Revenue-Generation Options
City Council Regular Meeting
July 22, 2025
Agenda
General FundFive-Year Financial Forecast
Understand the distinction between a “one-time” solution, a “defer” solution, and a “sustainable” solution One-time solutions effectively address immediate challenges; however, they do not provide a resolution for ongoing issues.
Deferrals postpone a problem by addressing a one-time issue but can result in equal or greater costs in future years.
A sustainable solution solves our ongoing budget issues now and in the future.
General Fund RevenuesWhere does the money come from?
80% from local taxes
Program Revenues (User’s Fees)
Miscellaneous (e.g., Investment Income)
Hercules: Local Tax Risk & Challenges
Sales Tax
Sales tax revenue in the City mainly comes from a few large businesses, with the top three accounting for over 50%. If any of these sources fall short of expectations, it could affect funding for future programs and services.
Property Tax
Hercules is classified as a low-to-no property tax jurisdiction. The City's share of the base 1% property tax rate is lower than that of most other jurisdictions, accounting for just over 5% of Hercules's total base property taxes.
General Fund ExpendituresWhere does the money go?
Need Assessments
Unfunded critical infrastructure needs
Rising cost of goods, services, and utilities
Employee retention
Deferred maintenance
Taxes
Taxes are used to pay for public services and facilities that benefit everyone, without needing a direct link between what a taxpayer pays and what they receive.
Cities have the authority to impose any tax that is not expressly prohibited by state law. (Gov. Code section 37100.5).
General & Special Tax
General Tax – revenues may be used for any purposes.
Majority voter approval required for new or increased local tax.
Special Tax – revenues must be used for specific purpose. 2/3 voter approval required for new or increased local tax
Taxes and Fee AssessmentsApproval Requirements(California Constitution)
Revenue Option 1:Additional Tax Initiatives
Revenue Option 2:Bond Measures
Voter Approval: Timeline
Tax initiatives require voter approval. There are two options for election dates:
On the date of the next regular Council election that is not less than 88 days after the Council meeting at which the petition is certified, or On a special election date that is between 88 and 103 days after the council meeting at which the petition is certified.
General Tax Process and Timeline for placing on the ballot Special Election (June 2026 Timeline)
General Tax Process and Timeline for placing on the ballot Regular Election (November 2026 Timeline)
General Tax Process and Timeline for placing on the ballot Special Election (June 2027 Timeline)
General Obligation Bond (GO) Bond Measure Process and Timeline for placing on the ballot
Questions & Next Steps