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2020/21 Measure G Sales Tax Annual Report ANNUAL MEASURE G SALES TAX OVERSIGHT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2021 OVERVIEW The Financial Advisory Commission (FAC) provides oversight of Measure G tax revenue. This fifth Annual Measure G Sales Tax Oversight Report covers the fiscal year beginning July 1, 2020 through June 30, 2021. Exhibit A includes a detailed summary of all Measure G activity. Measure G is a 1% transactions tax applied to sales of taxable goods and is part of the overall 8.75% sales tax rate in the City. It can apply to goods transferred at the point of sale (businesses within La Quinta City limits), but can also apply to goods that are purchased in other jurisdictions that are delivered to addresses within the City. Measure G revenue continues to help La Quinta thrive while focusing on the future financial health of the City. The funds assist with bringing the Sacred Values of La Quinta to fruition now and moving forward: Health and Wellness, High Quality Aesthetics, a Vibrant and Safe Community, a Visually Beautiful City and Cultural Diversity. Measure G ensures La Quinta will continue to be “The Gem of the Desert” for many years to come. REPORT HIGHLIGHTS • Since inception, over $19.6 million or 43% 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 23% of 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. FISCAL YEAR 2020/21 REVENUES Total Measure G sales tax revenue for fiscal year 2020/21 was $12,594,389, which was greater than initially anticipated when budgeted. Despite some business activity being restricted due to COVID-19, discretionary income that might have been spent on services was funneled to goods purchases. Coupled with increases in income that were the result of economic stimulus payments, this led to higher spending on such purchases as home office supplies, furniture, electronics, and home improvements, as well as increases in online spending for general consumables. Retailers that were able to offer ship-to- home, ship-to-store, or buy-online-pick-up-locally in general benefitted from stay-at-home orders. REVENUES SINCE INCEPTION The chart below summarizes Measure G revenue received from fiscal years 2016/17 to 2020/21. Revenue received in 2019/20 was lower than the previous year due to COVID-19 pandemic impacts, such as the closure of businesses deemed ‘non-essential’ by statewide orders. However, revenue rebounded in 2020/21 due to the factors noted above, as well as the general reopening of the economy. FISCAL YEAR 2020/21 USES The fiscal year 2020/21 operational expenses and capital improvements were prioritized, and the budget included a prudent reserve allocation for operational flexibility. The impacts of COVID-19 did not alter essential funding for public safety or capital projects. By allocating some revenue to reserves, the City is able to maintain ongoing service levels, while also being prepared in the event of any unforeseen decreases in revenues as were experienced in 2019/20. 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, or 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 the uses, since the inception, of Measure G funds. The majority ($19.6 million, or 43%) of these funds are for projects to improve citywide infrastructure and public recreational facilities. $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 2016/17 2017/18 2018/19 2019/20 2020/21 Revenues Since Inception $45,293,340 • 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 (a crucial commercial corridor for our City where a majority of sales taxes are generated), an overhaul of landscape medians north of Highway 111, and the design of an updated corporate yard administrative and crew quarters. • 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 they are most efficient to complete. The chart below summarizes citywide infrastructure improvements and recreational projects, totaling $19,619,682, funded with Measure G revenues. MEASURE G BACKGROUND AND COMPLIANCE SUMMARY Voters passed Ballot Measure G in November 2016. Measure G provides a permanent one percent transaction and use tax, effective April 1, 2017, which is fully allocated to the City of La Quinta and protected from State takeaways. All Measure G revenues shall be used in accordance with the ballot measure for costs including police protection, projects such as parks, streets, landscaping, and flood mitigation, programs attracting businesses, youth/senior services, sports recreation programs, and preserving property values and quality of life. This report confirms all Measure G tax revenues are properly recorded and are being used in accordance with the ballot measure. Prior oversight reports and information on Measure G are located online at https://www.laquintaca.gov/business/tax-measure. Questions regarding this report or the use of Measure G funds may be directed to the Finance Department by calling 760-777-7150 or by email at finance@laquintaca.gov. Exhibit A Fiscal Year (FY) REVENUES 2016/17 Actual 1,462,650$ 2017/18 Actual 9,967,657 2018/19 Actual 10,958,118 2019/20 Actual 10,310,526 2020/21 Actual 12,594,389 TOTAL 45,293,340$ Year Earned Reserve Allocation Year Operational Capital Reserves Total by Year 2016/17 Eisenhower Dr. Retention Basin 201704MG 750,000 Measure G Reserves 16/17 (X-Park Funding) 151609MG 712,650 - 1,462,650 2017/18 Public Safety Fund 300,000 North La Quinta Landscape Improvements 201603MG 1,802,576 Citywide Drainage Enhancements 151612MG 2,407,373 La Quinta Village Road Diet Project 151603MG 1,972,158 2018/19 X-Park Funding 151609MG 147,350 2019/20 Alongi Building Improvements 800,000 2019/20 SilverRock Event Site 201608MG 321,900 2020/21 SilverRock Event Site 201608MG 244,700 2020/21 Alongi Building at SilverRock Event Site 160,000 2020/21 SilverRock Event Site 201608MG 290,000 2020/21 SilverRock Event Site Retention Basin 202007MG 10,000 2020/21 SilverRock Event Site Retention Basin 202007MG 427,250 Measure G Reserves 17/18 1,084,350 9,967,657 2018/19 Public Safety Fund 850,000 Public Safety Contract Services 2,100,000 Citywide Drainage Enhancements 151612MG 194,730 North La Quinta Landscape Improvements 201603 MG 2,129,613 SilverRock Event Site 201608MG 1,300,000 Measure G Reserves 18/19 4,383,775 10,958,118 2019/20 Public Safety Contract Services 2,750,000 Corporate Yard Administration/Crew Quarters 201805MG 411,013 Highway 111 Corridor Improvements 1,000,000 North La Quinta Landscape Improvements 201603MG 3,703,369 Village Art Plaza Promenade 201901MG 310,000 Measure G Reserves 19/20 2,136,144 10,310,526 2020/21 Public Safety Contract Services 4,545,000 X-Park Landscaping 151609MG 275,000 Highway 111 Corridor Improvements 250,000 Measure G Reserves 20/21 7,524,389 12,594,389 TOTAL 10,545,000$ 19,619,682$ 15,128,658$ 45,293,340$ 23%43%33% MEASURE G REVENUES AND USES SUMMARY MEASURE G USES City of La Quints CITY COUNCIL MEETING: December 21, 2021 STAFF REPORT CONSENT CALENDAR ITEM NO. 14 AGENDA 1.1 L : RECEIVE AND FILE FISCAL YEAR 2020/21 MEASURE G SALES TAX COMPLIANCE REPORT RECOMMENDATION Receive and file fiscal year 2020/21 Measure G Sales Tax Compliance Report. EXECUTIVE SUMMARY • Measure G revenue for fiscal year 2020/21 was $12,594,389 and the Measure G reserve balance as of June 30, 2021 was $15,128,658. • The Financial Advisory Commission (FAC) provides oversight of Measure G revenue and prepares an annual Measure G Sales Tax Oversight Report to ensure Measure G revenue is used in compliance with the ballot initiative. • At the FAC's special meeting on December 14, 2021, the full Commission formally received and filed 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 three FAC members (Commissioners Anderson, Campbell, and Way). The report was presented, received, and filed at a special FAC meeting on December 14, 2021; it will also be posted to the City's website. The Annual Measure G Sales Tax Oversight Report for Fiscal Year 2020/21 (Attachment 1) covers the period from July 1, 2020 through June 30, 2021, and provides a summary of the Measure G revenue and expenditures for the fiscal year, as well as an inception -to -date summary. 123 ALTERNATIVE: Council may request additional information before filing this Report. Prepared by: Rosemary Hallick, Financial Services Analyst Approved by: Claudia Martinez, Finance Director Attachment: 1. Annual Measure G Sales Tax Oversight Report for Fiscal Year Ended June 30, 2021 124