Page 17 - FY 2021--22 Revenue Outlook

Other changes to the proposed budget include increased receipts from parking
citations and the Special Parking Revenue Fund transfer as parking demand
increases; an increased Power Revenue Fund transfer in line with assumptions
for current year fund revenue; augmented cable television franchise revenue with
the redirection of franchise fees previously deposited in the Telecommunications
Development Account; and a decline in interest earnings due to lower investment
returns.

Assumptions and potential issues that may adversely affect 2021-22 revenue
projections include:

 Revenue estimates assume the end of pandemic restrictions and the
recovery in receipts with widespread vaccination and herd immunity
reached by the end of July. No additional closures are assumed. If
vaccination efforts stall, or if variants prove to be vaccine resistant, there is
risk of new outbreaks prompting renewed restrictions.
 The absence of a preliminary growth forecast for property tax from the
County Assessor requires that growth estimates be based on historical
receipts, current trends and other applicable information from the County
or other sources. Lower inflation adjustments are assumed for assessed
values for the 2021 tax year, while secured receipts assume a higher
collection rate. Growth in supplemental and unsecured receipts are based
on 2020-21 fiscal year growth assuming minimal change from the
pandemic. Refund and redemption activity are expected to be higher with
the revaluation of commercial property and the payment of delinquent
taxes. There is downside risk if the pandemic’s impact exceeds these
assumptions.
 Property tax increment revenue from the former CRA/LA proves difficult to
project due to the receipt of additional surplus property proceeds,
negotiated settlement payouts, and adjustments to recognized obligation
payments. Both the June 2020 and January 2021 remittances deviated
significantly from County estimates. The April 2021 estimate for the
upcoming June remittance was lower than forecast. The 2021-22 revenue
estimate attributes the drop to a shift in the timing of distributions rather
than a drop in tax increment value.
 Departmental receipts are dependent on policy decisions to increase
departmental fees, collect full overhead cost reimbursements and
reimbursements from other agencies. Related cost reimbursements are at
risk if vacancy rates for special fund and proprietary reimbursed positions
exceed rates assumed in the budget. License, permit, fees and fines
receipts are at risk if service levels continue to be constrained by
pandemic restrictions.
 The electricity users tax estimate for 2020-21and 2021-22 are provided by
the Department of Water and Power (DWP) and are based on the 2020
load forecast updated with actuals through February 2021 and adjusted to

10