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CC - CONSENT ITEM: Receipt and Filing of Measure CC and Measure C Sales Tax Status Reports (FY2022-2023, Second Quarter) and Real Property Transfer Tax Status Report (FY2022-2023, Third Quarter), as Approved by the Finance Advisory Committee
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Meeting Date: July 10, 2023
Contact Person/Dept.: Lisa Soghor/Finance Department
Phone Number: (310) 253-5865
Fiscal Impact: Yes [] No [X] General Fund: Yes [] No [X]
Attachments: Yes [X] No []
Public Notification: (E-Mail) Meetings and Agendas - City Council (07/06/2023); (Email) Meetings and Agendas - Fiscal and Budget Issues (07/06/2023)
Departmental Approval: Lisa Soghor, Chief Financial Officer (06/13/2023)
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RECOMMENDATION
Staff recommends the City Council receive and file the attached Measure CC and Measure C Sales Tax Status Reports (FY2022-2023, Second Quarter) and Real Property Transfer Tax Status Report (FY2022-2023, Third Quarter), as approved by the Finance Advisory Committee (FAC) on May 10, 2023.
BACKGROUND/DISCUSSION
In November 2012, Culver City residents voted in support of Measure Y, a half cent transaction and use tax to maintain critical City services for the next 10 years. In March 2020, Culver City residents voted in support of ballot Measure CC, the continuation of the half cent tax through 2033. Measure Y is now referred to as Measure CC. The FAC Work Plan states that the FAC will “continue to provide quarterly reports to the City Council on Measure CC proceeds."
In November 2018, voters passed a quarter cent local transaction and use tax under Measure C to maintain the current level of public safety services, community programs, infrastructure maintenance, and other City services funded through the City’s General Fund. Measure C collections began in April 2019 and will remain in effect until ended by voters. The ballot measure included the stipulation that, if passed, the FAC would provide quarterly reports of fund proceeds and expenditures to the City Council. This task was added to the FAC Work Plan.
The FAC and staff have developed infographic-based Measure CC and Measure C Status Reports to provide background information, identify top 25 sales tax producers, illustrate budget versus actual results for the fiscal year, and show the cumulative totals received for each period.
Due to a lag in receiving data from the reporting agency, Measure CC and Measure C reports for review this period cover the Second Quarter of Fiscal Year 2022-2023 (October-December 2022).
The City’s Bradley-Burns sales tax receipts were down approximately 1.6% from the same period in the prior year due to an overall decrease in performance that also affected the City’s share of the Countywide tax pool. Measure C and CC, as transaction taxes, performed better. They were bolstered by an increase of new car purchases by Culver City residents.
Additionally, the FAC has requested to review and transmit a Real Property Transfer Tax Status Report to the City Council. The Real Property Transfer Tax (RPTT) is a one-time tax imposed by the City when a property is sold in Culver City. As a result, this revenue source is highly elastic and unpredictable.
RPTT revenues go into the General Fund and are used to provide essential services including deferred maintenance of parks, facilities, and streets, addressing homelessness, and providing programs for seniors, youths, and economic recovery.
Real Property Transfer Taxes are issued directly to the City from Los Angeles County. Therefore, the RPTT report for review this period covers the more recent Third Quarter of Fiscal Year 2022-2023 (January-March 2023).
The results from the third quarter for the last three years demonstrate just how unpredictable this revenue source is. January - March 2021 were the last three months prior to the implementation of Measure RE. During that quarter, the City received $2.9 million in real property transfer tax revenue. During the same period in 2022, after Measure RE’s implementation, the City received $19.1 million. This higher-than-expected revenue was largely driven by the sale of one commercial property. In 2023, the City received $720,000 in the same period. Economic factors including interest rate increases and shifting lending policies have had a cooling effect on the real estate market. Real property transfer tax revenue in the current year is trending below pre-Measure RE levels.
FISCAL ANALYSIS
The receipt and filing of these reports do not create a fiscal impact.
ATTACHMENTS
1. 2023_06_26_ATT1 - Measure CC Status Report (FY23 Q2)
2. 2023_06_26_ATT2 - Measure C Status Report (FY23 Q2)
3. 2023-_06_26_ATT3 - Real Property Transfer Tax Status Report (FY23 Q3)
MOTIONS
That the City Council:
Receive and file the Measure CC, C, and Real Property Transfer Tax Status Reports.