CITY MANAGER’S BUDGET MESSAGE
General Fund Revenues The General Fund revenue budget begins in FY 2023-24 at $253.5 million, a $18.1 million, or 7.7 percent increase from the FY 2022-23 Adjusted Budget of $235.4 million. In FY 2022-23, revenues are anticipated to be higher than what was budgeted due to the continued recovery from COVID-19 and overall growth in Irvine. The top three major revenue categories (Property Tax, Sales Tax, and Hotel Tax) make up approximately 80 percent of all General Fund revenues.
Property Tax is the City’s largest revenue source at $93.7 million in FY 2023 -24, an increase of $5.6 million, or 6.3 percent, from the FY 2022-23 Adjusted Budget of $88.1 million. This increase is due to the strong housing market and sales of homes in Irvine. As the City’s highest revenue generator, Property Tax brings financial sustain ability for Irvine’s future. This revenue source has stable growth as it is based on the assessed valuation of all the properties in Irvine, which has reached $100 billion according to the Orange County Assessor, and continues to grow. External factors such as higher interest rates and a slowdown in the housing market may affect Property Tax revenue growth. However, our best projections indicate that the growth rate will slow only slightly. Sales Tax, the City’s second largest revenue source, in FY 2023 -24 is budgeted at $91.9 million, an increase of $7.3 million, or 8.7 percent from the FY 2022-23 Adjusted Budget of $84.6 million. This increase is due to the strong economic recovery from the COVID-19 pandemic and higher consumer spending, especially in automobile sales, sit-down casual restaurants, and business-industry purchases. Sales Tax is highly volatile to external factors, where we saw a large decline in revenues during the pandemic. On the positive side, its volatility also results in higher growth from the recovery from the pandemic and when residents and visitors shop and eat in Irvine. We expect a steady growth in Sales Tax over the next five years; however, staff also monitors it very closely so the City is prepared for any changes in the economy. Hotel Tax may only represent 7 percent of the General Fund revenues, but it is the City’s third largest revenue source. In FY 2023-24, Hotel Tax is budgeted at $17.7 million, an increase of $2.9 million, or 20.1 percent from the FY 2022-23 Adjusted Budget of $14.8 million. Hotel Tax revenue was heavily impacted by the COVID-19 pandemic due to closures and restrictions of hotels, and was expected to make a slow recovery. We have seen this revenue recovery quicker than anticipated as there has been a shift in the nature of travel in Irvine from business to leisure travel. Hotel occupancy levels are still not fully recovered, but the revenue has been supplemented by higher hotel rates. There are currently 23 hotels located in Irvine with 4 new hotels expected to open over the next five years. The assessment revenue for the Hotel
FY 2023-25 Adopted Budget
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