REPORT TO THE CITY COUNCIL FROM: RUTH F. QUINTO, CPA, Assistant City Manager Office of the Mayor and City Manager BY: SANTINO DANISI, MBA, City Controller/Finance Director Finance Department SUBJECT ..Title ***BILL B-5 (Introduced February 27, 2025)(For Adoption) - Amending Subsection (a) of Section 7-504, and Subsection (a) of Section 7-505 of the Fresno Municipal Code relating to the local Sales and Use Taxes (Subject to Mayor's Veto) ..Body RECOMMENDATION It is recommended that Council adopt the attached amendment to the Sales and Use Tax Ordinance, implementing an already agreed upon provision of a Memorandum of Understanding between the City of Fresno and the County of Fresno approved December 20, 2024 (2024 MOU). EXECUTIVE SUMMARY State law allocates one percent of Sales and Use Tax revenues to local governments. The 2024 MOU requires the City to adjust its proportional share of the one percent allocation pursuant to the agreed upon Sales Tax Revenue Sharing Proportion of 5%. The City's share of the Sales and Use Tax revenue generated within the City limits will increase by 0.0031 percent, from 0.9469 to 0.9500 percent of gross receipts, effective July 1, 2025. This Sales Tax Revenue Sharing Proportion will apply throughout the term of the MOU. The amount of the sales tax that is charged to the consumers remains unchanged. The sales tax remains cost neutral to the consumer by increasing the City's share and decreasing the County's share in the same amount. BACKGROUND On December 13, 2024, the City Council approved the 2024 MOU, which provides for a Sales Tax Revenue Sharing Proportion of 5% over the life of the agreement. Currently, Sales and Use Tax revenue generated within the City limits is allocated by providing 0.9469 percent of gross receipts to the City and 0.0531 percent of gross receipts to the County. The 2024 MOU requires the City to increase its share by 0.0031 percent for Fiscal Year 2025, and the County to decrease its share by the same amount. Only the distribution of the existing Sales and Use Tax rate will change. There is no change in the overall tax rate paid by the consumer. Attached for Council Action is an amendment to the Sales and Use Tax Ordinance, Fresno Municipal Code Chapter 7, Article 6, which changes the City's rate to 0.9500 percent of gross receipts, effective July 1, 2025. The Ordinance amendment is being introduced on February 27, 2025 and will return on March 27, 2025, for Council adoption, as mandated in the City Charter. The County will be taking complementary action to the Board of Supervisors in March 2025. ENVIRONMENTAL FINDINGS By the definition provided in the California Environmental Quality Act Guidelines Section 15378, this is not a "project." LOCAL PREFERENCE Local preference was not implemented as this item does not involve the bid or award or a construction or services agreement. FISCAL IMPACT This amendment will result in an increase in the General Fund revenues by approximately $474,000 in Fiscal Year 2025. Attachment: Ordinance