TO: HONORABLE MAYOR AND MEMBERS OF THE TRANSACTION AND USE TAX OVERSIGHT COMMITTEE
FROM: Javier Carcamo, Finance Director
PREPARED BY: Javier Carcamo, Finance Director
SUBJECT:
title
Transaction and Use Tax (Measure T) Budget to Actual Report for FY 2023/24
end
title
end
RECOMMENDATION
recommendation
Receive and file.
body
PRIOR ACTION/VOTE
On July 17, 2018, the City Council adopted Resolution No. 18-3953, proposing an ordinance enacting a transaction and use tax be placed on the November 6, 2018 ballot (Vote 5-0).1
On December 18, 2018, the City Council adopted a Resolution declaring the results of the November 6, 2018, General Election, including therein adoption of Ordinance No. 540-18 enacting a Transaction and Use Tax (Vote 5-0).2
On February 5, 2019, the City Council adopted a Resolution establishing an advisory Transaction and Use Tax Citizens Oversight Committee (Vote 5-0).3
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
Measure T, approved by Murrieta voters in November 2018, is a general-purpose tax revenue source that supports the City’s operations, including emergency services such as police, fire, and paramedics; street maintenance and improvements; parks and recreation; maintenance of public facilities, such as graffiti removal; and other expenses that support Murrieta quality of life in Murrieta. The FY 2023/24 Measure T Budget to Actual report is attached to this report (Attachment 1).
The Transaction and Use Tax Citizens Oversight Committee provides oversight of Measure T district sales tax revenues and expenses. This Measure T Oversight Report covers the fiscal year (FY) from July 1, 2023, through June 30, 2024. During the March 28, 2024, meeting, the Citizens Oversight Committee received and filed a budget to actual reports for activities through February 2024 and proposed budget adjustments for FY 2023/24. This report includes a recap of all Measure T activities through June 30, 2024. As of the date of this report, the independent external audit and financial statements for FY 2023/24 have not been concluded. As a result, the actual amounts are subject to change should accounting adjustments be necessary prior to finalizing the audit.
Revenues
For FY 2023/24, the City adopted a budget of $30.5 million in revenue from Measure T funds. The amended fiscal year 2023/24 revenue projection is $28.5 million based on the City’s sales tax consultant updates and actual sales tax collections throughout the fiscal year. There were two significant drivers causing lower-than-anticipated sales tax receipts. First, the City expected the opening of two big box retailers with the expectation to generate sales tax revenue at the beginning of the fiscal year. Second, consumers remained cautious with spending, primarily with high-ticket items requiring financing. While the Federal Reserve Board’s (Fed) interest rate reduction signaled that inflation is trending with their expectations, the cost of borrowing remains high, impacting the auto/transportation and building/construction categories.
As of June 2024, the fiscal year-to-date revenue from Measure T was $28.2 million, approximately $275,888 less than the amended budget. When comparing revenue year-over-year, the FY 2023/24 sales tax revenue was slightly lower than the FY 2021/22 and FY 2022/23 revenue by approximately $269,608 and $311,701, respectively. The county and state sales tax receipts were 1.1% and 1.3 less than the FY 2022/23, respectively. Per the City’s sales tax consultant, consumers are expected to spend less, as inflated prices for household obligations (utilities, insurance, and food) take priority over procurement of non-essential and gift items. The City’s sales tax consultant anticipates modest improvement across most tax-generating groups. The Fed’s approach to the funds rate and consumer confidence trends will influence future spending patterns.
Expenses
The FY 2023/24 amended expenditure budget for Measure T funds is $28.1 million. Akin to revenue projections, staff proposed amendments to the adopted budget to account for an increase in personnel costs based on approved labor agreements after budget adoption and unanticipated recurring and one-time expenses. The year-to-date expenditures as of the preparation of this report are $23.3 million, representing approximately 83% of the amended budget. The most significant budgetary savings were realized in the Transfer Out category, as the transfers to the Community Services District, Fire District, and Library District were lower than anticipated due to budgetary savings within those funds. Pending year-end accounting transactions, actual expenditures are expected to remain under budget.
Below is the list of significant Measure T fund expenses. This list is nonexclusive:
• 74% of the Measure T budget is dedicated to public safety;
• Authorized positions funded by Measure T since inception;
Police
• Tasers, body-worn cameras, dash cameras, and licenses;
• Evidence.com technical support;
• Twenty (20) Flock cameras (20 were purchased in FY 2022/23);
• Four (4) Unmanned Vehicle Systems, associated equipment and training;
• Five (5) Police vehicles, including uplifting costs;
• Carry concealed weapon application services;
• Professional Development Training;
• Eight (8) Motorola Radios for PD vehicles;
• Audio/Visual equipment for the Community Room; and
• Furniture purchased for the Computer and Technology Crime High-Tech Response Team (CATCH). An existing vacant office was converted into a space where multiple CATCH Task Force members can work.
Fire
• EMD dispatch system and training;
• EMD Dispatch System (ESP);
• EMS priority dispatch system (Q Plus);
• Wildland Fire hose and test;
• CalFire Service agreement (Wildland Fire Protection);
• Elevator Fire Safety Test;
• IPads for tablet command (replacement mobile data terminals)
• Fitness room furniture replacement;
• Office desk/furniture and uniform for new staff;
• Six (6) sets of turnout safety equipment;
• Pulse Point software license;
• EMS Lease equipment (Striker);
• Data incident response system;
• FY24 Annual System Fees for Tri-Tech/Central Square CAD;
• Public Safety Enterprise Communication System (PSEC) radio system equipment;
• Five deionized tank systems;
• Personal Protective Equipment Extractor;
• Fire Station 5 bathroom improvements, repairs, and preventive work; and
• Fire Administration lobby enclosure.
Other Departments
• Economic Development marketing, data market research, conference and training;
• Development, design, print, and distribution of the Murrieta Magazine;
• Development Services backfill personnel for EnerGov system implementation;
• Citywide vehicle lease program;
• Citywide expanded weed removal program and installation of water-efficient plants and
• Traffic Engineering services.
Capital Improvement Plan
Revenue from Measure T is an essential source of funds for several projects in the five-year Capital Improvement Plan (CIP). Completed CIP projects funded with Measure T funds include the Library bin sorter, Police Department office expansions, Library roof, Library HVAC replacement, tenant improvements and furnishings for the City Hall annex space, and preparation of the Parks and Recreation Master Plan. The table below lists the completed CIP projects during FY 2023/24.
During FY 2023/24, Measure T allocated $990,842 to replace seventy-two (72) Self-Contained Breathing Apparatus. Other Measure T-funded or partially funded projects include the Police Department Mobile Command Center, Fire Station 1 Improvement Project, and Police Department administrative office improvements. In addition to these projects, the following is a summary of other Capital Improvement Plan projects funded or partially funded by the Measure T Fund, the cumulative expenditures, and the remaining balance.
The attached report provides a complete list of Measure T Fund Capital Improvement Projects, including year-to-date expenditures and the remaining balance.
Operating and Sustainability Reserves
The City Council’s formal policy calls for establishing Operating Reserves at 25% of the adopted budget, with an informal goal of 30%. The Measure T Operating Reserve balance of $4.9 million fulfills the City Council Operating Reserve Policy. In addition, the Measure T fund is setting aside approximately $3.4 million, $541,751, and 246,152 as an Operating Reserve for the Fire District, Community Services District, and Library District funds, respectively, to meet their respective Operating Reserve Policy requirements.
In addition to the Operating Reserve, certain commitments and assignments of fund balance will help ensure adequate financial resources for planned expenses and unforeseen circumstances and events such as an economic downturn, catastrophic events, unanticipated expenses, and one-time purchases.
During FY 2023/24, the Measure T fund was projected to have an estimated ending balance of $36.1 million, net of contributions and uses, in various Operating and Sustainability Reserves. The amounts in each Operating and Sustainability Reserve account are shown in the table below.
Fiscally responsible budgeting, prudent long-term financial projections, fund oversight, and financial transparency have strengthened the City’s reserves since the implementation of Measure T. This is consistent with the City Council's goal to maintain a high-performing organization that values fiscal sustainability, transparency, accountability, and organizational efficiency.
Fiscally responsible budgeting, prudent long-term financial projections, fund oversight, and financial transparency have strengthened the City’s reserves since the implementation of Measure T. This is consistent with the City Council's goal to maintain a high-performing organization that values fiscal sustainability, transparency, accountability, and organizational efficiency.
FISCAL IMPACT
There is no fiscal impact with receiving and filing this report.
ATTACHMENTS
1. FY 2023/24 Budget to Actual Report