HomeMy WebLinkAboutAgenda Statement 1975/08/26 Item 08 Item 8
August 26, 1975 � . .
' � . CITY OF CHULA VISTA ' 17EM N0. $
� COUNCIL AGENDA STATEMENT ' '
FOR MEETING OF: 8-z6-75
ITEMTITLE Ordinance��yv Setting Tax Rate for the Fiscal Year 1975-76 - First Reading
and Adoption
SUBMITTED BY City Manager �
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ITEM EXPLANATION�
The Government Code requires that the City Council fix the tax rate on or before
September first of each year.
The attached ordinance provides for a canbined rate of $1 .35 per $100 for Fiscal
Year 1975-76 ($1 .09 General Fund, $.20 Retirement Fund, $.06 Bond Retirement Fund).
The combined rate of $1 .35 was used in developing the preliminary 1975-76 budget
recently approved by the City Council , when final assessed valuations of property
were not known. We projected a 5.1% increase in assessed values; with final figures,
as reported by the Assessor, increasing that percentage to 6.1% net, after deductin9
a 4.7% additional increase above the frozen base within the Bayfront Redevelopment
Project area, As you know, these funds are not available for general City purposes.
The resultant funds available from this 1% increase over our original estimate ar.e
approximately $32,500. Action required at your August 19, 1915 meeting, appropriating
$75,000 to meet increased liability insurance costs, more than offsets the increase
realized. While the City's fiscal position is sound, a reduction in this major source
of revenue can not be recoimnended in view of the continued inflationary condition of
the economy, and a judicious evaluation of current year operating revenue vs. operatin9
expenditures.
FINANCIAL STATEMENT:
Total property tax revenue, based on a $1 .35 rate, is estimated to be $3,098,810 after
exemptions and less 2% for delinquencies.
EXHIBITS ATTACHED
Agreement Resolution Ordinance X Plot Other X
Environmental Document: Attached Submitted on
STAFF RECOMMENDATION:
Adopt Ordinance fixing combined tax rate at $1 .35 per $100 assessed valuation.
BOARD/COMMISSION RECOMMENDATION�
A P P R 0 V E D
by the
C1�� �CiiT;Cl�.
COUNCIL ACTION� „_
Chula Gista, Cali�ornia
Dated,.....�— aG��'�
, � � Form A-113 (ReeS-75)
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. . . . . . . �cx�• �;
. I August 21 , 1975
To: Honorable Mayor and City Council
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From: Lane F. Cole, City Manager
Subject: Recamnended 1975/76 Tax Rate
The proposed 1975/76 Annual Budget was prepared and subsequently adopted by the
City Council on a projected tax rate of $1 .35 per $100 assessed valuation. While
this rate was assumed �aith a projected assessed valuation increase of 5.1%, final
equalized assessed values for the City now reflect a 6.1% increase, or roughTy
$32,500 more property tax revenue than originally anticipated.
Based on the recent approved Charter amendment, the canbined rate is divided into
three basic funds, i .e. , General Fund $1 .09, Retirement Fund $.20, and Bond
Retirement 5.06. The tax levy for Parks and Recreation, Planning, and Library
is included in the $1 .09 General Fund rate.
. Recortunendation
It is recortunended that the City Council adopt a tax rate for Fiscal 1975/76 of
$1 .35 per $100 of assessed valuation.
General Discussion
The final budget estimates total revenue for 1975/76, from all sources, at
y12,386,100. Expenditures, on the other hand, as approved by the City Council
in the preliminary budget or subsequently amended by supplemental appropriations,
total $12,874,604. The $488,504 difference between estimated income and projected
expenditures has been drawn from beginning fund balances.
Our main concern and reason for recommending a retention of the current tax rate
is not based on the difference between total estimated revenues and total esti-
mated expenditures, but due to a careful review of anticipated current year
operating revenue vs, projected current year operating expenditures. 4�hile
revenue estimates historically exceed budget estimates and operating expense
falls short of budgeted figures, the final budget document reveals it will re-
quire a 2% increase in revenue and decrease in operating expenditures during
the fiscal year if current year operating income is to equal current year ex-
, penditures. A thorough analysis of previous years' experience indicates this
can be reasonably anticipated.
In addition to the above observations, it must be recognized that today's economy
is uncertain and some major revenue sources could decline sharply if the economy
should decline still more:. Also, it is generally felt that if Federal employment
programs should conclude, sizable increases in normal personnel requirements
will be necessary to maintain facilities, particularly parks, that have been and
are being developed with C.E.T.A. employees.
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, Finally, the new Library and its future impact on the City's operating budget
has not been fully realized nor determined. We know, or at least anticipate,
continuing increases in all naterial and supply costs, not to mention employee
wages which, in the final analysis, represents a substantial part of the
total cost of any municipal operation.
Conclusion
Retention of the previous year's tax rate of $1 .35 therefore appears the most
reasonable and prudent course to follow for the following reasons :
1 ) The adopted preliminary budget was prepared on an assumed �1 .35 tax rate
with an anticipated 5.1X assessed valuation growth. While the final
assessed value figure increased 6.1%, the resultant additional revenue
generated, based on a $1 .35 rate, is approximately $32,500. Recent
unavoidable City Council action appropriating $75,000 additional funds
for liability insurance costs is more than double the newly-found
property tax revenue.
2) The 1975/76 Budget, while fiscally sound, is $488,504 short, in a
. budgetary sense, of making current estimated revenue equal budgeted
expenditures. Even more disconcerting is the fact that a sizable
gap exists in operating revenue available and current operating
expense.
3) The uncertain economic picture, coupled with the ever-present threat
of that condition causing a drop in substantial revenue sources, �
cannot be overlooked.
4) The need to increase the number of permanent staff, for park main-
tenance in particular, will undoubtedly be necessary in the future to
maintain parks presently being developed.
5) The full financial impact of the new Library is not totally reflected
in the 1975/76 Budget.
6) The constant rise in the cost of labor and material will make it still
more difficult next year to maintain the budgetary gap between revenue
and expense within reasonable limits. It would not be prudent, in my
judgment, to adopt a budget where a greater spread between the two
exists than in the current budget.
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