Council Chamber
580 Pacific St.
Monterey, California
CITY COUNCIL AGENDA
Council Special Meeting
Wednesday, August 27,
2025
4:00 PM
Mayor
Tyller Williamson
Councilmembers
Kim Barber, District 1
Ed Smith, District 2
Jean Rasch, District 3
Gino Garcia, District 4
City Manager
Hans Uslar
City Attorney
M. Christine Davi
HOW TO PARTICIPATE IN THIS MEETING:
In-Person: At the meeting location listed above.
Remotely via ZoomGov webinar:
o On a computer or smartphone: https://monterey-org.zoomgov.com/j/1616037682 Zoom software must be up-to-date. For help, please use our Zoom Meeting Instructions. o By telephone dial 833-568-8864 (Toll Free), 669-254-5252 (CA) or 646-828-7666 (NY). If one number doesn’t work, please try another. Enter Webinar ID: 161 603 7682 # If asked for participant ID, press #. To raise your hand (or lower it), dial *9. Once called upon, dial *6 to unmute.
This meeting will also stream live for viewing only on youtube.com/cityofmonterey (~10 second delay) and on Comcast Channel 25 (up to 90 second delay). Written comment: Emailed comments to [email protected] sent no later than ½ hour before the start of the meeting (sooner preferred) are not read aloud but are made available to the Council and public at monterey.gov/submitted-comments.
PUBLIC COMMENT PROCEDURES AND TIME LIMITS:
The total amount of time allocated for public comment on a particular issue and for each individual speaker is generally as follows:
1. Up to three minutes per speaker.
2. For regular City Council meetings, there are two 15-minute public comment periods, one in the afternoon and one in the evening. Speakers may only comment during one session.
3. The total time allocated for public comment:
a. 30 minutes per item – Public Appearance and Public Hearing items b. 15 minutes per item – All other items (including, but not limited to, Consent, Closed Session, Presentations, and Requests to Agendize)
At the time an item is considered, the Mayor will ask those attending the meeting in person to line up at the podium or raise their hands, and for remote participants to use *9 on the telephone or the “raise hand” function in Zoom, if they wish to address the City Council. The maximum amount of time for each person to speak and the total amount of time allotted for each item will be determined based on the number of people indicating an interest in speaking and the amount of business to be conducted on the agenda. In exceptional circumstances and when necessary to ensure a full opportunity for public input, the Mayor may, with the legislative body’s consent, adjust the amount of time allowed for public input and/or the time allotted for each speaker.
CAMPAIGN CONTRIBUTION DISCLOSURE: Pursuant to the Levine Act (Govt. Code §84308), any party to a permit, license, contract, or other entitlement before the Council is required to disclose on the record any contribution, including aggregated contributions, of more than $500 made by the party or the party's agents within the preceding 12 months to any City official. Participants and agents are requested to make this disclosure as well. The disclosure must include the name of the party, participant, or agent, and any other person making the contribution; the name of the recipient, the amount of the contribution, and the date the contribution was made. 8/27/2025 4:00:00 PM
2 Call to Order
Pledge of Allegiance
Afternoon Session
Public Appearance
Public Appearance items are on non-routine issues that might stimulate public interest and comments.
1. Receive Presentation on Potential Strategies to Reduce the City's $10 Million Structural (Annual) Budget Deficit (Not a Project Under CEQA Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
Adjournment
Writings distributed for discussion or consideration on these matters within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, are available at: monterey.gov/submitted-comments and in the City Manager’s Office at 580 Pacific St., Room 1, Monterey, CA 93940 during regular business hours. All comments and materials provided to the Council become part of the public record. Members of the public who comment in any fashion on an agenda item may be subject to the Levine Act which requires disclosure of campaign contributions of more than $500 to an officer of the City within the preceding 12 months.
INTERPRETATION: The Monterey City Council invites and encourages public participation at its meetings.
Requests for language interpretation may be made by contacting the City Clerk at [email protected] or 831-646-3935. The City Clerk will make every effort to accommodate requests for interpreter assistance.
Requests should be made as soon as possible in advance of any meeting of the City Council. The City is committed to addressing language interpretation requests swiftly in order to maximize public participation.
ACCESSIBILITY: The City of Monterey is committed to including disabled people in all of its services, programs and activities. In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact [email protected] or (831) 646-3935.
Notification 30+ hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting [28 CFR 35.102-35.104 ADA Title II]. Later requests will be accommodated to the extent feasible. For communication-related assistance, dial 711 to use the California Relay Service (CRS) to speak to City offices. CRS offers free text-to-speech, speech-to-speech, and Spanish-language services 24 hours a day, 7 days a week. If you require a hearing amplification device to attend a meeting, dial 711 to use CRS to talk to the City Clerk's Office at (831) 646-3935 to coordinate use of a device.
CITY OF MONTEREY 24-HOUR SUGGESTION HOTLINES: (831) 646-3799 or [email protected] Upcoming city meetings are listed at monterey.gov/agendas For more information, call (831) 646-3935 Council
Agenda Report
№07/19
FROM: Hans Uslar, City Manager
Prepared by: Nat Rojanasathira, Assistant City Manager
SUBJECT: Receive Presentation on Potential Strategies to Reduce the City's $10 million Structural (Annual) Budget Deficit (Not a Project Under CEQA Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
RECOMMENDATION:
That the City Council receive a presentation on
potential strategies to reduce the City’s $10 million
structural (annual) budget deficit. The item on August
27, 2025 will be informational only and staff will be
available to answer questions about the various deficit reduction options. The City Council will provide input
and feedback at its meeting on September 2, 2025.
VALUE DRIVERS:
Serve as stewards of the City’s financial resources
through sound economic vitality efforts, streamlining
operations, reasonable revenue enhancements,
visionary long-term planning, fiscal transparency, and
community partnerships.
CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE
ACT) APPLIES: No.
FISCAL IMPLICATIONS:
The City is faced with a $10 million structural deficit that started in FY 2025-26 that will continue to grow
unless the City increases ongoing revenue and/or
reduces ongoing expenditures. This study session with
the City Council is a first step towards identifying
solutions to address this fiscal challenge.
There is no direct cost for the City to discuss deficit reduction strategies.
ENVIRONMENTAL DETERMINATION:
The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines”), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect Agenda Report Highlights
The City of Monterey faces a $10
million annual structural budget
deficit starting in FY 2025-26, driven
by rising costs and insufficient
revenue growth.
Maintaining the status quo is not
viable, and the City requires
immediate and sustainable solutions
to address the budget deficit.
Proposed solutions include
increasing ongoing revenue (e.g.,
new taxes, fees, property sales) and
reducing ongoing expenditures
(e.g., program cuts, operational
optimizations).
City Councilmembers and the public
can use an index card exercise to
prioritize deficit reduction strategies,
with results shared at the
September 2, 2025 meeting to
guide further public engagement
and decision-making.
Date: 8/27/2025
Item No.: 1.
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 1, Packet Page 3 on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.
ALTERNATIVES CONSIDERED:
The City Council could opt to not discuss deficit reduction strategies, but that is not recommended. Maintaining status quo (continuing $10 million budget shortfalls annually) is not an option, as the City must balance its budget in FY 2026-27 and future years.
DISCUSSION:
Rising Costs and the City’s $10 million Structural Deficit The current fiscal year’s budget (FY 2025-26) is the single largest budget in the City of Monterey’s 175-year history, projecting a General Fund total of $110,205,573 (4% above the FY 2024-25 Adopted Budget). The City’s expense growth is outpacing the City’s revenue generation. For FY 2025-26, the City is projecting a total of $120,663,607 in expenses for the General Fund (11% above the FY 2024-25 Adopted Budget). Although we were able to balance the budget for the current fiscal year, the City’s projected expenditures, or the cost of providing services, outpaced our projected revenues by a projected $10 million.
This year’s City Manager’s Budget Message1 explained:
“This is a result of the City’s rising costs, some of which can be controlled by the City, yet many of which are outside the City’s control. For any municipal organization, salary and benefits are one of the largest drivers of costs and the City’s budget is no exception.
Costs continue to rise for health insurance and other benefits provided to employees, and this is the case in the private sector as well.”
Concrete examples of increased costs include City’s liability and property insurance premiums by $3.2 million since FY 2019-20 (a 375% jump) and costs for salary, health and insurance benefits for employees, which is typical for any municipal organization and the private sector as well. Revenues are not increasing substantially to cover the cost of expenditures.
Solving the Structural Deficit
This $10M structural deficit cannot be solved with one-time solutions; it is by definition a structural deficit because it requires ongoing solutions. A one-time $10M fix only delays the problem - we’ll face another $10M+ shortfall each subsequent year.
Our only options as a City government to reduce the deficit are to:
a) increase ongoing revenue, and/or
b) reduce ongoing expenditures
1 City Manager’s Budget Message within the Online Budget Book can be found at monterey.gov/budget Council Special Meeting, 8/27/2025, Item No. 1., Item Page 2, Packet Page 4 Collectively, the combined revenue increases and/or expenditure reductions must add up to $10 million annually in order to balance the budget.
Deficit Reduction Strategies
Staff have developed a wide range of deficit reductions strategies for the City Council and the community to consider. These types of strategies are placed into three categories:
1. Direct impacts on the General Fund
2. Indirectly relieves General Fund obligations
3. One-time or other revenue supporting the General Fund Direct impact strategies:
Reappropriate some or all NCIP Funds to General Fund
Potential New Taxes
o Sales Tax Increase of 0.375%
o Admissions Tax
o Vacancy Tax (under legal challenge)
o Parking Tax
o Streaming Tax (on appeal pending legality determination) o Update Real Property Transfer Tax
Changing the Way We Do Business
o First Responder Fee Program
o Pause or Eliminate Programs
o Optimize Veterans Park Campground
o Changing Government Access Providers
o Reduce Property Maintenance Costs (Through the Sale of City Property) o Discontinue Mills Act Approvals
o Partnerships & Contracts for Service
o Payments in Lieu of Taxes (PILOTs)
Use Existing Attrition to Gain Salary Savings
Reduce Maintenance Costs (Through Sale of Underutilized Property) Indirect relief of General Fund. Strategies that would not directly reduce the $10M structural deficit, but help reduce the General Fund’s reliance to support other funds include:
Central Public Safety Facility Bond Measure (reduce need for General Fund to cover financing or direct cost of facility)
Renew of Measure P/S (reduce need for General Fund to cover cost of projects) Renew Measure G
Update Stormwater Fees
Implement Parking Fee Strategy (strategy could be combined with merging Parking Fund and General Fund)
Adjust Rent on the Aquarium Lease (revenues would support Tidelands Fund) One-time or other revenue:
Defund Non-Priority NCIP Projects (one-time revenue)
Sell Underutilized Property (revenue from one-time sale of property) Charter Amendment for Visitor Accommodation Facilities (Economic Development effort) Council Special Meeting, 8/27/2025, Item No. 1., Item Page 3, Packet Page 5 Prioritizing Strategies: Index Card Exercise
Staff have developed an exercise that City Councilmembers and the public can use at home to carefully review each deficit reduction strategy and prioritize what strategies make the most sense for them. The attached document, which outlines each of the potential strategies in detail, can be cut into 5”x7” sheets of paper or placed on index cards. Councilmembers will be provided these cards at the August 27, 2025 meeting.
Staff recommends reviewing each budget deficit strategy card and sorting them into three piles.
First, create a "yes" pile of strategies you support - these should total at least $10 million (values are in the upper right corner). Consider including cards with "$0" or "N/A" values, like Measure P/S renewal, as they significantly help the budget by reducing future General Fund needs. Next, create a "maybe" pile for strategies you're open to considering, and a "no" pile for strategies you oppose. You'll end with three sorted piles representing your preferences.
At the City Council meeting on August 27, 2025, staff will present each of the deficit reduction strategies in detail and ask any questions the City Council has about the presented strategies.
Staff will also describe how Councilmembers and the public can complete this exercise at home.
At its meeting on September 2, 2025, members of the City Council will individually share the results of their exercise, and which deficit reduction strategies are in their “yes” and “maybe” piles. Based on consensus reached at this meeting, staff will conduct further public and community engagement on budget reduction strategies the City Council may be interested in, which include fees, tax measures, and other efforts.
Attachment: Budget Deficit Reduction Strategies (formatted to be cut into index cards) Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
monterey.gov/submittedcomments
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 4, Packet Page 6 As the City of Monterey looks to the FY 2026-27 budget and beyond, the City is faced with a structural deficit of more than $10 million. A “structural deficit” is a budget shortfall that is expected to continue or grow on an annual basis. Stated differently: we are spending more than we earn. This year's $10m fix only delays the problem - we’ll face another shortfall of $10m or more in each subsequent year.
Staff has taken a holistic look at solutions that directly address the $10m structural deficit as well as strategies that reduce future burden on the General Fund, such as revenue streams for Tidelands and Parking funds and renewal of Measure P/S.
These index cards, developed in August 2025 and sorted from high to low, outline potential strategies for Council and community consideration. Green cards address the ongoing deficit (must total at least $10m+), yellow cards support the budget otherwise.
Please sort the cards into three piles: yes (you like the solution), maybe (you aren’t sure), or no (you don’t like it). City Council will share their individual results and discuss these options at its meeting on September 2, 2025. Feel free to add your own budget reduction ideas! Structural Deficit Reduction Strategies
Overview
Card #01
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 5, Packet Page 7 Title describes the reduction strategy out of $10M needed.
Value identifies the dollar value by which the strategy addresses the $10M structural deficit. Some strategies may not show a value but still support the City’s budget goals.
Frequency describes how often the revenue would be
generated (ongoing, one-time, annual, etc.)
Timeframe describes how soon the strategy could provide revenue (immediate, short-term, mid-term, long-term)
Feasibility. Higher feasibility means that it may be easier to implement due to complexity, support, and other factors.
Approval required describes how the strategy is achieved.
Structural Deficit Reduction Strategies
How to Read Each Card
VALUE
$831,000
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Immediate
(Now)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
Card #02
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 6, Packet Page 8
A NOTE ON BALLOT INITIATIVES
Some structural deficit reduction strategies would require voter approval. Voters typically resist multiple tax measures on one ballot, so you may want to limit tax initiatives in your green pile. The City already must hold an election in November 2026, at a cost estimated at $98,508 to $131,344 based on current voter counts.
The City can add an election in June for an additional $98,508 to $131,344.
Upcoming elections include:
• June 2, 2026 Consolidated Statewide Primary Election (at additional cost) Council must submit ballot measure to County Elections by Mar. 6, 2026 • November 3, 2026 Consolidated General Election (already scheduled) Council must submit ballot measure to County Elections by Aug. 7, 2026 Ballot measures require Council supermajority approval. City staff would work with experienced research firms to optimize ballot placement and timing.
Structural Deficit Reduction Strategies
Information on Ballot Initiatives
Card #03
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 7, Packet Page 9 Strategies that Directly Address
the $10m Deficit (Green Cards)
• 05 - Reappropriate NCIP [up to $6m]
• 06 - Position Attrition [up to $3.1m]
• 07 - First Responder Fee [$700k]
• 08 - Pause Programs [up to $360k]
• 09 - Vets Park Campground [$125k]
• 10 - Access Providers [$118k]
• 11 - Property Maintenance [$150k]
• 12 - Mills Act Contract [$50k]
• 13 - Additional Sales Tax [$4.5m]
• 14 - Admissions Tax [$3.9m]
• 15 - Vacancy Tax [$2m]
• 16 - Parking Tax [$450k]
• 17 - Streaming Tax [$440k]
• 18 - Property Transfer Tax [$228k]
• 19 - Partnerships/Contracts [TBD]
• 20 - PILOTs [TBD]
Structural Deficit Reduction Strategies
List of Deficit Reduction Strategies
(Ordered by Card Number)
Strategies that Indirectly Address
the $10m Deficit (Yellow Cards)
• 21 - Public Safety Bond [up to $100m]
• 22 - Measure P/S [$12m]
• 23 - Sell Properties [up to $10m]
• 24 - Measure G [$6m]
• 25 - Stormwater Fees [$1.2m]
• 26 - Parking Strategy [$627k]
• 27 - Aquarium Lease [$500k-$1m]
Strategies that Indirectly Address
the $10m Deficit Through OneTime Efforts (Yellow Cards) • 28 - Defund NCIP Projects [TBD]
• 29 - VAF Amendment [TBD]
Card #04
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 8, Packet Page 10
DIRECT STRATEGY
In order to address the existing deficit, our City Charter allows the City Council, through supermajority vote, to allocate some or all NCIP funding (16% of Transient Occupancy Tax, or hotel tax) into the General Fund.
City Charter: "If the Council determines that there are insufficient funds available to provide for the ordinary and necessary services in any budget year, they may, by an
affirmative vote of four (4) members of the City Council, reduce the amount to be appropriated for Neighborhood and
Community Improvements.“
Other options include reallocating some or all NCIP funds, allocating NCIP funds to other projects, or implementing a City Charter Amendment change that changes the NCIP formula.
Direct Structural Deficit Reduction Strategy
Reappropriate NCIP Funds to General Fund
VALUE UP TO
$6,000,000
OUT OF $10M NEEDED
FREQUENCY
Annual
TIMEFRAME
Immediate
(Now)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
Card #05
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 9, Packet Page 11
DIRECT STRATEGY
As of August 1, 2025, the City has 488 approved Full Time and Regular Part-Time positions. Positions, whether they are filled are vacant, are included in the budget each year. Of these, 488 positions, approximately 418 are filled, leaving
approximately 70 vacant. Reducing the number of budgeted positions by 15-20, at an average cost per employee of
$154,000 (including salary and benefits), would generate significant, sustainable savings. All departments could be affected in accordance with existing bargaining agreements.
This action would reduce the City’s expenditures while
preserving City services and protecting the livelihoods of existing employees. However, this action could impact service delivery and increase staff workload.
Direct Structural Deficit Reduction Strategy
Use Existing Attrition for Salary Savings
VALUE UP TO
$3,100,000
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Immediate
(Now)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
Card #06
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 10, Packet Page 12
DIRECT STRATEGY
First Responder Fee Programs help cities recover some costs associated with emergency medical responses by billing
health and auto insurance companies for specific types of service calls. Without billing health insurance, residents pay for emergency services through both their taxes and their
insurance premiums. Revenue from this proposal could be transferred from the General Fund to be used for public safety equipment and vehicle replacement.
Costs may range from $400 per medical aid call to $700 for motor vehicle collisions with extrication. Waivers would be available for patients with financial hardship. Administrative costs are estimated to be $148,500 annually. Net revenue is estimated to be $600,000 to $800,000, annually.
Direct Structural Deficit Reduction Strategy
First Responder Fee Program
VALUE
$700,000
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Mid-Term
(7-12 mos.)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
Card #07
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 11, Packet Page 13
DIRECT STRATEGY
The City offers a variety of programs and services to the community that are directly provided by the City at a premium cost. Some of these services or programs may be more
efficiently provided by outside organizations or nonprofits, or in partnership with nonprofits.
Examples of programs to pause or empower partners to
provide include:
• Rental Assistance Program ($274,285)
• Special Event Support Program ($50,000)
• First Night Monterey ($35,000)
• Partnerships with nonprofits for senior or youth programs • TBD
Direct Structural Deficit Reduction Strategy
Pause or Eliminate Programs
VALUE UP TO
$360,000
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Short-Term
(1-6 mos.)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
Card #08
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 12, Packet Page 14
DIRECT STRATEGY
Veterans Park Campground, located in the forested hills of Monterey, features campsites on a first-come first-served basis. In FY 2024-25, the campground operations
generated $115,136 in net revenue ($420,487 in revenue and $305,351 in expenses). Campsite fees have been updated to maximize revenue generation. The base fee for campsites with one vehicle is $47 per day with additional fees for RV use.
There are additional opportunities for the Veterans Park Campground to generate more revenue, including accepting online reservations, expanding the number of campsites, utilizing campground hosts to reduce staff costs, and
maximizing revenue from the two group areas and picnic
areas.
Direct Structural Deficit Reduction Strategy
Optimize Veterans Park Campground
VALUE
$125,000
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Mid-Term
(7-12 mos.)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
Card #09
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 13, Packet Page 15
DIRECT STRATEGY
Since 1998, the City of Monterey has contracted with Access Media Productions (AMP) to provide for Public, Educational, and Government (PEG) programming by recording and
producing the City’s council, board, commission, and town hall meetings on cable Channel 25 and streaming on YouTube.
The annual cost for the service was $256,233 in FY24-25, including $118,514 from Franchise Fees (General Fund) and $137,719 from PEG Fees (dedicated use). Beginning in April 2026, the City can contract this service to another third-party for a cost of $92,000 per year from PEG Fees, leaving
Franchise Fees revenues for other core City services.
Direct Structural Deficit Reduction Strategy
Change Government Access Providers
VALUE
$118,000
OUT OF $10M NEEDED
FREQUENCY
Annually
TIMEFRAME
Mid-Term
(7-12 mos.)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
Card #10
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 14, Packet Page 16
DIRECT STRATEGY
The City currently maintains 99 buildings. Staff has identified approximately 7 underutilized properties that have $2,286,000 in urgent repair needs, and an ongoing annual operational maintenance and utility costs of $150,000. The sale of property where staff have offices would require the City to identify or lease other office space.
Direct Structural Deficit Reduction Strategy
Reduce Property Maintenance Costs
(Through the Sale of City Properties)
VALUE
$150,000
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Long-Term
(12+ mos.)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
Card #11
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 15, Packet Page 17
DIRECT STRATEGY
The City currently has 66 Mills Act properties, which receive significant property tax relief in exchange for property owners preserving and restoring these historic properties. The annual staffing costs are $22,258 and property tax loss is $160,375.
If the remaining properties that are eligible for Mills Act agreements (61 in total) entered into agreements, the City would see $259,200 in additional revenue loss annually.
Ending new Mills Act approvals would prevent further erosion of the City’s property tax base and could provide modest gains in revenue in the near term with growing gains in the longer term as existing contracts continue to roll off until the program is phased out entirely.
Direct Structural Deficit Reduction Strategy
Discontinue Mills Act Approvals
VALUE
$50,000
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Immediate
(Now)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
Card #12
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 16, Packet Page 18
DIRECT STRATEGY
The City of Monterey can place another sales tax measure on the ballot, with voter approval, up to 0.375%. This maximum amount is due to the maximum combined rate that local taxes should not exceed, which is typically 2%.
A sales tax measure exceeding 0.375% would require
approval by the State legislature, and there is insufficient time to do so for elections in 2026. Our sales tax is paid 62% by non-residents.
A general sales tax used for general purposes requires a simple majority vote (50%+1). This could be placed on the June 2026 (fiscal emergency declaration required) or
November 2026 ballot.
Direct Structural Deficit Reduction Strategy
Sales Tax Increase of 0.375%
VALUE
$4,500,000
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Long-Term
(12+ mos.)
FEASIBILITY
Medium
APPROVAL
REQUIRED
Council +
Voters
Card #13
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 17, Packet Page 19
DIRECT STRATEGY
An admissions tax of 5% would enable the City to generate revenue based on ticketed events and attractions that take place within the city limits. Venues subject to an admissions tax include the Monterey Bay Aquarium, Monterey County
Fairgrounds, Golden State Theatre, Cinemark Theatres, and other ticketed events.
If Council chose to include the Monterey Bay Aquarium in this effort, based on their 2024 annual report, the revenue
generated for the City would be $3.3m.
All other sources would account for an estimated $600k in revenue for the City, bringing the combined total to an estimated $3,900,000 annually.
Direct Structural Deficit Reduction Strategy
Admissions Tax
VALUE
$3,900,000
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Long-Term
(12+ mos.)
FEASIBILITY
Medium
APPROVAL
REQUIRED
Council +
Voters
Card #14
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 18, Packet Page 20
DIRECT STRATEGY
This is a potential dual approach to impose a tax on vacant commercial properties and empty homes. Vacancy taxes are designed to address the growing problem of vacant residential properties. By taxing homes left unoccupied for extended periods, these policies aim to:
• Increase housing availability: Encouraging owners to
rent or sell empty homes.
• Combat speculation: Discouraging investors from
leaving properties vacant while waiting for values to rise. • Likely: These funds may be allocated to housing
programs and/or the City’s Rental Assistance Program.
A significant challenge is the identification of empty units (for example, defining empty as greater than 182 days).
Note: San Francisco’s Vacancy Tax is on appeal and pending a decision on the legality of the tax.
Direct Structural Deficit Reduction Strategy
Vacancy Tax
VALUE
$2,000,000
OUT OF $10M NEEDED
TIMEFRAME
Long-Term
(12+ mos.)
FEASIBILITY
Medium
APPROVAL
REQUIRED
Council +
Voters
FREQUENCY
Ongoing
Card #15
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 19, Packet Page 21
DIRECT STRATEGY
Some California municipalities have a voter-approved parking tax, which levies a tax on daily parking fees in privately-owned parking lots within the city limits. The City of Santa Cruz, for example, has a 10% parking tax rate that generates $694,105 annually. The City could consider a lower 5% parking tax rate and still generate significant revenue due to the more than 1,400 private parking spaces on privately managed parking lots in the City.
A parking tax in Monterey would likely be paid by a sheer majority (over 90%) of non-residents.
Direct Structural Deficit Reduction Strategy
Parking Tax
VALUE
$450,000
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Long-Term
(12+ mos.)
FEASIBILITY
Medium
APPROVAL
REQUIRED
Council +
Voters
Card #16
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 20, Packet Page 22
DIRECT STRATEGY
Since FY 2017-18, the City’s revenue from cable franchise fees has declined an average of 4% per year resulting in at least $300,000 in lost revenue over the past eight years. To offset these losses, more than 40 California cities (mostly charter cities) have started taxing streaming services, often passed as an extension of Utility Users Taxes (UUTs), and commonly at a rate of 5% to 7%.
According to a 2024 report, 90% of U.S. households with streaming capable-devices actively watch streaming content with an average of 3.9 streaming apps per household. The City has an estimated 10,800 households likely using streaming services.
Note: This tax is currently on appeal in the court system.
Direct Structural Deficit Reduction Strategy
Streaming Tax
VALUE
$440,000
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Long-Term
(12+ mos.)
FEASIBILITY
Medium
APPROVAL
REQUIRED
Council +
Voters
Card #17
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 21, Packet Page 23
DIRECT STRATEGY
Increase the real property transfer tax rate from $0.275 per $500 of property value to $0.55 per $500 of property value, bringing the total tax including the amount levied at the county level to $1.10 per $1,000 of property value. This would essentially double the City’s revenue from this tax. This tax is applied each time there is a transfer any real property interest.
Over the past five years, the City has received an average of $228,132 annually from this tax. Increasing the tax rate could generate an additional $228,000 in annual revenue by
increasing this from $0.275 to $0.55 per $500 of property value.
Direct Structural Deficit Reduction Strategy
Update Real Property Transfer Tax
VALUE
$228,000
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Long-Term
(12+ mos.)
FEASIBILITY
Medium
APPROVAL
REQUIRED
Council +
Voters
Card #18
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 22, Packet Page 24
DIRECT STRATEGY
Consistent with the fiscal strategy of "changing the way we do business," there may be other opportunities for some City services to be provided through partnerships with nonprofit organizations or contract for services to supplement and support staff efforts.
Models of these types of partnerships and contracts for services have proven to be successful fiscal strategies for cities throughout California and the United States.
For example, the City saved $239,046 in 2024/25 by using landscape contractors instead of City employees for small landscaping projects.
Direct Structural Deficit Reduction Strategy
Partnerships & Contracts for Services
VALUE
TBD
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Immediate
(Now)
FEASIBILITY
Low
APPROVAL
REQUIRED
Council +
Labor
Card #19
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 23, Packet Page 25
DIRECT STRATEGY
Nonprofit organizations, which often include large landowners in the community, including Montage Health, Monterey Bay Aquarium, Middlebury Institute of International Studies at Monterey, and Cal State Monterey Bay, are tax-exempt
organizations and as such do not pay property tax.
However, many of these organizations receive a considerable amount of police, fire, public works, and other services by the City at no cost. Payments in Lieu of Taxes (PILOTs) are payments made to compensate local governments for property tax revenue that would otherwise be lost due to tax exemption.
These agreements can be voluntary funding as a goodwill measure (donations to the City) or formal contractual
arrangements that specify service delivery levels to
institutions.
Direct Structural Deficit Reduction Strategy
Payments in Lieu of Taxes (PILOTs)
VALUE
TBD
OUT OF $10M NEEDED
FREQUENCY
Ongoing
TIMEFRAME
Mid-Term
(7-12 mos.)
FEASIBILITY
Low
APPROVAL
REQUIRED
Council +
Nonprofits
Card #20
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 24, Packet Page 26
INDIRECT STRATEGY
This strategy does not address the structural deficit but would address an unfunded need.
There are insufficient funds in the General Fund to cover the cost of a new Public Safety Building, which may cost between $90 million and $100 million.
Options include:
• Use a portion of NCIP funds for bond payments.
• Voter-approved General Obligation bond measure paid for through property tax. Future elections include the June 2, 2026 Statewide Primary and the November 3, 2026 General Election. Borrowing $50M for a 30-year General Obligation Bond could cost property owners $26 to $39 per $100,000 of assessed property value. With an average property value around $1.25m, property owners would be looking at an
average increase of $325 to $487.50.
Indirect Structural Deficit Reduction Strategy
Central Public Safety Bldg. Bond Measure
FREQUENCY
Ongoing
TIMEFRAME
Long-Term
(12+ mos.)
FEASIBILITY
Medium
APPROVAL
REQUIRED
Council +
Voters
INDIRECT VALUE
UP TO
$100m
Card #21
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 25, Packet Page 27
INDIRECT STRATEGY
This strategy does not reduce the structural deficit. However, revenues from Measure P/S for streets and sidewalks would reduce the need for General Fund to pay for these critical infrastructure needs in the future.
The renewal of Measure P/S, a 1% local district tax (sales and use tax) would continue generating between $11 million and $12 million per year “to address significant deferred
maintenance by fixing streets, sidewalks, and potholes; improve related access and safety for senior citizens, disabled residents, and others; and repair its 100-year-old storm drain system…” While this does not reduce the structural deficit, it would prevent it from increasing significantly. The renewal would require a simple majority vote, whereas any changes to the measure would require a 2/3rds voter approval.
Indirect Structural Deficit Reduction Strategy
Renew Measure P/S
FREQUENCY
Ongoing
TIMEFRAME
Long-Term
(12+ mos.)
FEASIBILITY
Medium
APPROVAL
REQUIRED
Council +
Voters
INDIRECT VALUE
$12m
Card #22
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 26, Packet Page 28
INDIRECT STRATEGY
This strategy would not reduce the structural deficit. However, funds from the sale of these buildings could support balancing the budget as they are sold (see “Reduce Property
Maintenance Costs” card).
Staff has identified approximately seven (7) underutilized properties with an estimated sale value totaling at least $10 million. The sale of property where staff have offices would require the City to identify or lease other office space.
This would provide one-time infusions of revenue as these properties are sold, so this cannot be relied on as an ongoing revenue source.
Indirect Structural Deficit Reduction Strategy
Sell Underutilized City Properties
INDIRECT VALUE
UP TO
$10m
FREQUENCY
As Able
TIMEFRAME
Long-Term
(12+ mos.)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
Card #23
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 27, Packet Page 29
INDIRECT STRATEGY
This strategy does not immediately address the structural deficit; however, Measure G provides a source of revenue for the General Fund which the City depends on from year-toyear.
In March 2020, 63% of Monterey voters approved Measure G, a .5% sales tax increase for a period of nine years. This tax measure has generated more than $5 million per year since 2022 and in FY 2025-26 is projected to generate more than $6.1 million. If left unattended, this tax initiative will end on June 30, 2029, causing the structural deficit to balloon.
Indirect Structural Deficit Reduction Strategy
Renew Measure G
FREQUENCY
Ongoing
TIMEFRAME
Long-Term
(12+ mos.)
FEASIBILITY
Medium
APPROVAL
REQUIRED
Council +
Voters
INDIRECT VALUE
$6m
Card #24
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 28, Packet Page 30
INDIRECT STRATEGY
While this strategy does not directly reduce the structural deficit, bringing Stormwater Fees to full cost recovery would ease the burden on the General Fund.
City collection of stormwater fees was discontinued temporarily beginning in FY 2024-25. The City will be able to begin collecting these fees again in FY 2026-27. While not collecting these fees, the General Fund has been used to subsidize the Stormwater Program.
Restarting the stormwater fee collection will give the City the ability to collect approximately $1.2m in dedicated stormwater revenue, easing that burden on the General Fund.
Indirect Structural Deficit Reduction Strategy
Update Stormwater Fees
FREQUENCY
Ongoing
TIMEFRAME
Long-Term
(12+ mos.)
FEASIBILITY
Low
APPROVAL
REQUIRED
Council +
Voters
INDIRECT VALUE
$1.2m
Card #25
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 29, Packet Page 31
INDIRECT STRATEGY
This strategy does not reduce the structural deficit. But, this would increase revenue in the Parking Fund which could be absorbed into the General Fund in the future.
The City could absorb parking revenues into the General Fund, while ensuring that sufficient dollars are maintained and reserved for parking facility maintenance and replacement.
In addition, the City could implement consultant
recommendations on updating parking fees, to collect greater revenue, including:
• Extending downtown parking garage hours
• Enforcing parking in private parking lots with permission, which encourages on-street parking
• Adding paid on-street parking in key strategic locations for revenue and to manage parking demand
Indirect Structural Deficit Reduction Strategy
Implement Parking Fee Strategy
FREQUENCY
Ongoing
TIMEFRAME
Short-Term
(1-6 mos.)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
INDIRECT VALUE
$627,000
Card #26
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 30, Packet Page 32
INDIRECT STRATEGY
The Aquarium lease benefits the Tidelands Fund which
supports areas such as the marina, wharves, harbor facilities and other areas, reducing dependence on the General Fund.
As the cost of relocating structures due to sea level rise continues to increase, this could be a prudent step toward shoring up the Tidelands Fund for the future and limiting impact to the General Fund with all costs associated with climate change and sea level rise.
The Aquarium currently pays $1 in rent per year to the City.
The rent adjustment would involve appraisals and discussions between City and the Aquarium. Tidelands revenue could
increase by as much as $500,000 or $1 million.
Indirect Structural Deficit Reduction Strategy
Adjust Rent on the Aquarium Lease
FREQUENCY
Ongoing
TIMEFRAME
Mid-Term
(7-12 mos.)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
INDIRECT VALUE
$500k - $1m
Card #27
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 31, Packet Page 33
INDIRECT STRATEGY
City Council has approved 105 Neighborhood and Community Improvement Program (NCIP) projects with a total budget around $22 million over the last three NCIP cycles. In the last three years, city staff have completed 37 of those projects. As of August 2025, there are 73 active NCIP projects with a budget of approximately $20 million. Another 73 projects were proposed this cycle. Consultation with NCIP required.
On average, City staff and consultants complete one project per month, while adding roughly 35 projects per year.
Defunding non-priority and NCIP projects could allow funding to be transferred back to the General Fund and serve as onetime cost savings to balance the budget. Staff can work with NCIP committee to propose a list of projects to defund.
Indirect Structural Deficit Reduction Strategy
Defund Non-Priority NCIP Projects
FREQUENCY
One Time
TIMEFRAME
Immediate
(Now)
FEASIBILITY
High
APPROVAL
REQUIRED
City Council
INDIRECT VALUE
TBD
Card #28
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 32, Packet Page 34
INDIRECT STRATEGY
Amending the City’s charter to provide for flexibility for visitorserving properties could yield long term financial benefits and support economic vitality. This was mentioned in the Draft Economic Development Strategy shared with Council in spring 2025.
As the City continues to see increased Visitor Accommodation Facility (VAF) competition from neighboring cities, loosening the current restrictions may attract more investment in the tourism and hospitality in areas outside of the existing VAF zones.
Changes to the VAF could also allow existing VAF zones to be utilized for housing or other needs, based on the priorities and market conditions.
Indirect Structural Deficit Reduction Strategy
Charter Amendment for VAF
FREQUENCY
Ongoing
TIMEFRAME
Long Term
(12+ mos.)
FEASIBILITY
Low
APPROVAL
REQUIRED
City Council
INDIRECT VALUE
TBD
Card #29
ATTACHMENT
Council Special Meeting, 8/27/2025, Item No. 1., Item Page 33, Packet Page 35