AgdaPkt 2018-02-26 Joint SA PFA - Laserfiche WebLink

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7.A - Page 17 potential effect of eroding incentives for home ownership. This could lead to a weakened housing market, slowing of property tax revenue growth, and more cautious consumer behavior. Another source of property tax revenue received by the City is the Educational Revenue Augmentation Fund (ERAF) revenues. These are residual proceeds from a complicated property tax formula administered at the County level, as required by legislation. Budgeted revenue estimates assume a conservative $2.5 million of ERAF revenue annually, as the City has been advised that these funds will not continue indefinitely. Actual receipts in recent fiscal years have exceeded this estimate. It is due to this conservative estimate that projections for FY 2018-19 and FY 2019-20 are less than the FY 2017-18 mid -year estimate, which includes actual ERAF receipts of $5.6 million. Sales tax is expected to grow by approximately 4 percent in FY 2018-19, due to the sales activities of several of the top 25 sales tax generators and the addition of a new luxury auto dealer in FY 2018-19. The growth rate is expected to slow to about 2.5 percent in FY 2019-20. Currently, the City's sales tax consultant is expecting an economic slowdown in the winter of 2020 but notes that the effect on sales tax revenue typically lags by about 18 months. For this reason, sales tax revenue is projected to remain flat through FY 2022- 23. Transient Occupancy Tax (TOT) revenues are projected to remain flat for FY 2018-19, and increase by 1 percent for FY 2019-20. Limited data is available for projections at this time; however, a planned major hotel, estimated for completion in 2021, should generate additional TOT revenue. Utility Users' Tax (UUT) revenue is expected to increase by 1 percent in FY 2018-19, and remain flat through FY 2022-23. As interest in traditional cable services declines, and as an increasing number of households "cut the cord" of their cable provider, it is prudent to forecast conservatively forfuture UUT revenue. By Council policy, UUT revenue has been dedicated to capital projects and is not reflected in the chart below depicting major General Fund revenue sources.