Indio updates tax revenue expectations ahead of festival season

Los Tucanes de Tijuana perform at the Coachella Music and Arts Festival in 2019.

City leaders signaled a high level of confidence in Indio’s financial health Wednesday, raising revenue expectations ahead of the Coachella and Stagecoach Music Festivals in April.

Finance Director Ruby Walla informed the City Council in a mid-fiscal year budget report that the city is in a strong position to both meet its current needs and move forward with additional resources to make future decisions.

Asked to rate the city’s current financial status on a scale of one to 10. “Financially, I think the city’s doing well, so I would do nine or 10,” Walla told the City Council.

City staff is so confident, it recommended councilmembers vote to increase the general fund revenue target to $129.8 million, up from the $123.7 million originally adopted. This adjustment comes despite an initial conservative approach that assumed a flattening of consumer behaviors and tax revenues.

A significant portion of the growth is attributed to the Transient Occupancy Tax (TOT), which is expected to reach $16.5 million, up from the estimated $15.7 million. Walla noted about 75% of TOT revenue comes from short-term vacation rentals compared to 25% from hotels.

“If tourism is doing well, we’re doing well,” she said. “But we also rely on the festivals. If they succeed, we succeed. The lineup and everything, those are all driving factors. And that does have a domino effect.”

The city remains on track to fund the Phase 2 construction of the new Police Headquarters building, but the staff report cautioned that rising labor and materials costs could impact future projects.

While revenues are trending upward, the city is also closely monitoring the Measure X transaction and use tax, which is projected to hit $18.2 million by the end of the fiscal year. Walla reported that Measure X is “trending better than anticipated”.

Councilmembers praised the city’s fiscal discipline and the public’s support for local tax measures. In 2021, Indio residents voted to approve Measure E, extending the city’s one percent sales tax measure and use the funds for public safety, fire, medical, emergency response and more.

“It took a lot of courage,” Councilmembers Glenn Miller said, “Because we hadn’t had a good track record of spending money, and then [residents] saw what we were able to do, and invest in downtown. And it’s been a transformation over the last 20 years.”