenue source to the General Fund providing
$5.9 million or 22% of General Fund revenue. It is the most reliable and stable
funding source that the City has due to the fact that it is under local control. The
UUT funds many of the capital improvement projects needed in the City; such as,
street improvements, storm drains, and beaches & pier projects. Without the
City's UUT, it would be impossible to continue the aggressive capital
improvement program established by the City.
The fiscal year 2009/10 adopted budget is projecting $26.9 million in revenue
and $45.1 million in expenditures. The expenditures include $18.9 million in
capital projects. The amount that operating revenues exceed operating
expenditures is approximately $700 thousand.
Since June, when the budget was adopted, due to the tough economic times that
we are experiencing, the State has adopted a budget that is borrowing money
from local government agencies. This amounts to a projected revenue
reduction of approximately $710,782.
Agenda Item F
Page 2
In addition, at the June 8, 2009 City Council meeting, a budget amendment in the
amount of $46,600 to complete renovations of the Council chambers restrooms
was approved.
The City Council also has increased ongoing operating expenditures of the
General Fund by approximately $43,566; $40,000 annually for the beach buggy
and $3,566 annually for the portable restrooms at Heather Park.
Taking all of the above mentioned items into consideration, currently projected
expenditures exceed revenues by approximately $101,000.
FINANCIAL IMPACT:
By reducing the UUT, City services would need to be reduced by an equal
amount or the City would need to use reserves to fund services for the difference
between revenues and expenditures. The latter is a temporary solution and
could not be sustained over time.
RECOMMEN®ATION:
Staff recommends that the City bring this item back for review bi-annually during
the budget adoption process to determine the feasibility of the UUT reduction.
SUBMITTED BY: NOTED AND APPROVED:
~ ~~~
Robbeyn Bi d, CPA David Carma y, City Manager
Director of Administrative Services