AgdaPkt 2020-04-06 Special - Laserfiche WebLink

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S.A. - Page 5 of 21 Chart 1: Summary of Major Operating Revenue Sources and Potential Impacts from COVID-19 Recession Major Operating Revenues Property tax, 40% Sales tax, 21% San Carlos Fire Utility Users' Tax, Service, 5% 6% / Transient Other revenues, Business licensechise fees, 3% occupancy tax, 5% ° tax, 2% Recreation class Development - fees, 1% related revenues, 5% Property tax is the largest contributor to the City's revenue stream, representing 40 percent of operating revenues. At this time, there is no anticipated impact on property taxes for FY 2019-20 and the County of San Mateo has not announced any delay in payments. There is a possibility of State action to defer payments, as this topic was briefly addressed in Governor Newsom's April 2, 2020 press briefing, which would present major concerns for the City unless the State backfilled the loss. Because a majority of property taxes are paid twice a year, with the bulk of annual revenue received by the City in May, a delay in property tax payments would negatively and immediately impact cash flow for the City. Two revenue sources that are included in the property tax revenue category and are highly susceptible to fluctuations are excess Educational Revenue Augmentation Funds (ERAF) and property tax in lieu of vehicle license fees. The City received $11.0 million of excess ERAF in FY 2018-19 and originally forecasted $7.1 million for FY 2019-20. Property tax in lieu of vehicle license fees was $9.2 million in FY 2018-19 and is projected to be $7.8 million in FY 2019-20. Since these revenue sources fluctuate annually and are not guaranteed, the City should not rely on these as ongoing resources and the mid -year budget update and forecast presented February 24, 2020. These revenue sources are remitted to the City from the County of San Mateo. Staff is expecting an update from the County of San Mateo on these revenue sources by April 15, 2020, which will be shared with the City Council. Sales tax is the second largest contributor to the City's revenue stream, representing 21 percent of operating revenues. As part of the Bradley -Burns Uniform Local Sales and Use Tax, the City receives an additional 1 percent tax on all sales originating within the City limits. This tax is collected by the business, along with the County and State sales tax. Due to the Shelter in Place Order, it is anticipated that sales tax revenue could be the most negatively affected by the COVID-19 pandemic. For example, auto sales are among the top 10 sources of sales tax paid to the City and dealerships currently are permitted to repair cars, sell auto supplies, and only sell vehicles online or by phone. Restaurant activity also contributes significantly to the City's sales tax base, and restaurant sales are expected to plummet due to requirements to provide food only for take-out or delivery. Page 5 of 21 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore