Item 26 - Early Direction for the Fiscal Year 2024-25 Budget

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Early Direction for the Fiscal Year 2024-25 Budget March 19, 2024 Page 12 4 1 3 1 Fentanyl. The process of detoxification is very difficult and is best done with hospital rehabilitation. Shall staff explore the feasibility of using this funding for medical treatment for homeless individuals with an addiction to Fentanyl who wish to detoxify? Gas Tax The City receives allocations from the state Highway Users Tax Account (HUTA, commonly known as Gas Tax) and the Road Maintenance and Rehabilitation Account (RMRA). Both HUTA and RMRA are cents-per-gallon taxes. Therefore, if consumption decreases, so does the City’s revenue allocations. The City expects to receive $15.8 million from these allocations in the current fiscal year. Next fiscal year, the estimate from the League of California Cities is $16.5 million or 4.4% more overall. The increase is short-lived. The California Legislative Analyst Office (LAO) released a report in December 2023 regarding the impact of California’s climate policies (e.g. mandating more electric vehicles) on transportation funding such as HUTA and RMRA. The report states: “Most significantly, policies aimed at increasing the adoption of ZEVs will decrease the consumption of gasoline and diesel fuels, and consequently reduce the associated tax revenues that currently support the state’s transportation system.” The report goes on to estimate state transportation revenues will decrease by 31% over the next decade, and recommends the California Legislature develop a long-term plan. The City’s HUTA and RMRA allocations currently fund the following expenditures. Debt Service for $68 million of local street improvements beginning in 2007 (debt is scheduled to be paid-off in 2040) $3.2 million Traffic Signal Maintenance $2.6 million Median Landscaping $1.2 million Roadway Maintenance $2.0 million Street Projects (SB-1 spending plan approved by City Council each year) $7.7 million Recurring Programs Paid by Gas Tax Fund $16.7 million In the last five years, since the passage of Measure X, the City’s General Fund began paying for the following recurring roadway maintenance expenditures. Streetlights $1.0 million Alley Improvements $1.5 million Sidewalk and/or Street Repair $1.0 million Traffic Calming $1.0 million Median Landscaping $0.5 million Street Paving $2.0 million Recurring Programs Paid by Measure X in the General Fund $7.0 million