City of Gonzales
FINANCE DEPARTMENT
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: October 2, 2023
FROM: Mike Howard, Finance Director
THROUGH: Carmen Gil, City Manager
SUBJECT: Consider a Parcel Tax to Support Fire Services
RECOMMENDATION
It is recommended that the City Council of the City of Gonzales receive the staff report and provide direction to staff regarding a potential Parcel Tax to support fire services in the City of Gonzales.
BACKGROUND
Historically, the City of Gonzales has had a Volunteer Fire Department at a cost of just over $300,000 annually. At that time, the City had sufficient revenue sources to support the Volunteer Fire Department program. Jason Mucio was originally hired as the first full-time Fire Fighter in 2007, working day shifts and volunteers covered other shifts.
In 2015, the City hired an additional full-time Fire Fighter to help with shift coverage. This lasted for about three years.
In 2018, the City hired two additional full-time Fire Fighters and Jason Muscio was promoted to Fire Chief. With the additional two new Fire Fighters, the City now had one full-time Fire Fighter on each shift with volunteers filling in the other shifts for coverage.
In 2020 through 2021, the Volunteer Fire Fighter program began to dwindle, and coverage of shifts became an issue. Overtime costs began to escalate to cover the necessary shifts. In 2020, the City filled three part-time Fire Fighter positions and in 2021, it became necessary to convert the three part-time positions to full-time positions. At this point, the City now has six full-time Fire Fighter positions.
AGENDA
ITEM
12 All of the above took place with no additional funding sources to support the expansion of the Fire Department. Current costs to staff the Fire Department is approximately $1,100,000. This has been a gradual increase in cost of $800,000 annually with no additional funding sources.
In FY 21/22, the Measure K Committee recommended, and City Council approved to fund $100,000 for the Fire Department positions. In FY 22/23 the funding contribution increased to $200,000; and currently in FY 23/24, Measure K is providing $250,000 to help cover the Fire Department costs. Even with the contributions from Measure K, the City is left with a funding gap of $550,000. The allocations from Measure K were not intended to be a long-term commitment. In order to maintain a full functioning Fire Department in the City of Gonzales, it is essential that the City find new revenue sources to fund this essential public safety function.
REVIEW AND ANALYSIS
Staff have explored options to generate additional revenues to fund the full-time Fire Department.
Alternatives explored were an additional .5% Sales Tax that would be dedicated to the support of the Fire Department. Such a measure would generate about $830,000 annually and would require a 2/3 vote by the voters. A sales tax measure would fluctuate with the economy and revenues would go up and down accordingly.
Another alternative is a Parcel Tax for fire services. The City of Greenfield adopted this approach when the Greenfield Fire Protection District was no longer able to operate, and the City was faced with not having a source for fire services. A Parcel Tax would be added to the property owners annual tax bill.
Staff is recommending a Parcel Tax to support fire services. For the purposes of this discussion, the City has used the City of Greenfield’s Parcel Tax model for fire services. This model would potentially generate more than $425,000 on an annual basis to the City of Gonzales. This number would also grow as the City grows and new homes are constructed. The parcel tax, using the City of Greenfield model, would range from $93.18 to $219.23 per parcel. Commercial and industrial parcels have an additional charge of .07 per building square foot. Impact to resident and commercial parcel tax owners would be as follows:
Single Family Residential Parcel $219.24
Multi-Family Parcel $164.42 (per unit)
Non-Residential Parcel $93.18 - $219.23 plus $.07 per building sq ft.
It is recommended that a parcel tax model also have an inflationary provision to increase on an annual basis based on a pre-determined formula such as CPI. An inflationary provision will ensure that future cost increases such as salaries, benefits, and supplies will be covered. The passage of a Parcel Tax would require a 2/3 vote of the voters to pass.
The Fire Department is funded fully by the General Fund. Over the past several years, the General Fund’s reserves have been depleted by these additional costs with no new revenue sources to pay for them. The Fire Department is a vital service to the City of Gonzales and therefore we need to find ways to pay for the service. The General Fund, Fund Balance (reserves), has gone from just under $2,500,000 in 2018 to below $800,000 currently.
Explain Recommendation and How it Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small-town charm.
Explain: A Parcel Tax for fire services will generate revenue for the City to fund the new fulltime fire department.
Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment and resources necessary to provide excellent services that enhance the quality of life of our diverse community. X Yes ___No ___ NA
Explain: Please see explanation above for the Vision.
City services will be delivered in a cost-effective, respectful and friendly manner to ensure the safety and well-being of the residents and the promotion of business, recreational, housing and employment opportunities in an environmentally sustainable manner. __X_ Yes ___No _ NA Explain: Please see explanation above for the Vision.
Strong fiscal reporting allows us to provide appropriate resources for:
• Public Safety X Yes No N/A
• Housing Yes No X N/A
• Recreation Yes No X N/A
• Environment X Yes No N/A
• Education Yes No X N/A
Explain: A stable organization is needed to ensure a high level of service necessary to promote public safety for the community and to maintain the City’s infrastructure.
ALTERNATIVES
• Direct staff to pursue the option of a Parcel Tax for fire services. • Direct staff to explore other revenue generating sources. • Direct staff to do nothing.
BUDGET IMPACT
The adoption of a Parcel Tax for fire services could potentially generate $425,000 annually. This will not cover the entire funding gap but would provide a significant revenue source to ensure that the City can continue to provide fire services.
CONCLUSION
It is recommended that the City Council of the City of Gonzales direct staff to begin exploring a Parcel Tax program to support fire services in the City. Without additional revenue sources to fund fire services, the City may be faced with not having services within the City and rely on outside agencies for the services, which is not ideal.