Transaction and Use Tax Oversight Committee - Regular Meeting

Okay. Good morning, everyone. The 03/26/2026 meeting of the Transaction and Use Tax Oversight Committee is now called to order. Madam executive assistant, could you call the roll, please?

Liz Jones? Present. Heather Pinco? Present. Rojufo Oyawole.

Present. Please rise for the pledge of allegiance led by committee member Pinco. Thank you. All right. Approval of the agenda. Are there any changes to the agenda today? Changes to agenda? None. Okay. May I have a motion and a second to approve the agenda?

I'll make a oh.

Alright. And a second. Alright. So we have a motion and a second. Please vote.

All right. Motion passed. All right. Mr. Finance Director, any updates for the committee?

Good morning. Thank you for being here again. We appreciate your support and fiduciary duties as our oversight committee members. Just a couple of quick updates. As we you received your report today, we just wanted to bring one oversight to your attention.

I think it was on the one of the graphs in the attachment. This is the revenues, budgeted revenues, and expenditures. There was a variance between the that report and what was presented in as a sales tax revenue. So we apologize for that. We wanted to bring that to your attention, first thing, just as part of transparency purposes and for our community members as well.

As you received the report today, this is very similar to what you have received in the past. Our duties as my duty as finance director is to ensure that we present to you information up to this point very consistent with what we present also to city council as part of our quarterly budget updates. Sales tax, as you know, is Measure T, which is a 1% sales tax, is a district sales tax, very consistent with the other 1% sales tax we collect for the city. We maintain oversight over some of the sales tax trends that's happening on a quarterly basis, considering that Measure T fund, the most significant revenue is the sales tax revenue. We maintain close monitoring in some of those sales tax trends.

For Measure T, the general consumer goods and auto and transportation, those are the two significant sales tax groups for RCD. Those two mix up about 60% of the major industry categories for the Measure T sales tax. So far through the first six six months of the fiscal year, those have remained relatively good with a year to date change over the prior year same period, approximately 3% each of those categories. Other categories that we have seen a decrease in trends or comparison to the prior year, is with business and industry, food and drugs, and fuel and services stations. The latter primarily because during the first six months of the fiscal year, we had really gas prices have been low, which impact sales tax.

Nevertheless, the so far through the six months period, when we compare sales tax relation to the same period last year, we are approximately 4% higher, which is very good, considering the various economic factors that might be impacting our economy, both locally as well as nationally. And so with that, we also look at closely of our economic drivers, primarily at the nation level. We look at real gross domestic product growth, and that has been relatively the same during the last two years with about 2.3% increase. California unemployment, it's approximately 5.7% as of the December. So that has remained, stable, somewhere around 5.4%, 5.6%.

And certainly, we also keep eye on the, Federal Bank tax, Federal Bank rates, and the impact that may have on future loans, primarily, the cost of borrowing will likely increase with rates going higher. But conversely, it would also borrowing costs could decrease and that could also incentivize purchases of big ticket items like cars and furniture, so on and so forth. So we're keeping an eye on those. We work closely with HDL, which is our sales tax consultant, so that we update our sales tax projections on a quarterly basis. And that is my administrative update to you, later today, with the presentation that will be delivered by our management analyst, Evan Prokat.

Thank you. All right.

Thank you for that. Any question for Mr. Finance Director? No.

All

right. Okay. We move on to the public comments part of our agenda. Any person may address the governing bodies on any subject pertaining to City business. Normally, no action may be considered or taken by the governing body on any matter not listed on the agenda. Each speaker will be limited to three minutes. Madam Executive Assistant, do we have any public comments?

We do not have any public comments.

All right. Thank you. So we'll move on to the consent calendar. Items on consent calendar are considered routine and may be enacted by one motion and vote. There will be no discussion of these items unless specific items are removed from the consent calendar for separate motions. Are there any other requests from the committee to pull any consent calendar items? All right. Madam Executive Assistant, are there any members of the public requesting, to speak on consent?

We do not.

All right. Can I have a motion and a second? We have a motion. We have a second. Please vote.

Motion carries unanimously.

All right. Thank you. Okay. So we move on to the discussion item, Measure T, biannual report for fiscal year twenty twenty five-twenty twenty six. Staff, may we have

a staff report, please? Good morning. Chairperson Wally, Vice Chair Pinco and committee member Jones, my name is Evan Crockett, and I'm the management analyst for the finance department. I aid in financial reporting to the Measure t oversight committee. Thank you for the opportunity to present the Measure t biannual report update for fiscal year 02/2526.

These reports are an important part of our commitment to transparency and responsible stewardship to the of the voter approved sales tax measure, and I appreciate the committee's continued engagement and oversight. Thank you all for continuing your fiduciary duties and your civic service to the community and city of Murrieta. This report relates to the district sales and use tax financial activities through the midpoint of fiscal year two thousand twenty five, twenty six. Please let me know of any questions as I present my findings. The upcoming slides are sharing information on the summary of revenue.

This slide particularly represents the Measure T revenue budget versus actuals. Based on the prior fiscal year twenty twenty four-twenty of the sales and use tax collections, finance staff proposed adopting the revenue budget of $28,700,000 The Measure T, revenue collected through to December 2025, is approximately 14,900,000.0. This represents approximately 52% of the amended budget. This graph summarizes transaction sales and use tax collections with the for the last five fiscal years, including current collections through December 2025. When comparing the halfway point, district sales tax receipts to the same period last fiscal year, the current year's revenue is higher by 05/2023 thousand and eleven or approximately 3.6%.

Based on projections of sales tax receipt collection for the remainder of the fiscal year, the total transaction use tax revenue is projected to be around 28,900,000.0. This is approximately 170,000 more than the originally adopted budget. Based on the revenue trend over the last five fiscal years, we continue to experience revenue stagnation. Finance staff will continue to work with the sales tax consultant and closely monitor collections through the remainder of the fiscal year. The graph on screen represents the first six months of revenue collections for the 2526.

The monthly average receipts were approximately 2,500,000. This is an approximate 87,000 monthly average more than the same period last year. Based on this graph, you'll notice the quarter end months with higher collections. This is primarily due to sales tax collections and remittance by businesses and the California Department of Tax and Fee Administration performs a true up calculation at the end of each quarter. The month of December increase is primarily due to holiday shopping season.

This table, you'll find the Measure t operating budget. The amended operating expenditure budget for fiscal year 02/2526 is 32,400,000 as of December 2025. The year to date expenditures as of the preparation of this report are 15,800,000.0 or approximately 49% of the amended budget. For transparency purposes, we are also reporting the CIP related expenses of approximately 352,000. The CIP budget is maintained in a separate general ledger.

The internal service charges and transfers were aligned with expectations at the halfway point. Personnel costs are slightly below 50%, which is attributable to, vacancies that occurred throughout the fiscal year and to capturing 12 instead of 13 pay periods through the first six months of fiscal year. Operations and maintenance and capital outlay expenses may include onetime expenses that can be spent at any point in time during the fiscal year, and monthly expenses are not consistent on a monthly basis. The following slide summarizes the budget adjustments approved by the city council through the midyear point. In the first quarter budget update on 12/02/2025, the city council approved finance staff's recommendation for the following budget adjustments.

Due to limited sales tax data collections, staff did not recommend revenue adjustments during the first quarter budget report. Staff recommendations to the expenditure budget were as follows, A reduction of 80,000 in the contract services and account for a contract that should have been funded by the general fund instead of the Measure T fund, and an increase of $2,430 in the internal service charges for information technology due to a missed allocation during the biennial budget development. During the second quarter budget update on 03/03/2026, finance staff recommended to the city council revenue and expenditure budget adjustments. Based on the review of Measure collections, revenue was trending slightly higher than initial projections by 1.5%. Staff proposed increasing the budget for Measure T sales revenue by a 150,000.

For the expenditure budget, staff recommended an appropriation of 26,400 for a personnel related benefit due to a missed allocation during the biannual budget development. In addition, staff recommended a 47,383 budget adjustment to the onetime expenditure category for emergency repairs made at the Fire Fleet Maintenance Building. Lastly, as a result of researching accounting guidance on interfund loans, staff found that interfund loans should not be treated as a transfer transaction. We therefore removed the 3,500,000.0 budget for the loan from the transfers out category and now track it in the balance sheet as a note receivables. Based on the proposed midyear adjustments, Measure t fund revenue budget is 28,900,000.0, while the expenditure budget is 32,500,000.0.

This slide summarizes the accomplishments so far as well as those budgeted for fiscal year 02/2526. The agenda report refers to a total of 68 Measure t funded positions, since inception. This is broken down to 30 for police, 50 for fire 15 for fire, and 23 for all other departments. When breaking down the year to date expenses by department through the halfway point, 64 of Measure T expenses are public safety related. This is aligned with the amended budget as 65% of the budget is earmarked for public safety.

Some of the measured t expense highlights, regarding public safety include police vehicles and uplifting costs, police safety equipment, body worn cameras, license plate reader software, drone equipment, Narcan, fire hose and ladder test services and equipment, fire PPE gear and safety equipment, facilities maintenance, and others. A comprehensive list is included in the agenda report. We have a small budget for economic development, primarily for marketing, data, research, and conferences training with the efforts to attract new businesses, create new jobs for the local economy, and continue to highlight Murrieta's brand. Other areas expanding services include graffiti and weed abatement, citywide vehicle lease program and, funding the vehicle lease program and maintain the city's operating and sustainability reserve requirements. Speaking of operating and sustainability reserve requirements, this table summarizes the various reserves maintained by Measure t Fund.

For fiscal year 02/2526, the measure t fund will set aside $1,070,504 in the various sustainability reserves to meet city council's recommended reserve balance, which is 30% of the adopted operating budget. Conversely, dollars 6,280,521 is being used in fiscal year twenty twenty five-twenty six from the fleet replacement and facility repair reserves. Of these balances, nearly 5,000,000 was used from Measure T fleet replacement reserve to establish the vehicle replacement program. Of the 5,000,000, 3,800,000.0 is used towards the purchase of a tiller truck and a type one engine for the fire department, 1,200,000.0 towards general fleet replacement, and 35,000 for facility repair with a focus on emergency one time repairs at fire stations. The Measure t fund facility repair reserve for CSD committed 1,200,000.0 to be allocated to, capital improvement project 22039 for synthetic turf replacement at Los Alamos Hills Sports Park and Torrey Pines.

Lastly, this table includes an adjustment to change in fund balance classification for the 3,500,000.0 loan from committed fund balance reserve to non spendable loan receivable fund balance. Javier will be taking over on this slide.

Thank you, Evan. So this slide shows the Measure T in general for the fund balance for Measure T, both those fund balances or resources that are available for future spending and those that are not available primarily because of their very specific fund balance class ifications. So we're presenting to you is what how we ended up in fiscal year twenty twenty five and any projections on how we believe we're going to end it up with fiscal year twenty twenty six. Of course, with everything else, there are certain assumptions that we have to make. Needless to say, the goal is really to show you how the fund balance is projected to end at the end of fiscal year twenty twenty six with commitment of about $36,100,000 That's the biggest fund balance classification that we have.

That includes all the reserves and also all the commitment that we have set aside for future capital improvement plan projects. The $3,600,000 non spendable, that includes items such as like inventory, things that are not in a spendable format like in cash. That includes also the $3,500,000 loan or notes receivable, which now, that cash is no longer in the Measure T, but it becomes a different set of assets now, now becoming a note receivable, which is an unspendable format. And then lastly, the unassigned fund balance, so those are the financial resources that are available for future commitments. That is projected to end approximately $17,400,000 And all of that is based on the assumptions on the budgeted revenues and budget expenditures.

Deviation from any of those two versus the actual expenses to the budget, of course, that number will change at the end of the fiscal year. And I believe that is our last slide. I'll turn it over to Evan. This

concludes the presentation of the district sales and use tax, Measure T fiscal year twenty twenty five-twenty six biannual report. This is a receive and file report. We are available for questions or comments from the committee. Thank you.

Well, thank you so much, Evan. I think this is the first time you presented to us. It is, yes. Very nice, very nice. Thank you. Thank you. All right. Let me do you have any questions?

Yes, I do. So in that last slide, the $57,000,000 is that a year end projection or that's as of today?

$57,200,000 that is a projection through the end of the fiscal year. So that will be June 2026.

Okay. So assuming all that revenue that we're planning comes in, it will sit us at the end of this fiscal year at 57. Got it. Thank you.

Right. Any questions?

No. That was an excellent presentation. Yes,

very nice. I think for me, I don't have a lot of questions as well today. So we're going get out of here. But I agree with most of pretty much everything that you highlighted with respect to what's going on with the economy and some of the things that you're looking at. We're seeing the same thing in L. A. We do see an increase in our sales revenue also for this fiscal year. So pretty much in line with what we're seeing as well. So I have no questions there. Okay.

Yes. So the only and I think you cleared these up for me with this page here. When I looked at the March 3 presentation, I was looking at that schedule and I saw that 100 I knew it was an error, but I wanted to kind of I was hoping that you guys already caught it and you've already explained that to City Council that this was an error. So I think if you could just have the city clerk update that page. So if somebody else were to check at some point, that those are not correct numbers.

So these are the correct numbers, which makes sense to me. So the 3.6 you've kind of explained that. So the 3.5 loan is going to be part of that, right. So when the loan comes in or when the repayment comes in, then that amount will gradually go down, right? That's correct. And then go into the honest side, right? That's kind of the way we work, right? When repayment comes in for that $3,500,000 loan?

That's correct. So as the library development impact fees makes the annual payments for both the principal and the interest, the principal component will reduce the note receivable, the loan receivable based on that amount on that year. So this the non spendables Ernie, will decrease. And of course, that also depend on other categories in the non spendable fund classification like prepaid and inventory that we also count within that category as well. So, we expect that to change on an annual basis, but certainly note receivable will be decreasing on an annual basis based on the principal payments.

All right. Think Member Lee has a question.

So a few little questions. So in projecting why things are going up, is that relative to the cost of goods maybe rising sales tax and that's why we're collecting more? Is that why you see it happening? Or maybe it's more people moving into the area?

Yeah, great question. And so with our sales tax projections, we consider both. Additional population coming into our area and as you see, we continue to have significant number of housing developments that really reach out to our city and want to develop here with additional housing that leads to additional population, which impacts additional sales tax collections. The other component is that we continue as a city encourage new businesses coming to our city with future commercial development. Would also impact the sales tax in future years.

And we have certainly a couple of commercial developments in the pipeline coming through. They haven't been fully developed yet. But those that actually have come in certainly have an impact on sales tax. So those two factors have helped the city to have sales tax collection revenues better than last fiscal year. And of course, there's always an offset with things that have impacted sales tax like gas

Oh,

it's Gas good to prices, for instance. With the economy factors coming at the national level, I think consumers spending have changed slightly with looking for more where they find values in items, but also looking at purchasing items that are more essential versus needs versus wants. And so I'm very optimistic that we will continue to have a good economy locally in Murrieta. And so we're very optimistic that we will be able to meet the expected forecast for sales tax rate.

I would imagine in the short term with gas prices rising, that's going to give a little bit of lift into that price.

That is correct.

Approximately, do we know how much per gallon, or is it based on the total fill up? In other words, if you spend $100 you get a portion of that, or is it based on a gallon, your return?

It's based on the price of the gallons.

Got it. Price of the gallon. Okay. And then we answered that one. Okay. And you mentioned the long term loan for the library. Do they make one annual payment on that? Is it just one repayment annually? That's correct. Okay. Thank you.

That's all my questions. Okay. Anything else? No. You All guys right. So one other thing I do notice, just out of curiosity, some of the on the CIP listing, the expenditures year to date are not quite as much. And I'm just wondering why folks are not getting going on those items about, what, eight months into the year? Only if you know, because I know these are all over the place with respect to some of the items that are on the CIP list. Great

question, on the CIP report. So some of these projects, it all depends. Some of these projects might be at the end of the last phase of completion. And so we'll probably not see a lot of expenditures happening. Some of these remain may have been completed but remain open until city council accepts the improvements.

And at that point, we close out the project. Sometimes they're like post project completion, and there are certain expenses that may happen with infection, things like that. And then so sometimes we do keep this open more than usual. For some of the projects that, for instance, like Fire Station 1, sewer, and concrete, that's ongoing. That's happening right now. So we should be able to see a lot of expenses coming through that project. Same for the library building, children area expansion. That's ongoing right now. It's happening. And so most of the bulk of the work has been done, and so we should be expecting the those invoices coming through as well.

And so some of these projects are more active, while others are at the end, and we don't see a lot of activities on the expenditure side.

Right. Okay. Thank you. Madam Executive Assistance, are there any public comments regarding this item?

We do not have any public comments.

All right. Do you have any comments? Close. Any comments? Okay. Well, thank you so much for the presentation and, for the reports. Appreciate all your hard work, helping the committee. No action is needed. This is a receipt and file item. So, we basically got on to our last item. If you have any comments?

I'm good.

Okay. Coming?

No.

All right. Well, with no further business, we're now adjourned for today's meeting. Thank you.