The Quinta will lose revenue if Measure A passes

La Quinta “will experience a significant loss of revenue and cash flow if Measure A is passed,” says George J. Batavik [Opinion]

I want to respond to a recent review by Jim Alderson entitled “La Quinta Measure A Financial Forecasts Called Out”. Like Mr. Alderson, I am a CPA. My resume also includes serving as controller and chief accounting officer of Texaco Inc., and a member of the board of directors of Financial Accounting Standards Boardwhich establishes financial accounting and reporting standards for all US corporations.

After retiring in 2008, I became a resident of La Quinta and began serving the City of LaQuinta. My first service was on the Special Advisory Committee which studied in detail the revenues and expenditures of the City, which led to the passage of measure G. I currently serve on the City’s Finance Advisory Board, which provides advice and guidance on City finances, including annual budgets and updates, full audited annual financial report, 10 year financial projections years and the planned capital improvement program. Suffice it to say that I have a solid working knowledge of all elements of the City’s financial situation.

Mr. Alderson points to the city’s 10-year projections as of November 2020 and February 2022 which he says show robust positive projections for available cash. What Mr. Alderson failed to say is that these projections did NOT include a reasonable amount for capital improvement expenditures, nor did they consider the overall economic impacts of the potential adoption of Measure A, which would permanently eliminate a large number of short-term expenses. La Quinta vacation rentals by December 31, 2024.

After the petition for Measure A was filed in April 2022, City Council directed the city’s finance department to prepare, with the assistance of outside economic consultants, new 10-year projections assuming Measure A is approved (scenario #1) and assuming measure A is not approved (scenario #2). Scenario 1 includes the expected impact of the passage of Measure A which includes the loss of permit fees, transitional occupancy taxes on short term rental income and other negative economic impacts caused by a decline in tourism-related income. Scenario #1 and Scenario #2 both include a projected level of capital improvement spending (approximately $9 million per year, which approximates current spending levels, compared to only $2 million per year). year in the November 2020 and February 2022 projections).

Both scenarios predict a cash shortfall after 10 years, with Scenario #1 showing a shortfall of $19.1 million and Scenario #2 showing a shortfall of $13 million. These inadequacies are NOT the result of “age-old budgeting tricks,” as Alderson suggests. Rather, it is a fitting refinement of the City’s 10-year projections to provide all residents with better up-to-date information to consider before voting on Measure A.

Do NOT, as Mr. Alderson suggests, trust past and inaccurate 10-year projections showing strong cash for the city. Instead, residents should use Scenario #1 and the updated Scenario #2 for their comparison of economic impacts on the city if Measure A is adopted. A comparison of these two scenarios clearly shows that the city will suffer a significant loss of revenue and cash flow if Measure A is adopted.

Sallie R. Loera