Panel discusses monitoring revenue from recently passed tax measure
Benicia City Council learned Tuesday that the 1-cent sales tax increase voters approved Nov. 4 becomes effective April 1, 2015. But because of state practices, 75 to 80 percent of revenue from the increase will be kept by the Board of Equalization until it gives Benicia a “true-up” in September 2016.
That’s what Finance Director Karin Schnaider told the Council, explaining that other jurisdictions are treated the same way.
Not only that, but the state, not Benicia, gets any interest earned on the money while it remains in state hands, Schnaider said.
“Clever little devils!” Mayor Elizabeth Patterson responded.
But the clever ones Councilmember Tom Campbell worried about were members of future Councils, saying they could go “rogue” and spend the money as they pleased, rather than for infrastructure projects and services so basic that they’ve been nicknamed “keeping the lights on.”
Campbell is one of two Council ex-officio members of the city Finance Committee, which has been tasked with monitoring the estimated $3.7 million the tax increase is expected to bring to the Benicia General Fund.
Because the sales tax wasn’t tied to specific projects, it was put on the ballot as a general tax that could be approved by a simple majority — which is what happed, by a 5,827 to 3,407 margin, according to numbers provided by City Clerk Lisa Wolfe when the Council certified the election Tuesday.
Campbell, however, hoped the Council would create a fund within the General Fund equal to the amount the tax was expected to bring in, to make chronicling revenues and expenditures easier for the Finance Committee.
Patterson sought a resolution that would memorialize the tasks assigned to the committee so that future members of that panel and the Council would know what to expect. “We’re not always going to be here,” she said.
“I know we can’t put the money in an account, but we can account for it,” Councilmember Alan Schwartzman said.
City Manager Brad Kilger said, “We can’t track it in the traditional manner.” But he assured the Council the Finance Committee was well aware of its responsibilities concerning the tax’s income and the city’s expenditures.
Meanwhile, Economic Development Manager Mario Giuliani described the city’s plan for the money.
About $2 million in the first year’s worth of revenues would underwrite equipment purchases and infrastructure projects, and $1.7 million would be spent on maintaining city services at the current level. That’s based on the Council’s own priority list and a community survey that sought residents’ priorities, too, Giuliani said.
Of the infrastructure projects, $150,000 would be used to replace the First Street promenade railing; $80,000 would replace police radios; and $100,000 would repair downtown sidewalks.
Another $200,000 would replace playground equipment; $400,000 would replace dispatch and records systems; $50,000 would go for plans and specifications for the Industrial Park Road project; $292,000 would buy a wildland fire engine; $100,000 would fund stormwater management and flood mitigation plans; $200,000 would repair road damage; and $500,000 would pay to repair and pave Southampton Road, Panorama Drive, Hastings Road and safety crossings at Benicia Middle School.
The city also expects to spend $448,492 for a new fire engine; $1 million to patch and pave Industrial way from Teal Drive to Lake Herman Road; and $400,000 to repair the pool desk and restrooms at the James Lemos Aquatic Center.
All projects are expected to be finished by fall of 2017.
Vice Mayor Mark Hughes urged city staff to find ways to tell residents about the projects the sales tax revenues are funding.
“We are going to do signs,” City Manager Brad Kilger said, explaining that voters put their trust in Benicia officials when they approved the measure. “We have a responsibility for that trust,” he said.
Also Tuesday, Hughes and Schwartzman, both incumbents who ran unopposed, took their oath of office, after which Hughes, who garnered slightly more votes than Schwartzman, was named vice mayor.
Historically, the candidate receiving the most votes is named to that post.
In other matters, the Council agreed to hear at a subsequent meeting Campbell’s request to consider making Treasurer Kenneth Paulk a voting member of the Finance Committee.
In the Nov. 4 election, voters decided the city treasurer should remain an elected position, rejecting a measure that would have changed the post to an appointed one.
The Council also dropped the Jan. 27, Nov. 24 and Dec. 22 meetings from its 2015 calendar before adopting a schedule for the coming year.
What exactly is a “true-up.?
Sam, the State of California holds approximately 20% of a City’s sales tax revenue each quarter. This is done in case a business over reported or paid taxes in the wrong jurisdiction. If that occurs then the State has funds to either reimburse the business or more likely redistribute to the proper jurisdiction. A “true up” occurs the following quarter when the State pays the City the money it was withholding.