DATE: FEBRUARY 6, 2024
DEPARTMENTS: ADMINISTRATION and FINANCE
FROM: JIM PIA, INTERIM CITY MANAGER
SELINA ANDREWS, ASSISTANT FINANCE DIRECTOR
TITLE: DISCUSSION AND ACTION OF POTENTIAL EXTENSION OF MEASURE G SUNSET DATE RECOMMENDATION:
It is recommended that the Finance Committee receive the report on extending Measure G and provide input into the process to extend the Measure G sales tax with a possible ballot measure, subject to full City Council approval and placement on the ballot and taken to the voters in the City’s next General Municipal Election to be held on November 5, 2024.
EXECUTIVE SUMMARY:
Following the City Council’s placement of this one cent transactions and use tax measure on the 2014 November ballot, Salinas residents approved the measure on November 4, 2014, establishing Measure G for a period of fifteen (15) years. Since its inception, Measure G has provided for ongoing staffing and capital project needs. In FY 2023-24, $24 million was appropriated to provide the operating budget expenditure for services and projects which align with City Council’s goals and objectives. Additional G funds are utilized in the transfer out budget process and used for costs including, debt service, internal service needs and Capital Improvement Projects (CIP’s). In the ninth year of Measure G, the City continues to allocate its resources to citywide operational needs while sustaining staffing levels and services. City staff is recommending the Finance Committee members review and provide feedback on the possibility of an extension of the sunset date of Measure G. Although there is still the possibility for future election year ballot placement, staff strongly believes that 2024 provides an important opportunity for the City to act in extending this measure.
BACKGROUND:
On December 2, 2014, City Council adopted a resolution declaring the results of the November 4, 2014, election, which included the election for Salinas Mayor and City Councilmembers for District 2, District 3, and District 5; and the adoption of the Ordinance establishing Measure G. Following ordinance adoption, the tax collection began in the Spring of 2015, and is scheduled to sunset after a period of fifteen (15) years, unless extended by a majority of the voters of the City.
Over the years, the City has taken steps to reduce costs and protect vital services, including:
Adopting long-term pension reform;
Reducing the size of some government expenditures, consolidating some department efforts, and working through the Salinas Plan to identify cost savings as appropriate; Implementing employee contributions to the City’s health program; Leveraging existing public, private, and non-profit partnerships to supplement City services; and Leveraging grants to support public safety, economic development, and capital maintenance.
The City’s structural budget deficit as identified in the Salinas Plan, assumes the sunset of Measure G in the second half of FY 2029/2030. Based on the current budget and assumptions for future growth, the City should expect positive net revenue through 2029. However, in FY 2030, there would be a significant drop in net revenue based on the current expiration schedule of Measure G. If Measure G is not extended, the City will have significant issues funding operations at current levels.
The below chart illustrates the approximate impacts of Measure G on the general government budget forecast. The chart includes a snapshot estimate of revenues and expenditures combined, with the noted budget problem shown should Measure G sunset in FY30.
CEQA CONSIDERATION:
Not a Project. The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines 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 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 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.
STRATEGIC PLAN INITIATIVE:
This memorandum aligns with City Council’s Strategic Goal of striving for Economic Development - Sustain, encourage, and develop a diverse and thriving economy that benefits all Salinas residents and businesses and that contributes to both our economic health and social well-being.
DEPARTMENTAL COORDINATION:
This memorandum has been coordinated with the Finance Department and City Manager’s Office.
FISCAL AND SUSTAINABILITY IMPACT:
There is no cost associated with this action.
ATTACHMENTS:
None.
Page | 3
Page | 1
CITY OF SALINASFINANCE COMMITTEE REPORTCITY OF SALINASFINANCE COMMITTEE REPORT
CITY OF SALINAS
FINANCE COMMITTEE REPORT
CITY OF SALINAS
FINANCE COMMITTEE REPORT