PREPARED BY: arturo e. castillo DATE OF MEETING: 12/9/2024
SUBJECT:
TITLE
CONSIDER ADOPTING A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO (1) ACCEPTING THE GENERAL FUND REVENUE ENHANCEMENT RECOMMENDATIONS BY NBS GOVERNMENT FINANCE GROUP; AND (2) AUTHORIZING THE CITY MANAGER TO AMEND THE FY 2023-25 CITY COUNCIL PRIORITY WORKPLAN WITH PROPOSED POLICY AMENDMENT NO. 10, UNDER MAJOR POLICY GOAL: FOCUS ON ECONOMIC DEVELOPMENT AND FISCAL DIVERSIFICATION, EXPANDING EXISTING POLICY 405: EXPLORE AND SUSTAIN NEW REVENUE ENHANCEMENTS TO THE CITY’S GENERAL FUND
CEQA: This proposed action is not a project as defined by CEQA.
Label
RECOMMENDATION
Recommendation
Adopt Resolution
Body
Compliance statements
This item is not directly related to a specific policy within the FY 2023-25 City Council Priority Workplan adopted May 1, 2023 but is provided to increase local government operational transparency.
CEQA Compliance Statement
This proposed action is not a project as defined by CEQA.
BACKGROUND
In December 2023, the City’s municipal advisor, PFM, made a presentation to City Council reviewing the multi-year financial planning model results. In that analysis an annual revenue shortfall of approximately $4 Million was identified due primarily to flattening casino revenues and increasing personnel costs. In January 2024, results of the City’s annual community survey, completed by the City’s polling firm SRI, were presented to City Council. Among the findings from the polling were specific revenue measures and services concerns where community support was high.
The City engaged NBS, a consulting firm focused on assisting local government agencies with revenue solutions, in September 2024 to integrate the findings from the financial planning model and polling results into actionable revenue solutions for the City. NBS has prepared the attached presentation that recaps the prior studies, provides background on local government revenue options and makes recommendations for specific revenue mechanisms that the City may consider pursuing. The NBS assessment covers taxes, fees and assessments, the three primary revenue tools outside of general property taxes available to cities.
Budget, Fiscal & Legislative Standing Committee
On December 2, 2024, the Budget, Fiscal & Legislative Standing Committee (Mayor Ponce / Councilmember Pabon-Alvarado) received a presentation on the City’s General Fund Revenue Enhancements analysis from NBS and, upon motion and unanimous vote, directed that the NBS recommendations and proposed policy amendment No. 10 to the City Council Priority Workplan be forwarded to the City Council for consideration and approval.
RECOMMENDATIONS
Staff is requesting that the City Council accept the General Fund Revenue Enhancement recommendations by NBS and approve Amendment No.10 to the FY 2023-25 City Council Priority Workplan to include the following new policy amendments as follows:
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
(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.)
FISCAL IMPACT
There is no fiscal impact related to this item at this time. The proposed recommendations are projected to produce additional General Fund Revenue in FY 2025-26 and 2026-27.
ATTACHMENTS:
Att A - Resolution
Att B - Amendment No. 10 to the City Council Priority Workplan
Att C - General Fund Revenue Enhancement Presentation