REVENUE & EXPENDITURE ASSUMPTIONS
SALES TAX
Description California sales tax is imposed on the total retail price of tangible personal property (excluding a variety of state mandated exemptions), while use tax is imposed on the purchaser for eligible transactions when sales tax has not been collected. The sales and use tax rate in Orange County is 7.75 percent and is collected from the California Board of Equalization (BOE) of all taxable sales occurring within the City. Irvine receives 1 percent of the 7.75 percent tax collected. Additionally, included in the C ity’s sales tax revenue projection is $550,000 from the State’s Public Safety Augmentation Fund. Sales tax is one of the top three largest components of the City’s General Fund operating revenue sources, comprising approximately 36.3 percent of overall General Fund resources. Trend Even as the Federal Reserve Board continue ramping up interest rates in an effort to curb the larger concern of inflation, consumers maintained purchases on multiple fronts, especially automobiles. Restaurants experienced a strong uptick as increased menu prices, consistent desire to dine out and strong tourism contributed to this favorable news. Just as important, theme parks, leisure-entertainment venues and hotels pushed positive momentum back to pre-pandemic levels. Outlook The City works closely with its sales tax consultant, HdL, in projecting sales tax revenue. Based on HdL’s analysis of the trend in year-to-date tax receipts, macroeconomic conditions (done in collaboration with its partner Beacon Economics) and an examination of local business data, the City’s sales tax revenue is anticipated to have continued strong growth from pent-up demand and normalize growth of 3.3 percent on average over the five-year forecast. The continued growth over the five years reflects growth in Automobile Dealerships, Business & Industry, Restaurants & Hotels, and the state and county pools. For FY 2023-24 and 2024-25, sales tax revenue is estimated at $91.9 and $95.3 million, respectively. This is a year-over-year increase of 8.7 percent in FY 2023-24 and an increase of 3.7 percent in FY 2024-25.
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FY 2023-25 Adopted Budget
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