Politics & Government

Local Sales Tax Revenues Up $1 Million from Last Year

Increased sales tax has helped bring additional funds to the city, according to latest budget report

Union City residents and businesses are spending money again, according to the city's latest budget report.

Despite worry that some sources may fall short, the revenues came in slightly higher than projected in the last quarter of the 2010-2011 fiscal year, which ended June 30. According to the report, the city’s current general fund is approximately $37.1 million, compared to just under $36.5 million in the 2009-2010 fiscal year.

Much of the city’s gain is due to an unexpected increase in sales tax revenues, according to Richard Digre, administrative services director for the City of Union City.

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“We were expecting it to go down. This is the saving grace,” Digre said during a budget presentation at the Aug. 23 City Council meeting.

Sales tax revenues came in about $1.1 million higher than last year, according to the report. The funding source comprises about $6.4 million, or 17 percent, of the city’s general fund. Digre credits the gains mostly to a rebounding in the business-to-business, construction and transportation sectors.

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Sales tax given the relocation of OneSource Distributors, an electrical parts warehouse that was  the second largest sales tax producer in Union City before its recent move to Oakland. The city is expected to lose about $800,000 with its departure, Digre said.

The increase n April also contributed to increased revenues. So far, the city has received $487,000 in additional sales tax revenue through Measure AA. The tax bump is expected to bring the city an additional $3.5 to $4.5 million each year for the next four years.

However, the gains in sales tax were offset by losses in other revenue streams.

Property tax collections were $98,200 less than in the 2009-2010 fiscal year because of declines in prior year property tax payments and supplemental property taxes, which occur when homes are resold or new homes are constructed, the report said.

“The decline is indicative of a weakened real estate market,” Digre said in his report.

Property taxes are the largest revenue source for the city and comprise 46 percent, or approximately $17 million, of the city’s general fund, according to Digre. He expects property taxes to increase to $17.5 million in the next fiscal year.

Though franchise tax collections, which make up 10.4 percent of the city’s budget, came in slightly higher with almost $34,000 more than last year, the city’s service charges took a small dip.

Charges for service, which account for 5.6 percent of the city’s revenues, brought in $71,800 less than in 2009-2010. However, increased Sports Center membership gave the city an additional $115,000, with parking meters raking in $72,000 more than last year.

License and permit collections were $149,000 short due to decreases in zoning and building permits.

“These revenue sources continue to be affected by the slowdown in the City’s construction sector,” Digre wrote in his report.

The fees make up 4.5 percent of the city’s total general fund. They’re expected to increase to 6.1 percent as the economy improves, Digre said.

The city’s expenditures were also within its budget threshold for the 2010-2011 fiscal year.

According to Digre, the city used $36 million of its $38.2 million budget, in comparison to its spending of $39 million in the 2009-2010 fiscal year. The $3 million drop in spending is due to budget cuts made last June and to staff vacancies and tightened control of costs, Digre noted.

While the budget presentation was primarily informational, City Council did vote to approve a reserve of $435,000 to pay for Alameda County Fire Department retirement and benefit contributions, which was not funded last fiscal year, the first year the city and the agency entered its contract.

To view the full budget report, click on the document above.


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