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CC - CONSENT ITEM: Receipt and Filing of Measure CC and Measure C Sales Tax Status Reports (FY2022-2023, Third Quarter) and Real Property Transfer Tax Status Report (FY2022-2023, Fourth Quarter), as Approved by the Finance Advisory Committee
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Meeting Date: October 23, 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 (10/17/2023); (Email) Meetings and Agendas - Fiscal and Budget Issues (10/17/2023)
Departmental Approval: Lisa Soghor, Chief Financial Officer (10/09/2023)
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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, Third Quarter) and Real Property Transfer Tax Status Report (FY2022-2023, Fourth Quarter), as approved by the Finance Advisory Committee (FAC) on September 13, 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.
Due to a lag in receiving data from, the State of California, the reporting agency, Measure CC and Measure C reports for review this period cover the Third Quarter of Fiscal Year 2022-2023 (January-March 2023).
The City’s Measure CC tax receipts were down 5.6% and the City’s Measure C tax receipts were down 2.9% from the same period in 2022. Typically, these two tax measures track closely, the difference in the year over year percentage change identified in this quarter was driven by audit corrections and a small number of taxpayer filing discrepancies.
Historically the status reports have included 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.
Recently, staff worked with the City’s sales tax consultant, HdL Companies, to revamp the Measure CC and Measure C Status Reports to provide more analysis along with the top 25 sales tax producers and cumulative totals received for each period that have been historically shown.
On September 13, 2023, FAC reviewed and approved the report and requested that the next status report include information illustrating the budget versus actual results for the fiscal year. Staff with work with HdL Companies to make sure this information is included in the next quarterly status report.
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.
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 Fourth Quarter of Fiscal Year 2022-2023 (March-May 2023).
The results from the fourth quarter for the last three years demonstrate just how unpredictable this revenue source is. April through June 2021 were the first three months after the implementation of Measure RE and the City received approximately $2.7 million. During the same period in 2022, the City received $5.3 million in real property transfer tax revenue. In 2023, the City received $600,000 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 Fiscal Year 2022-2023 was below the budget projections.
FISCAL ANALYSIS
The receipt and filing of these reports do not create a fiscal impact.
ATTACHMENTS
1. Measure CC & Measure C Status Report (FY2022-2023 Q3)
2. Real Property Transfer Tax Status Report (FY2022-2023 Q4)
MOTIONS
That the City Council:
Receive and file the Measure CC, C, and Real Property Transfer Tax Status Reports.