55C - RESO SALES TAX MEASURE - Laserfiche WebLink

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Proposed Add on Sales and Use Tax Measure for Municipal Services for Public Consideration on the November 2018 Ballot July 17, 2018 Page 3 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. Staff met with members of the City Council to provide additional information on the proposed Neighborhood Safety and Essential City Services Protection Measure. This included information regarding the need for additional new on-going revenues, projected revenues based on a variety of add on sales and use tax increments, community needs and priorities, and the results of the poll conducted by. FM3. The briefings provided an opportunity to present Staffs recommendation for the Santa Ana Neighborhood Safety and Essential City Services Protection Measure to be placed on the November 2018 ballot, which would generate the requisite funds to maintain and enhance programs and services to the community. What is Sales and Use Tax? Sales tax is imposed on retail transactions for tangible personal property. The Use tax is imposed on consumers of tangible personal property that is used, consumed, or stored. Sales tax is not applicable to several general categories including: 1) Necessities of life (food products, unless heated, health related, housing), 2) General public benefit (alternate energy, museums, public art exhibits), 3) Industry benefit (transportation related such as motor vehicle fuel, entertainment industry); 4) Exclusions by definition (admission charges, sales price/gross receipts); and 5) Other exemptions, exclusions or credits (full list of exemptions is available at hftps://www.cdtfa.ca.gov/formspubs/pub6l.pd . A general-purpose tax measure requires approval from the majority of the voters (50% plus 1) to implement such a tax. The sales and use tax is a common method used by various cities to generate additional revenue for city programs and services. 55C-3