2008/10/15 Council Agenda Packet

CITY OF EVERETT FISCAL ANNEXATION ANALYSIS Fines and Forfeits. Currently the revenue estimated in the City's budget projects the per capita revenues for fines and forfeits to be $21.13 in 2008. These per capita estimates are assumed to increase with inflation. Other Charges. The City receives some small revenues that have been categorized as "Other Charges" for this analysis. Included in this category are, among others, dog licenses, animal shelter contracts and fees, and other miscellaneous charges. These revenues are estimated on a per capita basis, averaging$18.98 for the City population in 2008, and are assumed to increase with inflation. Gas Tax. A portion of the state-collected gas tax is shared directly with municipalities which bear a substantial portion of the overall costs of road maintenance and construction. The gasoline and diesel tax is a flat amount levied per gallon (rather than a percentage of the price at the pump), so even with increasing fuel prices,the state distributions will decrease if the number of gallons sold is decreasing. Until 2005, cities had been receiving their gas tax in two distributions: a restricted portion (32%) to be used for capital; and an unrestricted portion (68%) allowed to be used for operating or capital funding. Recently, however, the dual-distribution and restriction have been removed, but most cities (including Everett) have continued to allot 32% of gas tax revenues to their capital program. It is assumed going forward that Council direction on this issue will not change. The maintenance portion of gas tax revenue estimates from the City's budget projects a per capita gas tax allocation of $16.96 in 2008.This per capita number is assumed to increase at the rate of inflation. Criminal Justice Sales Tax. Snohomish County levies a dedicated sales tax to support criminal justice expenditures. This 0.1% sales tax is collected by the state's Department of Revenue, and is distributed to Snohomish County and to cities within the County on a per capita basis. In 2008, Everett estimates criminal justice sales tax revenues at a per capita rate of $16.00. Total future revenues are calculated on a per capita basis, with the annual per capita revenue assumed to increase at the rate of inflation. Ambulance Transport Fees. Ambulance Transport fees are estimated based on per capita allocation of Everett's 2008 budgeted revenues ($15.57 per capita) to each city resident. According to City staff, the anticipated revenues from the annexation areas will be at approximately half of this rate. Building and Planning Permits and Fees. Building permit and planning revenues are generally estimated on a cost recovery basis, with City costs of permitting based on those labor positions directly related to performing these services. According to the City's budget estimates, approximately 94% of the City's permitting labor costs and 44% of the planning labor costs are recovered through fees. These cost recovery factors have been applied to the expected increase in permitting and planning labor costs due to annexation in order to estimate future fee revenues. Natural Gas Use Tax. The Natural Gas Use Tax is applied to the in-state use of natural or manufactured gas that was purchased from outside of the state and was not subject to the State Public Utility Tax. Cities may levy this tax at the same rate as their natural gas utility tax. Because this is a very specific type of purchase, this analysis assumes no increase in tax revenues from the annexation areas. Current City revenues are projected to increase at the rate of inflation. Final Report: October 2008 Page 31