Council Communication

Title:	Report on Proposed Increase to Food & Beverage Tax to Fund Parks Open Space and Trails
Dept:	Finance Department
Date:	February 18, 2003
Submitted By:	Lee Tuneberg, Finance Director
Approved By: ...........................	Brian Almquist, Interim City Administrator

Synopsis:	At their February 4th, 2003, meeting City Council requested a report on the impact of an increase in the Food & Beverage tax rate from 5% to 6%, dedicating the additional revenue generated for funding the Parks Improvement Plan.
Recommendation:	If Council wants to refer the tax increase to the public for a vote they should take action by July to ensure adequate time for the City Recorder to submit the necessary documents to Jackson County for a September election.
Fiscal Impact:	The proposed budget for FY 2003-2004 would be adjusted to include an additional $336,000 in revenue from Food & Beverage Tax revenue, transferred to the Parks District for acquiring additional properties.
Background:	The Parks & Recreation Commission has considered many potential sources of revenue to provide additional funding for The Parks & Recreation Commission capital plan. At the February 4th City Council meeting, Parks proposed a change in the allocation of the current F&B revenue stream from 20% to Parks for acquisitions and 80% to the Wastewater Fund for debt service to 40% Parks and 60% Wastewater Fund. This would have necessitated a 14% increase on sewer rates to replace the lost revenue to the Wastewater fund. Council requested additional information be provided before considering an increase in the tax rate instead of the reallocation. Increasing the tax will probably not materially affect the amount of revenue generated for the Parks as compared to the reallocation. With an estimated increase in revenue of 3% per year, it estimated that an additional revenue for Parks of $2,780,000 would be generated by December 2010 (the sunset date of the current tax).

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