Page 18 - FY 2021--22 Revenue Outlook

reflect delinquent payments. DWP’s update to the load forecast to reflect
the latest economic outlook was pending during the development of the
budget.
 Business tax estimates for non-cannabis activities assume a modest
recovery in 2022 annual renewal period, based on the growth rate from
the 2020 renewal period and estimated 2021 tax period receipts as the
base. While tax period growth was lower during the recovery from the
Great Recession, this was attributed to the severity of economic decline
and the broad sectors that were impacted.
 The sales tax growth rate of 17.5 percent follows two years of consecutive
declines. Proposed receipts are only 4.3 percent above the pre-pandemic
revenue realized in 2018-19. Revenue estimates assume the return of
indoor business operations, a decline in unemployment, and low inflation.
There is downside risk if these assumptions are missed.
 Transient occupancy tax revenue assumes a 75 percent increase to hotel
and short-term rental revenue, again after two years of declines. Proposed
revenue remains below 2018-19 actual receipts. Estimates are based on
assumptions for room demand and room rates, with greater downside risk
from international tourism assumptions. There is additional risk to short-
term rental receipts since the full-year impact of the City’s home-sharing
ordinance in 2020-21 could not be accurately quantified during pandemic
travel restrictions.
 Parking occupancy assumes the same 75 percent growth as transient
occupancy tax, although from a relatively smaller decline in 2020-21.
There is potential liability for the credit against taxes owed for pre-paid
parking occupancy taxes collected from prior year season-ticket holders
 The documentary transfer tax is most volatile when sales volume and
price move together. Since the real estate bust, sales volume has
remained low while prices have appreciated as a consequence of low
inventory. This trend was amplified during the pandemic with the
combined drop in inventory and interest rates. The current year estimate
assumes that pricing and sales volume remain stable under increasing
mortgage rates.
 FEMA disaster grant reimbursements are based on documented project
costs that are subject to review and audit. There is downside risk for costs
that are disallowed and delays in reimbursements.

The following two graphs provide a perspective on the economy and the City’s
General Fund taxes. Revised, proposed, and forecasted growth assumptions for
2020-21 through 2025-26 follow. The balance of this book provides detail on
each General Fund revenue.

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