CC 10-15-2024 Item No. 8. Uncommit Sales Tax Repayment Reserve_Supplemental Report
CITY COUNCIL STAFF REPORT
SUPPLEMENTAL 1
Meeting: October 15, 2024
Agenda Item #8
Subject
Unassign funds from the Committed Sales Tax Repayment Reserve
Recommended Action
Approve an amendment to the City’s Committed, Unassigned Fund Balance, and Use of
One Time Funds Policy to uncommit $74.5 million dollars from the Sales Tax Repayment
Reserve, resulting in those funds becoming unassigned fund balance.
Background
Staff’s responses to questions received from councilmembers are shown in italics.
Q1: Why do we need to move the funding from the Sales Tax Repayment Reserve at this
time?
The purpose of the Sales Tax Repayment Committed Reserve (STRCR) was to set aside funds in
case the City needed to pay the CDTFA following an unfavorable ruling on the appeal. The
agreement with CDTFA allows the City to retain past sales tax allocations, eliminating the need to
maintain the reserve. Since the City no longer has a reason to retain these funds in the STRCR,
staff is requesting to move the funds back to Unassigned. This action will appropriately adjust the
City’s reserve balances until the Council provides direction on the use of these funds.
Q2: Any consequence if we do not move the entire Sales Tax Repayment Reserve to the
general fund now?
While there are no immediate consequences from uncommitting the STRCR, it may result in missed
opportunities to reallocate funds to address immediate needs and could complicate financial
reporting.
Q3: If we leave the Sales Tax Repayment Reserve as is until we have a better idea of how
to proceed later, would that be ok?
Uncommitting the funds is the only option, whether done now or later. The reassignment aligns
with best financial practices and guidance from the City’s auditors.. Council will approve the
appropriations of these funds at a later date. It is important to note that uncommitting the funds
does not automatically make them available for immediate use; it simply allows for more flexibility
in how the funds can be allocated.
Q4: What is the timeline to consider the options on how to move forward? What options
are being considered?
The City Council will have its first opportunity to discuss options for use of the funds reallocated from
the STRCR at its November 19 meeting. Staff recommendations that will be presented at that meeting
are currently being developed.
Q5: Would any movement of funding affect how the funding is invested in our portfolio?
Uncommitting STRCR has no bearing on the current investment strategy.
Attachments Provided with Original Staff Report:
A – Redline Policy
B – Clean Policy