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APPROPRIATION COMMITTEE-2020ATM 25March 2020 INew Growth 11 emx : Assumed for- Pirojection vs. Actuall $4,008 $3,500 $3,000 6 $2,588 $2,088 $1588 � $1088 $500 0 $- �--------------------------------------------------------------- 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 � � FiscaUYear ~~~~�Amo"nt ~~ ~~ Ass"medfor forecast The average for New Growth over the last ten years was $3.24 million. lfrruuse this average rather than the assumed $275 million, this ruyuky in an additional $490,000 per year in projected revenue, which is further compounded hvthe 2.5Y6annual increase inthe tax levy. The Finance Department's projection uyyumuydhu1duoonyurvudvufiguruuyyignudfhrNurr(}rorrthinihu budget can huused uyuvalid projection,hu1indu |ongrund/iyrrU|unduruydnuate future tax revenue. The budget for New Growth iyintentionally set well below the expected value uyusafeguard against ubudget shortfall,which could result ifactual New Growth fell below the budgeted amount. The projection should instead be huyud on nuuuyuruh|u trends, including, but not |bndud to, the long-term average for New Growth". Tuh|u A-3 shows the cumulative inoruuyu inprojected revenues over five years,which grows to $2,576,000hyFY2025. This represents roughly 25Y6ofthe projected ruvunuugupyhorrninTuh|uA-|. Tuh|u A-3. Impact ofUsing Historical Average ofNew Growth Levy Rather than Assuming $275million per Year. 2021 2022 2023 2024 2025 Annual increment $490 $490 $490 $490 $490 Cumulative impact $490 $992 $1,507 $2,035 $2,576 Amounts sho,"n in thousands of dollars. Annual increment=difference between historical average and value assurned in projection 1 Cumulative impact=prior balance x 1.025 +annual increment It is more dhffiouk to uvuk/atu the assumptions regardingthe projections of other revenue categories, but we note that past forecasts for those other categoni es have not been consistently low or high. Horruvuc for total revenues, in the last three oonup|utud fiyou] years (FY2017-FY2019), uotuu] revenues have been higher than projected, uypuoiu]|y for projections nudu several years in advance. For uzun p|u, pnUuodony for FY2019 made /n20|5 ruru ||Yh below actuals and those for FY2018 made /n20|4 were 4.2%lower than the actual. /' Sadly, the CU\8D'19 outbreak may herald u sharp and prolonged divergence from recent trends in commercial activity,new growth,and state aid. We have not attempted to incorporate such changes into this year's projections. 50