20-Year Resource Allocation Plan - City of Sunnyvale

the other fi ve cases, the actual CPI was less than 2% but was
always above 0%. For the fi rst time since the approval of
Proposition 13, the FY 2010/2011 Property Tax Roll refl ected
a negative CPI factor (-0.25%). This, along with a reduction
in assessed valuation for the City’s non-residential properties,
drove the 1% drop in Secured Tax revenue for FY 2010/2011.
For FY 2011/2012, the CPI is back to being a positive amount
(0.753%); however it is still not at the typical 2% factor.
This, combined with the expected continued reduction in
assessed valuation on non-residential properties, will drive
the projected 0.5% reduction in Secured Tax revenues in
FY 2011/2012. Recovery in this area is expected to begin
in FY 2012/2013 and quickly return the City to its projected
sustainable baseline by FY 2015/2016, with future growth set
at the historical average.
Two other important elements of Property Tax revenue are the
Unsecured Property Tax and Supplemental Property Tax rolls.
Unsecured Property Tax grew signifi cantly during the height
of the economic boom and has slowly reduced to an average
of approximately $2.25 million annually, which is what is
projected for both FY 2010/2011 and FY 2011/2012, with
future growth tied to expected rates of infl ation.
The Supplemental Property Tax roll refl ects properties that are
sold or transferred after the offi cial lien date. Supplemental
assessments pick up the higher or lower value on the property
immediately by using a fl oating lien date, and the added or
reduced assessed value is placed on a separate Property Tax
bill. Revenue from the supplemental roll is dependent strictly
upon timing of sales and thus is diffi cult to forecast. Another
factor that makes this revenue source diffi cult to forecast
is the fact that it is a pooled revenue at the County level.
Therefore, all Supplemental Property Tax collected by the
County is allocated to the cities based on a formula and not on
transactions within each jurisdiction. As such, the signifi cant
valuation declines and foreclosures in other parts of the county
have impacted the City of Sunnyvale’s Supplemental Property
Tax revenues. Over the past several years, the City has seen
a sharp drop in Supplemental revenues, with revenues going
from $1.3 million in FY 2007/2008 to a projected $220,000 in
FY 2010/2011. Going forward Supplemental Tax is projected
to recover to its historical average between FY 2011/2012
and FY 2012/2013 and then increase modestly from there
throughout the remainder of the long-term plan.
Sales and Use Tax
Sales and Use Tax represents the second largest source of
revenue to the General Fund. Sales Tax is expected to make
up 23% of budgeted revenues in FY 2011/2012.
Sales and Use Tax also represents one of the General Fund’s
most volatile revenue sources, with drastic swings over the
past decade. In FY 2000/2001, Sales Tax was the General
Fund’s largest revenue source, constituting 32% of total
revenue at $36.3 million. Following the bust in the technology
industry, Sales Tax revenue plummeted to $22.8 million by
FY 2002/2003. Over the next four fi scal years Sales Tax
rebounded, hitting $30.9 million in FY 2006/2007. Revenues
then dropped 4% in FY 2007/2008 as the initial impact of