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CITY OF SAN BERNARDINO -REQUEST FOR COUNCIL ACTION
From: Charles E. McNeely Subject: Discuss and take possible action
concerning the implementation of a '/z cent
Dept: City Manager's Office Local Transactions and Use Tax.
Date: July 1, 2010
MCC Date: July 6, 2010
Synopsis of Previous Council Action:
6/30/2010—The Mayor and Common Council direct staff to research a possible ''/z cent increase
to the City's sales tax and bring the information back to the Council on July 6,2010.
Recommended Motion:
That the City Manager's Office be authorized to proceed with the Local Transaction and Use
Tax process including securing proposals from consultants for public education, voter outreach,
and the preparation of documents necessary for the place ent of a ballot measure on the
November 2010 Statewide Consolidated Election.
Charles . McN ely
Contact person: Barbara Pachon. Director of Finance Phone: 5144
Supporting data attached: Staff Report Ward: All
FUNDING $100,000+for election—one tax measure
REQUIREMENTS: Amount: $504100,000 for public outreach
Source: (Acct.No.) City Clerk and General Government
(Acct. Description) Elections/Professional &Contractual
Finance:
Council Notes:
Agenda Item No.
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CITY OF SAN BERNARDINO—REQUEST FOR COUNCIL ACTION
Staff Report
Subject
Discuss and take possible action concerning the possible implementation of a '/2 cent Local
Transactions and Use Tax.
Background:
Beginning in April, 2010, the Mayor and Common Council have been presented with a number of
"Budget Balancing Strategy Options" presented by the City Manager. The strategy options were
presented to address the City's proposed $24 million deficit for FY 2010/2011, which is a result of
the historic downturn of the local and national economy over the past two to three years.
At the Council's direction, staff was requested to research and present information for a Property
Transfer Tax and the formation of a City-wide Assessment District. On June 30, 2010, the Mayor
and Common Council were presented with each of these options, and the associated revenue. After
discussion, the Council decided not to pursue these two options. As an alternative, a motion was
made directing staff to research a possible %2 cent sales tax and to bring the information back to the
Council on July 6, 2010,
Senate Bill 566, effective January 1, 2004, authorizes cities to levy transactions and use taxes for
general or special purposes, subject to voter approval. Prior to the enactment of SB 566, cities
needed specific legislative approval in order to place a sales tax ordinance before the voters of that
city. In the current economy, a %2 cent Local Transaction and Use Tax (Tax) is expected to generate
approximately $10.2 million annually, with $2.5 estimated for FY 2010/2011. Staff has based these
estimated revenue projections on actual revenue generated from Measure Z, the '/4 cent sales tax
passed by voters in 2006. The revenue estimates to be generated from a '/2 cent Tax would be
sufficient to meet the revenue enhancement assumptions for the previously proposed Property
Transfer Tax and City-wide Assessment District combined.
The deadline to submit ballot measures for the Statewide Consolidated election on November 2,
2010, is August 6. If the Council decides to proceed with the Tax, several actions must be taken
including adopting a resolution proposing the tax, and adopting a resolution calling a special
municipal election to be consolidated with the statewide general election and requesting services
from the County Registrar of Voters for the conduct of the election. If approved by voters, the tax
will become effective April 1,2011.
Financial Impact:
The %2 cent Local Transaction and Use Tax is anticipated to generate approximately $10.2 million
annually. If the Council proceeds with placing the measure on the November ballot, the additional
%2 cent will become effective on April 1, 2011; generating approximately $2.5 Million for FY
2010/2011.
Staff'Report—Local Transaction and Use Tax p.1
The estimate of $100,000 to place one measure on the November ballot is budgeted in the FY
2010/2011 proposed City Clerk's budget. The funds originally allocated for consultants for the
Property Transfer Tax and Assessment District will be reallocated for this measure.
Recommendation:
That the City Manager's Office be authorized to proceed with the Local Transaction and Use Tax
process including securing proposals from consultants for public education, voter outreach, and the
preparation of documents necessary for the placement of a ballot measure on the November 2010
Statewide Consolidated Election.
Staff Report—Local Transactions and Use Tax p. 2