Anaheim officials warn of midyear shortfall as hotel tax and property growth lag

Anaheim city staff told the City Council on March 25 that the city expects to finish fiscal 2024–25 with roughly $8.4 million less than the budget the council adopted in June, driven primarily by weaker-than-projected transient occupancy tax and somewhat lower property tax growth.

The Finance Department presentation—delivered by Director Moreno and budget manager Diane Lee—reviewed the city’s $2.3 billion adopted budget, explained that the general fund is the main discretionary resource (about 21% of total budget) and laid out a five‑year forecast that assumes continued TOT and property tax recovery but at lower rates than originally projected.

The nut graf: the city still plans to maintain service levels for now, but officials said they are relying on limited one‑time resources and structured paydown of legacy resort‑related obligations (LPMR) to get through the next few years. Council members pressed staff for follow‑up detail about Visit Anaheim marketing strategy, housing pipeline risks and use of deficit bond proceeds.

Key budget drivers and staff outlook

City staff said the three largest general fund revenue sources—transient occupancy tax (TOT), sales tax and property tax—remain the “big three.” The adopted TOT estimate for 2024–25 was about $271 million (roughly 42% of general fund operating revenue). Staff now expect to finish the year at about $241 million, a decline they attributed to a stronger dollar, some travel timing effects around major anniversaries and broader uncertainty affecting international visitors. Sales tax is tracking slightly above budget; property tax is expected to be roughly $2.5 million under budget because…