PREPARED BY: MATT RODRIGUEZ DATE OF MEETING: 03/03/2025
SUBJECT:
TITLE
CONSIDER RESOLUTION AUTHORIZING THE CITY MANAGER TO DETERMINE AND EXPLORE FURTHER POLICY FEASIBILITY OF NEW GENERAL FUND REVENUE MECHANISMS (IN SEQUENTIAL RANK-ORDER) WITH NECESSARY COMMUNITY EDUCATION AND OUTREACH EFFORTS, AND INCLUDING POTENTIAL ELECTORATE AND PROPERTY OWNER POLLING UNDER THE CITY MANAGER’S BUDGET AUTHORITY FOR FISCAL YEAR 2024 - 2027 PERIOD
CEQA: This proposed action is not a project at defined by CEQA.
Label
CITY MANAGER RECOMMENDATION
Annual Year-end City Survey; and under Major Policy Goal: Focus on Economic Development and Fiscal Diversification, Policy No. 414 - New Strategic Budget Initiatives to Address new Structural Deficits forecasted for FY 2025-2027 Period are current adopted policy items in the FY 2023-25 Council Priority Workplan, effective May 1, 2023.
CEQA Compliance Statement
This proposed action is not a project as defined by CEQA.
BACKGROUND
Annual Year-end City Survey Process
To support civic engagement and community outreach, the City of San Pablo commissions an Annual Year-end City Survey to assess the community at-large, identify desired core priorities, needs and values to assist the City Council in formulating public policy decisions.
Strategy Research Institute, Inc. (SRI) administers the City’s annual year-end city survey process, conducts data analysis using appropriate scientific tools, and then provides summary findings and survey results to the City Council and City Manager’s Office. Information gathered from annual year-end city surveys assists the City Council in overall policy decision-making and aligns current policy issues with adopted policies contained in the adopted City Council Priority Workplan.
Previous City Council Action
On December 13, 2023, a new City financial condition was presented to the City Council following formal presentation of the City’s new Long-Range Financial Forecast Plan. As a result, future funding mechanisms must be explored to meet Strategic Budget Initiatives/Measures adopted by the City Council via Resolution 2023-167 to determine their feasibility in eliminating said forecasted deficits in addition to other critical cost measures under consideration.
On February 5, 2024, following presentation of 2023 Year-end Annual City Survey results by SRI, the City Council adopted Resolution 2024-016 which authorized further policy consideration, evaluation, feasibility and prioritization of the following previously considered City funding mechanisms (See Table A below), which included the following:
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TABLE A: NEW FUTURE FUNDING MECHANISMS UNDER POLICY CONSIDERATION (IN SEQUENTIAL RANK-ORDER) FOR FY 2024 - 2026 PERIOD |
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Future Funding Mechanism (Rank-Order) |
City Council Workplan/Strategic Budget Initiative Goal |
Target Election Cycle or Timeframe |
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1. Commercial Cannabis Retail Business License Tax |
New GF revenue on Special Business Tax Uses (i.e. Max: 3 Commercial Retail Cannabis Retailers); Amount: $2.0 - $2.2M Annually |
Potential November 2024 Ballot Measure (Add 5% City Business Tax to City Business License Tax Ordinance) |
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2. City-wide Landscape and Lighting District Property Assessment Increase (TBD - parcel tax assessment) |
Eliminate or Reduce Annual GF Subsidy to LLAD; Eliminates or Reduces (-$1.5M annual GF Subsidy) |
Potential Spring 2025 Property Majority Protest Ballot Measure to consider increase in Annual Property Assessment (TBD) |
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3. College & Trade Youth Scholarship Funding Mechanism |
Extends existing GF-funded program beyond 06/30/26 for a period of 10 years until September 2036; Amount: $1M annually |
Potential March or November 2026 Ballot Measure (i.e. 1/4 cent sales tax measure; sunsets in 10 years) |
Note: Since City Council action in February 2024, the City has successfully passed the Commercial Cannabis Retail Business License Tax (Measure M), with 72.65% voter support on November 5, 2024, and continues to explore the feasibility of the other potential GF revenue mechanisms noted in Table A for future consideration.
FY 2024-26 Council Priority Workplan Amendment #10 - New Revenue Enhancements
On December 16, 2024, following presentation of a proposed FY 2024-26 City Council Priority Workplan Amendment #10 on December 9, 2024, the City Council adopted Resolution 2024-149 which identified a total of seven (7) new, potential GF revenue mechanisms to be explored for their potential policy feasibility by the City Manager following approval on new Revenue Enhancement Recommendations presented by NBS Government Finance Group.
Specifically, for those new GF revenue mechanisms identified under Tiers II-III below, the City Manager sought City Council approval to add these new revenue mechanisms as a component of the 2024 Year-end Annual City Survey process to examine the propensity of potential local support from survey respondents (i.e. community at-large) to support current or future policies or programs in the upcoming future election cycles beginning in 2024 through the end of 2026, as follows:
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FY 2024-25 CITY COUNCIL PRIORITY-WORKPLAN AMENDMENT#10 (Adopted Resolution No. #2024-149) |
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UNDER MAJOR POLICY GOAL: PROCEED WITH A PROPOSED AMMENDMENT #10 TO FOCUS ON ECONOMIC DEVELOPMENT AND FISCAL DIVERSIFICATION Adopted Policy No. 405: EXPLORE AND SUSTAIN NEW REVENUE ENHANCEMENTS TO THE CITY’S GENERAL FUND 405.1: REDUCE GF SUBSIDIES: (1) Policy No. 405.2: Adopt a new fiscal discipline and financial practice to restrict new General Fund spending on any new program or service and maintain existing budgeted FTE staffing levels in the adopted FY 2024-25 Class and Comp Plan until June 30, 2027, or until the City generates a total of $2,000,000 in new, net increase in annual General Fund revenue whichever occurs first; and |
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(2) Policy No. 405.3: Explore feasibility and implementation of new General Fund revenue mechanisms by: • Gather and conduct polling and survey analysis for a future City Council approval process during 2025-2027 period under a proposed Tier I, II, and III implementation plan with necessary data, as follows: TIER I Implementation: (Administrative - Related) • Master Fee Schedule Update (with Cost Allocation Plan) TIER II Implementation: (Property Related - 2025 Property Protest) • City wide LLAD Assessment Increase • Stormwater Drain Fee TIER III Implementation: (Electorate vote - 2026 Election Cycles) • City Charter Amendment (Majority Vote Req.) • Real Estate Transfer Tax (Majority Vote Req.) • ½ cent or 1 cent Sales Tax (Majority Vote Req.) • Utility User Tax Increase (Prop. 218 Special Purpose Req.) |
2024 Year-end Annual City Survey Results (SRI, Inc.)
On January 6-16, 2025, SRI conducted an in-field survey of the community at-large. All survey results have been collected, evaluated and interpreted into summary findings for formal presentation to the City Council this evening under an earlier agenda item (See City Council - Presentations). The above noted new GF revenue mechanisms under Tier II-III only were included in the 2024 Year-end Annual City Survey instrument and process as noted above.
Individual results for each potential funding mechanism from the SRI 2024 Year-end Annual City Survey Results are attached to this staff report and are reflective of initial community at-large support as presented earlier this evening to the City Council (See Attachments #2-6)
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TABLE B: NEW FUTURE FUNDING MECHANISMS FOR POLICY FEASIBILITY (IN SEQUENTIAL RANK-ORDER) FOR FY 2024 - 2027 PERIOD |
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Future Funding Mechanism (Rank-Order) |
Description and Annual Revenue Generation (est.) |
Target Election Cycle or Timeframe |
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1. Half-Cent (1/2) Sales Tax Measure |
Establishes a new, $0.50 cents tax on existing sales tax rate to fund/sustain general municipal services (i.e. youth, senior, public safety, illegal dumping, tenant protection, street maintenance services; etc.) Amount: $2.0M Annually |
Electorate vote; June or November 2026 Ballot Measure (TBD) |
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2. City-wide Landscape and Lighting District Property Assessment Increase (TBD - parcel tax assessment) |
Increase Property Assessments from $72 to $144 per S/F parcel to eliminate/reduce Annual GF Subsidy to LLAD; Eliminates or Reduces Amount: Reduces (-$1.5M) Annual GF Subsidy) |
Property Majority Protest Ballot Measure (Spring 2026) |
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3. Increase the Utility Users Tax (UUT) +2.0% |
Since 2004, the City’s Utility Users Tax (UUT) rate is 7% on cable television, telephone, electricity, natural gas and water service. This tax is collected by each respective utility and remitted to the City. Amount: $872,000 annually (+2%) |
Electorate vote; June or November 2026 Ballot Measure (TBD) |
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4. Change from General Law to Charter City and establish new Real Estate Property Transfer Tax |
Establish new tax of +12% per $1,000 property sale value on all properties solid within City limits. Amount: $1M annually (3-year avg.) |
Electorate vote; June or November 2026 Ballot Measure (TBD) |
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5. Stormwater Property-Related Fee |
To meet increased Stormwater NPDES regulations for City’s stormwater infrastructure and run-off. These State regulations involve paying for enhancements to reduce urban street flooding, keeping waste and contaminants out of the City’s stormwater conveyance system, as well as on-going maintenance to the City’s stormwater system. Amount: $250,000 annually |
Property Majority Protest Ballot Measure; (TBD) |
Final City Council Approval on Future Revenue Mechanisms
The City Council further understands that future ordinances or actions are formally required to establish a new City funding mechanism, or to extend an existing City funding mechanism (i.e. sales tax, parcel tax, property assessment, etc.), which requires formal and separate City Council action for formal placement on a future local municipal ballot in accordance with State law. All funding mechanisms considered by local electorate (voters) must meet all applicable State law and election statute requirements. The following next two (2) elections cycles for potential electorate ballot measures under consideration include:
• Tuesday, June 2, 2026: State-wide CA Primary Election Ballot
• Tuesday, November 3, 2026: Local (City) Municipal Election Ballot
City Manager Recommendation
Tonight’s City Council action would authorize the City Manager to determine and explore further policy feasibility of new general fund revenue mechanisms (in sequential rank-order) with necessary community education and outreach efforts and including potential electorate and property owner polling under the City Manager’s budget authority for Fiscal Year 2024 - 2027 period.
FISCAL IMPACT
None associated with this report.
ATTACHMENTS:
Att A - Resolution
Att B - Figure 14A - SRI 2024 Year End Annual Survey Results (Jan. 2025) - Stormwater Drain Property Fee
Att C - Figure 14B - SRI 2024 Year End Annual Survey Results (Jan. 2025) - Increase to City-wide LLAD Property Assessment
Att D - Figure 14C (2) - SRI 2024 Year End Annual Survey Results (Jan. 2025) - Increase Half-Cent Sales Tax
Att E - Figure 14D - SRI 2024 Year End Annual Survey Results (Jan. 2025) - Increase UUT Rate +2%
Att F - Figure 14E - SRI 2024 Year End Annual Survey Results (Jan. 2025) - Change from General Law to Charter City and Establish new Real Property Transfer Tax