City Council Study Session Agenda and Packet 2008 05 13

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NCIL COMMUNICATI TO: MAYOR AND CITY COUNCIL FROM: MALCOLM FLEMING, CITY MANAGER DATE: MAY 13, 2008 SUBJECT: UPDATE/DISCUSSION - REVENUE STABILITY WORKGROUP ORIGINATING DEPARTMENT: CITY MANAGER SUMMARY: The Revenue Stability Working Group is comprised of representatives from Boulder County and municipalities within the County. The focus of the group has been to reduce the variation in annual sales tax revenue going to each municipality by developing a way to share incremental sales tax (i.e. new sales tax above the pre-Existing base amount in each community). The attached charts show the sometimes dramatic variation in revenue collections in the individual municipalities compared with the relatively Even combined revenue collection for all municipalities over the same period. Depending on their current fiscal and/or land use situation, each member of the Group may have different reasons to consider revenue sharing including: • Municipalities that are currently "leaking" sales tax (i.e., their residents are shopping in other communities) might view revenue sharing as more equitable than the status quo, and a key step to bolster the fiscal sustainability of their current budget, and perhaps a means to increase levels of service with additional revenue. • Municipalities that are currently "importing" sales tax (i.e., their level of retail sales is higher than what would be supported solely by residents) might view revenue sharing as away to help ensure long-term revenue stability if they believe that future retail development in other municipalities is going to reduce their existing market share. • Municipalities that are concerned about the fiscal implications of competing (i.e., incentive packages) with their neighbors for new retailer development might view revenue sharing as a more logical way to promote land-use decisions. • Municipalities that are concerned about the land-use implications of the above competition (i.e., sprawl, over-retailing, traffic congestion) might view revenue sharing as a means to promote more aesthetic and sustainable land-use patterns. With the help of consultants from BBC ResE;arch and Consulting, the Group has explored various approaches to sharing incremental ;sales tax revenue including: Population-based allocation where some portion of sales tax is attributed to point of sale and the remainder is shared based on apopulation-weighted pool; Spending Power, where the allocation is based on a weighted measure of spending power of households in each community. SUBJECT UPDATE/DISCUSSION - REVENUE AGENDA ITEM STABILITY WORKGROUP