❒ Recently passed sales tax hike isn’t panacea for all budget concerns, he says
The penny increase in Benicia’s sales tax, approved Nov. 4 by local voters, will slow the city’s losses, but it’s not the only fiscal solution it needs.
That’s the message City Manager Brad Kilger and Finance Director Karin Schnaider shared last week with the Finance Committee, the panel that will help city employees keep tabs on expenditures.
“Measure C won’t solve problems,” Kilger told the committee Nov. 20. “We have long-term issues.”
One of those “long-term issues” is a 20-percent decline in sales tax from the Benicia Industrial Park, Economic Development Manager Mario Giuliani said.
At one time, the city received $998,000 a quarter. That’s dropped to $799,000, even though the park, at 91 percent capacity, is as full as it’s been in several years, Giuliani said.
Nor is Benicia growing elsewhere. Few residential permits have been issued, and no one’s applied to open any industry, he said. Yet the cost of services keep rising.
In fact, even the most optimistic version of the city’s 10-year financial forecast shows Benicia losing money.
“To make matters worse, $1 billion in property tax is under the threat of appeal,” Giuliani said.
Measure C, expected to add $3.7 million to the General Fund, eases that situation, Giuliani said.
Some people have suggested ways the money could be spent, from funding homeless veterans to paying for the next Climate Action Plan coordinator’s salary.
But the first two years of the money already is spoken for, Giuliani said.
Benicia is walking a fine line on the matter, because the ballot measure wasn’t tied to specific projects, Kilger said.
Had the city dedicated the tax increase revenues to specific expenditures and set the money aside in special funds, the measure would have needed a supermajority vote to pass, he said.
Instead, city officials called it a “quality-of-life” tax increase and chose to put the revenue it generates into the General Fund.
That meant a simple majority could pass the measure, but it also makes it harder to track the funds, because they’re not isolated in a special account.
Regardless, a dozen different projects have been identified as areas where the money should be spent, from fixing potholes to replacing the rusted railing on the downtown coastline promenade.
In addition, $1.7 million from the new tax will be used to support city services, “to keep the doors open and the lights on,” Giuliani said.
Even if it will be harder to track the sales tax revenue and how it’s spent, Giuliani promised the results would be posted on the city website and its Facebook page.
Once the postings begin, residents will be able to chart progress — for instance, watching as each of 250 potholes is repaired, he said.
“We’ll have a program to measure accomplishments,” he said. “We want to make it transparent.”
But that’s not going to be the the only solution to the city’s financial decline.
For the first time in 20 years, Benicia is looking at its entire fee schedule, rather than studying fees department by department.
The Finance Committee will receive a report on the study in January or February, which may come in a joint session with the City Council.
However, any changes in fees wouldn’t be put into place before July 1, Schnaider said.
Part of the study is to look at the actual costs of providing city services, she said. Those are not only the direct costs, such as that of water to fill the municipal pool or the salary of lifeguards, but also indirect costs such as the pool operation’s share of city bookkeeping.
The resulting report will tell the Council and the Finance Committee the actual costs associated with providing each municipal service, Schnaider said.
That won’t mean fees would be increased to cover all those costs, she said.
“We capture the total amount as we calculate what that fee is, and we’ll bring it forward,” she said. “We may recommend a lower fee, but when the Council adopts the fee, it will know what we subsidize.”
Added to the mix is the cost index of living in the Bay Area, as calculated by the United States Department of Labor, which looks at gasoline, fuel, housing, food, energy and other costs.
“You’ll be surprised all the things we could be collecting fees on,” she said.
Also Nov. 20, the Finance Committee heard Schnaider recommend the city adopt Governmental Accounting Standards Board definitions and other parts of its fund balance policy.
Schnaider said the city has been using the board’s policy all along, but had not formally accepted the policy.
The panel may hear at its Dec. 18 meeting whether the Council has agreed to pursue its recommendation that City Treasurer Kenneth Paulk be allowed to vote on committee matters.
Schnaider also told the panel it will receive training next month on the city’s comprehensive annual finance report, but won’t receive a copy of the city’s examination of its Marina Fund before the Council receives it.
In January or February of 2015, the committee may hear an update of staff recommendations on the citywide finance computer software system upgrade, she said.
“Our goal is to send the RFP (request for proposal) out in March,” she said. Other dates won’t be available until the city chooses its software.
“I just want you to know there’s been progress.”
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Hmm …. I wonder what we could have done with that $14 million or what ever it was that was spent on that ridiculous solar farm on the corner or Rose and Second Street.
We DO NOT have a revenue problem, like most of government. What we have is a spending problem!
So much for the new tax that will maintain the quality of life in Benicia. Not so much. It is now acknowledged that it will only slow the degradation. Typical government sales job. The actual product never looks quite like the Demo!
That’s right there is a spending problem. There is no limit to the amount of money “needed”.
Before Measure C was voted on, this is what City Manager Kilger wrote in the Benicia Herald (9/2/14) in support of Measure C: “Maintaining Benicia’s financial viability as a full-service city and protecting our small-town quality of life is the key purpose of Measure C. This measure will improve public safety and city streets, maintain parks and trim trees, and fund programs to support our historic downtown and community events, as well as attract new businesses.”
Before the vote, this is what I wrote in an article in the Benicia Herald (10/31/14) about Measure C:
“In light of my knowledge of city finances, I can honestly say that I do not know if the sales tax increase is warranted. But what I do know is that there has been no competent analysis of city finances done to justify the measure — just a lot of hand waving about Benicia’s financial condition.”
After the vote approving Measure C, this is what City Manager Kilger is reported to have said about Measure C, last week (11/27/14, Benicia Herald):
“The penny increase in Benicia’s sales tax, approved Nov. 4 by local voters, will slow the city’s losses, but it’s not the only fiscal solution it needs. That’s the message City Manager Brad Kilger and Finance Director Karin Schnaider shared last week with the Finance Committee, the panel that will help city employees keep tabs on expenditures. “Measure C won’t solve problems,” Kilger told the committee Nov. 20. “We have long-term issues.”
I believe this is, unfortunately, a classic example of why I had an impossible time communicating with City Manager Kilger.
In the last five years I have personally spoke to all the finance directors interm or otherwise. The last interm finance Director had it right. The one percent tax was necessary. It was laid out as a two year plan not a forever plan. So the big problem is not the City Manger but certain groups in this wonderful town that have agenda driven ideals about how to spend the money. The City Manger was the only one that had it right and said so. This city is trying to be driven by this very small group of anti big business and for sure anti fossil fuel. If you cannot see that you have not been paying attention. It is not and has never been the present City Manager. If you cannot get alomg with him it may be the personality of the ones that cannot get along or communicate. We do not need dictitoriaal personalities to get thing done.Just go back and look at the previous City Manger and the Finance Director a few years back. You will understand the problem. Many things were never brought forward and then it became a crisis. Just follow this City Manager and our financalL problemes will be resolved. Now if the voters want to cancel that and elect agenda DRIVEN council/mayor things could change. But the City Manager layed out what it could be. He does know what he is doing as does our City Attorney not the agenda leaning few in this town. The problem is not the City Manager but the folks thjat do not understand the ten year financial outlook. It is not good and believe me the City Manager knows that and will do what is correct to fix it.
After the two year plan is where this city may face its biggesdt challenge. That being the election of 2016. If we elect the Agenda drive folks the 1% will be spent on personal agenda driven ideals. It is very importand who we elect if you want to keep this city financial responcible. Be wise and not personality driven.
That’s right. How about the fees the Coty will have to pay to get City Accounts off MCE after a couple of years. Another unnecessary cost…..
I would like to understand better why the revenue from the industrial park is going down?
Best thing to do is ask.
My guess would be that revenues are declining due to lack of manufacturing businesses locating in the park. Apparently, the park’s occupancy rate is high but revenues are dropping. This means that the businesses in the park are not generating taxable goods or services. This is probably due to our regulatory environment … Which is the hallmark of Mayor Patterson’s administration.
It is a toxic environment for anyone trying to start a business in this town. So much useless, senseless zoning, compliance and conditions to deal with.
You could be right. Please erxplain all the issues you have encountered so I do not have to go thru them. I would appreceate the help.
Start with the zoning department and make sure that what you want to do is allowed in the area where you want to conduct your business. I found the perfect location for what I wanted to do but was told flat out by the city that I could not conduct my business in that location. I requested a variance and it was denied. I went to the economic development department and was able to get the ear of one of the people there that went to bat for me but hit a brick wall. Some times you can request a special limited use permit, if approved and only after you pay a $1800 dollar administrative fee for them to trouble themselves with looking over your application.
The whole thing was painful, makes absolutely no sense and they seem to have no interest in trying to improve things. Those are the rules and you have to live by them.
Zoning changes are very difficult to do. I do understand what you mean. On the other hand variances cannot ber made for everything and also zoning changes. One of ther big problems with those two issues are adjacent homes or business that will fight those moves. It is not always the city.
That may be true but many things worth doing are difficult. Many of the zoning rules don’t make sense and they make it hard for people to setup shop here. So given that, and the fact that the city is feeling a revenue pinch, maybe it would be worth the effort.
It will be an effert but could well be worth it. I would suggest trying to talk to folks that have gone thru it and also the city for ther proper procedure. Nothing is impossible. Good luck and it could well be worth the effert and also a learning expierence you could pass along.
True but it is just such an impediment to progress. I don’t have time to mess with it. Had to move on and take a less than ideal location.
In the past year we’ve voted for a sales tax increase, a school bond measure that raised our property taxes, and had a water charge increase imposed. And now we learn the city still doesn’t have enough funding.
All the while our mayor is openly hostile to Valero and enjoys increasing regulations. Since the industrial park largely exists to support the refinery, any wonder why revenues are dropping? Why would any manufacturer want to locate in Benicia? The manufacturing of goods drives revenues.
What is our future? Apparently more and more taxes. The city council does not seem interested in controlling spending nor encouraging business to grow.
Matrter I do know you are an informed person as well as others. The city has reduced spending over the last five years. Go back and look at previous budgets. The city has cut salary/ benefits over two years by ten percent, reduced staff by about 10& also. The salary/benefit to total budget has also been reduced by 10 Percent. 75% to about 68% of budget. The problem is CalPers and the amount the city pays for its share. It never was the right amount because CalPers was on a hope and a pray. Now the city is playing catch up and was hit hard. Plus other issues. If there needs to be more cuts the City Manager would appreciate any info and where these cuts can be made. The City Manager is very open to suggestions. The important thing is ideas and talk about spending. Matter you may have good ideas that I think should be talked about. I would like to see your suggestions. I do believe you care.
Thank you Bob. You encourage me with your analysis. I do understand the CalPers situation. It is functionally bankrupting the state and CA cities. Someone should go to jail related to their actuary presumptions. If CalPers is the only villain in this mess then the solution is beyond city controls. Not good.
Thanks Matter. There are other issues that are out of the City controll. I will get a list and post it. You are correct about the Mayor and her followers. They think nothing of finamce only their own agend driven ideals. Keep your eye on the CSC group. This group will want the City to pay for the Climate Action Plan co-ordinater in July when contract is up. The city hopefully will not..