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Home My WebLink About2009-08-04; City Council; 19923; Presentation of local economic updateCITY OF CARLSBAD -AGENDA BILL AB# 19.923 MTG. 8/4/09 DEPT. FIN PRESENTATION OF LOCAL ECONOMIC UPDATE DEPT. HEA^O^f CITY ATTY. d^ CITY MGR. U/— RECOMMENDED ACTION: Accept presentation regarding an update of the local economy and the impact on the City of Carlsbad's revenues. ITEM EXPLANATION: The United States is experiencing an economic slow down especially with respect to the housing and financial markets. It is important for the City of Carlsbad to be aware of the economic slow down and the potential impacts on the City of Carlsbad's finances. This presentation will help provide an overview of the state and local economies with specific information regarding the City of Carlsbad's economy as well as the impact of the slowing economy on Carlsbad and its neighboring cities. This information will help the City be aware and proactive as we move through this economic uncertainty. FISCAL IMPACT: None. ENVIRONMENTAL IMPACT: The proposed presentation does not constitute a "project" within the meaning of the California Environmental Quality Act and, therefore, do not require environmental review. EXHIBITS: None. DEPARTMENT CONTACT: Lisa Irvine and Cynthia Haas 760-602-2430 lisa.irvine(a)carlsbadca.gov or cynthia.haas(a)carlsbadca.qov FOR CITY CLERKS USE ONLY. COUNCIL ACTION:APPROVED DENIED CONTINUED WITHDRAWN AMENDED D D D D D CONTINUED TO DATE SPECIFIC CONTINUED TO DATE UNKNOWN RETURNED TO STAFF OTHER - SEE MINUTES D D D * Received Report 11 City of Carlsbad Economic Overview and Financial Status August 2009 22 Economy and State of California Budget Impact (Lisa Irvine) Preliminary General Fund Results –Fiscal Year 2008-09 (Kevin Branca) A G E N D A 33 Economic Conditions Gross Domestic Product 4 -8 -6 -4 -2 0 2 4 6 GDP Unemployment Rate June 2009 National 9.5% California 11.6% San Diego County 10.1% Carlsbad 6.7% 5 Carlsbad Market Area Foreclosures 2007-Current -Auctioned 0 100 200 300 400 500 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Carlsbad Oceanside Vista San Marcos Encinitas 6 •Carlsbad –152 •Oceanside -436 •Vista –215 •San Marcos –283 •Encinitas -47 What is ahead? Forecasts for when the economy will begin to recover differ widely among economists. Many see a bottom forming in late 2009. Once a bottom is established it could be a very long slow recovery. Past spending patterns unlikely to return to their previous levels. 7 88 State of California Budget Impacts 99 California’s Economy State closed $26.3 billion deficit using cuts, loans and other one-time fixes Structural budget issues have not been addressed Revenue losses for FY 2009-10 have not been anticipated 1010 Summary of State Impact FY 09-10 FY 10-11 Property Tax $4.5 m -- Redevelopment $1.3 m $0.3 m Agencies In addition, delaying payment of Gas Tax and Prop 42 funds Property Tax –Prop 1A Waiver Prop 1A Waiver includes: Securitization of loan payments Hardship Process Repayment of loan with interest in FY 2013 11 Redevelopment Agencies California Redevelopment Association will continue to fight ERAF payments Village Area expired SCCRDA has negative tax increment Neither of City’s RDAs have schools 12 Transportation Delays July –December gas tax payments to undetermined time Delays Prop 42 payments to May 2010 Current cash will support City projects to continue on current time lines 13 Next Steps Continue to analyze State legislation for City impacts Review opportunity for securitization Continue to monitor economy State may need to take further actions to remain balanced in FY 2009-10 14 1515 Preliminary General Fund Results – Fiscal Year 2008-09 16 Preliminary General Fund Revenues –Fiscal Year 2008-09 ACTUAL FY 2008 ESTIMATED FY 2009 ACTUAL FY 2009 CHANGE FROM EXPECTED Taxes $98,398,972 $98,939,800 $97,252,622 $(1,687,178) Intergovernmental 3,335,594 1,504,056 1,821,262 317,206 Licenses/Permits 1,991,522 1,054,000 1,022,337 (31,663) Charges for Services 7,527,262 5,949,000 6,181,083 232,083 Fines/Forfeitures 1,336,293 1,300,000 1,308,090 8,090 Income from Invest.4,094,671 3,506,000 3,716,291 210,291 Interdepartmental 2,286,527 3,415,000 3,675,858 260,858 Other/Transfers In 1,438,181 1,111,040 918,162 (192,878) $120,409,022 $116,778,896 $115,895,705 $(883,191) Difference of 0.76% 17 Property Taxes Property taxes were up $3.2 million or 6.9% for the year Although assessed values increased by 7.6% over the prior fiscal year, current property taxes were up by only 6.5% due to an increase in delinquencies Major factors in the increase from prior fiscal year: Current taxes (up $2.8 million) Aircraft taxes (up $731,000) Delinquent taxes (up $436,000) Supplemental taxes (down $734,000) 18 Sales Taxes Top 25 Contributors Through the 1st Quarter 2009 ARCO AM/PM Marts Aviara Four Seasons Bob Baker Chrysler Jeep Bob Baker Volkswagen Cal Worthington Dodge Chevron Service Stations Coach Stores Costco Wholesale Hoehn Mercedes-Benz Hoehn Used Cars Invitrogen JC Penney Company Ken Grody Ford Ken Grody GMC/Pontiac La Costa Resort and Spa Legoland California Lexus Macy’s Department Store Pacific Sales Kitchen & Bath Petrochem Manufacturing Sears Roebuck & Company Toyota Carlsbad Toyota Motor Credit Vons Grocery Company Weseloh Chevrolet 1919 Sales Taxes YTD Revenues -$24.8 Million (down 11.6%) Estimated FY 2008-09 Revenues -$26.3 Million (down 6%) $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 HISTORIC SALES TAX BY GEOGRAPHIC AREA Benchmark Year Carlsbad Redevelopment Area Auto Mall Plaza Camino Real Carlsbad Premium Outlets The Forum 2020 Transient Occupancy Taxes Preliminary TOT figures for the year reflect a 10.7% decrease Reduction in TOT at the two largest hotels amounted to $1.6 million Decrease was partially offset by an increase in hotel rooms: Sheraton Carlsbad Resort, Hampton Inn and Homewood Suites Although TOT revenues were down at the smaller hotels, the decrease was much smaller 2121 Development-Related Revenues Includes: Building permits Planning fees Building plan check fees Engineering plan check fees 2222 Development-Related Revenues 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 Annual RevenuesFiscal Year Development-Related Revenues Engineering Plan Check Fees Building Plan Check Fees Planning Fees Building Permits 2009 2323 Other Revenue Factors Lack of home resales affected both supplemental and real property transfer taxes Annual SDG&E franchise payment was 25% higher than last year Drop in the yield on the Treasurer’s portfolio affected interest income for the year Updated cost allocation plan and increased engineering services charged to capital projects led to higher interdepartmental charges 24 Preliminary General Fund Expenditures –Fiscal Year 2008-09 ACTUAL ON A BUDGETARY BASIS FY 2008 BUDGET FY 2009 ACTUAL ON A BUDGETARY BASIS FY 2009 UNDER/ (OVER) BUDGET Policy/Leadership Group $5,052,821 $5,519,684 $4,820,509 $699,175 Administrative Services 8,260,385 9,159,463 7,389,846 1,769,617 Public Safety 43,885,319 46,082,464 44,948,753 1,133,711 Community Development 9,750,157 11,630,876 10,078,225 1,552,651 Community Services 17,672,315 19,066,776 17,798,086 1,268,690 Public Works 24,167,018 27,467,504 24,351,872 3,115,632 Non-Departmental 1,602,222 11,353,705 1,585,029 9,768,676 Transfers Out 19,163,800 7,964,273 7,954,591 9,682 $129,554,037 $138,244,745 $118,926,911 $19,317,834 Unaudited General Fund Unreserved –Undesignated Fund Balance 25 GENERAL FUND FISCAL YEAR 2008-09 UNRESERVED - UNDESIGNATED FUND BALANCE (unaudited) Actual on a Budgetary Basis Unreserved-Undesignated Fund Balance 7/1/2008 $46,059,403 Revenues/Transfers In 115,895,705 Expenditures/Encumbrances/Transfers Out (118,926,911) Other Changes in Reserves and Designations 4,613,879 Projected Unreserved-Undesignated Fund Balance 6/30/2009 $47,642,076 2626 2727 City of Carlsbad Economic Overview and Financial Status August 2009