Adjustments proposed for the City of West Hollywood’s budget for the 2016-2017 fiscal year anticipate a growth in revenue over earlier projections. However, in a presentation to the City Council, City Manager Paul Arevalo says: “The pace of growth appears to be moderating, and we anticipate that revenues will stabilize towards the end of this two-year budget cycle as several major, multi-year development projects open and reach stabilized operations.”
The budget anticipates overall operating revenue of $116 million in the 2016-2017 fiscal year, operating expenses of $114 million and $13 million in capital project spending. The draft 2017-2018 budget, which will be updated before the beginning of that fiscal year, anticipates $121 in revenues and operating expenses of $116 million. Six million dollars is budgeted for capital spending.
In his presentation, Arevalo said revenue for the 2016-17 fiscal year is 3.6% higher than that in the 2015-16 budget as adjusted in mid-year. Each fiscal year spans 12 months from July 1 in one year to June 30 in the next. The city regularly adjusts its budget based on actual expenditures and revenues.
The proposed adjustments presented by Arevalo are in the following areas:
— Transient Occupancy Tax, or hotel tax, which is the city’s biggest single source of revenue. Tourism in the Los Angeles region and in West Hollywood is at record levels, Arevalo’s report states, “which has led to high occupancy (83%) and average daily room rates ($280+) in the city.”
“Several new luxury hotel properties are nearing completion and are expected to open in calendar years 2016 and 2017.”
The proposed budget projects $23 million in room tax revenue in fiscal year 2016-17, an increase of 11% over the prior year. For fiscal year 2017-18, the city has budgeted $25.5 million in room tax revenue, an increase of 11% over the budget for the prior year.
— Property tax revenue. This source of revenue continues to show strong and steady gains due to a combination of factors, including rising property values, higher volumes of sales transactions, and the addition of new buildings to the city’s property tax roll, Arevalo’s report says.
“In fact, for the current year the city had the largest percentage growth rate in Los Angeles County at over 10%. During fiscal year 2016-17 the city anticipates a 9% increase in property tax for a total budgeted amount of $15.6 million. For fiscal year 2017-18 the city budgeted $16.5 million in property tax revenue, an increase of 6% over the budget for the prior year.
— Sales and use tax revenue. This revenue category, which has shown steady growth in recent years, is expected to increase by 1% in the next fiscal year, Arevalo’s report says. However, during the 2015-16 fiscal year the city budgeted for, and received, a one-time payment from the state of approximately $900,000. If this one-time payment is not considered in the calculation, the budgeted year-over-year sales tax increase is actually 7%. The city expects to receive approximately $14.8 million in sales tax in fiscal year 2016-17. For fiscal year 2017-18 the city budgeted $15 million in sales tax revenue, an annual increase of 1.5% over the prior year.
— Parking fines. West Hollywood’s budgeted revenue for parking fines is projected to be approximately $9.1 million in fiscal year 2016-17, a 2% increase over the prior year. For fiscal year 2017-18 the city budgeted $9.1 million in parking fine revenue, an annual increase of 1% over the prior year.
— Parking meters. For fiscal year 2016-17, West Hollywood has budgeted $5.2 million in revenue from parking meters. This is an increase of approximately 8% over the prior year. “Increases in parking meter hours and rates, combined with higher demand from improvements to the economy, have boosted parking meter revenue over the last several years,” the city manager’s report says. The city adjusted the parking meter revenue budget by 8% to account for higher revenues in previous years due to increased meter hours and rates.
For fiscal year 2017-18 the city budgeted $5.2 million in parking meter revenue, an increase of 1% over the prior year.
— Motor vehicle in-lieu fees. This is also a significant revenue source for the city, the report says. The fee is equivalent to 0.65% of the market value of motor vehicles and is imposed annually by the State of California “in lieu” of local property taxes. The state withholds a small portion of the fees to pay for administrative costs and distributes the remainder of revenues to cities and counties on the basis of
population, the report says.
For fiscal year 2016-17 West Hollywood budgeted $4 million in motor vehicle in-lieu fee revenue, an increase of 8% over the prior year. For fiscal year 2017-18 the city budgeted $4.1 million in motor vehicle in-lieu fee revenues, an increase of
1% over the budget for fiscal year 2016-17.
–– Community Development permit revenue. This is budgeted at approximately $3.7 million for fiscal year 2016-17, a decrease of approximately 16% from the prior year. Arevalo attributed that reduction to the wind-down of major construction activity at several projects along Sunset Boulevard. “The city projects a decline in permit revenue, especially from Building & Safety and Planning permits,” the report says. “However, the city typically budgets these revenues conservatively, because they can fluctuate significantly based on the timing of construction activity.”
For fiscal year 2017-18 the city budgeted $3.8 million in community development permit revenue, an increase of 1% over the prior year.
Most of the city’s other revenue sources such as business license tax, franchise fees, rent stabilization fees and recreation fees are expected to remain fairly flat or grow modestly (between 1% and 2%).
While revenue has grown, the cost of doing business also has increased, the report notes. “It is typical that the cost of providing the same level of services increases from year to year based on increases in the price of external goods and services, improved technologies, cost of living adjustments, and premiums for benefits. The change in the consumer price index (CPI) for the Los Angeles region over the last year was approximately 3.1%. All of the city’s bargaining unit contracts expired over the last two years and have been renegotiated, which resulted in some enhancements to remain competitive in the labor market.”
The draft 2016-2017 budget and a projected budget for the 2017-2018 fiscal year can be accessed online.
How does the City of West Hollywood plan to spend its revenue? Read City Manager Paul Arevalo’s proposal to the City Council here.
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Public Budget Discussion Wednesday at Beach Nation
The city will offer residents a chance to learn about and comment on the proposed budget at two events. One, Budget @ the Beach, will take place tomorrow from 6 to 7:30 p.m. at Beach Nation, 8289 Santa Monica Blvd. at Sweetzer. Staff members from several West Hollywood City Hall departments will be on-hand to discuss work plans and budget priorities. Beach Nation will be open to the public and will be serving from its regular dinner menu. Food and beverage purchases are not required in order to attend. One-hour parking will be available at the Kings Road Parking Garage, 8383 Santa Monica Blvd. at Kings Road.
The city’s Budget Presentation to the community will take place on June 18 at Plummer Park, 7377 Santa Monica Blvd., in Rooms 5 and 6. Members of the city’s Finance Department will provide a detailed overview of the City Manager’s recommended 2016‐2018 operating budget.
The presentation will be followed by a question-and-answer session. The meeting will be open to the public; complimentary parking will be available in the surface lots at Plummer Park for up to three hours.
The City of West Hollywood’s Open Data portal includes a page dedicated to the budget. The portal provides easily accessible information about current city revenues and expenditures in a user-friendly format.
was there any provision for ‘settlements’ of lawsuits such as the one paid to Ian Owens. or what will be paid to Michelle Rex or Fran Solomon, any mention of an increase in legal fees?
When did Arevalo present this to Council? He wasn’t present for last night’s meeting (Monday, June 6).
It was presented as part of Monday’s City Council agenda, although he wasn’t physically present.