Sales tax, property tax collections show Yorba Linda as 'thriving local business community' with 'positive growth,' according to city officials

Yorba Linda has “a thriving local business community,” based on accelerating sales tax revenue, and “positive growth” in land valuations, based on increasing property tax income.

That's the assessment of City Manager Mark Pulone and Finance Director Scott Catlett, as expressed in a letter accompanying the 163-page Comprehensive Annual Financial Report

for the 2018 fiscal year compiled by a city-hired auditing firm and presented to the City Council recently.

“While the city expects revenues to increase during the (2019) fiscal year, we continue to be cautious with the city's financial resources and are committed to maintaining a balanced operating budget and one of the strongest … budget reserves in Orange County,” they said.

Taxes comprise about 80 percent of the city's general fund revenues, mainly from property and sales taxes, with both showing increases in the Jan. 1 through March 31 quarter.

Property taxes brought in $265,000 and sales taxes $58,000 more than expected for the three-month period, compared to projections made in a budget review covering the July 1 through Dec. 31, 2018, period, according to a separate report from Catlett.

Most of the increase in property tax revenue is due to savings that occurred when the city issued refunding bonds to lower the debt service costs of bonds originally sold by the city's now-defunct Redevelopment Agency.

Other revenue increases from Jan. 1 through March 31 over the previously projected amount include $100,000 from building permits; $62,000 from parks and recreation fees, mostly from Community Center rentals; and $89,000 from revenue-sharing payments from the city's contract with the county landfill and unclaimed checks and deposits held by the city.

Lower-than-expected income includes $130,000 less from property transfer taxes; $57,000 less in engineering fees; $26,861 less in franchise fees; and $20,000 less in transit occupancy taxes.

The city is projecting $22.2 million million in operating reserves on June 30, which would bring the reserve balance to 64 percent of the year's general fund expenditures.

A key concern is the amount of unfunded liabilities, which grew from $31.7 million to $51 million from 2017 to 2018, due to changes in accounting standards and other factors.

The pension liability is $21.8 million and the liability for retiree medical insurance is $27.1 million. The city's long-term goal is to reduce the amortization period to 20 years from 30 years by making extra payments to the pension system from budget surpluses.

The retiree medical liability will decrease over time, since employees hired after April 2017, now 26 percent of the full-time work force, will receive significantly reduced benefits.

Other liabilities: $1 million each for accrued employee vacation and sick leave and claims and judgments, mostly workers compensation payments to cover the period when Brea provided the city's police services.