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D - 1 City of Pleasanton Operating Budget • FY 2021/22 - FY 2022/23 APPENDIX D • Discussion of Major Revenues • General Fund Ten Year Fiscal Forecast Discussion of Major Revenues MAJOR REVENUE FORECASTING ASSUMPTIONS The following discussion outlines the major operating revenue sources of the City and describes the methods used to forecast FY 2023/24 and FY 2024/25 revenues. GENERAL FUND Property Taxes Pursuant to Proposition 13 passed by California voters in 1978, countywide property taxes are set at 1.0 percent of assessed value. After Proposition 13, initial assessed values were set at the 1976 level. Since that time, assessed values have increased in most years by a factor of 2.0 percent. Upon change of ownership, the assessed value of a property is reset to the current market value (sales price). The City receives approximately 25.0 percent of the 1.0 percent countywide collected tax in Pleasanton. Secured property taxes are the single largest source of revenue to the City’s General Fund, representing approximately 50.3 percent of the total. Property taxes are collected on both secured (real property) and unsecured property (such as boats). If a property changes ownership in the middle of a tax year, the reassessment appears on the tax rolls the following year. However, the property is reassessed for a pro-rata portion of the year of sale, and an additional or “supplemental tax” is applied in that year. The County often lags behind on reassessments, so supplemental assessments can span more than one year, causing fluctuations in revenue. During the Great Recession, Pleasanton experienced essentially no growth in assessed property value and the impact on the General Fund revenue was evident. As the real estate market continues to improve the City is experiencing increases in assessments through Proposition 8 recaptures, stronger sales of existing properties, and new development. A two percent increase is typically derived from the Proposition 13 growth factor (but is not guaranteed). After factoring in all property tax related revenues (secured, unsecured, supplemental, delinquent and property tax in lieu of Vehicle License Fee), staff is projecting an increase of 5.5 percent ($4.6 million) in FY 2023/24 and 3.5 percent ($3.1 million) in FY 2024/25.