EXPLANATION OF MAJOR GENERAL FUND REVENUE ESTIMATES
The City of Inglewood relies on several major revenue sources to balance its General Fund budget. The most important of these revenue sources (based on percentage of the total revenue budget) are the following: Utility Taxes, Property Taxes, Sales Taxes, Motor Vehicle-in-Lieu Tax, Card Club License Fees, Business License Tax, Transient Occupancy Tax, Parking Fines and the Pari-Mutuel Tax. Together, these revenues account for $54,200,000 or approximately 87% of the total revenue budget in fiscal year 2002/03. Based on an estimated slowly improving local economic climate, ongoing revenues are projected to increase by approximately 2% over the prior year’s estimated figures. (No one-time revenues are used in this year’s revenue budget). Listed below are the assumptions used for estimating the major revenue sources for fiscal year 2002/03.
UTILITY TAXES (Revenue Source Codes: 1051-1057) REVENUE TOTAL- FY 2002/03-$16,070,000
Utility taxes of 10% are levied on consumption of electricity, gas, water, telephone and cable television services within the City of Inglewood. We are forecasting a 3 -% increase in total utility tax revenues for the 2002/03 fiscal year, to $16,070,000, compared to the 2001/02 current estimate of $15,620,000. In fiscal year 2002, drastically lower natural gas prices caused utility tax-gas revenues to severely decline. A modest recovery is forecast for this revenue source in 2003. This decline was somewhat offset by increasing electric utility tax revenues. We anticipate very modest increases for all other utility taxes. Combined, utility taxes are the general fund’s largest revenue source.
PROPERTY TAXES (Revenue Source Codes: 1001-1020) REVENUE TOTAL- FY 2002/03 $9,875,000
The County of Los Angeles levies a tax of 1% on the assessed valuation of property within the County. The City of Inglewood receives approximately a 14% share of this 1% levy for property located within the City limits. Because of State actions during fiscal years 1992/93 through 1994/95 to balance its budget, the City permanently loses $2,500,000 annually in property tax revenues to the State. In fiscal years 2001 and 2002, there began a modest recovery in the City’s assessed valuation, which rose by 4% in each of these two years. The revenue estimate of $9,875,000 for fiscal year 2002/03 assumes a continued upward trend in revenue of 4%, based on a continuing rise in the City’s assessed valuation. Of this total estimate, line items 1007 and 1008 represent a public employee retirement levy of .146958%, which is added to the basic 1-% property tax levy.
SALES TAX (Revenue Source Codes: 1025-1026) REVENUE TOTAL- FY 2002/03-$9,025,000
The City of Inglewood receives a 1% share of all taxable sales generated within its borders (line item 1025). In addition to this 1% share, the City receives a portion of an additional voter-approved 1/2% sales tax amount, which is dedicated for public safety purposes (line item 1026). The sales tax estimate in fiscal year 2002/03 of $8,350,000 (line item 1025 only) is 2% above the revised 2001/02 estimate of $8,200,000. In fiscal year 2000/01 revenues increased considerably due to increases in the consumer goods category, mainly through a correction of a sales tax misallocation for Herbalife. There was also the opening of the Home Depot and Target stores and strong results from Carmax. In fiscal year 2002 revenues declined due to lower revenues received from Alamo as a result of the 9/11 attacks; lower prices for gasoline also impacted revenues as well as a decrease in the City’s share of the County’s pooled sales tax allocation.
MOTOR VEHICLE-IN-LIEU TAX (Revenue Source Code: 5005) REVENUE TOTAL-FY 2002/03 $6,500,000
The State Revenue and Taxation code imposes an annual license fee of 2% of the market value of motor vehicles in lieu of a local motor vehicle property tax. Cities and counties equally share 81.25% of the total tax collected statewide; the State then distributes this revenue to cities and counties on a per capita basis. Motor Vehicle-in-Lieu taxes had increased steadily over the past several fiscal years, due to the strong statewide economy. In fiscal year 2002, revenues declined slightly, due to declining economic conditions. Revenues are expected to increase by 2% the next fiscal year over the 2001/02 current estimate of $6,375,000, based on a slowly improving state economy.
CARD CLUB LICENSE FEES (Revenue Source Code: 2050) REVENUE TOTAL-FY 2002/03 $3,650,000
A voter-approved card club opened at Hollywood Park in July of 1994. The City receives a percentage of the revenues generated by the card club, on a monthly basis. In fiscal year 2000/01 revenues declined 6%. In fiscal year 2002 revenues are anticipated to decrease by an additional 7%, due to increased competition and the effects of the 9/11 attacks. In July of 1996, casino management invoked their option to be taxed at a lower level for 72 consecutive months in exchange for an upfront fee of $3,000,000 paid to the City in fiscal year 1993/94. This option expired in June 2002, but has been temporarily extended. The revenue estimate of $3,650,000 for fiscal year 2003 assumes that the casino’s operations stabilize and that the alternate schedule continues to be in effect throughout the 2003 fiscal year.
BUSINESS LICENSE TAX (Revenue Source Code: 1041) REVENUE TOTAL-FY 2002/03-$3,550,000
Business tax revenues are expected to increase in fiscal year 2002/03, due to increased enforcement and collection efforts. In fiscal year 2001/02, revenues improved slightly mainly due to the licensing of Daniel Freeman Hospital as a for-profit enterprise, which offset revenue declines from a slowing economy. The revenue estimate of $3,550,000 in fiscal year 2002/03 is 1.4% above the 2001/02 current estimate of $3,500,000.
TRANSIENT OCCUPANCY TAX (Revenue Source Code: 1028) REVENUE TOTAL-FY 2002/03-$2,150,000
Transient occupancy taxes are assessed on hotel and motel room rentals within the City of Inglewood at a rate of 14%. In fiscal year 2002, revenues declined by 20% due to the effects of the 9/11 attacks. Some recovery is foreseen next fiscal year. The estimate for fiscal year 2002/03 of $2,150,000 is 12% above the 2001/02-revised estimate of $1,925,000.
PARKING FINES (Revenue Source Codes: 3013-3017) REVENUE TOTAL-FY 2002/03-$1,980,000
The City of Inglewood employs special enforcement officers to ensure adherence to City parking regulations. These officers issue citations for various parking violations. These violations can be paid directly to the City, paid at DMV renewal periods, collected through liening of state income tax refunds and received as a result of court action. In 2001/02, revenues increased by 18% over the prior year, due to aggressive enforcement of parking regulations. For the next fiscal year, we anticipate a continued increased level of enforcement activity. Revenue projections for 2002/03 are equal to 2.6% above the 2001/02 revised estimate of $1,930,000.
PARI-MUTUEL TAX (Revenue Source Code: 1067) REVENUE TOTAL-FY 2001/02-$1,400,000
The City of Inglewood receives 1/3 of 1% of all pari-mutuel wagering revenue at Hollywood Park. The 2002/03-revenue estimate of $1,400,000 is equal to the 2001/02 estimate of $1,400,000.
EXPLANATION OF OTHER IMPORTANT GENERAL FUND REVENUES
Line item 1065- Admissions Tax represents a levy on all live entertainment events held at the Forum. The present rate is 69 cents per admission. This rate is adjusted every July 1 based on the percent change in the Los Angeles Urban Area Consumer Price Index. The revenue estimate for fiscal year 2002/03 of $180,000 is equal to the 2001/02-revised amount of $180,000. In fiscal year 1999/00 revenues fell dramatically from the prior year, due to the loss of the Kings and Lakers as tenants at the Forum. In fiscal year 2002 there was some improvement, due to an increased amount of special events at the Forum than in the prior year.
Line item 1071-Parking Tax represents revenues received from the parking tax. In the spring of 1998, Inglewood voters approved an increase in the parking tax rate from 5% to 10%. In fiscal year 1999/000 revenues fell dramatically, due to loss of the Lakers and Kings as tenants at the Forum. The revenue estimate of $275,000 in fiscal year 2002/03 is equal to the 2001/02-current estimate. In fiscal year 2001/02 revenues were bolstered by a one-time increase from a back payment received by the City.
Line item 3001-Vehicle Code Fines represents the City’s share of revenue derived from violations of the California motor vehicle code. The passage of AB 233 in 1997 doubled the share of revenue going to cities, beginning in July 1998. The 2002/03-revenue estimate of $500,000 assumes an increase of 5% in receipts for the upcoming fiscal year over the current estimate of $450,000, due to more aggressive deployment of motor officers assigned to traffic patrol.
Line item 4001- Represents expected investment earnings on idle cash balances. Earnings have improved in recent fiscal years due to increasing cash balances in the General Fund. In fiscal year 2002, earnings declined from the prior year due to sharply decreased interest rates. In fiscal year 2003 no change is seen in this trend.
Line item 4070- represents the annual loan repayment to the City by the Redevelopment Agency from the portion of the sale amount of Parking Structure #1 to the Agency that was financed by the City.
Line item 7021-Donations represents donations to the City from fireworks vendors and contributions by Hollywood Park Charities.
Line item 7023-I.P.P. Contribution-depicts funds received from Inglewood Partners for Progress to fund the City’s Mobile Assistance Program.
Line item 5024 represented a one-time allocation from the State received by the City in fiscal year 2001 to provide for the purchase of a mobile command vehicle for the Police Department.
Line item 5085 represents a one-time traffic safety grant received by the City in fiscal year 2001/02.
Line item 7044 represents a one-time sales tax back payment the City received in fiscal year 2000/01 due to a correction of a sales tax misallocation as a result of a State audit.
Line item 7060 represents the estimate of the City’s share of one-time relief funds provided from the State to local governments in fiscal years 2000 and 2001. There are no funds set aside for local government relief in the State’s fiscal year 2003 budget.
Line item 7007-Sale of Real/Personal Property represents proceeds from the sale of City property in fiscal year 2000/01. Included in the fiscal year 2000/01 actuals was an auction. Funds were also received from the sale of the Fire Training Authority complex. Also included were proceeds from the sale of Parking Structure #1 to the Redevelopment Agency. In addition, funds were received from the sale of the Senior Center to the Agency. There are no sales of City property anticipated in fiscal year 2002/03.