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<br />IV. Budftetarv Sales Tax Estimation <br /> <br />A. The estimated percentage increase in sales tax revenue for the ensuing fiscal year budget <br />will not exceed the actual percentage increase of the most recently completed fiscal vear. <br />B. The following example illustrates the limitation set bv this policy. <br /> <br />Fiscal Year I Fiscal Year 2 <br /> Percentage <br />Actual Actual Increase <br />$10.000.000 $10500.000 5.0% <br /> <br />Fiscal Year 3 Fiscal Year 4 <br /> Percentage <br />Estimated Proposed Increase <br />$11.550.000 $12.127.500 5.0% <br /> <br />In the eXaIllple above. the Fiscal Year 4 Proposed Budget is limited to a 5.0% increase. <br />which is the actual percentage increase of the most recentlv completed fiscal vear (Fiscal <br />Year 2). <br /> <br />C. This policy ensures that the ensuing fiscal vear budget contains a sales tax revenue <br />estimate based on actual completed fiscal years onlv. <br /> <br />V. Budftetarv Sales Tax Revenue Shortfall ContinftenCl' Plan <br /> <br />A. The City will establish a plan to address economic situations that cause sales tax revenue <br />to be significantlv less than the adopted budget sales tax revenue. The plan is comprised <br />of the following components: <br /> <br />Indicators - Serve as warnings that potential budgetarv sales tax revenue shortfalls are <br />increasing in probability. Staff will monitor state and national economic <br />indicators to identify recessionary or inflationary trends that could <br />negatively impact consumer spending. Staff will develop a monthlv report <br />that compares the current month's sales tax revenue to the same month of <br />the previous year. The repOlt will show sales tax revenue bv month for the <br />last ten fiscal vears. <br /> <br />Phases - Serve to c1assifv and communicate the severitv of the estimated budgetary <br />sales tax: revenue shOltfall. Identify the actions to be taken at the given <br />phase. <br /> <br />Actions - Preplmmed steps to be taken in order to prudently address and counteract <br />the estimated budgetary sales tax revenue shortfall. <br /> <br />City of San Marcos Financial Policy - Revised April 2004 <br /> <br />Page 6 <br />