HomeMy WebLinkAboutItem 12a - Placing a General Tax Measure on the June 4, 2019, Special Election Ballot
DATE: March 5, 2019
TO: Honorable Mayor and City Council
FROM: Dominic Lazzaretto, City Manager
By: Michael Bruckner, Assistant to the City Manager
SUBJECT: RESOLUTIONS RELATING TO AN ALL-MAIL BALLOT SPECIAL
MUNICIPAL ELECTION TO BE HELD ON TUESDAY, JUNE 4, 2019;
AND APPROVE A SUPPLEMENTAL BUDGET APPROPRIATION IN THE
AMOUNT OF $225,000
RESOLUTION NO. 7246 CALLING FOR THE PLACEMENT OF A
GENERAL TAX MEASURE ON THE BALLOT AT THE JUNE 4, 2019,
SPECIAL MUNICIPAL ELECTION FOR THE SUBMISSION TO THE
QUALIFIED VOTERS OF A PROPOSED ORDINANCE ADDING PART
5.5 TO CHAPTER 6 (TAXES) OF ARTICLE II (ADMINISTRATION) OF
THE ARCADIA MUNICIPAL CODE TO ESTABLISH A THREE-
QUARTERS PERCENT (THREE-QUARTER CENT) GENERAL
TRANSACTIONS AND USE TAX (SALES TAX)
Recommendation: Adopt
RESOLUTION NO. 7247 REQUESTING THE BOARD OF
SUPERVISORS OF THE COUNTY OF LOS ANGELES TO RENDER
FULL SERVICES TO THE CITY RELATING TO THE CONDUCT OF A
SPECIAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, JUNE 4,
2019
Recommendation: Adopt
RESOLUTION NO. 7248 PROVIDING FOR THE FILING OF PRIMARY
AND REBUTTAL ARGUMENTS AND SETTING RULES FOR THE
FILLING OF WRITTEN ARGUMENTS REGARDING A CITY MEASURE
TO BE SUBMITTED AT THE JUNE 4, 2019, SPECIAL MUNICIPAL
ELECTION
Recommendation: Adopt
Resolutions Placing a General Tax Measure
on the June 4, 2019, Special Election Ballot
March 5, 2019
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SUMMARY
On January 15, 2019, the City Council unanimously adopted the recommendations of
the volunteer Citizens Financial Advisory Committee. On February 5, 2019, the City
Council received the Fiscal Year 2018-19 mid-year budget report. In summary, it is
projected that the Fiscal Year 2018-19 Adopted General Fund Budget will end the year
with a higher projected operating deficit, from $3.1 to $4.5 million. Due to the City’s
worsening financial condition, the City Council unanimously adopted a Resolution No.
7242 making certain findings and declaring a fiscal emergency in the City of Arcadia to
address the structural deficit in the General Fund which is projected to increase to
approximately $8.0 million per year by Fiscal Year 2024-25. Unless prompt action is
taken to address the structural deficit, there will have to be significant cuts to important
City services that will affect neighborhood police patrols, 911 emergency response
times, fire protection and life-saving services, recreation and library programs, road
quality, and infrastructure maintenance and improvements beginning in Fiscal Year
2019-20. The City currently has five fewer police officers than it did in 2008. Unless
more revenue is generated, as many as 13 police officers could be cut, affecting police
patrols and response times. Therefore, it is recommended that the City Council adopt
Resolution No. 7246 placing a ¾ cent sales tax measure on the June 4, 2019, Special
Election ballot.
BACKGROUND
The City of Arcadia has historically operated on limited yet sufficient resources to
ensure the quality of life Arcadians have come to expect and appreciate. Since 1998,
the City has taken a number of actions to reduce the cost of its operations by nearly
$3.4 million annually without sacrificing the quality of service to the community. In
addition to changes in service delivery, the City implemented pension and benefit
reforms in 2011, one of the first cities in the state to do so. While the City continues to
be well-managed and service levels are currently sufficient to address the needs of the
community, the City can no longer maintain these services in the foreseeable future
based on current revenue and expenditure levels, and the empaneled volunteer
Citizens Financial Advisory Task Force concurs.
On February 20, 2018, the City Council adopted Resolution No. 7202 establishing a
Citizen’s Financial Advisory Committee (“Committee”) to review the City’s long-range
financial forecast and provide recommendations for potential cost containment and/or
revenue enhancement strategies to address the City’s structural deficit. The Committee
was to submit a report to the City Council no later t han 60 calendar days following their
final meeting.
Resolutions Placing a General Tax Measure
on the June 4, 2019, Special Election Ballot
March 5, 2019
Page 3 of 5
On June 19, 2018, the Arcadia City Council adopted Resolution No. 7224 adopting a
budget for Fiscal Year 2018-19 and Resolution No. 7225 adopting a Capital
Improvement and Equipment Plan for Fiscal Years 2018-19 through 2022-23. At the
time of budget adoption, all funds totaled $120.5 million in expenditures, of which the
City’s General Fund budget was $62.4 million (excluding transfers). Once fund transfers
were included for the long-term forecast of the Capital Improvement and Equipment
Replacement Funds, the General Fund Operating Budget was projected to end the
Fiscal Year with a $3.1 million operating deficit.
After meeting for five months, on December 13, 2018, the Committee unanimously
approved a Final Report (“Report”) for submission to the City Council for its review and
consideration. This Report is a comprehensive fiscal sustainability plan with fifteen
specific recommendations, ten primary recommendations for immediate consideration
along with an additional five contingency recommendations should additional cost
containment and/or revenue enhancements be necessary. Most significantly, the
Committee recommended that City services be maintained at current levels and that the
City Council declare a fiscal emergency and place a ¾ cent local sales tax measure on
the ballot as quickly as possible but preferably no later than June 2019. On January 15,
2019, the City Council unanimously adopted the recommendations of the Committee
and directed staff to begin preparing for a general tax measure to increase the City’s
sales tax.
On February 5, 2019, the City Council received the Fiscal Year 2018-19 mid-year
budget report. In summary, it is projected that Fiscal Year 2018-19 Adopted General
Fund Budget will end the year with a higher projected operating deficit, from $3.1 to
$4.5 million. Due to the City’s worsening financial condition, the City Council
unanimously adopted a Resolution No. 7242 making certain findings and declaring a
fiscal emergency in the City of Arcadia. Unless immediate action is taken to address the
structural deficit, there will have to be significant cuts to important City services that will
affect neighborhood police patrols, 911 emergency response tim es, fire protection and
life-saving services, recreation and library programs, road quality, and infrastructure
maintenance and improvements beginning in Fiscal Year 2019 -20.
DISCUSSION
Like most other municipalities in California, the City of Arcadia is facing a challenging
fiscal outlook. The Adopted Fiscal Year 2018 -19 General Fund Operating Budget
showed a deficit of $3.1 million. According to the Fiscal Year 2018 -19 Mid-year Budget
review, the deficit is now estimated to be $4.5 million and the structural deficit in the
General Fund is projected to increase to approximately $8.0 million per year by Fiscal
Year 2024-25. Rising costs of services, including increasing pension costs, are
Resolutions Placing a General Tax Measure
on the June 4, 2019, Special Election Ballot
March 5, 2019
Page 4 of 5
threatening to crowd out resources available for important City services like police, fire,
street maintenance, parks, and the library.
A community survey conducted in October 2017, and again in January 2019, showed
Arcadia residents value the quality of life our City has to offer. According to Arcadia
residents, the following City services were identified as priorities:
Maintaining 911, police and fire services
Maintaining police patrols around neighborhood schools and parks
Preventing and investigating property crimes like thefts and burglaries
Keeping fire stations operating at current levels
A voter-approved ¾ cent sales tax measure would raise approximately $8.6 million, an
amount sufficient to fund and maintain these important City services in Arcadia for the
foreseeable future. The City will have total local control of this important source of
revenue as these funds would be not subject to seizure by the state or another local
taxing jurisdiction. The City currently collects approximately $11.5 million in sales tax
revenue each year. The tax is not a direct tax on residents but is paid primarily by non-
residents who shop and dine at Arcadia stores and restaurants, most significantly at the
Westfield Santa Anita Mall. Also, this type of funding mechanism is not levied on food
purchased as groceries or prescription medication.
Furthermore, as indicated through the Citizens Financial Advisory Committee process,
the City is strongly committed to prudent, responsible overs ight of taxpayer dollars and
strong fiscal stewardship. All funds generated by the measure will be fiscally
accountable, subject to independent annual financial audits and public review of
expenditures to ensure proper use of City funds should the measure be enacted by
voters.
California Elections Code Section 9222 authorizes the City Council to place a general
tax measure on a Special Election ballot for consideration by the voters. Accordingly,
the California Constitution requires that the voters approve such general tax by majority
vote. Resolution No. 7246 (Attachment 1) calls for a Special Election on Tuesday, June
4, 2019, for the purpose of submitting the measure to the qualified voters in the City.
The Resolution also directs the City Attorney to prepare an impartial analysis pursuant
to California Elections Code Section 9280, and authorizes arguments for and against
the measure in accordance with California Elections Code Section 9282(b).
Finally, the City has contacted the County of Los Angeles Registrar-Recorder/County
Clerk to conduct and administer the June 4, 2019, Special Election on behalf of the City.
The County estimates that the cost to administer an all-mail in ballot election is
approximately $225,000. Because this is an unbudgeted expense, a supplemental
Resolutions Placing a General Tax Measure
on the June 4, 2019, Special Election Ballot
March 5, 2019
Page 5 of 5
appropriation in this amount is recommended f rom the General Fund Operating
Reserve.
FISCAL IMPACT
The City currently collects approximately $11.5 million in sales tax revenue annually. A
¾ cent increase to the sales tax would raise approximately $8.6 million annually. The
City of Arcadia is facing a structural deficit of $8.0 million annually beginning in Fiscal
Year 2024-25. Unless prompt action is taken to address the structural deficit, there will
have to be significant cuts to important City services that will affect neighborhood police
patrols, 911 emergency response times, fire protection and life -saving services,
recreation and library programs, road quality, and infrastructure maintenance and
improvements beginning in Fiscal Year 2019-20. A supplemental budget appropriation
in the amount of $225,000 is required to conduct an all-mail in ballot. Sufficient funding
is available in the General Fund Operating Reserve.
RECOMMENDATION
It is recommended that the City Council adopt the following Resolutions relating to an
All-Mail Ballot Special Municipal Election to be held on Tuesday, June 4, 2019 , and
approve a supplemental budget appropriation in the amount of $225,000.
Resolution No. 7246 calling for the placement of a General Tax Measure on the
ballot at the June 4, 2019, Special Municipal Election for the submission to the
qualified voters of a proposed ordinance adding Part 5.5 to Chapter 6 (Taxes) of
Article II (Administration) of the Arcadia Municipal Code to establish a three -
quarters percent (three-quarter cent) General Transactions and Use Tax (Sales
Tax).
Resolution No. 7247 requesting the Board of Supervisors of the County of Los
Angeles to render full services to the City relating to the conduct of a Special
Municipal Election to be held on Tuesday, June 4, 2019.
Resolution No. 7248 providing for the filing of primary and rebuttal a rguments
and setting rules for the filing of written arguments regarding a City Measure to
be submitted at the June 4, 2019, Special Municipal Election.
Attachments: Resolution No. 7246
Resolution No. 7247
Resolution No. 7248