Yorba Linda economy shows signs of an upswing
One sure sign of a recovery in local economic conditions is an increase in property and sales tax revenue and other development-based taxes and fees remitted to municipal governments.
By that criteria Yorba Linda's economy is on a slight upswing, showing improvement over tax and fee declines recorded after the history-high revenue achieved for the 2007-08 fiscal year.
And importantly, higher tax receipts combined with lower operating expenses, are expected to result in a budget surplus when the city closes the books on the current fiscal year on June 30
Previously, city officials anticipated using “just a little over” $700,000 from the reserve fund that was built up during better economic times, but the current estimate is for an $880,000 surplus, according to a report from the city's treasurer and finance director, Dave Christian.
Additional expenditures could reduce the surplus to $310,000, Christian noted, but even that lower figure would leave the city with $42.8 million in reserves, about 158 percent of a year's worth of general fund expenses, exceeding council's current policy of a 50 percent reserve.
Of course, the general fund budget, which pays for the city's day-to-day operating expenses, doesn't include a separate capital improvement budget. The latter took $1.6 million from the general fund for this fiscal year, which resulted in a $720,000 hit to reserves.
Interestingly, Christian noted the general fund ended the 2011-12 fiscal year “much better than anticipated as well.” Last year's expected $3.1 million deficit turned into an $800,000 surplus, due to $1.5 million in increased revenues and $2.4 million in reduced expenditures.
Income from property taxes is the city's largest single source of revenue, and receipts through December trended “higher than expected,” Christian reported. Although most of the increase is due to the taxes previously siphoned to fund the city's now-defunct Redevelopment Agency, even excluding this $680,000 boost, revenue is expected to be “slightly better than budgeted.”
A projection for this year's sales tax revenue also is up, by “almost” 3 percent this year, with another 3.5 percent gain expected next year. But, as Christian noted, that's down nearly 9.5 percent from the 2007-08 banner year.
Franchise fees – paid by residents in cable, trash hauling and other utility bills – with other income, such as business license, property transfer and hotel-motel occupancy taxes, are “expected to remain stable,” Christian reported. Vehicle license fee revenue was once included in this category, but that income was eliminated in 2011-12.
However, one key economic indicator, revenue from building permits and plan check fees,
is up significantly, with this year's income “trending around 60 percent higher than the prior year,” Christian noted.
Interest income is down 85 percent the past five years “and will continue to drop as higher yielding investments are being called, forcing the city to reinvest at lower rates throughout the year,” Christian stated.
Among the cost savings for this year's budget are $150,000 from unfilled positions and $560,000 from the early implementation of the contract with the Orange County Sheriff.