REPORT TO COUNCIL
SUBJECT
Title
Discussion of, and Possible Direction on, Revenue Measures for the November 2020 Ballot [Council Pillar: Promote and Enhance Economic and Housing Development]
Report
BACKGROUND
For cities, revenue to cover services is primarily derived from two sources, taxes and fees for services. The City is in process of evaluating revenue options to address unmet capital infrastructure and future ongoing deficits. Below is a summary of these efforts over the past two years.
In May 2018, the City Council discussed and considered five revenue opportunities including: 1) an increase in the Transient Occupancy (TOT) rate, 2) an increase in the Documentary Transfer Tax, 3) Establishment of a Utility Users Tax (UUT), 4) Establishment of a Cannabis Tax, and 5) Establishment of an Infrastructure Parcel Tax. Council moved forward with a Cannabis Tax option for the November 2018 ballot.
In July 2018, the City Council took action to place a Cannabis Business Tax Measure on the November 2018 ballot. Measure M, the Santa Clara Marijuana Business Tax, was approved by the voters with a 76.68% approval rating. Since then, staff has been evaluating the implementation of similar programs throughout the state and will be providing recommendations to the City Council in a separate report on February 11, 2020.
In January 2019, as part of the City Council's Operational and Strategic Priority Setting Session, staff presented the Ten-Year Financial Forecast for the City's General Fund. This forecast, based on assumptions and known risks at that time, projected deficits of approximately $1.6 million for FY 2021/22 and $0.5 million for FY 2022/23 for a total of $2.1 million. In addition, the forecast showed a narrow surplus margin sensitive to changes in the economy or other changes in known risk factors (e.g. pensions, labor negotiations, etc). At that time, Council provided direction to the City Manager to continue working on two revenue strategy options -...
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