TO: Honorable Mayor and Members of the City Council
FROM: Tom Kisela, City Manager
1. SUBJECT
title
Consider potential sales tax measure scenarios and provide direction to City staff.
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2. SUMMARY
On May 14, 2024, the City Council directed staff to bring back information on different sales tax measure scenarios, including potential sales tax rates at 1%, 0.75%, and 0.5% as well as sunset dates at 10-years,15-years, and 20-years. Staff is seeking direction from the City Council on how to proceed.
3. RECOMMENDED ACTION
recommendation
Consider potential sales tax measure scenarios and provide direction to City staff.
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4. FISCAL IMPACT
None.
5. STRATEGIC PLAN GOALS
Goal 2: Be a Fiscally Healthy Community.
b. Analyze future fiscal needs and potential revenue opportunities.
6. DISCUSSION AND BACKGROUND
To address the Fiscal Year 2024-2025 (FY25) $19.1 million General Fund deficit, on May 14, 2024, the City Council discussed potential budget balancing proposals for the FY25 budget. During the City Council's discussion, potential revenue enhancements including a transaction and use tax (sales tax) were considered.
Ultimately, the City Council voted for 1) the budget ad-hoc committee to bring forward a service/program reduction and revenue enhancement package for consideration at the May 28th City Council meeting (hereinafter collectively referred to as "budget balancing proposals") to help close the budget deficit, and 2) for staff to bring back information on varying sales tax measure scenarios, including:
1. Financial forecasts with sales tax rates at 1%, 0.75%, and 0.5% with sunset dates ranging from 10, 15, to 20 years.
2. Information on voter thresholds for special taxes.
3. Information on a fiscal oversight committee should a potential measure pass.
Each item is reviewed in turn.
Financial Forecasts
Staff worked with HdL Companies to identify the estimated revenue for the different sales tax rates and scenarios.
Chart Descriptions
C...
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