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2022/23 Measure G Sales Tax Annual ReportANNUAL MEASURE G SALES TAX OVERSIGHT C. Qa�,ra REPORT FOR FISCAL YEAR ENDED JUNE 30, 2023 c� OVERVIEW The Financial Advisory Commission (FAC) provides oversight of Measure G tax revenue. This Annual Measure G Sales Tax Oversight Report covers the fiscal year beginning July 1, 2022 through June 30, 2023. 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 applies to goods transferred at the point of sale (businesses within La Quinta City limits), and to goods purchased in other jurisdictions that are delivered to addresses within the City. Measure G revenue continues to help La Quinta thrive and is integral to the financial health of the City. These funds assist in realizing the Sacred Values of La Quinta now and in the future: Health and Wellness, High Quality Aesthetics, a Vibrant and Safe Community, a Visually Beautiful City, and Cultural Diversity, to continue being recognized as the "The Gem of the Desert". REPORT HIGHLIGHTS • Since inception, about $27 million or 35% 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 27% of Measure G funds. • Fiscally responsible budgeting, prudent long-term financial projections, funds oversight, and financial transparency have strengthened the City's reserves with Measure G funds since the implementation of Measure G in April 2017. FISCAL YEAR 2022/23 REVENUES Total Measure G sales tax revenue for fiscal year 2022/23 was $16.1 million, which was greater than the $15.5 million initially anticipated when budgeted. While most general consumer goods purchases experienced a slight decline due to higher prices, restaurants and hotels continued to see growth as consumers prioritized eating out, specifically takeout, delivery, drive-through, and curbside sales. In addition, increased labor costs and a spike in lumber prices resulted in an increase in revenue from building -construction supplies. Stronger than anticipated fiscal year-end Measure G sales tax revenues are a result of steady consumer spending and demonstrate that La Quinta residents and visitors continue to support our local economy. REVENUES SINCE INCEPTION The chart below summarizes Measure G revenue received from fiscal years 2016/17 through 2022/23. Steady household spending and tourism have shielded our economy from recession. Sales tax has grown, but is behind the spike in growth seen during the pandemic recovery. Looking ahead, challenges such as higher labor costs and lower consumer spending may impact sales taxes into fiscal year 2023/24. REVENUES SINCE INCEPTION $77 MILLION $18 $16 $14 $12 o $10 $8 $6 $4 $$2 16/17 17/18 18/19 19/20 20/21 21/22 22/23 Fiscal Year FISCAL YEAR 2022/23 USES Operational expenses and capital improvements for fiscal year 2022/23 were prioritized, while also including a prudent reserve allocation for operational flexibility in the budget. By allocating a portion of Measure G revenue to reserves, the City intends to continue to preserve and support public safety and capital projects in the future. USES SINCE INCEPTION Annually, the City hosts a community workshop to either affirm or determine the following 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 the uses, since the inception, of Measure G funds. Approximately, $27 million, or 35% of these funds are for projects to improve citywide infrastructure and public recreational facilities. USES SINCE INCEPTION $77 MILLION Public Safety $21 M Reserves $29M Infrastructure Recreation Improvements $5M $22M • Public Safety use reflects 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 with administrative and crew quarters. The recent advanced funding of about $7.5 million for the Dune Palms Bridge Project allocated in fiscal year 2021/22 was subsequently approved for federal reimbursements. The advanced funding was returned to Reserves in fiscal year 2022/23. • Recreation projects have included funding for the new X -Park near La Quinta High School, the SilverRock event site, design of a new future Village Art Plaza Promenade connected to the La Quinta Museum, Fritz Burns Park improvements, and the Sports Complex lighting replacement. • 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 about $27 million funded with Measure G revenues. Infrastructure Improvements and Recreational City Facilities/Infrastructure � $1.4M Projects Public Safety $1.8M Highway 111 $3.2M Roads/Bridges $2 OM Drainage $3.4M Parks $5.4M Landscaping ! $9.8M $2 $4 $8 $10 Millions LOOKING AHEAD Due to the volatility of the economy, the past few years have presented challenges in some revenue streams. Fortunately, these have been offset by significant growth in sales tax. This revenue has allowed the City to look ahead to address critical needs such as road improvements, equipment replacement, and maintenance of City facilities. The City will also explore the use of Measure G reserve funds to prioritize additional funding intended to accelerate Capital Improvement Program projects, including for major street improvements. MFnsIlRF r. RAr.KrRn11ND AND COMPLIANCE SUMMARY Voters passed Ballot Measure G in November 2016. Measure G provides a permanent one percent transactions 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. City Council, management, and staff thank all residents for their continuing support and investment in our community. Prior oversight reports and information on Measure G are located online at https://www.laguintaca.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. Fiscal Year (FY) 16/17 Actual $ 1,462,650 17/18 Actual 9,967,657 18/19 Actual 10,958,118 19/20 Actual 10,310,526 20/21 Actual 12,594,389 21/22 Actual 15,615,802 22/23 Actual 16,088,087 Public Safety Fund 850,000 TOTAL $ 76,997,229 rla�al Year )16/17 17/18 18/19 19/20 Project Description Operational Eisenhower Dr. Retention Basin MMI X -Park Funding 2,129,613 Public Safety Fund 300,000 North La Quinta Landscape Improvements Citywide Drainage Enhancements 411,013 La Quinta Village Road Diet Project 1,000,000 X -Park Funding 3,703,369 Alongi Building Improvements 310,000 SilverRock Event Site/ Alongi Building/ Retention Basin Measure G Reserves 2017/18 275,000 Public Safety Fund 850,000 Public Safety Contract Services 2,100,000 Citywide Drainage Enhancements 1,408,356 North La Quinta Landscape Improvements 1,000,000 SilverRock Event Site 350,000 Measure G Reserves 2018/19 7,468,061 Public Safety Contract Services 2,750,000 Corporate Yard Administration/Crew Quarters Highway 111 Corridor Improvements North La Quinta Landscape Improvements Village Art Plaza Promenade Measure G Reserves 2019/20 Public Safety Contract Services 4,545,000 X -Park Landscaping Highway 111 Corridor Improvements Measure G Reserves 2020/21 Public Safety Contract Services 5,163,000 Landscape Renovation Improvements Highway 111 Corridor Improvements Fritz Burns Park Improvements Allocate Advance Dune Palms Bridge Funding Measure G Reserves 2021/22 Public Safety Contract Services 5,100,000 Landscape Renovation Improvements Sports Complex Lighting Village Underground Utilities Feasibility ADA Transition Plan Update Village Parking Lot Phase II Public Safety Camera System Smart Infrastructure Feasibility Highway 111 Corridor Improvements Dune Palms Bridge Advance Funding Reimbursemen Measure G Reserves 2022/23 TOTAL $ 20,808,000 27% Capital Reserves 750,00 712,650 - 1,802,576 2,407,373 1,972,158 147,350 800,000 1,453,850 500,000 300,000 100,000 150,000 500,000 1,797,000 250,000 1,000,000 7,468,061) 26,975,038 $ 35% 13,859,148 1 29,214,191 $ 38% EXHIBIT A Total by Year 462,650 9,967,657 10,958,118 10,310,526 12,594,389 15,615,802 16,088,087 76,997,229 1,084,350 194,730 2,129,613 1,300,000 4,383,775 411,013 1,000,000 3,703,369 310,000 2,136,144 275,000 250,000 7,524,389 1,408,356 1,000,000 350,000 7,468,061 226,385 500,000 300,000 100,000 150,000 500,000 1,797,000 250,000 1,000,000 7,468,061) 26,975,038 $ 35% 13,859,148 1 29,214,191 $ 38% EXHIBIT A Total by Year 462,650 9,967,657 10,958,118 10,310,526 12,594,389 15,615,802 16,088,087 76,997,229 City of La Quints CONSENT CALENDAR ITEM NO. 15 CITY COUNCIL MEETING: December 19, 2023 STAFF REPORT AGENDA TITLE: RECEIVE AND FILE FISCAL YEAR 2022/23 MEASURE G SALES TAX COMPLIANCE REPORT RECOMMENDATION Receive and file fiscal year 2022/23 Measure G Sales Tax Compliance Report. EXECUTIVE SUMMARY • Measure G revenue for fiscal year 2022/23 was $16,088,087 and the Measure G reserve balance as of June 30, 2023, was $29,214,191. • The Financial Advisory Commission (FAC) provides oversight of Measure G revenue and prepares an annual Measure G Sales Tax Oversight Report (Report) to ensure Measure G revenue is used in compliance with the ballot initiative. • At the FAC's special meeting on December 20, 2023, 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 FAC members (Commissioners Batavick and Mast). This Report will be presented to the FAC on December 20, 2023; and subject to their review, will be received and filed on this date, with an update to the City's website. The Annual Measure G Sales Tax Oversight Report for Fiscal Year 2022/23 (Attachment 1) covers the period from July 1, 2022 through June 30, 2023, and provides a summary of the Measure G revenue and expenditures for the fiscal year, as well as an inception - to -date summary. 41TERNATIVES Council may request additional information before filing this Report. 179 Prepared by: Claudia Martinez, Finance Director Approved by: Jon McMillen, City Manager Attachment: 1. Annual Measure G Sales Tax Oversight Report for Fiscal Year Ended June 30, 2023 180