General Fund
Revenues
DESCRIPTION
Realistic revenue forecasting is essential to sound financial planning. Revenue forecasting becomes more difficult in times of economic uncertainty and change. The Finance Department utilizes a number of techniques in projecting revenues, depending on the each revenue sources characteristics.
• Informed/Expert Judgement – internal sources such as department heads and external consultants
• Formulas determined by City ordinances
• Moving averages
• Estimates from the State of Colorado and property valuations provided by the El Paso County Assessor’s Office
Due to State constitutional restrictions, property tax revenues continue to be very stable. Sales tax revenues continue to trend upward with the additional revenues from online retailers. Franchise fees are estimated based on current contracts. Other revenues are estimated from various sources such as the State (HUTF) and Fort Carson (Intergovernmental support agreement) and the knowledge of various department heads and the anticipated activity in their departments (i.e. Parks, Recreation, Courts,etc.)
NOTE REGARDING TABLES IN THIS DOCUMENT : As with all tables provided in this budget document, additional infomation and details may be readily obtained. In addition, every data table that is not an excel copy, is expandable and may again be collapsed. This may be done by clicking on the "Collapse All" or "Expand All" description at the top of each table. By clicking on the arrow to the left of each account description, additional breakdowns of revenue and/or expense may also be seen.
The following describes each revenue source. All suggested departmental revisions from the initial proposed 2022 budget are indicated in bold narratives at the end of each description.
Sales Tax
Sales Tax is by far the largest revenue source within the General Fund and projected to be 55% of total General Fund revenue in 2022. The sales tax rate for the City of Fountain is 3.40% of which 3.0% is dedicated to the General Fund When combined with the State of Colorado sales tax of 2.9% and El Paso County sales tax of 1.23%, the businesses located in Fountain are collecting a total of 7.53% except for South Academy Highlands (Sam’s / Walmart site) which is comprised of City, State and County tax of 7.53% plus a 1% PPRTA tax and a .5% Public Improvement Fee (PIF). The .5% PIF fee amount is added into taxable sales before the 8.53% tax is calculated to which generates an 8.574% rate. The City retains .5%, for the General Fund, and remits the remaining 3% and .5% PIF fee to Fountain Urban Renewal to pay off bonds issued for the project.
The State Colorado Department of Revenue collects sales tax for the City. Sales tax payments are due to the Department of Revenue by the 20th of the following month and the City receives the distribution from the Department of Revenue around the 12th of the following month. There is a two month lag in receiving the sales tax from the time the business collects the tax to when the City receives the tax.
The trends are good, particularly with the advent of online sales tax revenue as a result of the Wayfair decision to tax online retailers locally. However, the City is heavily reliant on sales tax for operating expenses within the General and the Transportation Sales Tax Funds.
Based on the rapid rise in internet sales, the increased growth in population and the increases being realized in costs of goods, the trend in sales tax revenue is very positive. Sales tax revenues for 2021 are 6.4% over 2020 for the first half of the year. We are therefore conservatively anticipating an approximate 5% increase over 2020 actuals through 2022.
Use Tax
The use tax rate for the City is 2%. The two major sources of use tax are new construction and vehicle purchases.
The current trend in use tax revenue is also very strong, primarily due to the increased costs of automobiles, both new and used. We have therefore increased our projection by another 2.5%.
Property Tax
Based on valuations received from the El Paso County Assessor, revenue from property taxes is expected to be $2,864,367 in 2022. Real property is reassessed in odd numbered years in Colorado. The City’s mill levy of 10.239 has not changed for over twenty-five years.
Increased valuations will result in an increase that is approximately as projected last year. Property tax revenue may require a slight adjustment after final certifications are received from the El Paso County Assessor.
Franchise Fees
The City has a number of franchise agreements with various utility providers, including the City-owned water and electric utilities, which provide for payment for use of the City’s rights-of-way. The City owned electric utility will be the largest contributor to this revenue category with an estimated payment of $1,274,000 in 2022. Total revenue from franchise fees is projected to be $2,175,750 for 2022.
No revisions have been made to franchise fee revenue
Licenses and Permits
Revenue derived from various types of licenses and permits is historically flat and expected to be $130,500 for 2022.
No revisions have been made to licenses and permits revenue
Intergovernmental Revenue
This revenue source includes the Highway Users Tax Fund (HUTF), additional motor vehicle registration tax, an Intergovernmental Support Agreement with Fort Carson Army Base, cigarette tax, and grants. Intergovernmental revenue is projected to be $1,148,043 in 2021. The largest portion is the HUTF contribution, estimated to be $699,000 for 2021. HUTF is a state collected, locally shared revenue that is distributed monthly among state, county and municipal governments. HUTF revenues are derived from motor fuel taxes and various fees for vehicle registration, vehicle titles, licenses and taxes.
HUTF is increasing by $88,532 per CDOT and Intergovernmental Support Agreement Revenue will be increasing with the new General Facility Construction agreement with Fort Carson by $1,038,000.
Charges for Services
This revenue source totaling $1,077,850 includes Impact, Development, Park and Recreation fees plus the School Resource Officer agreement with School District 8 and other miscellaneous fees. Park impact fees are collected for the purpose of funding the impact of additional residents on the City’s park system. These fees are collected at the time of residential building permit application. These funds are dedicated to the acquisition and development of new parks and the enhancement of existing parks.
Development fees are predicted to decrease $175,000 due to water availability concerns
Fines and Forfeitures
Revenue from court and traffic fines is expected to be $486,300 in 2022.
No revisions have been made to fines and forfeitures revenue
Miscellaneous Revenue, Transfers and Other Financing Sources
Miscellaneous revenue
Miscellaneous revenue is minimal and estimated to be $178,575 in 2022.
No revisions have been made to miscellaneous revenue
Transfers and Other Financing Sources
Included in these revenue sources totaling $1,807,451 are transfers from the Water Fund, Electric Fund, and Ambulance Fund for costs of IT equipment and services, transfers from the Water and Electric funds for facilities maintenance and repairs, and a proposed lease to purchase vehicles, equipment, and computer hardware.