REVENUE & EXPENDITURE ASSUMPTIONS
INTRODUCTION
The City utilizes many techniques to forecast recurring revenues and expenditures. Under the direction of the City Manager, revenue estimates are developed by the Budget Office with input from individual City departments using a variety of techniques, including trend analysis, judgmental forecasting, and expert opinion. Trend data includes historical fiscal performance and historical and projected data modified for known past, current, and anticipated anomalies. The City also takes into consideration
expert opinion from the Chapman Economic & Business Review, the UCLA Anderson Economic Outlook, the City’s sales tax and property tax consultant, HdL Coren & Cone (HdL), and reports from various state and federal agencies. The forecasts presented are based on judgment incorporating information provided by various analytical methods; known and potential legislative and development impacts; and national, state, and local conditions expected to affect revenue sources. California’s economic outlook for 2023 is unce rtain due to various factors such as interest rates, inflation, COVID-19, infrastructure spending, and climate change. The U.S. economy is likely to experience below- trend growth and continued high inflation. According to the UCLA Anderson Forecast, the state could either experience faster growth or a milder recession than the U.S. as a whole. The state’s unemployment rate is expected to average 4.1 percent in 2023. Inflation is affecting consumers in various ways, such as increasing the price of goods and services, eroding purchasing power, reducing the value of savings, and increasing borrowing costs. Consumers are also changing their shopping habits, such as buying fewer things, trading down to lower-priced items, looking for products on promotion or turning to private label. The annual inflation rate in the US was 6 percent in March 2023. Overall, the economic outlook for Irvine is positive, with a diverse and growing economy, a low unemployment rate, and a high median household income. However, like all cities, Irvine is not immune to economic challenges and uncertainties. The City continues to focus on key strategies to improve revenue growth, such as ensuring full cost recovery, evaluating service levels and delivery of services, and utilizing technology to manage growth and increasing demands.
FY 2023-25 Adopted Budget
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