CC 2016-04-26_12b Revenue Plan PresentationRevenue Plan
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Purpose
Identify opportunities to increase revenues
Preliminary cost and revenue estimates
Council discussion and direction on which opportunities to pursue
It is not a detailed implementation
guide
It is not a one-time effort
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Why do we need a revenue plan?
Financial sustainability: Revenue Plan is a key component
Need to ensure sufficient revenue as required to continue providing services into the future: revenue / expenditure balance
Reserves
are currently estimated at 35.5% for FY 2015-16, exceeds 20% policy goal
Reserves are healthy, but they are one-time resources
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Comparisons to other cities
Each community is different and has unique circumstances, but a comparison of revenues and expenses by city can help identify opportunities for growth
Arroyo Grande provides a high level
of service for at a very modest cost
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Revenue Growth
Three basic ways to increase City revenues:
Ensure receipt of existing revenue streams
Grow existing revenue sources
Create new revenue sources
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Ensure receipt of existing revenue streams
Ensure City regulations and ordinances are enforced consistently
Audit sales tax, property tax, transient occupancy tax, business license tax, franchise fees
Verify information provided
by businesses
Focus on compliance/ education (not punishment)
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Auditing recommendations
Sales Tax – continue with current program
Property Tax – staff verification of annexed areas, but no additional program
Transient Occupancy Tax (T.O.T.) or hotel tax – develop an auditing
program
Business License Tax – two phased staff-led effort
Franchise Fees – develop auditing program
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TOT Audits
Develop an auditing program to ensure correct calculations and reporting are occurring at all lodging establishments
Anticipated revenue: $22,500 - $45,000 annually
Anticipated cost:
$40,000 - $50,000 one time
Estimate 6 – 9 months to develop program and select audit firm
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Business License Audits
Two-phased approach led by staff
Focus on compliance, not punitive actions
Ensure all businesses that require a license have one
Share information with Franchise Tax Board
Anticipated
revenue: $3,000 annually
Anticipated cost: $1,500 - $2,000 (decreasing as compliance is gained)
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Franchise Fee Audits
Develop an auditing program to ensure correct allocations and calculations are occurring with all 5 franchises
Allocation errors possible due to annexations or use of zip code
Anticipated
revenue: $29,000 annually
Anticipated cost: $20,000 - $24,000 one-time
Estimate 6 – 9 months to develop program and select audit firm
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Increase existing revenue sources
Update fees & charges – current effort nearly complete
Increase existing tax rates (not recommended)
Maximize use of City property
Telecommunications sites
Paid parking
Special events
Economic
development activities
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Creating new revenue
New fees – included in the current fee study
New taxes (not recommended)
Attraction of new tax-generating businesses
Special districts
Community Facilities Districts, Enhanced Infrastructure
Financing Districts
Grants
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Summary of Recommendations
Audits – TOT and Franchise Fees
Business License – compliance with ordinance and coordination with Franchise Tax Board (FTB)
Update fees and charges – User Fees and Development Impact
Fees
Maximize telecommunication site opportunities
Develop special events policy with cost recovery
When viable, pursue grants and special districts
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questions
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