RESOLUTION NO. 22-_____
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HERCULES UNANIMOUSLY DECLARING A FISCAL EMERGENCY IN THE CITY OF HERCULES WHEREAS, the City of Hercules has demonstrated excellent fiscal stewardship by balancing the budget, increasing reserves, and providing basic services despite limited revenues; and WHEREAS, the City’s excellent fiscal management continues to be recognized with budgeting and audit awards, including the Governmental Finance Officers Association’s (GFOA) Certificate of Achievement for Excellence in Financial Reporting for the City’s Comprehensive Annual Financial Report and the Distinguished Budget Presentation Award in the fiscal year ending June 30, 2020; and WHEREAS, despite exemplary fiscal management, the effects of the pandemic, the impact of unfunded state mandates on the budget, and the effects of being a low property tax jurisdiction have taken a significant toll on the City’s ability to continue providing a satisfactory level of vital services to Hercules residents that protect the public peace, health, safety and welfare of the community; and WHEREAS, in response to the effects of the Great Recession, the City slashed its budget by cutting service positions, purchased essentials with grant funding, and participated in purchasing pools with other cities to lower expenses; and WHEREAS, many of the staff positions that were eliminated and many of the services that were suspended as a result of the Great Recession have still not been restored, including curtailment of a number of civic activities popular with residents including suspension of 4th of July activities, the Cultural Festival, and other popular events; and WHEREAS, due to budgetary constraints, the City has been forced to defer maintenance on various City facilities; and WHEREAS, the City has had to freeze positions from public safety as well as other City departments, cut code enforcement positions, and has been unable to fill other vital staff positions due to budgetary constraints, and WHEREAS, the frequency and amount of emergency repairs to aging infrastructure is expected to increase, depleting reserves and requiring additional funding; and WHEREAS, although the City is currently able to provide one-time funding to meet foreseeable emergency needs, the City does not have the capacity to provide such relief in a sustainable, recurring manner, and is at risk of significant impact to the budget and city services during the next recessionary economic cycle should the need for emergency repairs continue to grow; and WHEREAS, while City budgets have stabilized after a prolonged and unprecedented recessionary economy and repeated state takeaways, current and projected city revenues are insufficient to prevent further decline in the City’s street, sidewalk, public facilities, recreational, and storm drain infrastructure. The City has been implementing cost saving strategies for several years, including service innovation, fiscal discipline, improved revenue collection, and employee collaboration on achieving sustainable benefits in order stabilize its operational costs; however, the magnitude of the infrastructure deficit will in all likelihood greatly exceed any additional savings that could practically be achieved through further cost cutting measures; and WHEREAS, the City Council finds additional revenues will be needed to restore city infrastructure to an adequate and sustainable level of maintenance; and WHEREAS, the City relies on its existing Utility Users Tax (UUT), a tax imposed on the use of certain specified utilities including electricity, water, telecommunications, gas, video programming and telephonic services, to support the provision of basic municipal services to City residents, receiving on average $3.6 million in revenue per year, which comprises a substantial portion of the City’s general fund budget; and WHEREAS, the UUT, adopted by the voters in 2004, is set to expire January 1, 2025; and WHEREAS, the Finance Director has projected a significant General Fund operating deficit, with operating reserves likely to be depleted, should the UUT be allowed to expire or otherwise not be renewed by January 1, 2025; and WHEREAS, cost saving measures the City might employ to address the budget crisis that would result from the loss of UUT revenues would not be sufficient to avoid significant service disruptions which would have a negative impact upon the public peace, health, safety and welfare of the community; and WHEREAS, in beginning to plan for the City’s forthcoming fiscal year budgets the City Council wants to ensure that the public is aware of the fiscal emergency that would result if the UUT were allowed to expire or otherwise not be renewed.
NOW, THEREFORE, be it resolved by the City Council of the City of Hercules as follows:
Section 1. That the City Council unanimously finds and declares the existence of a fiscal emergency within the City.
Section 2. That the City Clerk shall certify to the passage of this resolution and enter it into the book of original resolutions.
The foregoing Resolution was duly and regularly adopted at the City Council meeting of the City of Hercules held on the 25th of January 2022, by the following vote of the Council:
AYES:
NOES:
ABSENT:
____________________________
Dion Bailey, Mayor
ATTEST:
___________________________________
Lori Martin
Administrative Services Director/City Clerk