City of Glendale
Budget Study Session #1
April 30, 2024
Slide 2
Session #1 – Tuesday, April 30
• FY 2023-24 General Fund Projection
• General Fund Five-Year Forecast
• FY 2024-25 Proposed General Fund Budget
• Potential Future Revenue Enhancements
Session #2 – Tuesday, May 7
• Fee Study
• Potential Pension Refinancing and Infrastructure Bonds Session #3 – Tuesday, May 14
• FY 2024-25 Proposed Citywide Budget – All Funds
Session #4 – Tuesday, May 21
• Follow-Up Items
Budget Hearing and Adoption - Tuesday, June 4
FY 2024-25 Budget Adoption Calendar
2 Agenda
• FY 2023-24 General Fund Projection
• General Fund Five-Year Forecast
• Proposed FY 2024-25 General Fund Budget
• Potential Future Revenue Enhancements
• Transfer & Parcel Tax
• Business License Tax
• Cannabis Tax
3 City of Glendale
FY 2023-24 General Fund
Year-End Projection
4 Category
23-24
Revised
Final
Estimate
Over/
(Under)
%
Received
Property Taxes $80.3 $81.4 $1.1 101.4%
Sales Taxes $91.1 $89.2 ($1.9) 97.9%
Utility Users Taxes $31.5 $30.6 ($0.9) 97.1%
Occupancy Taxes $10.0 $10.3 $0.3 103.0%
Licenses & Permits $10.5 $10.1 ($0.4) 96.2%
Revenue from Other Agencies $0.4 $0.6 $0.2 150.0%
Charges for Services $34.8 $35.4 $0.6 101.7%
Interfund Revenue $19.1 $19.1 $0.0 100.0%
Fines & Forfeitures $3.2 $3.2 $0.0 100.0%
Interest/Use of Money $3.7 $4.4 $0.7 118.9%
Misc. & Non-Operating $0.8 $1.0 $0.2 125.0%
Transfers from Other Funds $22.4 $21.2 ($1.2) 94.6%
Total Revenues $307.7 $306.5 ($1.2) 99.6%
Final Measure S Fund Balance $18.7 $18.7 $0.0 100.0%
Total Resources $326.4 $325.2 ($1.2) 99.6%
FY 2023-24 General Fund Resources
In Millions
5 $190.0
$195.0
$200.0
$205.0
$210.0
$215.0
$220.0
$225.0
$222.9
$215.2
Millions
Salaries & Benefits
Revised Budget Projected Actuals
Under-Expenditures:
$7.7M
Slide 6
FY 2023-24 General Fund Expenditures
6 $70.0
$75.0
$80.0
$85.0
$90.0
$95.0
$100.0
$105.0
$110.0
$105.5
$94.8
Millions
Maintenance & Operation, Capital & Transfers
Revised Budget Projected Actuals
Under-Expenditures:
$10.7M*
Slide 7
FY 2023-24 General Fund Expenditures
*Includes projected carryovers of $5.2 million
7 Category (In Millions)
Final
Projection
Revenues $306.5
Final Measure S Fund Balance $18.7
Resources $325.2
Expenditures $310.0
Subtotal $15.2
Projected Carryover ($5.2)
Net Surplus/(Use) $10.0
FY 2023-24 General Fund Year-End Projection
8 Projected
Year-End Surplus:
$10.0 Million
Proposed Funding For
Central Park Renovation
Slide 9
FY 2023-24 General Fund Year-End Projection
9 Category (In Millions)
Final
Projection
Resources $325.2
Expenditures $310.0
Subtotal $15.2
Projected Carryover ($5.2)
Central Park Renovation ($10.0)
Net Surplus/(Use) $0.0
Projected Ending Reserve $123.2
Reserve % 38.5%
*Council Reserve Policy is a floor of 25% with a target of 35% FY 2023-24 General Fund Ending Fund Balance
10 City of Glendale
General Fund
Five-Year Forecast
11 $ In Millions 24-25 25-26 26-27 27-28 28-29
Resources $314.7 $324.8 $333.7 $333.3 $342.2
Section 115 Trust 0.0 0.0 5.0 5.0 5.0
Total Resources $314.7 $324.8 $338.7 $338.3 $347.2
Appropriations $315.6 $326.6 $339.5 $348.4 $361.0
Capital Improvement 10.0 10.0 10.0 10.0 10.0
Total Appropriations $325.6 $336.6 $349.5 $358.4 $371.0 Net Change ($10.9) ($11.8) ($10.8) ($20.1) ($23.8)
Ending Reserve* $112.3 $100.5 $89.7 $69.6 $45.8
34.5% 29.9% 25.7% 19.4% 12.3%
General Fund Five-Year Forecast
FY 2024-25 Proposed Budget
Without Proposed Fee Study Revenues
*Council Reserve Policy is a floor of 25% with a target of 35% 12 $ In Millions 24-25 25-26 26-27 27-28 28-29
Resources $314.7 $324.8 $333.7 $333.3 $342.2
Section 115 Trust 0.0 0.0 5.0 5.0 5.0
Proposed Citywide Fees 4.0 4.0 4.0 4.0 4.0
Total Resources $318.7 $328.8 $342.7 $342.3 $351.2
Appropriations $315.6 $326.6 $339.5 $348.4 $361.0
Capital Improvement 10.0 10.0 10.0 10.0 10.0
Total Appropriations $325.6 $336.6 $349.5 $358.4 $371.0 Net Change ($6.9) ($7.8) ($6.8) ($16.1) ($19.8)
Ending Reserve* $116.3 $108.5 $101.7 $85.6 $65.8
35.7% 32.2% 29.1% 23.9% 17.7%
General Fund Five-Year Forecast
FY 2024-25 Proposed Budget
With Proposed Fee Study Revenues
*Council Reserve Policy is a floor of 25% with a target of 35% 13 City of Glendale
FY 2024-25 General Fund
Proposed Budget
14 Slide 15
Category
23-24
Final Estimate
24-25
Proposed
Increase/
(Decrease)
%
Change
Property Taxes $81.4 $84.0 $2.6 3.2%
Sales Taxes $89.2 $91.1 $1.9 2.1%
Utility Users Taxes $30.6 $32.7 $2.1 6.9%
Occupancy Taxes $10.3 $10.8 $0.5 4.9%
Licenses & Permits $10.1 $11.3 $1.2 11.9%
Revenue from Other Agencies $0.6 $0.4 ($0.2) (33.3%)
Charges for Services $35.4 $38.9 $3.5 9.9%
Interfund Revenue $19.1 $19.7 $0.6 3.1%
Fines & Forfeitures $3.2 $3.3 $0.1 3.1%
Interest/Use of Money $4.4 $3.8 ($0.6) (13.6%)
Misc. & Non-Operating $1.0 $1.2 $0.2 20.0%
Transfers from Other Funds $21.2 $21.5 $0.3 1.4%
Total Revenues $306.5 $318.7 $12.2 4.0%
FY 2024-25 Proposed General Fund Revenues
In Millions
15 *Includes proposed fee study revenues
Category
23-24
Adopted
24-25
Proposed
Increase/
(Decrease)
%
Change
Salaries & Benefits $223.4 $231.1 $7.7 3.4%
Maintenance & Operation $75.1 $80.0 $4.9 6.5%
Capital Outlay $0.05 $0.1 $0.05 100%
Transfers Out $16.0 $14.4 ($1.6) (10.0%)
Total Expenditures $314.5 $325.6 $11.1 3.5%
FY 2024-25 Proposed General Fund Expenditures
In Millions
16 Category Projection
Resources $318.7
Appropriations $325.6
Net Surplus/(Use) ($6.9)
Plus Beginning Reserve $123.2
Projected Ending Reserve $116.3
Reserve % 35.7%
Slide 17
*Council Reserve Policy is a floor of 25% with a target of 35% FY 2024-25 General Fund Ending Fund Balance
17 Potential Future Revenue Enhancements
• Transfer Tax
• Parcel Tax
• Business License Tax
• Cannabis Tax
18 City of Glendale
Property Transfer and Parcel Taxes
Presented By: HDL Coren & Cone
Nichole Cone, Vice President
19 Potential Property Tax Options
20 Tax Type Description Voter Requirement
Property Transfer Tax General Tax Revenue for any
government purpose Majority Voter Approval
Parcel Tax for funding of public
safety, roads, libraries, parks,
etc.
Special Tax Revenue is restricted
for certain purposes 2/3 Voter Approval
• General Tax – Majority Voter Approval
• Only an option for Charter cities
• Tax on the price of the property when sold or transferred • Applies to all non-government parcels sold and some long-term leases. There can also be exemptions for low-income housing parcels
• City can determine its own rates, tiers, methodology
• Current rate in Glendale is $1.10 per $1,000 of sales price • City receives $0.55 per $1,000 and LA County receives $0.55 per $1,000 • If an additional tax is passed, LA County will receive $1.10 and the City will receive the rate(s) as passed
Real Property Transfer Tax
21 Model #1 – Santa Monica Model
Using Glendale Data from FY 2022/23
Current Transfer Tax
Rate Glendale County Portion
$1.10 per $1,000 $800k $800k
Scenario with City of Santa Monica Rate Structure
Transfer Value Rate # of Sales
Glendale
Portion
County Portion
($1.10 per $1k)
$0 to <$5 million $3.00 per
$1,000
947 $3.6m $1.3m
$5 million to <$8 million $6.00 per
$1,000
13 $0.5m $0.1m
$8 million & Over $56.00 per
$1,000
10 $7.9m $0.2m
Total 970 $12.0m $1.6m
22 Model #2 – Culver City Marginal Model
Using Glendale Data from FY 2022/23
Current Transfer Tax
Rate Glendale County Portion
$1.10 per $1,000 $800k $800k
Scenario with City of Culver City Rate Structure
Transfer Value Rate # of
Sales
Glendale
Portion
County Portion
($1.10 per $1k)
$0 to <$1.5 million $4.50 per
$1,000 687 $2.8m $0.7m
$1.5 million to <$3 million $15.00 per
$1,000 225 $3.0m $0.5m
$3 million to <$10 million $30.00 per
$1,000 51 $4.1m $0.3m
$10 million & Over $40.00 per
$1,000 7 $3.5m $0.1m
Total 970 $13.4m $1.6m
23 Model #3 – Alternate Marginal Model
Using Glendale Data from FY 2022/23
Current Transfer Tax
Rate Glendale County Portion
$1.10 per $1,000 $800k $800k
Scenario with Alternate Marginal Structure
Transfer Value Rate # of Sales Glendale
Portion
County Portion
($1.10 per $1k)
$0 to <$2 million $0.55 per
$1,000 832 $0.5m $1.0m
$2 million & Over $10.00 per
$1,000 138 $2.9m $0.6m
Total 970 $3.4m $1.6m
24 Secured Parcel Tax
• 2/3 Voter approval needed
• The tax must be for a specific purpose. Common special taxes are for library, public safety, parks, ambulance services, etc.
• Applies to all non-exempt parcels. Some parcels may be taxed at different rates based on their benefit.
• A parcel tax cannot be value-based.
• Flat taxes are an option.
• Most popular option is a characteristics-based tax. The Assessor-supplied use code, lot or living square footage, and unit count are all common options.
25 Scenario #1 – Flat Rate Per
Use Category
Use Category Count Tax Per Parcel
Total Tax
Per Category
Commercial 2,119 $69.03 $146,277
Cross-Reference 82 $69.03 $5,661
Industrial 618 $69.03 $42,661
Institutional 187 $69.03 $12,909
Miscellaneous 1 $69.03 $69
Recreational 53 $69.03 $3,659
Residential - Multi-Unit 5,849 $69.03 $403,763
Residential - Single-Family Attached 9,709 $ 11.51 $111,704 Residential - Single-Family Detached 23,321 $ 11.51 $268,312 Vacant 1,757 $ 11.51 $20,215
Total: $1,015,228
Less Delinquencies: $1,000,000
26 Scenario #2
Characteristic Based
Use Category Rate Type Count Tax
Total Tax
Per Category
Commercial Flat 2,119 $91.03 $192,893
Cross-Reference Flat 82 $9.90 $812
Industrial Flat 618 $101.85 $62,944
Institutional Flat 187 $54.29 $10,152
Miscellaneous Flat 1 $81.22 $81
Recreational Flat 53 $57.47 $3,046
Residential - Multi-Unit Units 43,089 $8.95 $385,787
Residential - Single-Family Attached Flat 9,709 $10.45 $101,442 Residential - Single-Family Detached Flat 23,321 $10.45 $243,655 Vacant Flat 1,757 $8.21 $14,416
Total: $1,015,228
Less Delinquencies: $1,000,000
27 Questions & Comments
28 City of Glendale
Business Tax
Presented By: HDL Companies
Eric Meyers, Operations Director
29 The Basis of the Tax
• The business tax is imposed on the privilege of transacting or carrying on a business.
• It cannot be imposed on net income.
• It is imposed for the purpose of generating revenue and not recouping the costs of regulatory activities.
30 Five Key
Components of A
Business License
Tax
1. The taxable activity.
2. The measure of the taxable activity.
3. The rate.
4. The classification.
5. The results.
31 Major Types of Measurements
Pros & Cons
Measure Pro Con
Per Employee • Maybe less volatile than
gross receipts
• Higher burden on businesses with more labor inputs (like restaurants) that have already seen their costs of goods sold increase. • Doesn't capture per-employee productivity gains from technology.
Square Footage • Fixed amount for
calculation
• Can be tricky to calculate.
• Tends to miss the business activity occurring at other than floor level. • Is limited to only businesses with a location in the city, reducing the tax base.
Unit • The units of input may
already be tracked
• Does require pro-ration and have a low relation to the amount of activity.
Flat Rate • Easy to calculate • No clear relationship to the amount of taxable activity.
Gross Receipts • Closer relationship to the
amount of business
• Can include alternative
measures for the cost of
operations
• Increase in the volatility of revenues since they are pegged to the outputs of the business activities.
• In some cases, may be harder to calculate.
• Under State law, it cannot be based on net income.
32 Jurisdictions Comparison Summary
Jurisdiction Name Est. Population Population
Density
Estimated
Businesses
Tax Schedule
General
Annual
Revenue
Pasadena 134,211 6,040 19,000 Base + Per
Employee $5.9 Million
Burbank 103,920 6,198 16,000 Base + Per
Employee $2.7 Million
33 Pasadena Model Rates Applied to Glendale Data
Categories
# of
Businesses Base Rate Unit Rate Unit Type
Est #
of
Employees
Estimated
Revenue
General Business Tax 1,855 186.82 $37.08 Employee 27,599 $1,301,120 Professional Business Tax 432 496.15 $247.44 Employee 1,631 $510,894 Service Business Tax 5,620 186.82 $37.08 Employee 37,467 $2,230,815 Theater Tax 12 -- $2.51 Seat 72 $5,120
General Contractor 72 997.13 -- Per Business 170 $71,793 Specialty Contractor 90 748.19 -- Per Business 135 $67,337 Hotel Motels 60 183.73 $19.84 Rooms over 3 2,061 $115,469 Non Residential Rental < 1,000 SqFt 165 100.69 -- Per Business 165 $16,614 Non Residential Rental > 1,000 SqFt 1,170 100.69 $19.84 Per 1,000 Sq. Ft. 2,796 $521,364 Total: $4,840,526
34 Burbank Model Rates Applied to Glendale Data
Categories
# of
Businesses Base Rate Unit Rate Unit Type
Est #
of
Employees
Estimated
Revenue
Manufacturing, Wholesaling, Retailing 1855 $112.85 $6.75 Employee 27,599 $383,105 Business Services 4175 $112.85 $10.55 Employee 34,975 $796,089 Professions and Related Occ. 658 $112.85 $13.70 Employee 2,298 $96,723 Unclassified 1085 $112.85 $10.55 Employee 1,663 $128,535 Contractors 162 N/A 0.001 Gross Receipts
(Max: $530) 305 $60,288
Apartments 126 N/A $11.30 Per Unit 189 $12,814
Hotels and Motels 60 N/A $22.60 Per Unit 2,061 $135,600 Commercial Rental 1355 $112.85 $2.25 Per 100 Sq. Ft. 3,006 $495,662 Total: $2,108,816
35 Questions & Comments
36 City of Glendale
Cannabis Retail Tax
Presented By: HDL Companies
Mark Lovelace, Senior Advisor
37 Background
• The City of Glendale currently prohibits cannabis businesses. • This analysis seeks to develop estimates for the amount of revenue that may be generated through a retail cannabis tax. • All revenues from a cannabis tax would be available for general City expenses.
38 Cannabis Retailers in the Glendale Region
39 39
Cannabis Taxes/Fees in the Region
40 Cannabis Retail Tax Revenue Projections
41 IF THE MEASURE PASSES
• City under no obligation to allow cannabis businesses • Tax measure would provide protection in the event
the state requires the City to allow cannabis retailers • The Council could adjust the tax rates as it sees fit, up to the maximum rate
• If the City wanted to allow some types of cannabis
businesses, the City would have a great deal of
control over the time, place and manner of regulations
42 Questions & Comments
43