Bobby Young, Principal, HdL Companies SCACA – Property Tax Managers’ Sub-Committee Conference February 4,

AN EXACT SCIENCE! 2

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HdL receives approximately 98% of the statewide sales tax data each quarter for clients and some non- clients With data for all major categories – use as the starting point to identify past trends then factor in current economic conditions 6

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Shale oil & fracking on global production Bakken Oil Formations in North/South Dakota and Canada OPEC and Saudi Arabia’s decision on future production ISIL/ISIS and conflict in the Middle East Future/continued sanctions on Russia National political interests 10

Offset effect of lower gas prices on General Consumer Goods and Restaurant categories Federal interest rate changes may affect long term financing options thereby purchases More online shopping shifting tax dollars from local point of sale to distribution centers and countywide pool allocations Possible expansion of the sales tax base by way of legislative action 11

Originally created to finance State Economic Recovery Bonds (Prop 57) because Wall Street wanted a dedicated revenue stream 1.Decrease monthly sales tax allocations from 1% to 0.75% 2.Counties transfer from ERAF to SUTCF then pay cities & counties their 0.25% 3.State General Fund reimburses County’s ERAF for schools (if needed) 12

Bonds paid off July 2015 Bonds paid off July 2015 Department of Finance (DOF) to advance for 2 nd Quarter 2015 Department of Finance (DOF) to advance for 2 nd Quarter 2015 Continue to take ¼ cent in 3 rd Quarter and 4 th Quarter 2015 Continue to take ¼ cent in 3 rd Quarter and 4 th Quarter 2015 Reimburse 3Q & 4Q and “true up” 2Q, 3Q & 4Q by May 2016 Reimburse 3Q & 4Q and “true up” 2Q, 3Q & 4Q by May 2016 Return to full 1 cent Bradley-Burns allocations in March 2016 (1Q16 advance) Return to full 1 cent Bradley-Burns allocations in March 2016 (1Q16 advance) 13

July 2015 – Bonds Paid Off September 2015 – DOF calculate 2 nd Quarter 2015 advance and provide notice to County’s of estimated advance amount (equivalent of 1 quarter) January 2016 – Counties pay agencies SUTCF advance 14

March 2016 – DOF & BOE calculate 2Q clean-up, 3Q & 4Q reimbursement amounts April 2016 – provide notice to Counties of final amounts to pay agencies May 2016 – Counties pay agencies final SUTCF amounts 15

Most of 2Q15 will be accrued back to FY – ¾ cent as usual Many agencies will likely see a one-time “bump” in FY due to: 2Q15 clean-up as part of May 2016 final payment Increase of FY year end accrual compared to FY Full 1 cent allocation vs. ¾ cent allocation 16

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Bobby Young, Principal, HdL Companies SCACA – Property Tax Managers’ Sub-Committee Conference February 4,