55C - RESO SALES AND USE TAX MEASURE

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Proposed Add on Sales and Use Tax Measure for Municipal Services for Public Consideration on the November 2018 Ballot July 3, 2018 Page 2 a. Designate up to five (5) Councilmembers to author an Argument and Rebuttal statement. 4. Direct the City Attorney to prepare Impartial Analysis 5. Direct Clerk of the Council to publish legal notices as required by law. Staff recommends the City Council approved Option 1 a, and 2 thru 5. DISCUSSION At the February 5, 2018, Special City Council Meeting, Staff identified a structural deficit in the City's proposed 2018-19 General Fund budget and five-year forecast. The City's financial forecast has identified a budget deficit moving into the foreseeable future. This is a result of expenditures outpacing revenue growth. To address these deficits, Staff identified a plan that includes expenditure reductions, transformational program delivery changes and potential revenue enhancements in order to continue to provide programs and services to the community. Given this precarious financial position, and the cuts that were made in staffing following the Great Recession, any changes would almost certainly require significant level of service reductions and or eliminations. This represents a less than desired outcome. In the City's ongoing effort to evaluate costs and revenue, the following actions have taken place: • Contracted out the City's fire department • Contracted out maintenance functions where feasible • Modernized the Utility User Tax • Evaluated and adjusted the City's miscellaneous fee schedule • Reduced all non-essential personnel • Invested in technology enhancements to reduce ongoing costs On March 20, 2018, the Mayor and City Council authorized staff to enter into agreements to evaluate revenue generating opportunities to meet the City's needs in addressing the projected deficit for the current fiscal year and for future fiscal years. As such, the City entered into a consulting agreement with MuniServices on May 1, 2018, to evaluate two revenue measures: 1) sales and use tax and 2) adult -use and commercial cannabis tax. The scope of work also included strategy consulting services from GrassrootsLabs and polling services from FM3. Consideration of the adult -use and commercial cannabis tax is provided as a separate ballot measure and directly tied to the ordinances approved by the City Council in November 2017 and early 2018. At the June 19, 2018 Council Meeting, the City Council voted to direct the City Manager and Staff to prepare add on sales tax options, the required resolutions, documents and guidelines necessary to proceed with a ballot measure. At that meeting, the City Council requested that staff brief members of the City Council to provide information on different sales tax increments, sunset alternatives, other revenue options, methods to ensure fiscal transparency, economic development opportunities, and information on how new revenue would be allocated to programs and services for the community. 55C-2