Property tax receipts to help pay for day-to-day Manteca municipal services have doubled since 2012.
The proposed City of Manteca general fund budget for the fiscal year starting July 1 projects $46,665,594 in revenue for a 4.4 percent increase over the current year. Property tax receipts — the No. 1 source of general fund revenue — is targeted to reach $17,828,585 in the 2019-2020 fiscal year. That’s a 6 percent increase from this year’s $16,815,425.
The city is fully recovered from property tax losses triggered by Proposition 13 downward adjustments when the housing collapse hit in 2007. Property tax receipts had reached a then record $11,031,346 that year before starting a three-year decline to $8,901,066 in 2012. Manteca’s drop off in property taxes was cushioned by the fact that during the four years of the recession the city was adding an average of 300 new homes. That was more than the combined residential construction in all of the cities in the three Northern San Joaquin Valley counties of Merced, Stanislaus, and San Joaquin.
Manteca continues to lead the 209 in housing starts reflected in the addition of 2,579 residents in 2018. The next closest for population gain in the region last year was Lathrop that added 1,258 residents. Lathrop was the state’s 7th fastest growing city in 2018 and Manteca was the 18th fastest growing.
The biggest increase in revenue for the city next fiscal year will be in hotel room tax. It is expected to grow 30.7 percent from $1,321,000 this year to $1,726,770 in the fiscal year starting July 1.
The boost is almost all attributable to a decision by voters in November 2018 to increase the city’s room tax for the first time in 27 years from 9 to 12 percent. The estimated $1,321,000 the city expects to receive in room taxes in the current year ending June 30 reflects only three months of the higher tax.
Room tax receipts have been growing by double digits for the past five years prior to the increased rate due to increased occupancy and higher room rate charges. The room tax receipts totaled $912,685 in the 2015-2016 fiscal year.
Based on current trends within a year room taxes will eclipse franchise fees collected from PG&E, Comcast and Frontier Communications as the third largest source of general fund revenue. Franchise fees are expected to grow 1.69 percent to reach $1,777,175 next fiscal year or just $51,000 more than room taxes.
The opening of the 500-room Great Wolf indoor water park — which will be the largest hotel in the entire Central Valley — in mid-2020 will bring a significant increase in room tax revenue for the 2020-2021 fiscal year. Based on historic 70 percent occupancy figures for its resorts Great Wolf expected to collect $4,237,000 in annual room taxes at the previous 9 percent rate. The additional 3 percent tax will generate $1,412,333 more in room taxes.
All of the increase from the taking the tax from 9 to 12 percent will go to the city.
Based on the 25-year period the city has agreed to share room tax with Great Wolf, the first $2 million a year would go to Great Wolf to help offset the $180 million plus in development costs. The remaining room tax would be shared with the city receiving 25 percent and Great Wolf receiving 75 percent for the first 10 years. Then for the next 15 years the split is 50-50 before the city receives all of the room tax in the 26th year and thereafter.
That 25 percent split for the first 10 years brings the city’s share based on the original 9 percent at $529,625. Add the additional 3 percent and the city in the 2020-2021 fiscal year would receive $1,941,958 from Great Wolf room taxes alone or $200,000 more than the city expects to receive next fiscal year from all the existing hotels in Manteca.
Sales tax is the second largest source of general fund revenue. It is pegged to rise 4.5 percent next fiscal year to $13.8 million from the current $13.2 million.
The general fund is projected to receive $46,605,594 in revenue next fiscal year for a 4.4 percent jump over the current fiscal year level of $44,659,587.
The general fund covers the cost of police and fire protection, day-to-day street and parks maintenance, library services as well as general government. Separate enterprise accounts collect fees charged for wastewater, water, and solid waste collection. They are not intermingled with general fund receipts as the three municipal services are designed to be 100 percent supported by users’ fees.
The overall budget also includes growth fees as well as taxes and fees collected for specific purposes such as the city’s share of gas tax for road maintenance projects.
The overall municipal budget when the general fund is combined with special and restricted funds as well as enterprise accounts is projected to top $181.9 million next fiscal year.
The city’s current general fund is expected to have a $22,130,700 beginning balance on July 1. That reflects various reserves including a targeted 25 percent set aside of one year’s worth of general fund revenue — $13,066,102 — for fiscal stability. It is designed to cover funding shortfalls triggered by economic issues or emergencies.
Given that the projected expenditures as they currently stand for the upcoming fiscal year will leave a undistributed reserve of just over $400,000, the city will for at least the fifth straight year will operate with a truly balanced budget without a structural deficit.
A structural deficit is when a city has to dip into reserves from a previous year. That happens when expenditures for a current year exceeds current year revenues.
Manteca, just like every other city in the state, faces issues with unfunded pension liabilities. The budget as proposed covers all of the city’s pension costs for next year. That is not the case in a small but growing number of California cities.
To contact Dennis Wyatt, email firstname.lastname@example.org