Measure intended for November ballot; water surcharge also up for discussion next week
Benicia City Council will hear a proposal Tuesday that could lead to a 1-cent increase in sales tax.
The panel may also decide to schedule a Sept. 16 public hearing to take public comment on a proposal to impose a drought-related water surcharge.
Voters would have to approve the increases. City staff is recommending the Council act in time to place the sales tax measure on the Nov. 4 ballot.
If a measure to increase Benicia’s sales tax from the current 7.675 percent to 8.675 percent were approved, it could raise as much as $3.7 million, Economic Development Manager Mario Giuliani said Wednesday during an Economic Development Board meeting.
Benicia’s sales tax is currently the lowest in Solano County, and a 1-percent increase would “mirror (sales tax rates in) Fairfield and Vallejo,” Giuliani said.
If the Council decides to pursue the sales tax increase, Benicia’s registered voters would see the measure on the Nov. 4 ballot, and should a majority of voters — 50 percent plus one — support the increase, it would become effective April 1, 2015.
“The purpose of it is to maintain existing services, as well as provide revenue to make improvements to our roads, which you have all heard the reports, is woefully inadequate,” Giuliani said Wednesday. Additionally, “We continue to lose funding from the federal and state government. We no longer have the same gas tax levels that we received a just a few years ago.”
Some of the sales tax revenue also would go toward public safety, emergency response times, neighborhood police patrols and crime prevention measures, to maintain city parks and on youth programs, Giuliani said.
He said before the measure is put to a vote, it will be presented to the Finance Committee for review.
And he added that the city has numbers to indicate the measure would get the required voter approval.
“In June, you may have recalled that the city commissioned a customer satisfaction survey. Embedded within that survey was a poll to test the viability of a sales tax measure,” Giuliani said.
“It came across very favorably, at 65 percent with a margin of error at 4 1/2 percent.” That favorable response encouraged staff to send the matter to the Council, he said.
According to the city’s 10-year forecast, completed this year, “we certainly need to take some action to secure our financial footing,” Giuliani said.
Despite cutbacks, expenditures are outpacing revenue, he said. “This follows the action the city has taken over the last few years: reducing employee compensation, reducing our overall employee base by 11 percent, and reducing employee compensation by, I believe, $10 million over the last few years.
“So we are at a point now where I believe that staff will be recommending Council consider a sales tax item.”
Giuliani said Wednesday that he still was working on a report that will be sent to the Council and added to the agenda before Tuesday’s meeting.
The race to get the item on the Nov. 4 ballot is on, he said.
“This is quite fast. Normally we would have a greater lead-in time.
“We are now at the end of July, with a deadline of Aug. 8 to get something to the (Solano County) Registrar of Voters for the November election.
“If we do not take advantage of the November election, we have to wait two years before we place it on the ballot again.
“We could certainly do a special election, but there are added costs for that and it’s really cumbersome.”
Giuliani described how the Council might act on the matter: “The way the process will work, it is an ordinance that will be considered and introduced on Tuesday night.” Once the item is heard Tuesday, the Council may set a special meeting to consider its approval on second reading and set in motion placing the item on the Nov. 4 ballot.
Benicia residents also will have a say on the water surcharge, but that matter won’t be contested in November. Its passage will take place in a more passive manner.
Affected property owners opposed to the surcharge will need to file objections or protests to the surcharge for it to fail; otherwise, the measure is considered to have passed.
This is the procedure used to affirm last year’s water-related rate increases. Those increases were put in place to cover costs that had grown while rates remained unchanged for several years.
According to staff reports, the severe statewide drought emergency has forced Benicia to find alternative sources of water after local officials learned that Benicia’s primary water source, the State Water Project, would supply only from 0 to 5 percent of clients’ contracted amounts.
The Council has authorized spending up to $900,000 on water, urged residents and companies to reduce consumption by 20 percent, and recently imposed temporary emergency water use restrictions. The panel is in the middle of extending those restrictions.
To maintain the financial integrity of the Water Enterprise Fund and to find those additional sources of water, Benicia hired Bartel Wells Associates, a Berkeley-based public finance consultant, to determine what type of water surcharge should be imposed.
City employees will mail notices to affected property owners and water customers, and will tabulate any protests related to the surcharge.
Both the sales tax and surcharge matters are related to Benicia’s ongoing efforts to regain fiscal stability as it recovers from the recession.
Though the city had tried to maintain a balanced budget during the economic downturn, it kept being hit with fiscal surprises such as unexpected and dramatic drops in anticipated utility fees and property taxes.
This year, one of the surprises is the unanticipated need to purchase water. Another is the discovery that because of the age and programming of department computers, a long-planned upgrade to the Finance Department’s software can’t be completed and a new, far more expensive approach must be taken to move the city away from paper and entering data by hand.
Benicia has coped with past economic upheavals by trying to curb expenses, laying off some employees, freezing vacant positions, asking its staff to accept a 10-percent compensation reduction and delaying maintenance or replacement of equipment and buildings.
Last May, City Manager Brad Kilger and Assistant City Manager Anne Cardwell outlined a long-term approach designed to bring about financial resiliency, including how a top-to-bottom organizational examination could lead to greater efficiency and identify critical needs of the city’s staff and departments.
Employees and consultants also are looking at better ways Benicia could provide services to residents, including asking residents how the city should spend its limited funds.
The Council will meet at 6 p.m. Tuesday in a closed session to discuss legal matters.
The regular meeting, beginning a half-hour earlier than most of the Council’s meetings, will start at 6:30 p.m. Tuesday in the Council Chamber of City Hall, 250 East L St.
Danny Demars says
Tell you what… If you anti oil-by-rail nuts run Valero out of town, we’re gonna need a 15% increase in sales tax to make up for the loss….
Mickey D says
Got that right Danny.