Prior to the 2018 calendar year, it appeared the council was on track for around a $250 parcel tax for parks and roads, with another possible $50 social services tax. But all of that changed at the January 9 meeting and now the option of a utility user tax, off the table for a number of meetings, has resurfaced.
As staff notes: “Those discussions, in July, October, December and the previous meeting in January, have resulted in a Council consensus that the City needs, at minimum, a revenue measure on the ballot to replace the existing parks tax; there is also Council support to increase the existing $1.4 million generated by the $49 parcel tax, although the precise amount, purpose(s) and mechanism is still under discussion.”
At the last meeting, council talked about raising half of the existing unfunded need through a revenue measure or a blended approach this year.
Mayor Pro Tem Brett Lee said that there is no need to bite off everything at once.
“I’m not sure we need to eliminate the shortfall in one go in terms of a revenue measure. The question is, of course, what percent,” he said. “I’m sort of thinking a reasonable approach is to cut that gap by half.”
That would mean taxes that generate about $4 million of the $8 million gap between current funding and what is needed for basic levels of full funding.
Staff writes: “The total unfunded amount over the 21-year period of FY 2015-16 through FY 2035-36 is $189.1 million, assuming the existing parks tax expires and its $1.4 million of annual revenue does not continue, so the average annual shortfall is $9.0 million.”
Staff also notes, “Regardless of approach taken related to a ballot measure or measures in June, the Council was clear that any 
tax measure also needs to include a clear accountability and oversight process.”
The city council believes that existing commissions like Finance and Budget should review proposed and actual expenditures of revenue generated through a measure or measures, as well as determine how well the revenue is utilized to meet priorities, and make recommendations to the city council annually for both short-term and long-term use of the funds.
The review process would include a measure of how much of the general fund is being displaced.
Option A:
Measure 1: $98 Parcel Tax
Measure 2: 2% UUT on electricity/phone/cable/gas:
- Park and Transportation Infrastructure Tax of $98 for 10 years, with 2% inflator (plus 0.4% growth from new parcels over time; assumes current structure).
- UUT of 2% on gas, electric, cable, telephone
- Raises $4.24 million.
- Closes 47% of the current $9 million average annual gap (includes $1.4 million gap left from expiration of current Parks Tax)
- Shifts general fund infrastructure contributions up or down over time as needed to maintain a 15% GF reserve.
- Achieves 71% overall funding of infrastructure needs.
Option B:
Measure 1: $125 Parcel Tax
Measure 2: 4.25% UUT on phone/cable/gas
- Park and Transportation Infrastructure Tax of $125 for 10 years, with 2% inflator (plus 0.4% growth from new parcels over time; assumes current structure).
- UUT of 4.25% on gas, cable, telephone
- Raises $5.01 million.
- Closes 56% of the current $9 million average annual gap (includes $1.4 million gap left from expiration of current Parks Tax)
- Shifts general fund infrastructure contributions up or down over time as needed to maintain a 15% GF reserve.
- Achieves 76% overall funding of infrastructure needs.
Option C:
Measure 1: $98 Parcel Tax
Measure 2: 6.5% UUT on phone/cable/gas
- Park and Transportation Infrastructure Tax of $98 for 10 years, with 2% inflator (plus 0.4% growth from new parcels over time; assumes current structure).
- UUT of 6.5% on gas, cable, telephone
- Raises $5.00 million.
- Closes 56% of the current $9 million average annual gap (includes $1.4 million gap left from expiration of current Parks Tax)
- Shifts general fund infrastructure contributions up or down over time as needed to maintain a 15% GF reserve.
- Achieves 75% overall funding of infrastructure needs.
Option D:
Measure 1: $150 Parcel Tax
- Park and Transportation Infrastructure Tax of $150 for 10 years, with 2% inflator (plus 0.4% growth from new parcels over time; assumes current structure).
- Raises $4.29 million.
- Closes 48% of the current $9 million average annual gap (includes $1.4 million gap left from expiration of current Parks Tax)
- Shifts general fund infrastructure contributions up or down over time as needed to maintain a 15% GF reserve.
- Achieves 73% overall funding of infrastructure needs.
The council needs to approve the ordinance it wants to place on the ballot by February 6.
Staff has drafted up a sample ordinance, one for a utility user tax and one for a parcel tax which would allow funding for parks as well as facilities and transportation infrastructure.
The utility user tax draft ordinance includes electricity, telephones, gas and cable, all at two percent, for a period of 10 years.
Those are preliminary and any of these utilities can be removed if the council does not wish to include them.
Right now, the sample ordinance provides exemptions for the city, low income seniors, and other users specifically exempted by federal or state law.
The parcel tax ordinance models the current parks maintenance tax wording and structure but expands the revenue generated to include transportation infrastructure and public facilities.
The current parcel tax structure employed by the city charges a flat rate to single family homes and to each apartment unit in town.
Staff notes, “Group living homes are charged at approximately 40% of the regular amount. Commercial properties and day care centers are charged per 1,000 square feet, up to 10,000 square feet, and industrial properties are charged per employee.”
The draft numbers are prorated to reflect the $125 parcel tax level.
Staff notes: “It is within the Council’s authority to develop a new structure or different cost ratios for specific types of parcels.”
The parcel tax drafted would have a 10-year sunset and a two percent inflator.
It is important to note that none of this has been voted on by council, and these are only drafts for the council to work with.
—David M. Greenwald reporting
