City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2025-00416 2/25/2025 Discussion Item 26.
Fiscal Year (FY) 2024/25 Budget Update and Proposed Adjustments F
ile ID: 2025-00416
Loc
ation: Citywide
R
ecommendation: Adopt a Resolution: 1) accepting the FY2024/25 budgetary adjustments; 2) committing $26.8 million in FY2023/24 year-end resources for future budget development; 3) authorizing the City Manager or their designee to continue making all necessary budgetary and accounting adjustments related to the Reduced Residential Development Impact Fees for Affordable Dwelling Units Program (Zero-Dollar Rate Program); and 4) rescinding Section 18.16 of the FY2024/25 Approved Budget Resolution (Resolution No. 2024-0193) so that the Youth Program Scholarship Fund can keep unspent appropriations at year-end.
Contact: Peter Coletto, Finance Director, (916) 808-5416, [email protected]; Mirthala Santizo, Budget Manager, (916) 808-5078, [email protected]; Department of Finance
Presenter: Peter Coletto, Finance Director, (916) 808-5416, [email protected]; Mirthala Santizo, Budget Manager, (916) 808-5078, [email protected]; Department of Finance
Attachments:
1-D
escription/Analysis
2-Resolution
3-Revenue Adjustment Details
D
escription/Analysis
Issue Detail: As the City prepares for the upcoming budget cycle, the latest forecast shows substantial budget deficits in FY2025/26 and future fiscal years. While the current fiscal year remains balanced, the proposed budget commitment of remaining resources will help the Council with citywide efforts to balance the FY2025/26 budget as required by the Charter.
File ID: 2025-00416 2/25/2025 Discussion Item 26.
General Fund/Measure U (G/MU) Updated Forecast
The updated FY2024/25 forecast below includes projected changes to revenues and expenditures, Council approval of the Local 522 agreement and the estimated Homeless Housing, Assistance and Prevention (HHAP) Round 6 funding for FY2025/26. While FY2024/25 is balanced, the City continues to face a structural budget deficit with expense growth outpacing revenues growth over the term of the forecast. The budget gap for FY2025/26 is projected to be $62.2 million including the receipt of HHAP 6 and grows to $130.3 million in FY2028/29.
The forecast provided in the FY2024/25 Approved Budget included a budget deficit for FY2025/26 projected to be $77.6 million, with that projection excluding HHAP Round 6. The current forecast includes HHAP Round 6, with revenues of $18.3 million, which is the primary cause of the decrease in the forecasted budget gap. However, a projected decrease in citywide revenues, mainly a reduction in sales tax growth, has partially offset the HHAP Round 6 revenues, increasing projected deficits in the following years of the forecast.
It is important to note that the updated forecast does not project a recession; if a recession were to occur the projected deficits would become much larger. The updated forecast also does not include potential losses of federal funds due to Presidential Executive Orders, changes in legislation, or directives of Federal agencies. Losses of federal funds would also worsen the City’s projected deficits.
A detailed forecast is included in the Financial Considerations section below.
5-Year Forecast
General (G) and Measure U (MU) Funds ($ in 000s)
FY2024/25
Approved
FY2025/26
Projection
FY2026/27
Projection
FY2027/28
Projection
FY2028/29
Projection
BEGINNING AVAILABLE FUND BALANCE 3,334 3,347 - - - Projected Resources 842,976 846,253 842,728 859,093 875,894 Use of Budget Reserves 12,601 - - - - Projected Expenses (867,286) (886,209) (913,818) (942,496) (979,248) Gross Funding Gap (11,710) (39,956) (71,090) (83,402) (103,354) Projected Salary Savings 11,722 11,956 12,195 12,439 12,688 Net Funding Gap 12 (28,000) (58,895) (70,963) (90,666)
Homelessness Services Resources 45,997 11,460 11,507 11,555 11,604 Homelessness Services Expenses (45,997) (48,976) (50,225) (50,727) (51,235) Funding Gap - Homelessness Services - (37,516) (38,718) (39,172) (39,631) Total City Funding Gap 12 (65,516) (97,613) (110,135) (130,297) ENDING AVAILABLE FUND BALANCE WITH HOMELESS SERVICES 3,347 (62,169) (97,613) (110,135) (130,297)
File ID: 2025-00416 2/25/2025 Discussion Item 26.
Citywide G/MU Revenue and Department Revenue/Expenditure Adjustments Based on citywide revenue performance throughout the first half of FY2024/25, staff is recommending several revenue adjustments resulting in a net reduction of $0.8 million, as reflected below:
Due to a $0.9 million increase in estimated Cannabis Business Operations Tax, there will be a $0.4 million increase to the Sacramento Children’s Fund.
Based on departmental revenue performance through the first half of FY2024/25, three City departments are recommending associated revenue adjustments which total $3.8 million, as reflected in the table below. Detailed information on the citywide and department revenue adjustments is included in Attachment 3.
Also included in the table below, is an expenditure decrease of $0.8 million in the Youth, Parks and Community Enrichment (YPCE) department due to labor offsets from two Expanded Learning Opportunities to Participants (ELOP) contracts. The ELOP contracts are with the Twin Rivers Unified School District and the Robla Unified School District. YPCE provides various camps during the spring, winter and summer and a before and after school enrichment program both during schooldays and summer, intersession, or vacation days. Since YPCE is using existing staff to provide the contract services, a labor offset to G/MU is required. This adjustment is not due to a reduction in services.
In addition to the proposed G/MU changes above, the Public Works department has identified a need for $971,000 for critical facility repairs to the City’s 911 Communication Center which houses the City's Revenue Type (dollars in 000s)
FY2024/25
Approved
FY2024/25
Amended $ Change
%
Change
Utility User Tax 67,465 70,444 2,980 4.4%
Real Property Transfer Tax 9,691 12,373 2,682 27.7%
Property Tax Current Secured 154,979 157,615 2,636 1.7% Cannabis Business Operations Tax 23,322 24,209 887 3.8% Property Tax In-Lieu of Vehicle License Fee 65,791 66,512 722 1.1% General Sales & Use Tax 107,228 102,465 (4,763) -4.4%
Measure U Transactions & Use Tax 139,094 133,195 (5,898) -4.2% Recommended Revenue Revisions 567,569$ 566,814$ (755) -0.1% Expenditure
Change
Department (dollars in 000s) FY2024/25
Approved
FY2024/25
Amended $ Change $ Change $ Net
Change
City Treasurer 5,200 6,200 1,000 0 1,000
Fire 63,315 63,003 (312) 0 (312)
Public Works 28,225 31,381 3,156 0 3,156 Youth, Parks, and Community Enrichment 6,377 6,377 0 (792) 792 Recommended Revisions $103,116 $106,960 $3,844 ($792) $4,637 General Fund Revenues
File ID: 2025-00416 2/25/2025 Discussion Item 26.
911 operators and main data center. It also serves as the Emergency Operations Center (EOC) during emergencies. This mission-critical facility must operate twenty-four hours a day seven days a week without interruption.
Two essential elements of the facility are at end of their useful life and require immediate replacement to ensure that the facility is able to continue operation, particularly during bad weather and emergencies. The Uninterruptible Power Supply (UPS) and roofing system require replacement. In the event of a power outage, the system is supported by two diesel generators and two UPS units. The UPS units ensure continuous power preventing abrupt shutdowns of mission-critical systems and avoiding failures of essential IT components. The building was commissioned in 2005, and the UPS units are original to the facility. The building's roofing membrane, also installed in 2005, has been leaking during rainy events and is beyond the ability for temporary patches. Roof failure and ongoing leaks could make it infeasible to house staff in the building. Total cost to replace the UPS units and roof is $1,791,000, of which $820,000 will be covered with existing funds in the Cal EPA fund. The remaining $971,000 will be funded by the General Fund.
The five-year forecast has been updated to reflect the citywide and departmental G/MU revenue adjustments listed above.
In addition to the proposed G/MU changes, the Department of Utilities (DOU) is also recommending an increase to the Water Fund expenditure budget by $806,000. As part of the FY2024/25 Approved Budget reduction strategies, funding for credit card fees was decreased to eliminate City subsidies of merchant fees for credit card payments. Since this was a citywide strategy, all funds were affected.
DOU is finalizing implementation of this process which will be completed later this calendar year. As a result, DOU will need to utilize $0.8 million from fund balance to cover merchant fees in FY2024/25.
The current fund balance of the Water Fund is $44,494,670, which is sufficient to cover the increase in expenditures.
G/MU Fund Balance
As presented in the FY2023/24 Annual Comprehensive Financial Report (ACFR), year-end net results (revenues less expenditures) resulted in one-time G/MU Fund budgetary resources of $26.8 million, with $14.1 million from revenues and city operations and $12.7 million due to the one-time repayment of unrealized investment losses on the treasury pool from prior years. As the updated FY2024/25 G/MU five-year forecast projects a $62.2 million deficit in FY2025/26, staff recommends committing the $26.8 million for FY2025/26 budget development with the ability to use those funds to balance the current year if the recission of federal funding for already incurred expenses causes the current fiscal year to go into deficit.
On February 11, 2025, the Council approved the Prior Year Savings Policy, which allows staff to use year-end net results to address immediate and long-term financial challenges (File No. 2025-00417).
The policy’s 1
st priority includes the use of using prior-year savings to balance the budget if there is a
File ID: 2025-00416 2/25/2025 Discussion Item 26.
projected deficit in the coming budget year. Staff’s recommendation is consistent with the Prior Year Savings Policy.
Authority for Community Development Department (CDD) Program The CDD manages the Reduced Residential Development Impact Fees for Affordable Dwelling Units Program (Zero-Dollar Impact Fee Program) and has currently been using Section 3 of Resolution No. 2022-0386 to move funds from the project to the operating budget and replenish the impact fee fund balances. Since a new project (Multi-Year Operating Project - I21002600) has been established and the funding tied to the old project in Resolution No. 2022-0386 has been exhausted, new authority must be established for FY2024/25. To ensure that CDD can continue managing the Zero-Dollar Rate Program, similar authority language will be added to the FY2025/26 Budget Resolution.
Authority Changes for YPCE Multi-Year Operating Project (MYOP) As part of the FY2024/25 Approved Budget, the Youth Sports Field Permit Program MYOP (I19143000) was renamed as the Youth Program Scholarship Fund (I19143000), and the scope and purpose of the project was changed to focus on expanding eligibility to youth-serving facilities and programs. Any unused funding in the program on June 30 should remain in the project to address this new scope and purpose. In Section 18.16 of the FY2024/25 Approved Budget Resolution (Resolution No. 2024-0193), unspent appropriations in the project as of June 30 would be committed to the Measure U Park Improvements Program (L19706000). To ensure that YPCE can manage the Youth Program Scholarship Fund as intended by Council, Section 18.16 should be rescinded.
Policy Considerations: This report is consistent with Council’s direction to keep the Council informed on the fiscal condition of the City and Council’s Prior Year End Savings Policy.
Economic Impacts: None.
Environmental Considerations:
California Environmental Quality Act (CEQA): This report concerns administrative activities and government fiscal activities that do not constitute a “project” as defined by the CEQA Guidelines sections 15378 and California Public Resources Code section 21080 and are not subject to the provisions of CEQA (CEQA Guidelines section 15060(c)(3)). CEQA review for any project, which utilizes funds allocated in this report, has been or will be performed in conjunction with planning, design, and approval of each specific project as appropriate.
Sustainability: Not applicable.
Commission/Committee Action: The Budget and Audit Committee will review the report on February 25, 2025.
File ID: 2025-00416 2/25/2025 Discussion Item 26.
Rationale for Recommendation: The actions recommended in this report provide authority for adjustments necessary to complete the fiscal year, address critical public safety infrastructure needs and provide resources necessary to help close the budget gaps in future fiscal years.
Financial Considerations: The proposed budgetary commitment will help balance the FY2025/26 Proposed Budget.
Following is the five-year forecast in expanded detail:
5-Year Forecast
General (G) and Measure U (MU) Funds ($ in 000s)
FY2024/25
Approved
FY2025/26
Projection
FY2026/27
Projection
FY2027/28
Projection
FY2028/29
Projection
BEGINNING AVAILABLE FUND BALANCE 3,334 3,347 - - - Revenues
Revenues 813,707 826,328 845,214 862,955 880,750 Other Sources 25,388 7,116 7,734 7,713 8,486 Total Revenues/Resources 839,094 833,444 852,948 870,669 889,236 Expenditures
Department Operating, Debt, and MYOPs 834,573 851,000 878,303 907,223 943,664 Capital Projects 15,092 14,367 14,392 13,864 13,844 EUR Contribution - 4,373 4,511 4,652 4,834 Total Expenditures/Uses 849,665 869,740 897,207 925,738 962,342 Surplus/(Deficit) (10,571) (36,296) (44,258) (55,070) (73,106) Other Sources/(Uses)
Reserve for Future Budget Development (FY2021/22) 5,200 - - - - Reserve for Future Budget Development (FY2022/23) 7,401 - - - - FY2024/25 Vacancy Factor 11,722 11,956 12,195 12,439 12,688 Other Spending Increases (7,000) (7,140) (7,283) (7,428) (7,577) Total Other Sources/(Uses) 17,322 4,816 4,913 5,011 5,111 FY2024/25 Financial Update
Critical 911 Facility Repair (971)
Project Closure Savings 33 - - - - New Homeless Services Resources (HHAP-6) - 18,274 - - - Citywide Revenue Adjustments (755) (5,465) (10,220) (11,575) (13,343) Department Revenue/Expense Adjustments 4,637 - - - - Measure L True Up (355) - - - - Council-Approved Local 522 Agreement - - - - - Total Midyear Budget Update 2,589 12,809 (10,220) (11,575) (13,343) Voter-Approved Spending
Measure L (9,329) (9,329) (9,329) (9,329) (9,329) Total Voter-Approved Spending (9,329) (9,329) (9,329) (9,329) (9,329) Surplus/(Deficit) with Other Sources 12 (28,000) (58,895) (70,963) (90,666) Homeless Services
General/Measure U Homeless Services Funding 21,308 11,460 11,507 11,555 11,604 New Homeless Services Resources (HHAP-5) 20,889 - - - - Prior Year Homeless Services Resources (HHAP1-4) 3,800 - - - - Homeless Services Programming (45,997) (48,976) (50,225) (50,727) (51,235) Total Homeless Services - (37,516) (38,718) (39,172) (39,631) Surplus/(Deficit) with Homeless Services 12 (65,516) (97,613) (110,135) (130,297) ENDING AVAILABLE FUND BALANCE WITH HOMELESS SERVICES 3,347 (62,169) (97,613) (110,135) (130,297)
File ID: 2025-00416 2/25/2025 Discussion Item 26.
The forecast shown above does not include $26.8 million in FY2023/24 year-end resources in the G/MU Funds. Staff recommends committing the entire $26.8 million for FY2025/26 budget development consistent with the Prior Year Savings Policy. If this recommendation is approved, the projected deficit in FY2024/25 would be reduced to approximately $38.7 million, as shown in the forecast below.
Ongoing reduction strategies adopted by Council during the FY2025/26 budget process will reduce the projected budget deficits in the future fiscal years of the forecasts. 5-Year Forecast
General (G) and Measure U (MU) Funds ($ in 000s)
FY2024/25
Approved
FY2025/26
Projection
FY2026/27
Projection
FY2027/28
Projection
FY2028/29
Projection
BEGINNING AVAILABLE FUND BALANCE 3,334 12 - - - Revenues
Revenues 813,707 826,328 845,214 862,955 880,750 Other Sources 25,388 7,116 7,734 7,713 8,486 Total Revenues/Resources 839,094 833,444 852,948 870,669 889,236 Expenditures
Department Operating, Debt, and MYOPs 834,573 851,000 878,303 907,223 943,664 Capital Projects 15,092 14,367 14,392 13,864 13,844 EUR Contribution - 4,373 4,511 4,652 4,834 Total Expenditures/Uses 849,665 869,740 897,207 925,738 962,342 Surplus/(Deficit) (10,571) (36,296) (44,258) (55,070) (73,106) Other Sources/(Uses)
Reserve for Future Budget Development (FY2021/22) 5,200 - - - - Reserve for Future Budget Development (FY2022/23) 7,401 - - - - FY2024/25 Vacancy Factor 11,722 11,956 12,195 12,439 12,688 Other Spending Increases (7,000) (7,140) (7,283) (7,428) (7,577) Total Other Sources/(Uses) 17,322 4,816 4,913 5,011 5,111 FY2024/25 Financial Update
FY2023/24 Year-End Resources 23,473 - - - - Reserve for FY2025/26 Development (26,807) 26,807 - - - Critical 911 Facility Repair (971)
Project Closure Savings 33 - - - - New Homeless Services Resources (HHAP-6) - 18,274 - - - Citywide Revenue Adjustments (755) (5,465) (10,220) (11,575) (13,343) Department Revenue/Expense Adjustments 4,637 - - - - Measure L True Up (355) - - - - Council-Approved Local 522 Agreement - - - - - Total Midyear Budget Update (745) 39,616 (10,220) (11,575) (13,343) Voter-Approved Spending
Measure L (9,329) (9,329) (9,329) (9,329) (9,329) Total Voter-Approved Spending (9,329) (9,329) (9,329) (9,329) (9,329) Surplus/(Deficit) with Other Sources (3,322) (1,193) (58,895) (70,963) (90,666) Homeless Services
General/Measure U Homeless Services Funding 21,308 11,460 11,507 11,555 11,604 New Homeless Services Resources (HHAP-5) 20,889 - - - - Prior Year Homeless Services Resources (HHAP1-4) 3,800 - - - - Homeless Services Programming (45,997) (48,976) (50,225) (50,727) (51,235) Total Homeless Services - (37,516) (38,718) (39,172) (39,631) Surplus/(Deficit) with Homeless Services (3,322) (38,709) (97,613) (110,135) (130,297) ENDING AVAILABLE FUND BALANCE WITH HOMELESS SERVICES 12 (38,697) (97,613) (110,135) (130,297)
File ID: 2025-00416 2/25/2025 Discussion Item 26.
The City has also compiled a preliminary estimate of its exposure to federal funding, including federal funding the City receives via the state. Across all funds, the City has approximately $178.8 million in federal funding that has been appropriated. In addition, the City has $271.9 million in exposure to future awards, these are federally approved projects for future years that have not yet been obligated.
Local Business Enterprise (LBE): No goods or services are being purchased under this report.
Federal Exposure
Current
Federal Exposure
Future Awards
Total Federal
Exposure
Grant 148.4 271.9 420.2 Ongoing 30.4 - 30.4 Grand Total 178.8 271.9 450.6 Attachment 2
RESOLUTION NO. 2025-XXXX
Adopted by the Sacramento City Council
February XX, 2025
Fiscal Year (FY) 2024/25 Recommended Budgetary Commitment and Authority Adjustment
BACKGROUND
A. Revenue adjustments are recommended based on revenue performance through the first half of FY2024/25. These revenue adjustments include various General Fund citywide revenues, General Fund department revenues, and Measure U revenues.
B. Expenditure adjustments are recommended for the Youth, Parks, and Community Enrichment Department due to labor offsets from two Expanded Learning Opportunities to Participants contracts with the Twin Rivers Unified School District and the Robla Unified School District which will offset department operating costs.
C. The Measure L Youth Funding Program (I80000100) is the Sacramento Children’s Fund, and i t i s used to support positive youth development and youth violence prevention programs for children and youth less than 25 years old.
D. The 911 Communication Center houses the City’s 911 operators and main data center and also serves as the City’s Emergency Operations Center during emergencies. The facility requires replacement of mission-critical systems to ensure that it is able to continue operation.
E. The updated FY2024/25 G/MU five -year forecast projects an operating deficit beginning in FY2025/26. A commitment from FY2023/24 year-end resources is necessary to help balance the FY2025/26 budget.
F. The Community Development Department manages the Reduced Residential Development Impact Fees for Affordable Dwelling Units Program (Zero-Dollar Impact Fee Program) and has currently been using Section 3 of Resolution No. 2022 -0386 to offset impact fee funds. Since a new project has been established and the funding tied to the old project has been exhausted, new authority must be requested for FY2024/25 to ensure that the Community Development Department can continue managing the Zero-Dollar Impact Fee Program.
G. As part of the FY2024/25 Approved Budget, the Youth Sports Field Permit Program MYOP (I19143000) was renamed as the Youth Program Scholarship Fund (I19143000), and the scope and purpose of the project was changed to focus on expanding eligibility to youth-serving facilities and programs. Any unused funding in the program on June 30 should remain in the project to address this new scope and purpose.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Manager or the City Manager’s designee is authorized to increase the General Fund (Fund 1001) revenue budget in the Fiscal Year (FY) 2024/25 Citywide and Community Support Operating Budget by $5,143,408.
Section 2. The City Manager or the City Manager’s designee is authorized to decrease the Measure U Fund (Fund 2401) revenue budget in the FY2024/25 Citywide and Community Support Operating Budget by $5,898,438.
Section 3. The City Manager or the City Manager’s designee is authorized to increase the General Fund (Fund 1001) revenue budget in the FY2024/25 City Treasurer’s Office Operating Budget by $1,000,000.
Section 4. The City Manager or the City Manager’s designee is authorized to decrease the General Fund (Fund 1001) revenue budget in the FY2024/25 Fire Department Operating Budget by $312,000.
Section 5. The City Manager or the City Manager’s designee is authorized to increase the General Fund (Fund 1001) revenue budget in the FY2024/25 Public Works Department Operating Budget by $3,156,376.
Section 6. The City Manager or the City Manager’s designee is authorized to decrease the Measure U (Fund 2401) expenditure budget in the FY2024/25 Youth, Parks, and Community Enrichment Department Operating Budget by $792,270.
Section 7. The City Manager or the City Manager’s designee is authorized to increase the expenditure budget in the Measure L Youth Funding Program (I80000100) by $354,900 (General Fund, Fund 1001) to align the program with 40% of projected cannabis business operations tax revenues for FY2024/25.
Section 8. The City Manager or the City Manager’s designee is authorized to increase the expenditure budget in the City Facility Reinvestment Program (C13900000) by $971,000 in General Funds (Fund 1001) and $820,000 in Cal EPA Funds (Fund 2801) to replace critical systems at the 911 Communication Center to ensure continuity of 911 services.
Section 9. The City Manager or the City Manager’s designee is authorized to increase the General Fund (Fund 1001) available fund balance by $7,661,884.
Section 10. The City Manager or the City Manager’s designee is authorized to decrease the Measure U (Fund 2401) available fund balance by $5,106,168.
Section 11. The City Manager or the City Manager’s designee is authorized to decrease the Cal EPA Fund (Fund 2801) available fund balance by $820,000.
Section 12. The commitment of $26,807,085 in FY2023/24 General/Measure U Fund year-end resources for FY2025/26 budget development is authorized.
Section 13. The City Manager or the City Manager’s designee is authorized to make all necessary budgetary and accounting adjustments related to the Zero- Dollar Rate Program (I21002600, Fund 2401) to the various impact fees affected by the Reduced Residential Development Impact Fees for Affordable Dwelling Units Program.
Section 14. The commitment of any unspent appropriations in the Youth Sports Field Permit Program MYOP (I19143000) on June 30 to the Measure U Park Improvements Program (L19706000) under Section 18.16 of the FY2024/25 Approved Budget Resolution (Resolution No. 2024-0193) is rescinded.
Adopted by the City of Sacramento City Council on February XX, 2025, by the following vote:
Ayes:
Noes:
Abstain:
Absent:
Attest:
Attachment 3
Citywide Revenue Adjustments
The five-year forecast has been updated to reflect the following revisions. The following provides additional detail regarding the revenue revisions in the G/MU Funds.
A. Utility User Tax (UUT), $3.0 million: UUT is a usage tax on telecommunication, cable, gas, and electric services. Based on collections through the first five months of FY2024/25 UUT revenue has Increased by 11.1% compared to the same period in FY2023/24. The energy components of the UUT account for approximately 70% of all revenue. SMUD electricity collections have increased by 18% from July through November while PG&E has increased by 1 4% compared to last year. In addition, SMUD is raising its rates by 5.5% and PG&E will increase rates by 8.6% over the next twelve months. Based on the year -to-date collections, staff are anticipating an increase of $3.0 million, or 4.4%, in UUT revenues.
B. Property Transfer Taxes, $2.7 million: Property transfer tax is a charge imposed by the City upon the passing of title from one owner to another. The City charges $2.75 for every $1,000 of the property’s sale price. During the first five months of FY2024/25, real estate transactions increased by 6% and the value of these transactions have also increased by 37% when compared to the same period in the prior year. This revenue source is considered one-time in nature and fluctuates from year to year. Staff will continue to monitor the transactions to determine if this is a one -time anomaly, as transactions declined by 21% in FY2023/24 compared to FY2022/23.
C. Property Tax Current Secured Roll, $2.6 million: The recommended increase is based on the County Assessor’s fiscal year -end report estimating countywide property tax growth for the secured roll which includes land, structures, fixtures, and personal property. The FY2024/25 amended budget will be increased by $2.6 million or 1.7% above the FY2023/24 approved budget.
D. Cannabis Business Operations Tax (CBOT) Revenues, $0.9 million:
Cannabis tax revenue is generated from cultivation, manufacturing, testing, delivery, microbusiness, dispensary, and distribution. CBOT revenue increased by $0.7 million or 7.6% during the first five months of FY2024/25 compared to the same period in FY2023/ 24. Distribution, Cultivation and Dispensaries, which comprise the three largest components of CBOT increased by 7.2%. Based on the year-to-date collections, staff are anticipating an increase of $ 0.9 million, or
3.8%, in CBOT revenues.
E. Property Tax In-Lieu of Vehicle License Fees (VLF), $ 0.7 million: The State’s 2004 property tax for VLF swap permanently reduced the VLF rate from 2% to
0.65%, shifted the VLF revenue to the state General Fund to make up for reduced property taxes to schools and shifted property taxes from the school share to property tax in-lieu of VLF to cities/counties. The projected increase is based on recent information provided by the County of Sacramento Audit-Controller Division indicating the city will receive an additional $0.7 million, or 1.1%, over the approved budget.
F. General Fund Sales and Use Tax (Bradley Burns), -$4.8 million: The estimates for FY2024/25 are updated to reflect recent trends in revenue collections and are based on sales tax projections from Avenu Insights & Analytics, the City’s sales tax consultant. The city receives three forecasting scenarios from Avenu Insights & Analytics and uses the most-likely scenario for the current budget year and FY2025/26 development . The average of the conservative and most -likely forecasts are used for future years in the five -year forecast. General sales tax is expected to decline by $4.8 million or 4.4% compared to the FY2024/25 approved budget. Sales in the business-to-business sector are projected to decline by 6.6%, transportation will decline by 4.0% and the City’s pro-rata share of the county sales tax pool will decline by 6.1%.
G. Measure U Transaction & Use Tax, -$5.9 million: The estimates for FY2024/25 have been updated to reflect recent trends in revenue collections and are based on sales tax projections from Avenu Insights & Analytics, the City’s sales tax consultant. The city receives three forec asting scenarios from Avenu Insights & Analytics and uses the most -likely scenario for the current budget year and FY2025/26 development . The average of the conservative and most -likely forecasts are used for future years in the five -year forecast. Measure U Transactions and Use Tax is expected to decline by $5.9 million or 6.9% compared to the FY2024/25 approved budget. Sales in the construction sector are projected to decline by 5.4%, business -to-business will decline by 1.8% and transportation will decline by 1.3%. Inflationary pressures continue to decrease disposal income for consumers across all sectors.
Department Revenue Adjustments
The five-year forecast has been updated to reflect the following revisions. The following provides additional detail regarding the revenue revisions in the G/MU Funds.
A. City Treasurer’s Office, $1 million: The City Treasurer’s Office is projecting revenues above budget due to financing charges for new Mello-Roos Community Facilities District bonds.
B. Fire Department, -$312,000: The Fire Department is projecting revenues below budget related to fewer than anticipated fire prevention inspections being completed this fiscal year.
C. Public Works Department, $3.2 million: The Public Works Department is projecting revenues above budget related to on -street parking enforcement and meter revenues.