TITLE
Recommendation to, by motion of the City Council, direct City Manager to assist the City Council in developing a policy for dealing with revenues realized above projections from on-going revenue sources (i.e., property taxes, sales taxes, oil properties, etc.) so that general fund services are funded appropriately, debt is retired and infrastructure replaced and repaired.
DISCUSSION
From time to time, the City of Long Beach has received “one time money” such as a $9 million dollar settlement in the Sempra litigation. That money is truly “one time” as it was not budgeted as an on-going revenue source and the City will only receive that settlement “one time.” Such “one time” revenues can be used appropriately for “one time expenditures” - for items or projects that require only “one time” revenues. Conversely, for several budget cycles, City Management has wisely projected oil revenues at conservative levels. However, this practice of under projecting revenues has resulted in several years of what has been also termed as “surplus revenue” and this revenue has been spent as “one time money” instead of being used to restore cuts in city services. A more accurate definition of these funds should be “under projected revenue” as these funds would not be “surplus” if they had been accurately projected in the current budget year. This designation of revenues realized in excess of projections has only been applied to oil revenues. Last year, the City experienced an 11% increase in sales tax revenue over projections, but that revenue was not treated as “surplus,” nor spent as “one time money.” In the same budget cycle, the City realized $18 - 20 million dollars in oil revenues over what had been projected to be received. These funds were designated as “one time money” and spent on a variety of projects instead of being utilized to deal with the deficit of FY 2012 by restoring cuts to services or banked to deal with the recently announced $26 million deficit over t...
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