Despite warning the Manteca City Council and public that sales tax is cratering 14.7 percent due to economic fallout from the pandemic, a financial document elected leaders are being asked to approve Tuesday as part of requirements under the Gann Limit projects sales tax will increase almost 2 percent.
It is an example of the disarray that the city is dealing with in the finance department that has been framed as “an accounting issue” as opposed to a “financial issue” when it comes to roughly $67 million in cash deficits that were identified in an assessment of the finance department made in mid-October.
The $67 million deficit is basically described as a situation where expenses and/or revenue weren’t applied to the proper accounts. The biggest example is the expenditure of $40 million on major infrastructure work that was paid with money from other city accounts instead of funds earmarked for it being drawn from bonds.
Interim Finance Director Stephanie Beauchaine has repeatedly stressed the city has adequate reserves to “true” up funds as required by law.
She also noted for whatever reason the department hadn’t stayed on top of necessary work including keeping the general ledger up to date.
The backup material to the resolution the council will consider Tuesday to determine the total annual appropriations subject to the Gann Limit for the City of Manteca for fiscal year 2020-2021 offers a different financial outlook for at least two items that account for a third of the city’s general fund revenue — sales tax and hotel room tax — than was offered just a week before the election that had the Measure Z one cent sales tax increase on the ballot.
Sales tax receipts the city collected in fiscal year 2018-2019 came to $13.2 million. Sales tax revenue was projected to reach $13.8 million for the fiscal year ending on June 30, 2020. The $13.8 million sales tax figure was carried over for the current year in what is essentially a provisional budget as city staff was unable to get a spending plan in place for the current fiscal year due to unknown economic impacts from the pandemic.
The documents the council has been presented with for Tuesday’s meeting reflects a projected increase in sales tax to $14,186,876 for the current fiscal year ending June 30, 2021. That goes counter to indications last month sales tax revenue is off by 14.7 percent so far due to retail and restaurant shutdowns due to the pandemic.
The most egregious calculation of City of Manteca proceeds of taxes for fiscal year 2020-2021 on the worksheet accompanying the Gann Initiative spending limit resolutions may be to do with transit occupancy taxes or hotel room taxes.
The document projects the number at $2,605,384. That is almost double the $1,321,000 it was projected to be for the fiscal year ending June 30, 2020.
While that is likely to include the projection of Great Wolf Resort room taxes when the indoor waterpark eventually opens, it doesn’t appear to take into account the hit existing hotels are taking.
On the flipside, if the two projections for sales tax and room tax are solid it calls into question the $6 million deficit city management indicated three weeks ago that the fallout from COVID-19 was creating for the city’s general fund.
To contact Dennis Wyatt, email firstname.lastname@example.org