CITY OF POMONA
COUNCIL REPORT
November 6, 2023
To: Honorable Mayor and Members of the City Council
From: James Makshanoff, City Manager
Submitted By: Andrew Mowbray, Finance Director/City Treasurer Rosalia Butler, City Clerk
Sonia Carvalho, City Attorney
SUBJECT: Adoption of Resolutions Adding an Initiative Measure and Competing Measure to the March 5, 2024 Primary Election Ballot Pertaining to the City’s Transactions & Use Tax (TUT) Rate RECOMMENDATION:
It is recommended that the City Council adopt the following Resolutions:
RESOLUTION NO. 2023-211 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, SUBMITTING TO THE QUALIFIED VOTERS OF THE CITY OF POMONA AN INITIATIVE MEASURE REDUCING THE RATE OF THE CITY’S TRANSACTIONS AND USE TAX FROM THREE-QUARTERS PERCENT (0.75%) TO ONE-HALF PERCENT (0.50%) AND EXTENDING THE TERM OF THE TAX BY REMOVING ITS MARCH 31, 2029 SUNSET, AT THE MUNICIPAL PRIMARY ELECTION TO BE HELD ON TUESDAY, MARCH 5, 2024.
RESOLUTION NO. 2023-212 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, REQUESTING THE BOARD OF SUPERVISORS OF THE COUNTY OF LOS ANGELES TO CONSOLIDATE A MUNICIPAL PRIMARY ELECTION TO BE HELD ON MARCH 5, 2024 WITH THE STATEWIDE PRIMARY ELECTION TO BE HELD ON THAT DATE PURSUANT TO ELECTIONS CODE SECTION 10403 RESOLUTION NO. 2023-213 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, PROVIDING FOR THE FILING OF DIRECT AND REBUTTAL ARGUMENTS AND SETTING RULES FOR THE FILING OF WRITTEN ARGUMENTS REGARDING A CITY MEASURE TO BE SUBMITTED AT THE MARCH 5, 2024 MUNICIPAL PRIMARY ELECTION RESOLUTION NO. 2023-214 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, SUBMITTING TO THE QUALIFIED VOTERS OF THE CITY OF POMONA A GENERAL TAX MEASURE MAINTAINING THE CURRENT RATE OF THE CITY’S TRANSACTIONS AND USE TAX AT THREE-QUARTERS PERCENT (0.75%) AND EXTENDING THE TERM OF THE TAX BY REMOVING ITS MARCH 31, 2029 SUNSET, AT THE MUNICIPAL PRIMARY ELECTION TO BE HELD ON TUESDAY, MARCH 5, 2024.
RESOLUTION NO. 2023-215 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, REQUESTING THE BOARD OF SUPERVISORS OF THE COUNTY OF LOS ANGELES TO CONSOLIDATE A MUNICIPAL PRIMARY ELECTION TO BE HELD ON MARCH 5, 2024 WITH THE STATEWIDE PRIMARY ELECTION TO BE HELD ON THAT DATE PURSUANT TO ELECTIONS CODE SECTION 10403 RESOLUTION NO. 2023-216 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, PROVIDING FOR THE FILING OF DIRECT AND REBUTTAL ARGUMENTS AND SETTING RULES FOR THE FILING OF WRITTEN ARGUMENTS REGARDING A CITY MEASURE TO BE SUBMITTED AT THE MARCH 5, 2024 MUNICIPAL PRIMARY ELECTION EXECUTIVE SUMMARY:
On October 2, 2023, the City Council directed staff to prepare a competing measure to the citizen initiative measure, which would reduce the rate of the City’s Transactions and Use Tax (TUT) from three-quarters percent (0.75%) to one-half percent (0.50%) and would extend the term of the Tax by repealing its March 31, 2029 expiration date/sunset.
Approval of the Resolutions, including Resolution No. 2023-214, the City’s competing measure to the citizen initiative, requiring a unanimous vote from the City Council of those present, will allow submission of the ballot measures to the qualified voters of the City at a Municipal Primary Election to be held on Tuesday, March 5, 2024 FISCAL IMPACT:
The estimated cost of holding an election for these measures on March 5, 2024, or a special election for this same measure is currently unknown. However, the cost of the November 8, 2022, General Municipal Election was approximately $388k. The Los Angeles County Registrar-Recorder will invoice the City of Pomona for Election Services after the election.
The petition to reduce the TUT from 0.75% to 0.50%, will result in a reduction of TUT revenue by one-third. Based on the City’s projected revenue forecast prepared by HdL, this would reduce the annual TUT revenue by an average of $5.8M per fiscal year or $29M over the five-year period. Repealing the March 31, 2029 sunset on the TUT would eliminate the impact of the loss of TUT revenue set to occur in 2029.
PREVIOUS RELATED ACTION:
On September 11, 2023, the City Council directed staff to prepare an impartial and informational report analyzing the impact of the initiative petition to reduce the TUT rate from 0.75% to 0.50% and to extend the term of the TUT by repealing its March 31, 2029 sunset.
On October 2, 2023, the City Council directed staff to prepare a City initiated competing measure to maintain the current TUT rate at 0.75% and extend the term of the TUT by repealing its March 31, 2029 sunset.
DISCUSSION:
Over the last several months, a Pomona resident circulated a local initiative measure in the City seeking to reduce the rate of the City’s TUT from three-quarters percent (0.75%) to one-half percent (0.50%) and to extend the term of the TUT by repealing its March 31, 2029 expiration date/sunset. On July 5, 2023, the proponent timely submitted a signed petition to the City Clerk’s Office to qualify for the initiative measure for the ballot. The City Clerk’s Office has verified the petition is in proper format and contains the required number of signatures to qualify the measure for the ballot. A certificate of Sufficiency of Initiative Petition was received, filed and accepted by the City Council on the September 11, 2023 Council Meeting.
On September 11, 2023, the City Council also directed staff to prepare an impartial and informational report analyzing the impact of the initiative measure on the City’s finances, ability to provide public services, land use and development regulations, and the like.
Staff worked with the City’s sales tax consultant, HdL, to gather initial projections on the proposed initiative and the City’s Financial advisor, Urban Futures, Inc. (UFI), who prepared a detailed financial impact analysis that was presented to the City Council on October 2, 2023. According to the financial data, the citizen initiative replaces the problem of complete TUT revenue loss at the TUT expiration date in FY 2029-30, with growing annual operating deficits due to a permanent reduction in annual TUT revenue. The net result is that compared to the status quo, the citizen initiative simply delays the depletion of the General Fund by four years, from FY 2032-33 to FY 2036-37.
As directed by the City Council, staff prepared a competing measure to the citizen initiative which maintains the City’s Transactions and Use Tax at three-quarters percent (0.75%) and would also extend the term of the Tax by repealing its March 31, 2029 expiration date/sunset. Approval of the Resolutions, including Resolution No. 2023-214, the City’s competing measure to the citizen initiative, requiring a unanimous vote from the City Council of those present, will allow submission of ballot measures to be submitted to the qualified voters of the City at a Municipal Primary Election to be held on Tuesday, March 5, 2024.
NEXT STEPS:
If approved by the City Council, the proposed Citizen Initiative Measure and the City’s Competing Measure would both be placed on the March 5, 2024 ballot for voter consideration. The law provides that if two competing measures regarding the same subject are presented to the voters and are passed, the measure receiving the larger number of votes prevails. The Council desires to present the City ordinance included herein as a competing measure.
Prepared by:
Andrew Mowbray
Finance Director / City Treasurer
ATTACHMENT(S):
Attachment 1 – Resolution No. 2023-211
Attachment 2 – Resolution No. 2023-212
Attachment 3 – Resolution No. 2023-213
Attachment 4 – Resolution No. 2023-214
Attachment 5 – Resolution No. 2023-215
Attachment 6 – Resolution No. 2023-216
Resolutions on Initiative to Reduce TUT Rate and Competing Measure to Maintain TUT Rate