REPORT TO COUNCIL
SUBJECT
Title
Actions Related to Revenue Opportunities for a November 2018 Ballot Measure - Cannabis Business Tax
Report
EXECUTIVE SUMMARY
On July 5, 2018, following several months of public discussion regarding the City's fiscal outlook and the Council's interest in pursuing potential revenue options as one of several critical strategies to stabilize the City's 10-year fiscal outlook, the Council directed staff to bring back a measure related to a potential cannabis tax for further consideration and possible inclusion on the November 2018 ballot. This report outlines a recommendation for a ballot measure and ordinance which, with voter approval, could provide additional revenue to the City's General Fund.
BACKGROUND
During the January 2018 Council Goal Setting Session and the May 22, 2018 Fiscal Year 2018/19 Proposed Budget Study Session, the City Manager presented the City's 10-Year Fiscal Outlook which forecasts structural deficits over the next ten years. During the January session, the Council authorized staff to return with an analysis of revenue options and, by consensus, expressed support to commit to solve annual deficits with sustainable budget solutions such as on-going expenditure reductions, increases to current revenue sources, and/or identifying new revenue sources to stabilize the City's future fiscal condition.
On May 29, 2018, staff made a presentation to Council on potential revenue options aimed to stabilize the City's fiscal outlook to preserve service and staffing levels; generate more revenue to meet expenditure growth demand; and develop strategies for unfunded needs/projects. At the study session, Council considered several revenue options including:
1. Increase in the Transient Occupancy Tax (TOT) rate,
2. Increase in the Documentary Transfer Tax,
3. Establishment of a Utility User Tax (UUT),
4. Establishment of a Cannabis Tax, and/or
5. Establishment of an Infrastructure Parcel Tax.
Recognizing that both reven...
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