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2019/20 Measure G Sales Tax Annual ReportANNUAL MEASURE G SALES TAX OVERSIGHT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2020 PURPOSE The Financial Advisory Commission (FAC) provides oversight of Measure G sales tax revenues. This fourth Annual Measure G Sales Tax Oversight Report covers the fiscal year July 1, 2019 through June 30, 2020. This report also provides a summary of the Measure G budget for the fiscal year ending June 30, 2021. Exhibit A includes a detailed recap of all Measure G activity. This Report clearly shows the importance of Measure G revenues to the current and future financial health of the City. The uses of these revenues follow the City’s Sacred Values which focus on - Health and Wellness, High Quality Aesthetics, a Vibrant and Safe Community, a Visually Beautiful City and Cultural Diversity. Following these Sacred Values secures our City’s standing as “The Gem of the Desert.” REPORT HIGHLIGHTS •Since inception, over $18 million or 45% of Measure G funds have been allocated to improving citywide infrastructure and public recreational facilities. •Public safety services are a priority of La Quinta and have been supported with Measure G funds. •Fiscally responsible budgeting, prudent long- term financial projections, funds oversight, and financial transparency have strengthened the City’s reserves since the implementation of Measure G in April 2017. •No Measure G funds have been used for Covid-19 related purposes. The City’s strong fiscal health continues to allow the City to respond quickly and effectively to Covid-19 related financial impacts to City operations, and provides much needed support to local businesses. FISCAL YEAR 2019/20 REVENUES Total Measure G sales tax revenues for fiscal year 2019/20 were $10,310,526. As a result of the pandemic, this fiscal year ended with many unexpected challenges and uncertainties. Abruptly in March 2020, mandatory Statewide stay at home orders closed non-essential businesses, limited travel, restricted working outside the home, closed hotels, and limited restaurants to take out orders. Stronger than anticipated fiscal year-end Measure G sales tax revenues are primarily the result of both rising online sales with a better collection rate and La Quinta residents and visitors continuing to support our local economy. With the City’s financial support, businesses have pivoted operations by taking advantage of extended outdoor Al Fresco Dining options and Small Business Economic Relief Loans and Rebates. REVENUES SINCE INCEPTION The chart below summarizes Measure G revenues received from fiscal year 2016/17 to 2019/20 and budgeted revenues for 2020/21. Revenues received in 2019/20 were lower than the previous year because of COVID -19 business closures. Budgeted revenues for 2020/21 are subject to change as State mandates are revised and expected seasonal local events are adjusted. Additionally, the effects of unemployment continue to impact discretionary travel and spending in our City. FISCAL YEAR 2019/20 USES The fiscal year 2019/20 operational expenses and capital improvements were prioritized and budgeted prior to COVID with a prudent reserve allocation for Budgeted operational flexibility. The impacts of COVID did not alter essential funding for public safety or capital projects. By allocating some revenue to reserves, the City was able to preserve and fully fund public safety and capital projects. USES SINCE INCEPTION Each year, in January, the City hosts a community workshop to either affirm or determine the next year’s budget priorities. Staff then evaluates funding options such as grants, interagency cost sharing, and use of reserves. Public safety services have been a community priority since before Measure G, and with the support of this additional revenue, the City has been able to maintain the public safety service levels the community desires. The chart below summarizes uses, since inception, of Measure G funds. The majority ($18,487,732 or 45%) of these funds are for projects to improve citywide infrastructure and public recreational facilities. • Public Safety use shows the City’s continuing commitment to provide all residents with a safe living environment. • Infrastructure improvement projects have included numerous road repairs, street striping projects, drainage improvements to avoid street flooding, an investment in Highway 111 where since 2016 nearly 80% of annual sales taxes are collected, an overhaul of landscape medians north of Highway 111, and the design of updated corporate yard administrative and crew quarters. 26% 36% 9% 29% • Recreation projects have included funding for the new X-Park adjacent to the La Quinta High School, the SilverRock event site, and the design of a new future Village Art Plaza Promenade connected to the La Quinta Museum. • Measure G reserves reflect fiscal responsibility and allow for operational flexibility by ensuring cash is available for public safety services and capital improvement projects when these are most efficient to complete. The chart below summarizes citywide infrastructure improvements and recreational projects funded with Measure G revenues. MEASURE G BACKGROUND AND COMPLIANCE SUMMARY Voters passed Ballot Measure G in November 2016. Measure G provides a permanent one percent transaction and use tax, effective April 1, 2017, which is fully allocated to the City of La Quinta and protected from State takeaways. All Measure G revenues shall be used in accordance with the ballot measure for costs including police protection, projects such as parks, landscaping and flood control, programs attracting businesses, youth/senior services, sports recreation programs, and preserving property values and quality of life. This report concludes all Measure G tax revenues are properly recorded and are being used in accordance with the ballot measure. Prior oversight reports and information on Measure G are located online at https://www.laquintaca.gov/business/tax -measure. Questions regarding this report or the use of Measure G funds may be directed to the Finance Department by calling 760-777-7150 or by email at finance@laquintaca.gov. EXHIBIT A MEASURE G REVENUES AND USES SUMMARY Fiscal Year (FY) REVENUES 2016/17 Actual $ 1,462,650 2017/18 Actual 9,967,657 2018/19 Actual 10,958,118 2019/20 Actual 10,310,526 2020/21 Budgeted 8,197,200 TOTAL $ 40,896,151 USES Operational Capital Reserves Total by Year 2016/17 Eisenhower Dr. Retention Basin 750,000 Measure G Reserves 16/17 (X-Park Funding) 712,650 2017/18 Public Safety Fund 300,000 North La Quinta Landscape Improvements 1,802,576 Citywide Drainage Enhancements 2,407,373 La Quinta Village Road Diet Project 1,972,158 Measure G Reserves 17/18 (X-Park Funding) 147,350 Measure G Reserves 17/18 (Alongi Building Improvements) 800,000 Measure G Reserves 17/18 Measure G Reserves 17/18 (SilverRock Event Site) 321,900 2,216,300 2018/19 Public Safety Fund 850,000 Public Safety Contract Services 2,100,000 Citywide Drainage Enhancements 194,730 North La Quinta Landscape Improvements 2,129,613 SilverRock Event Site 1,300,000 Measure G Reserves 18/19 4,383,775 2019/20 Public Safety Contract Services 2,750,000 Corporate Yard Administration/Crew Quarters 411,013 Highway 111 Corridor Improvements 1,000,000 North La Quinta Landscape Improvements 3,703,369 Village Art Plaza Promenade 310,000 Measure G Reserves 19/20 2,136,144 2020/21 Public Safety Contract Services X-Park Landscaping Highway 111 Corridor Improvements 4,545,000 275,000 250,000 3,127,200 1,462,650 9,967,657 10,958,118 10,310,526 8,197,200 TOTAL $ 10,545,000 $ 18,487,732 $11,863,419 $40,896,151 26% 45% 29% In FY 2018/19, the City allocated $860,000 from Measure G reserves for the XPark. $712,650 from FY 2016/17 and a portion of FY 2017/18 ($147,350) reserves. In FY 2019/20, $800,000 of Measure G reserves was allocated from FY 2017/18 reserves to the SilverRock Event Site Alongi Building Improvements. In FY 2020, $321,900 of Measure G reserves was allocated from FY 2017/18 reserves to the SilverRock Event Site. 99 BUSINESS SESSION ITEM NO. 3 City of La Quinta CITY COUNCIL MEETING: November 3, 2020 STAFF REPORT AGENDA TITLE: RECEIVE AND FILE FISCAL YEAR 2019/20 MEASURE G SALES TAX COMPLIANCE REPORT RECOMMENDATION Receive and file fiscal year 2019/20 Measure G Sales Tax Compliance Report. EXECUTIVE SUMMARY • Measure G revenues for fiscal year 2019/20 were $10,310,526 and the Measure G reserve balance as of June 30, 2020 was $8,736,219. • The Financial Advisory Commission (FAC) provides oversight of Measure G revenues and their uses. • The FAC prepares an annual Measure G Sales Tax Oversight Report to ensure Measure G revenues and their uses are in compliance with the ballot initiative. • At the FAC's meeting on November 4, 2020, the full Commission will formally receive, review and file this Report. FISCAL IMPACT - None BACKGROUND/ANALYSIS In accordance with the Measure G ballot measure, the FAC provides oversight of Measure G funds. This Measure G Report was prepared by the Finance Department with assistance from two FAC members (Commissioners Batavick and Rosen). The next FAC meeting is on November 4, 2020. This Report will be presented to the FAC, and subject to their review, received and filed on this date, with an update to the City's website. The attached Annual Measure G Sales Tax Oversight Report for Fiscal Year 2019/20 Ended June 30, 2020 (Attachment 1) covers the period from July 1, 2019 through June 30, 2020, provides a summary of the Measure G budget for fiscal year ending June 30, 2021, and includes an inception to date summary. 93 ALTERNATIVES The City Council or FAC may request additional information before filing this Report. Prepared by: Karla Romero, Finance Director Approved by: Jon McMillen, City Manager Attachment: 1. Annual Measure G Sales Tax Oversight Report for Fiscal Year Ended June 30, 2020 94