Measure K Transaction and Use Tax Oversight Committee
March 4, 2025
To: Pleasant Hill City Council
From: Measure K Oversight Committee
Re: Measure K Oversight Committee’s Annual Report to Council on the Measure K Transaction and Use Tax for Fiscal Year (FY) 2023-24
Pleasant Hill voters passed Measure K, a 20-year ½ cent transaction and use tax (TUT) in November 2016. The TUT commenced on April 1, 2017, with a stated purpose “to provide and maintain Pleasant Hill City services and facilities, including fixing potholes, and repairing neighborhood and city streets; replacing the aging library with a 21st century facility, including space for afterschool homework and tutoring; creating additional walking and biking paths; maintaining storm drains; and other city services”.
On February 6, 2017, the City Council established a "Transaction and Use Tax Oversight Committee” – known as the Measure K Oversight Committee. The Committee’s primary duties are: (1) to review revenue and expenditure reports produced by City staff; (2) to determine whether the revenues are expended efficiently and effectively; and (3) to make recommendations if needed, along with an annual report to the City Council.
In reviewing revenues and expenditures of Measure K funds for FY2023-24 the Committee met twice. On November 13, 2024, the Committee received a detailed report from staff on the unaudited FY 2023-24 revenues and expenditures along with a historical summary of all Measure K revenues and expenditures since its inception. The committee was able to question staff on revenues and expenditures for the library and other eligible activities (streets and roads, pedestrian and bicycle, storm drain improvements, and administration).
At that meeting a sub-committee (comprising committee members John Pollock and Debbie Baker) was established to follow up with Finance Department staff to review a sample of individual transactions for compliance with the Measure.
On December 12, 2024, the sub-committee met with Erick Cheung, Chief Financial Officer, along with Ann James, Public Works Director, to begin the process. The sub-committee was subsequently provided with the Measure K detail from the financial system. After selecting a sample of 16 transactions, the sub-committee returned to City Hall on January 28, 2025.
They reviewed the source documentation and consulted with Ann James (Public Works Director) along with Erick Cheung for clarification and additional information on certain transactions. The sub-committee found all the transactions reviewed to be appropriate, properly approved, and consistent with Measure K. objectives. The 16 transactions, totaling $3.4 million constitute over 50% of the overall fiscal year expenditures. City staff also provided details of the approximately $5.5 million in sales tax revenue received during 2 the fiscal year. The sub-committee referenced the California Department of Tax and Fee Administration’s website to independently match the receipts documented by city staff.
On March 4, 2025, the Measure K Committee met again to receive a report on the final FY 2023-24 Measure K audit presented by Jon Waller from the City’s auditors Macias Gini and O’Connell (MGO). City and MGO staff responded to questions from the Committee. The Committee reviewed and approved the sub-committee’s report summarizing its review findings. The Committee subsequently approved this annual report for presentation to City Council.
Revenue and Expenditure Summary for FY2023-24
Beginning Measure K Balance $4,457,512
FY 2023-24 Revenues: $5,707,449
Expenditures:
Library Construction: $ 354,016
Library Maintenance: $ 217,567
Ped/Bike $ 339,000
Streets & Roads $2,557,000
Storm Drain $ 518,000
Other/Admin $ 5,838
Debt Service $2,492,372
Total Expenditures $6,482,917
Ending Fund Balance: $3,682,044
The expenditures summarized above reflect the maturity of the Measure K program. Library construction is essentially complete, with emphasis shifting to maintenance.
Approximately 45% of sales tax revenues are used to pay down the loan with Bank of the West (now BMO); and the balance of the revenues are being used for projects: streets and roads, pedestrian/bicycle and storm drains.
The ending balance of $3,682,044 comprises the following set-asides: $2,500,000 debt service reserve to address any future revenue fluctuations; $150,000 for future one-time fixes at the library; $165,690 in remaining bond proceeds for the library, with a remaining unrestricted amount of $866,354.
Summary
In making its recommendation to City Council, the Committee relied on the following:
3 (1) The presentation by City staff to the Committee on November 13, 2024, on the overall revenues and expenditures along with questions, discussion and explanations as needed; and
(2) The sub-committee’s work in December and January consulting with City staff and reviewing the Measure K detail and independently analyzing selected transactions (i.e. invoices and transfers); and
(3) The March 4, 2025 presentation of the Measure K financial statements for FY 2023- 24 by MGO which concluded that the statements “presented fairly in all material respects the financial position of the Fund as of June 30, 2024, and changes in its financial position for the year then ended”.
(4) The sub-committee’s discussion of the procurement and contract renewal process with Ann James. Based on the discussion, the sub-committee determined that a process exists to ensure that vendor and contractors are properly vetted and selected based on pre-defined criteria.
Conclusion
The Measure K Oversight Committee concludes that Measure K revenues were expended “efficiently and effectively” during FY 2023-24.
The Committee wishes to thank the Finance and Engineering staff for their professionalism, assistance, and clarity in responding to the Committee’s inquiries.
Respectfully submitted.
Paul Maxwell
Chair, Measure K Oversight Committee