| Sales tax is the City's second largest General Fund
revenue source. The State of Idaho shares sales tax revenues with certain local
governments based upon formula established in State Code. Sales tax is
characterized in the Structural Balance policy as base (for such sales as food)
and cyclical (for consumer confidence sensitive discretionary purchases).
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| Fiscal
Year |
1998a |
1999a |
2000a |
2001 a |
2002 a |
2003 b |
2003 p |
2004 p |
2005 p |
2006 p |
2007 p |
| Revenue $ |
8,718 |
9,853 |
10,105 |
10,378 |
11,153 |
11,056 |
11,352 |
11,637 |
11,936 |
12,354 |
12,786 |
| % Change |
5.4% |
13.0% |
2.6% |
2.7% |
7.5% |
-0.9% |
1.8% |
2.5% |
2.6% |
3.5% |
3.5% |
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| Historical Events |
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In 1999, the City received over $265,000, or more than 2.7% of
sales tax revenue) as a one-time adjustment due a miscalculation by the State
Tax Commission. The Commission found that market values used in a portion of
the formula were incorrect for Boise and several other cities. The remaining
increase resulted from strong sales in the last half of FY 1999 and from
enforcement efforts by the State.
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Adopted by the State Legislature in 2000, a new formula replaced
the former �inventory replacement sales tax� program and combined the
distribution with Revenue Sharing. The State appropriates 13.75% of net sales
tax revenue to the revenue sharing �pool� account for distribution to cities
and counties. The funds are distributed quarterly.
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Strong 4th quarter sales tax revenue in FY 2002
(primarily from auto sales) resulted in the City�s 7.5% increase over FY 2001.
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The 2003 Legislature passed the Governor�s proposed sales tax rate increase
from 5% to 6% of sales for a 2-year period. The increase provides additional
funding to support the state�s budget needs. The 1% increase specifically
excludes cities and counties.
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| Projection/Assumptions |
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Sales tax is shared revenue and all statewide proceeds are pooled.
Therefore, statewide sales projections are a key variable. Distribution to
cities is based upon population and market value.
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The State (as of January 2003) projects an increase
in total sales tax revenue of 3.3% in FY 2003 and 3.9% in FY 2004. The State�s
fiscal year starts July 1. The first 6 months, July through December, had
strong sales, increasing more than 5.5% over same period from the previous
fiscal year, primarily believed to be from strong auto sales. This is believed
to be an anomaly in FY 2002 and the first quarter of FY 2003; thus, the revised
projection in FY 2003 compared to the adopted budget. This trend is not
anticipated to continue through the fiscal year.
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The City's proportionate market value is 30.27%, an increase from
29.69% in FY 2001. Proportionate population continues to be 21.89% based on the
2000 Census. The US Census Bureau will publish estimated population figures for
cities in summer 2003. The City's population percentage may in crease in FY
2004.
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The City has projected a more conservative projection in sales tax
revenue ranging of 2.5% in FY 2004 and 2.6% in FY 2005. This revenue source
will be watched through FY 2003. The projections do not assume any higher
amounts as base budget source |
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Projections do not include effect of economic turnaround. |
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The FY 2004 and 2005 projections are unchanged from the February
2003 Six Year Financial Plan.
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Threats/Opportunities
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Stronger economic recovery than projected could enhance revenue
(as appeared in the last six months of 2002).
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Layoffs that lead to lower available income including purchases made by major
employers.
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Possible legislative change.
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