i'll call to order the santa barbara city council finance committee meeting for may first is there anyone in the audience you'd like to speak to any items that are not on our agenda today report is related to the recent filing of the fisker nineteen recommended budget with council and as you know this finance committee will be reviewing certain parts of it and so this is the first substantive item we have for the finance committee over the next few weeks and we always start with  fund revenues and then we use that to build our multi or forecasts so it'll be a sort of a two part presentation miss julie nemeth our treasurer manager will be starting with the revenues and it's important and we want make sure you're comfortable with our assumptions but you know we we make a lot of assumptions this year what we're how we're gonna end the year which we come the basis for the next year and they you know the revenues are the most important part of the budget tells you how much you have to spend and it drives a lot of our decisions so we want to make sure that you're comfortable with our assumptions and then just for informational purposes we'll again go into a multi or forecast looking all the way through two thousand and twenty one what the trends are looking like based on our assumptions of revenues and costs and so with that i'll turn it over for the finance department and i will be covering the general fund major revenue forecast for fiscal year two thousand and nineteen i'll be going over a couple different areas today i'll be starting with just a summary of the non departmental revenue revenues for  year seventeen eighteen and nineteen then i'll be going into the detailed revenues for sales tax property tax transient occupancy tax utility users tax franchise fees business license and property transfer tax i'll be going over as m the assumptions what we use to create our forecast and looking for any input from from all of you so this beginning slide is marie of our general fund non departmental revenues it shows the fy seventeen actuals and that's in yellow in orange is fy eighteen and that is our adopted budget our revised forecast for fy eighteen and then the variance between the adopted budget in the revised forecast and in purple is the f y nineteen budget which is our proposed budget the reef forecast for fy nineteen and then the variance between the two but i wanted to point out is that in these are all of our major revenues for fy eighteen we are we have a revise forecast that is creating a variance of five hundred and seventy six thousand dollars below the adopted budget this is almost entirely due to sales tax and i'll be getting into the details on future slides sales tax and t ot continues to  perform a little bit below our expectations where as property tax and ut is performing a little bit better than our expectations and fy eighteen for fy nineteen the reef forecast is actually better than the original proposed budget we are forecasting ninety one million which results in a positive variance of three hundred zero and it's following the same trends that we saw in fiscal year eighteen sales tax and t ot has gotten a little soft whereas property tax and ut is performing a little bit better than we had originally budgeted so moving on to the detailed revenues the first being sales tax sales tax is our second largest revenue source for fiscal y eighteen we did have a lower base going into eighteen because when we adopted budget every year we only have two quarters worth of data to review when we adopt the budget sales tax is received quarterly and one quarter in arrears so we did not have the march or june quarters at the time of adopting the budget for fy eighteen so the final quarters of fiscal year seventeen did come in lower than we had anticipated this does result in additional growth needed in the final two quarters of fy eighteen to meet the adopted budget so that just basically means we start with a lower base already in fy eighteen i also wanted to point out that we did see an impact in second quarter from the thomas fire the first quarter was pretty close to budget and i'll have a slide that shows the numbers the second quarter we did see a decline from the time largely due to the thomas fire based on the thomas fire mudslide we are revising our projection for the remaining two quarters we are projecting a decrease of about two hundred and fifty thousand dollars that's our estimate of the impact for the remaining two quarters from those two disasters the net effect of all of these results in a projected revenue decrease of close to a million dollars to spot nine hundred and twenty five thousand dollars from adopted budget for fy nineteen we are recommending to reduce the growth rate from two percent which was in the original proposed budget for fy nineteen to one five percent we're doing this because we've seen low quarterly returned for the past several years for the last six quarters there's only been one quarter that has achieved a two percent growth rate so we're recommending this reduction also we are treating the thomas fire and mudslide results as one time impacts so the results for the december quarter and that we're down about five percent and i'll show you that on the next slide and also that two hundred and fifty thousand dollars adjustment that we made for the remaining two quarters of fiscal year eighteen we're treating tho as one time impacts so the sales tax forecast for fy nineteen assumes revenues will return to pre disaster levels we have also factored in any new businesses into the revised forecast for fy nineteen so taking into account all of those factors  assumptions our revised revenue forecast results in a decrease of about three hundred and ninety thousand so looking at all of that data together gives you this chart showing fy seventeen in yellow it shows the actual results and the actual growth rate in orange similar to the first chart we looked at is the fy eighteen adopted budget the re cast and the revised growth rate and in purple is fy nineteen the revised forecast and the revised growth rate at the bottom in green you'll notice we have variants to the between fy eighteen revised and fy nineteen revised to the adopted and proposed budgets for both years i've also shown you in green at the bottom what the original adopted growth rate is so i wanted to point it was a decline of five six percent we think that was a largely attributed to the thomas fire and in the remaining two quarters you'll notice the grayish blue shading that is a fork those are forecasts whereas in the white or actual results so for the  march st quarter on the june th quarter and fy eighteen that's where we have included that two hundred and fifty thousand dollars adjustment for the remainder of the year in total the fy eighteen reef forecast is nine hundred twenty four thousand dollars below the adopted budget fy nineteen we have revised that growth rate from two percent to one five percent you'll notice below the september th quarter the growth rates all seem a lot higher than one five percent that's because we used those pre  growth rates even though it is a one point five percent of pre disaster revenue levels does that make sense council member dominguez that mostly makes sense the one question i wanted to get a clarification so under the yellow column fiscal year actual the december quarter there's negative one point three percent growth is that year to year that is year to year that's december the prior so it'd be fiscal year sixteen december quarter fiscal year seventeen december quarter that that three month period okay and then the june quarter that's ending june th crisis negative two point seven correct and do we have an idea that seems like a pretty big drop that two point seven was there something what was explanation back then if you remember i believe that quarter did have some one time adjustments in it i don't know if i do have diego martine here from treasury i'm not sure if he recalls but i believe that quarter did have some one yeah there certainly were some one time adjustments in the june quarter i think december was more just general retail to activity being a little down than where it was the prior year but june there was some kind of one time shifts believe so got might report two quarters worth of income in one quarter or some kind of readjustments in the location of their business so i'm not completely sure what the exact reasons were for that one but there was some large kind of one time transfers and then the nine quarter okay great thank you and then the green adopted growth rate on the very bottom of one percent does that refer back up to the forecasted twenty one million or is that what is that one percent adopted growth rate so that was the original fy eighteen adopted growth rate that they developed that adopted budget number the twenty one point nine million the very left column under the orange okay so the twenty one nine hundred and thirty six was one percent above the actual or the forecast twenty seventeen above the fy seventeen actuals at the time we adopted the budget it was the forecast of fy seventeen at the time we adopted the the data we had at the time we adopted budget and so what would be the revised growth rate it would actually be not a negative growth it would be some percentage because of the twenty one three seventy eight or going back to the forecast and rate so our the revised growth rate so you'll see as two thousand one hundred and one two is compared to fy seventeen actuals where we finally we actually ended the year so if you wanted to look at it the time that  that's calculated from the actual with our forecast correct it's based on fy seventeen actuals and just add it so the one percent is what we based on what we forecast in seventeen well we budgeted in eighteen but because seventeen came in lower in order to meet budget in eighteen just the budgeted amount we need more than one percent great exactly yeah we started with the lower base because you'll notice the last two quarters of fy seventeen only showed a growth is because we've assumed that it's starting in nineteen we go back to the pre disaster numbers so i mean treating the month what's happening this year is one time so that brings us up pretty substantially then about the top of that we would add one and a half percent to our assumed growth about that base so comparing it to two thousand and seventeen it's about six hundred zero more than two thousand and seventeen s actual and so that would be somewhere two two and a half percent growth from two thousand and seventeen yes over two year period you okay great thank you so just the last thing i wanted to say on this was just for fy nineteen then that reef forecast results in about three hundred ninety thousand below the original proposed budget i'll move on to a little more data on sales tax we'd like to show a historical chart on sales tax just to show some trends and what we've seen over the last nine years this is data from two thousand and eleven through two thousand and nineteen in two thousand and eleven the city received seventeen point six million in sales tax in oringer all actual results green as the forecast in two thousand and seventeen the city received twenty one point four million in two thousand and eighteen we're projecting twenty one million and in two thousand and nineteen twenty two million am i wanting to point out is that in between two thousand and eleven two thousand and fifteen you'll notice that it was a pretty pretty decent growth rate for those years it averaged about five percent growth however between two thousand sixteen and two thousand and eighteen we're looking at only sorry between two thousand and seventeen to two thousand and nineteen we only looking at about three percent growth rate the two thousand and eighteen number forecast does include that thomas fire and mudslide impact so that's why you see one nine percent decline however even without that impact he'll notice that sales taxes are just not performing the way they were about seven eight nine ten years ago freedman with the increases that we're projecting does that include measure c as part of it that's a great question no i have not included the measure c money in this chart or in any of the tables and that's completely separate cuz they're not it won't be general fund but it's it's pretty close to it's almost a one to one it's just slightly higher than the general fund portion moving on to property taxes property taxes is the largest revenue source non departmental general fund revenue source for the city in fiscal year eighteen we did revised our projection based on county evaluation reports we received that assessed values had an increase of six percent our original adopted budget growth rate was five point five percent that is primarily secured and unsecured taxes we have other things that are components of property taxes that might impact to that growth rate but it is a large portion of our property taxes we are also informed by the county that we had a one time thomas fire impact of one hundred and ninety thousand dollars the ongoing impact is less than zero one percent less than twenty thousand dollars so it's pretty minimal based on this data we projecting a revenue increase of about four hundred and forty thousand four hundred and fourteen thousand from adopted budget in fy eighteen for fy nineteen we are recommending a change to our growth rate from five percent to five point five percent  largely due to the last several years our growth rate has exceeded five point five percent we continue to see healthy growth in property taxes both statewide locally nationally the housing market continues to perform very well locally inventory is very low turnover is very quick and we are continued to see prop eight recapture which is basically the properties that were assessed down during the housing crisis the county can then recapture those values at any time they can do it quickly or slowly and they've done it very conservatively and there are still values to be recaptured we believe it could end in nineteen or twenty it usually accounts for about one percent of growth so we still have about one percent of growth for prop eight recapture we also see about two to three percent for new development so we believe that five five percent is a healthy growth rate for fy nineteen based on the change in the growth rate and the higher  fy results fy eighteen forecast and fy nineteen forecast as well as the variance to the adopted and proposed budget i wanted to point out the numbers i've already provided but for fy eighteen with the additional data we received from the county even with the thomas fire adjustment you'll notice towards the bottom of the fy eighteen columns that one time thomas fire adjustment one hundred and ninety zero we are still projecting revenues to come in above budget of four hundred and fourteen thousand and for fy nineteen we are changing we're recommending a change to our growth rate from five percent to five point five percent which is going to result in additional revenues of seven hundred and eighty seven thousand and that's due to having question on actually wrong wrong tax i'll come back to you okay absolutely so historical look at property taxes i used the same time period two thousand and eleven through two thousand nineteen in two thousand and eleven we did have twenty two point eight million dollars in property taxes received by the city in two thousand and seventeen twenty nine point four million was received and we're forecasting in two thousand and nineteen about thirty two point six million was interesting about property taxes is in two thousand and eleven through two thousand and fifteen we didn't see the growth that was when we had the housing crisis when properties were actually being assessed down or just it's just starting to come back from being assessed down it is in recent times we're starting to see more improved growth in property taxes and over the last several years we are seeing growth rates exceeding two five percent he'll notice in two thousand and eighteen we do have at four point four percent growth rate and that was slightly impacted by that one time thomas fire adjustment over nine years we do show over almost a ten million dollar increase in property taxes so this is one of our healthiest property one of our healthiest revenue sources for the city next is transient occupancy tax for fiscal year eighteen we did revise our projection based on actual results through february two thousand and eighteen in fy eighteen we had included hotel californian for the entire year however there was a two month delay which impacted results for fy eighteen we also are recommending to revise our projection due to the thomas fire in mudslide in december and january we had some pretty significant  variances in our results and i'll be going over that in a few minutes but we felt that for the remaining four months of the fiscal year that there could be some lingering impacts from the thomas fire mudslide on our local hotels and lodgi establishments so we are recommending a reduction in our growth rate from three percent to two percent just for those remaining four months so based on the data that we've received through february and that adjustment to our growth rate we are projecting a revenue decrease of about eighty three zero dollars moving on to fiscal year nineteen at this time we're not recommending any change to the hotel motel growth rate of three percent the thomas fire month light results in december january we're similar to how we treated it with sales tax we are treating those as one time impacts when we get to next chart i'll show you they're pretty significant variances of over twenty percent so we are treating those as one time impacts and we're not including them in the f nineteen forecast so we are the night fy nineteen forecast assumes revenues will return to pre disaster levels just for december and january however we will use the february i'm sorry the march through june adjusted base of the lower growth rate from three percent to two percent for our fy nineteen forecast the opening and expansion of any hotels and motels has already been factored into the forecast as additional growth above the three percent however we have some made some slight modifications based on additional data that we've received for this year and for fy nineteen from the community and from local lodging establishments based on all of this information we are  revenue forecast and it results in about a hundred and forty two thousand dollar decrease from fy nineteen so this is a little small i'm sorry i try to make it as big as possible we look at our data on a monthly basis because that's how we receive t o you'll see that for fy eighteen based on the results all the way through february and the revision to our growth rate from three percent to two percent we are projecting revenues to come in about eighty three zero dollars below budget on this slide i did want to point out in fiscal year eighteen under the orange section the results for december and january we'll notice are pretty big variances december was down twenty seven percent and january is up twenty percent we do believe  largely impacted by the thomas fire and by the mudslide we see we think that positive variance could be due to residents being displaced and having to stay in local lodging establishments so we have that is why we've treated those  one time impacts for fy nineteen refor cast so based on the assumptions that we've provided for fy nineteen it results in one hundred and forty two thousand dollar decrease below our proposed budget for fy nineteen and you'll notice for december and january why there's such a big variance there because we went to pre disaster revenue levels any questions on this before i move on okay great thank you historically tod revenues prior to the last couple years have performed very well this is the data from two thousand and eleven through two thousand and nineteen back in two thousand and eleven the city earned twelve five million in t ot in two thousand seventeen the city earned nineteen point two million and we are forecasting the city to receive nineteen point eight million in two thousand and nineteen once again you'll notice similar to sales tax from two thousand and eleven to two thousand and fifteen tod was performing very well we saw several years of double digit growth however over the last couple years we are not seeing the same level of performance whether or not it's just starting to level off or it's reached a ceiling we know that our hotels our occupancy rate is very high so whether it's reached a point where most of the growth is related to growth in prices we think that's a possibility we also know that two thousand and eighteen obviously had some impacts from the thomas fire and mudslide over the last nine years we've seen about a growth of about seven million dollars in t ot so that's why we've recommended some lower growth rates for t ot for fy nineteen compared to what we were seeing a few years ago the next revenue is utility user taxes in fiscal year eighteen we also have data on a monthly basis so we revised our projection through based on data through february two thousand and eighteen we are not recommending any changes to the growth rates the individual do vary and so we're seeing the biggest declines as we have for the last couple years in cellular we're also seeing the biggest growth in water based on the year to date results through february  is performing well water and electric are performing well so we're projecting revenue a revenue increase of about one hundred and seven thousand over adopted budget and fy eighteen for fy nineteen we are recommending one change we're recommending in a growth an increase to the growth rate for refuse from four percent to eight percent and that is consistent with staffs recommendation of an increase to solid waste rates for fy nineteen the overall growth rate for fy nineteen for all of our utilities is increased from zero two to zero seven percent we are assuming a continued decline in cellular telephone and cable it's what we've seen for a couple years now we're seeing people actually move away from traditional cellular and move towards prepa prepaid cellular and luckily in two thousand and eight two thousand and sixteen the city started to receive uut on prepaid cellular so that's an area of growth for the city it does assume growth at all over all other categories except electric that we've kept flat with the largest growth rates and refuse and water so based on this data we are revising our forecast results in additional revenues of one hundred and fifty zero looking at all the data this shows the individual re caste and growth rates for all of our utility users taxes and you'll see that we subtotal telephone which is comprised of cellular voice over internet protocol telephone  prepaid cellular the very bottom one is prepaid cellular is one that's new to us since two thousand and sixteen and it's pretty much the only one that is consistently growing at this point as we see customers moving away from traditional landline and traditional cellular towards prepaid cellular cable continues to decline and however we do see growth in electric sce did have a rate increase in fy eighteen which is why i think we have the growth in fy eighteen and we had budgeted for it gas it really varies year to year and refuse we've seen a growth along with pricing with rate increases as well as water so overall we're seeing we're recommending our sorry our revised projection shows an increase of one hundred and seven thousand for  fy eighteen and for fy nineteen the one change is related to refuse where we're increasing the growth rate from four percent to eight percent and that results in additional revenues of one hundred and fifty zero partly due to refuse and partly due to the higher results on fy eighteen i'm gonna be going into the final few revenues but i won't be going into as much of detail and they're not as big of a revenue source for the city so the first being franchise fees the revised projection is based on results through december two thousand and seventeen we recommending no changes to growth rates in fy eighteen based on data through december two thousand and seventeen we are projecting a revenue increase of twenty four zero this is primarily from electric performing better both at the end of fy seventeen and in eighteen for fy nineteen the growth rate we rec we are recommending an increase in the growth rate for refu similar to ut from four percent to eight percent and this results in a revised revenue forecast of forty seeing some thomas fire a mudslide impacts two business licenses we're seeing a decline this year and we think it's possible that businesses either may have gone out of business or deciding not to continue to operate and we're not receiving we're not receiving the applications for business license renewals like we anticipated we also do have some staffing impacts we have some turnover in our treasury division which impacts the ability to follow up on delinquent notices as often as we usually do and so businesses that are delinquent we generally call and ask are you going out of are you no longer operating in the city of santa barbara are you just behind on making the payment so it's possible some of the se this decline is just late payments as opposed to no longer renewing the based on the data through february two thousand and seventeen we are projecting a revenue decrease of seventy zero from adopted budget in f nineteen we are recommending a reduction in the growth rate from one percent to zero just based on the data we have through february of two thousand and seventeen and this results in a revised revenue forecast of a hundred and one percent decrease for fy nineteen for property transfer tax which just a reminder of what this is so anytime a property is sold there is a tax that it equates to a dollar and ten cents for every one thousand dollars of assessed value and the city gets fifty percent of that it's very difficult to estimate because it's based on sales activity and one very large purchase can have a significant impact on this revenue line so right now we are not recommend is a summary of all three of those revenues franchise fees business license and property transfer tax even though i summed the three revenues they are not related but just to look at them  three for fy eighteen in total we are projecting the variance to the adopted budget below the variance below adopted budget of ninety thousand dollars franchisees are performing better than anticipated how our business license and property transfer tax are slightly below what we anticipated a slightly below budget for fy eighteen for fy nineteen it's a very similar story franchise fees are performing better than we predicted whereas business license and proper transfer tax are slightly behind budget so the net effect is about one hundred and two thousand dollars below the proposed budget so now that we went through all the details i thought it'd be helpful just to go back one more time and look at the summary of revenues in case there's any questions and it gives you a good idea of where we're where fy seventeen ended up where fy eighteen will be in where fr nineteen is being forecast so you'll notice that for fy seventeen the revenues came in at about eighty six point two million dollars for fy eighteen based on all of the assumptions we went through we are refor casting revenues to come in at eighty seven point four million for fy nineteen we're actually projecting revenues to come in slightly above the original proposed budget at ninety one million for oh sorry for a variance of three hundred and three thousand and fy nineteen so i'm happy to answer any questions before i move on before i pass it off to mario for the multi year any questions councilmember dominguez thank you the so this last slide you just showed us so the forecast the re cast number is ninety one million so that's a pretty significant difference from fiscal year two thousand and seventeen actual looks like close to five million do you know what that is in terms of a percent i know that looks like three or four percent maybe  fire so that seems like roughly in the ballpark particularly with a big property tax engine driving this in terms of the property tax in the thomas fire how did that play out you said there was a one time impact is that because of properties on coast village road or would that impact the city yeah it should be mostly the properties on coast village road because that should be the only properties within the city limits and those are property owners who've filed paperwork to reduce their property taxes i'm not i you know i'm not sure i'm not sure if we got that information and i'm not sure if the county assessor just did these three assessments on their own there's different ways that they can do reassessments they can do them at the request of a property owner or they can do it  themselves they can initiate it so i'm not sure what direction they took on this one okay and is the city eligible either through insurance or federal government assistance to recoup any of that lost revenue  we are not able to recover that through fema or oes any lost revenues only cost you actual cost that we incurred damages occurred and or insurance insurance there's a possibility that we're pursuing that that there based on where the damage occurred in the nexus to lost revenues we have to meet certain thresholds we may be able to see some recovery of lost revenues but not for things such as sales taxes and those  be more like in the waterfront any lost revenues from rents or facilities that weren't able to be rated because of that is there a a ballpark number amongst all the revenue sources in terms of how much was lost because of the thomas fire no no we haven't kind of quantified that okay thank you friedman my question i'm not sure if it's has to do with the general fund but i'll i'll start there in in two in two weeks we have for the council of the issue of the library and when the the county action to cap the administrative fees my understanding is that's going to have an impact in a couple hundred thousand dollar range is that part of general fund or is that part of a categorical or a fund and the reason i asked is i see this three hundred and three thousand dollar impact is going to be to the general fund of the couple hundred thousand dollars or so and that's because because we charged the county library fund a separate fund for those services then it comes into the general fund the library department so that is an impact the library department general fund but going into nineteen we have a balanced budget but we haven't factored in how we address that unbalanced amount so we're really technically out of balance by that amount so this three hundred thousand dollars are effected into that equation okay so let's turn it over to the star talk about multi or forecast so this is just a recap of what miss nemeth just went through for eighteen and nineteen and the purpose of this is to kind of give you a sense of how it's looking what are the assumptions we're building into a multi year forecast and we do this every year we're always updating this sometimes we go out further but two years out is about as far as i'd like to go that where it's meaningful to us because there are so many variables but i wanted to highlight what i've assumed in this multi year forecasts and these major revenue categories so starting with sales taxes in two thousand and twenty the the blue column you'll see that i've assumed a continuation of the assumption we that we built into the nineteen budget of one and a half percent for the two out years so one and a half in two thousand and twenty and an additional one and a half percent in two thousand and twenty one we think that's a reasonable assumption i think that there is potential short of any recession for an upward pressure or you know be that higher because i think cpi is starting to grow and as cpi grows prices of goods and services by definition go up and we can see some increases there but based on what we're seeing now and still sort of the impacts of in the amazon and all that we think one and a half percent per year is a reasonable number for forecast and at least we are keeping the five percent in the out years for property taxes miss dimas indicated that the one percent of that we're seeing now is from property recapture that could run out in nineteen at a minimum s so what would think the five percent growth in those two years as a reasonable amount or a number and then you'll see for the first time showing up in two thousand and twenty a million dollars and this is property taxes rda was dissolved in back in two thousand and eleven or twelve we were allowed to continue to receive tax increment property tax increment in order to pay off existing rda bonds there are two bonds that are outstanding you should in two thousand one and three and those will be fully retired in two thousand and nineteen and it's about seven or eight million dollars that we are receiving in order to pay for these but these debt these bonds once that is completed then that money will be reapportioned just like the rest of it  was to all that you're taxing jurisdictions and we are one of the jurisdictions within the project area if you will and our share of that is thirteen percent which works out to be about a million dollars so we'll start to see a million dollars roughly in two thousand and twenty and then we'll we're expecting to see that grow along with property taxes it'll be  folded into our property tax number and so should go about five percent so it's kind of a nice you know boon for us and that started in that year with tlt we're assuming three percent in the out years just don't know that's such a such a tough one to  forecast but to be kind of in line what we're thinking now what we're seeing now we think three percent is a good numbers could be better it could be worse don't know it's sort of a good mid range number your total users tax business license tax there are always in the one percent range so we're going to be consistent with that and then real property tempt franchise tax there they're not necessarily tied to property taxes they're almost a leading indicator but we've seen kind of an average of three percent growth per year on that and that's what we're sticking with not a big number in any case but to kind of go to mister dominguez this kind of question about overall growth just for tax revenues in eighteen it's gonna be a one three percent growth overall relative to seventeen of course that factors in factors into thomas fire and then nineteen of four four percent overall growth a little bit it's higher because of the fact that we assume some of that one time stuff is gonna come back to normal nineteen but you know if you were to normalize that stuff we're looking at a two to three percent overall growth in taxes over a couple years and twenty the only reason we're looking at four three is because of that million dollars coming in for the first time but it otherwise would be more than three percent range giving is yes thank you on the property tax do you know where santa barbara's property values are relative to the past peak and we drop down and several years ago and we've been climbing back up i did hear once in a while some communities have caught up do you know where we are in a no property tax revenue tends to lag behind that curve so i'm just curious you know you've so a good question i'm not sure have the answer but i from an assessed value perspective we're not back to where we were otherwise we wouldn't see it we wouldn't have that capacity to be property you know for the property recapture so i think for an assessed value perspective what they call property thirteen value i think we're still below in terms of market values i think we're you know median prices are at or above where we were so a lot of detail here but just the the idea is to kind of show you rapping in the not in not only in taxes but the other revenues that are part of the general fund there are a number of them you can see the tax is by far the largest categor all together which is what we just went over some of the other large revenues we have in the general fund includes service charges that's kind of about halfway or into the revenue section at eleven point nine million in eighteen twelve point one nine and two thousand and twenty in in nineteen  those are charges for services like planning building recreation services they represent about ten or so percent of our overall general fund revenue total but on a percentage basis not not big but in terms of but we do our best there are other considerations such as market participation where we might lose we raise them too much but we generally try to increase them we typically see that they go up in the one to two percent range in total per year and that's kind of our target charges that includes a lot of things one of the biggest components of that is the overhead number overhead is about eight million dollars per year and that is what the general fund charges all the enterprise funds and other funds for the services that we provide out of the general fund so the finance department city administrator's office city attorney's office office they're all housed within the general fund from a cost perspective and to the extent we provide bennett services to those other funds we charged them through what's called the overhead so we recover some around forty percent or over over administrative costs through the overhead so the number i wanted to point out is in terms of the revenue is the last one which is the anticipated year in variance you can see that we're in the two to two point three to two four range million dollars this as a reminder is what we believe in our estimate of what we expect to achieve every year in expenditure savings we always have turnover and staff we never we never have full staff in the general fund we may have any any point in time somewhere between fifty and seventy five vacancies and that provides savings to us and it's usually in the lease our estimate on average about two three million dollars the last few years with the high vacancies in library community development and police that number has been a million dollars but on an ongoing basis particularly going forward as we see these departments better these vacancies going away we have less vacancies now than we did last year or two years ago we see that normalizing back to two three million dollars expenditure side you can see i just put salaries and benefits as one run row and everything else and the other the other expenditures i've kind of kept constant they've kind of have these one time things coming in and out but for the most part i have assumed pretty constant expenditures supplies services allocated cost and the like but salaries and benefits you can see where we have the biggest the biggest number and it's also there where we see the biggest growth in nineteen about a four point four percent growth in twenty three point eight and then three point six in two thousand and twenty one it's about four million dollars a year we've seen in terms of overall growth and these this is based on an assumed one percent per year growth and salaries so because of that there's a corresponding impact to other other costs that are tied to salary particularly retirement and then toward the bottom you'll see that obviously in nineteen the kind of white column in the middle is we're balanced that we're proposing a balanced budget safe for the library issue we have to resolve still going forward based on the assumptions on can see the capital program at one point four that's our typical capital expenditure which is what's driving that the deficit not a big dollar amount and then in two thousand and twenty one it's growing slightly to one three million dollars so the takeaway here is essentially you know we talk about revenue growth overall you know individually they have they go they vary but in total what we're seeing is around the three percent revenue growth that's just not quite keeping up with our expenditure growth i'm  one percent saw our increase and that's what's creating this deficit so if we were to carry this forward over the next several years beyond two thousand and twenty one those numbers would continue to go get bigger and bigger question is on that piece okay and then this is the the the other half of that forecast if you will this is on the reserves what does all this mean to reserves and the thing to keep in mind with reserves is that if for example next year we have a balanced budget if we came in and exactly as our budget and with no surplus no deficit from a reserve perspective we would be behind because our reserves are a function of a budget i mentioned that our budget grows about four million dollars per year so every year we have to generate a surplus of a million dollars just to stay even with our reserve policies which is twenty five percent of operating budgets so you know it's puts a lot of  pressure on our budget if we will and it's it's it sort of begs the question why shouldn't we budget some kind of a number in there that says we need this at least to not only be balanced for an operative perspective but to be balanced from from reserve perspective but that's just that's just with you for conversation so just to of keep that in mind so in two thousand and nineteen given that we're sort of starting the year with reserves of a policy at least for potentially reserves of a policy at then this year we will still be at policy by in nineteen assuming what our numbers come in as as we budgeted but in twenty because we have this deficit compounded by the fact that we didn't generate that million or so in reserves to cover our growing policy requirements we are we be showing a one two million dollar deficit in our reserves and then it basically more than doubles in two thousand and twenty one because again we're not generating the surplus to cover the growth the natural growth and reserve requirements plus we have to add to that at to one three million dollar deficit so just to kind of give you the sense of how this plays out you know the numbers are fairly small on in terms of our deficits we're projecting couple years but in terms of its impact and reserves it's a little more magnified any questions on that piece it's pretty straightforward and i can't you know we you indicated we didn't want to get into the pension discussion but i can't really you know it's not it would be irresponsible of me to not get into the discussion of pensions in terms of what the forecast looks that even though we kind of look at the next couple years only this is this is a problem that's gonna you know long term base is gonna be something were challenged with so we've seen this chart the only addition to this chart is that the blue line at the bottom city would be pairing pain would be instead of forty nine and a half percent it would be forty one percent because they would be picking up that incremental eight percent today they're picking up about nine or ten percent of their content of their total rock costs so by two thousand and twenty one and this sort of hold true then they would be paying somewhere around eighteen or nineteen percent and then it's once upon a time not too long ago that i think the question was asked mister dominguez what does that mean in terms of dollars what are the costs gonna be i think i mentioned at a work session that some cities based on a survey that the league did that some cities would see a hundred percent increase in their purse cost and dollar wise by two thousand and twenty five when the the discount rate is fully phased in and this shows us what we based on what pers has provided us what those costs would be and this is based i wanted to kind of isolate that you know and the the increases from the salary increases so if we gave no salary increases starting in two thousand and twenty we built in a one percent this year next year but starting in two thousand and twenty we gave no additional salary increases this is what our cost would be citywide and the general fund so today the general fund in eighteen is paying twenty thirty million dollars in retirement costs that would grow to thirty seven point three million dollars by two thousand and twenty twenty five it's a fourteen million dollar increase it's about a seventy percent overall increase on a percent basis and city wide about twenty nine million dollars of arraigned this year that would grow to forty seven point two million dollars in two thousand twenty five for about an eighteen point two million dollar increase so those are the numbers that assuming no salary increases so obviously these numbers will be impacted by the fact by any increases above zero for starting in twenty some factors that could affect our actual results going forward potential for recession so the general fund as you know it we rely on you know right or wrong we rely on our tax revenues that are tied to tourism we see we've historically see those revenues between a recession hits or we have a strong recovery we saw a major impact in two thousand and seven and eight but then we saw strong recovery and quixote and even sales taxes in two thousand twelve through seventeen so we have volatility there so when recession hits we can expect some further impacts or some impacts to some of our revenues that were relying on we are currently in the third longest expansion you know period as following a recession in us history and this fall if we were to continue on this trend it would be the longest in history amazingly that nobody's forecasting at least very few are forecasting a recession in the next year maybe not even the next couple years but certainly i think there the for the economists will tell you that there's a really good chance in the next three years that we see recession and that would be that would blow out in terms of the the longest expansion period to be thirteen years of expansion again the longest right now is ten years and then the potential impacts o two bills that are that had been sponsored by senator glazer this would have an impact on how current sales tax is collected through online sales would be distributed among the jurisdictions so there will be winners and losers pie doesn't change in terms of size it just who gets the money and it shifts what's called the situs you know which becomes the basis for how things get allocated from the seller to the buyer and what this means is that rather than looking at where the sales office is or where the distribution facilities are as the basis for allocating sales taxes it would be shifted to where the product is delivered so if you you know for amazon or other companies you know right now it's based on where those quarters are being fulfilled to the large extent but this would mean that we're product is delivered interestingly for us if this were to be become an effect we would see a net loss in revenues it'd be in the range of two hundred to seven hundred thousand very rough estimate the cities that would really lose out are the cities like nuba who has invested substantially in bringing in and building and bringing in large distribution facilities that are within the state companies within the state and they get all the sales taxes now  they indicated i know at one meeting i went to that if they weren't for the fact that they had these facilities and the way the current taxes are allocated they would see their sales taxes cut into almost half so they've invested on the premise that it's based on  where the seller you could resides versus where they it's delivering so you can see statewide it becomes a kind of a tough discussion because there'll be some a lot of winners and a few big losers the other one is is different than the the redistribution of the sales taxes for online sales this is really adding to the pie this is making the pie bigger and this would this is the wayfarer versus south dakota case this is the case that's currently being held by the us supreme court i mentioned not too long ago this was kind of coming up and it's revisiting the one thousand nine hundred and ninety two quill case where north dakota north dakota lost they were they were they were wanting this catalog company that was out of state to collect sales taxes that for those things that were being delivered into the state of north dakota they were unsuccessful the supreme court decided and said that no that's not required and that became the basis and wide for why states like california can't force out of state companies who were selling products in the state of california from collecting sales taxes our consultants has indicated that we could potentially see a million three per year other estimates are based on sort of per capita averages put that at about a million seven not sure where this is gonna land i mean with that i'd be happy to answer any questions or we'd be happy to answer any questions well thank you both for that very comprehensive report you spent a lot of time carefully examining those revenues coming up and appreciate the level of detail or is there anyone in the public that like to speak to this awesome bonnie would you mind going up to the microphone is reason could you make sure the microphone is on step one could you check to make sure their microphones on sorry thank you there we go now you can go under capital programs does that include our infrastructure and the monies that came from the voters passage of major c i mean capital capital means  raisin you could ask your questions and then we'll have a conversation about them up here rather than just doing a one on one with the staff you're really looking at how are we accounting for the measure c revenue and and i got some of it a few weeks back but missing from it was a huge for me it was twenty two point five million that was supposed to go into that's the estimated revenue that would be getting from this additional sales tax increase from measure c mm hmm on an annual basis and your question is and my question is and out of that it's going to eventually amount to eighty million plus right over a period of time i mean yes it depends on how long a period of time and you were projecting and projecting well i think what i'm asking for and i think the people who voted for that would like to have a concise and and easy to understand for the public how that money is going to be spent and is it i mean i know it's not going to be complete some of it is going to go to new salaries and so forth i assume because it figured  to sixteen point eight hundred million when i i don't know this was a while back but just for clarification sure is it i think we understand the question is there is that the whole you a discussion on the measure c so we'll be bringing to you on the nd how that twenty one or twenty two million dollars is going to be planned to be spent for next year on what projects specifically and it'll be a little bit duplicative of a present a presentation we have schedule also on june th for the full council and one of the public hearings for the budget so we're covering here and in detail and maybe it's a less degree in with full council so that'll give you a good place for miss raisin to you know to attend and hear where the money's going to be  about twenty one million dollars there's no sunset that over a ten year period that's two hundred million over twenty years that's four hundred million or so so those are the numbers we're talking about thank you very much for that any additional questions for staff today coughs member dingus the so the online sales it's interesting that a couple of these outcomes could result in us having a revenue loss i had thought it might go the other way is that because we sell a lot of online products that were not that we're capturing revenue from what i can do it going yeah we have before we got the number of our consultant we were asking ourselves would we win or lose in that regard and it has to do with the proportion of folks who do online sales music versus how the monies are being allocated and it i guess it turns out that we have more folks doing online thought we would be a winner or a loser based on this change and it is all about where those purchases are made so whether there's a higher percentage of online purchases made within the city of santa barbara compared to other cities within santa barbara county because it's all pulled together by the county and then allocated out to the individual cities so it's just looking at the percentage of sales by the individual components of the county and comparing that to how it's already being allocated through the pool and it turns out we actually would lose and we didn't know until we actually contact our consultant and said it could have gone either way and it's you know we didn't know we didn't have the data on how we would how the citizens within santa barbara we're actually  purchasing yeah i think what happens is because we're a tourist destination we have a lot more sales taxes than michael santa maria does so because of the way it's allocated we get our share of any online transactions within the county based on how much sales taxes we get and i think because that number is inflated to some degree we're getting more than we otherwise would have based on where the transaction actually occurred could you go to slide twenty five please and so it shows that  revenue projected revenue for eighteen nineteen one seven percent for point four and then it shows our growth in salaries and benefits five percent four percent and then in twenty it's two seven percent revenue grow three eight percent salary and benefit growth and then twenty one two point four percent revenue growth and three point six salaries and benefits so for three out of the four years we're predicting that our expenditures are going to go up a lot more our revenue in that particular category so that seems troubling and i don't know if there's a a municipal finance way that can help us deal with that problem so just to kind of make sure you understand so the two thousand and twenty and twenty one those those expenditures that are using a an assumed increase the salaries of one percent per year right so to the extent that we did zero for example then we wouldn't we wouldn't have that same problem and there was no salary increases whether that's realistic or not that's that's not you know for me to say but but so that's what's really driving this because of the purse cost retirement costs on top of that is really the factor that's making those costs go up because the one percent sorry crease typically wouldn't be that substantial but because the retirement cost it's bigger and and it's also just being matched up with a time when our revenues well not doing bad aren't doing great as i mentioned before we typically are in a three or four percent overall growth rate our revenues from you look historical averages last twenty years taking out the highs and lows we're typically at least three percent overall revenue growth and because salaries the benefits are not a hundred percent  overall cost the other costs tend to be sort of first stagnant they tend to be keep balanced we wind up in sort of a balance the ongoing basis but because we're soft and revenues a little soft on some of the revenues in and impacts retirement we're seeing this sort of odd imbalance structural   accounted for in this because it's not part of the general fund did i understand that correctly no and not it is part of the general fund so we'll see if you look at the budget that we just submitted you'll see that there's one more row in the list of revenues we call it measure c it's going to track assumptions that go into what get that number are essentially the same the only thing i will mention and not to confuse the issue is that any any add on sales taxes which is ours what it's ours is above the base of one percent it goes to this destination approached for how sales tax is allocated so what's being proposed by glazier is on the one percent base it's already occurring on the on any add on taxes and that's what they wanted part of it was let's just making the same so we may end up being a slightly a winner on that because of that so we may actually see our one percent for measure cb is slightly higher than what our base for one percent is because of that differential and how its allocated destination versus selling point but that's the only difference but they're gonna be pretty close great thank you very much you're welcome