Annual surplus grows to almost $16 million
The City of Visalia reported lower growth in sales tax revenue in 2023 the council heard this week in a report. Sales tax revenue to the city last year climbed only 2% from the year before compared to double digit increases of over $10 million in each of the past two years, what was about a 16% jump in sales tax revenue each year.
City finance chief Rene Nagel says 2023 fiscal year sales tax revenue reached $84.6 million compared to $82.1 million in 2022 and $70.9 million in 2021 (see chart)
Proposed civic center would be paid for in cash
The city enjoyed a sales tax boom in the past two reports despite the fact these were the years when COVID arguably shut down the economy with the results coming in as a big surprise to the city – including staff.
Now in 2023 things slowed down here and across California with some area cities reporting red ink in their general funds.
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Despite slower growth in Visalia sales tax income, the top category in the city’s general fund, has roughly tripled since 2014 from $28.8 million. Even more impressive is the fact that total revenue from all sources in 2023 was $177.8 million including property tax, grant funding, franchise fees and TOT bed tax monies. Total revenue is up from $163 million in 2022 and that is a jump of an impressive $15.8 million.
The city report says this is the tenth consecutive year that the General Fund has ended the year with a surplus, with the General Fund’s fund balance (including the emergency reserve) at $55.4 million at fiscal year-end, last June.
So the slowdown in sales tax monies should not hurt the city’s budget picture again this year.” We are in really good shape” says Visalia Mayor Brian Poochigian. He says the slowdown in sales tax to 2% is probably” the new normal.”
The report says “contributing to the growth was a continued high inflation rate. Although we saw the California consumer price index come down to 3.1% as of June 2023, the average rate for the fiscal year stood at an estimated 5.52%. The main areas of the growth in Sales Tax for Visalia were in General Retail (department stores, apparel stores) which grew $.5 million and Food Products (restaurants, food markets, liquor stores) which grew $.3 million.”
Property Tax continued its growth trend increasing 7% as existing house sales, new development, and property values increased in Visalia.
Travel Down
Travel to the area saw a slight downturn in fiscal year 2022-23 as Transient Occupancy Tax (TOT) revenue had a decrease of 1% as compared to last year possibly due to less disposable income available to consumers.
Franchise Fee revenue increased 17% in fiscal year 2022-23 due to increases in gas and electric revenue as the City continued to have new development as well as the utility companies increased fees to their customers. Business License revenue increased 13% when compared to last year as new businesses have been added and the continued growth in sales as indicated by growth in sales tax.
Also of note,Visalia has 13,126 licensed businesses operating in the City, a net increase of 173 as compared to last year. These businesses include private manufacturing, technology research, retail and service businesses, educational services, healthcare and social assistance, consulting, arts and entertainment, hospitality services, along with non-profit institutions.
Record year
The nearly $16 million dollar jump in total revenue is even more impressive when we look at revenue gain for the past two big sales tax years increasing $11.6 million and $12.7 million making 2023 a record year. Visalia’s annual revenue has doubled since 2014.
The surplus last year allowed the City Council to announce they would be able to pay for the planned new Civic Center out of cash reserves built up by years of positive revenue. That includes the 2023 year when the city moved $10 million from the surplus into the $107 million Civic Center project, now in the final planning stages.
Mayor Poochigian says being able to pay for the civic center with savings, has been a 30 year effort involving many city council members.
Even with higher revenue, the city has also had higher expenses says the report.
“The General Fund ended the 22/23 year with a change in fund balance and surplus of $15.85 million. Contributing to the surplus was not only the growth in the main General Fund revenue categories, but also in uses of money and property (interest income) which was up $1.7 million as compared to last year as not only were interest rates up this fiscal year but there was a significant negative adjustment to the fair market value on investments held by the City last fiscal year which had decreased interest income. Additionally, fees and fines (vehicle, parking, and local ordinance violations) were up by $0.1 million.”
“However, the City did have a decrease in charges for services (engineering fees) of $1.4 million as development activity was down for the year and miscellaneous revenue by $0.8 million.
Employee expense
Offsetting the large revenue growth this fiscal year, total expenditures were up $6.6 million compared to last year mainly due to increases in employee compensation of 8%. These increases also affect pension obligations. Additionally, we had increases in most all other costs due to inflation and in capital outlay of $2.3 million as general fund projects, such as the East Regional Park Basin and Lower Kaweah/Mill Creek project.
New staff
The strength of the Visalia economy has allowed the city to not only raise wages, but to hire a new talent to guide the city from nearby communities, including the former city manager of Porterville, John Lollis, now Visalia Assistant City Manager and the former Assistant City Manager of Lemoore Michelle Speer who joined Visalia staff this week as the new Community Services Director. MayorPoochigian adds that these positions are not new, but simply vacant and now filled.
Caption for chart: Revenue stream for Visalia by year
Caption for pic:Visalia’s budget surplus allows city to pay cash for new $107M civic center