02-13-10, Hal Weber Comments on the Glendale Projected Revenue Shortfall for Fiscal Year 2009-2010

According to Agenda Item 8.a. for next Tuesday’s Glendale City Council Meeting, Finance Director Robert P. Elliot states in the "2nd Quarter Financial Update and Adjustments to the Adopted 2009-10 Budget":

"As of December 31, 2009, the City's General Fund received approximately $60 million which represents 35.9% of the original estimated revenues for fiscal year end June 30, 2010.  This amount is consistent with the previous fiscal year.  Fiscal year end revenues are projected to be $3.7 million less than originally expected.  The decrease in revenue projections are primarily due to the economic impact on local sales tax revenues as well as construction-related permit fees and interest revenue from investments.  The City continues to see these areas underperform."

 

If $60M is 35.9% of the original estimated revenues for fiscal year end June 30, 2010, then the estimated revenue must have been approximately $60M/0.359, or $167M.  The only significant increase in estimated revenues during the second half of the Fiscal Year appears to be in Property Tax, since only 19.8% was accounted for through 12-31-09.  If the other 81.2% comes in through 6-30-10, somewhat dubious considering the high number of foreclosures in Glendale this year, that would bring in $41.2M, $33.1M more than the$59.2M during the first half, for a total of $92.3M.  Adding this new estimated revenue for both halves of the Fiscal Year ($59.2M plus $92.3M) equals $152.5M.  That’s a shortfall of $164.8M minus $152.5M, or $12.3M, NOT the 3.7M projected by Mr. Elliot.

 

There is a difference between my calculation of the original estimated revenue ($167M) and the actual estimated revenue ($164.8M) due to Mr. Elliot’s rounding the revenue received, shown in Table 1, page 4, from $59.2M up to $60M.

 

There’s a lot of speculation here, of course.  I hope I am wrong and Mr. Elliot is right.  Be sure to re-visit this page when the Fiscal Year 2009-2010 information is finalized!

 

Hal Weber