RES 95013 - Laserfiche WebLink

Revenue Management for Local Governmenl Hinderliter, de Llamas & Associates HdL Coren & Cone December 19, 1994 Sue Rossi Finance Director City of Pleasanton 200 Old Bcmal Road Pleasanton, California 94566 Dear Sue: Regarding your question on projecting sales tax revenues, I suggest that Pleasanton take a conservative approach as its sales tax activity is more difficult to project than many of the surrounding cities. This is not a bad problem to have, Sue. It reflects the fact that your city's tax base contains a high percentage of industrial "business to business" sales that are more sporadic and unpredictable than consumer goods, but tend to continue to grow after the market for traditional consumer goods has saturated itself and leveled off. The largest--deviations in your sales tax revenues during the last few years have been due to unanticipated changes in business to business sales resulting from new companies, relocations, new product lines and in some cases, changes in the way that the state treats "point of sale" allocations for spec'.xfic industrial uses. These simply can't be forecast. Another reason for continuing with a conservative budgeting philosophy is the market saturation problem. Pleasanton has had fantastic growth in the past few years but unless you are anticipating huge population increases, the mount of consumer goods that the tri-valley area can absorb is getting close to the top of its cycle. Once it reaches that point, consumer sales tend to level off and revenues are more prone to track the costs of inflation. I frankly expected this to occur a year ago but it will eventually happen as it does in all maturing market areas. Incidentally, .the current economic predictions arc generally that sales activity will show strong gro~vth through the rest of this fiscal year but level off in 1995-1996. Call if you .need · further elaboration. · Sincerely, LdL:paf 1340 Valley Vista Drive I Suite 200 I Diamond Bar. CA I 91765 I 19091 861-4335 FAX 1909] 861-7726