Trolling for revenue anyplace it can find it, the City Council
will take another look at what it calls
“revenue enhancement” at its Wednesday night meeting.
Trolling for revenue anyplace it can find it, the City Council will take another look at what it calls “revenue enhancement” at its Wednesday night meeting.
Despite a significant reserve fund carefully stored up during boom times, the Council finds itself with a gap between income and outgo that it needs to fill not just for the 2004-05 budget but for the next several years.
The alternative to new taxes and fees would be to make deeper cuts in critical city services, cuts that the public will notice and council is reluctant to make, especially since the largest part of the general fund budget goes to pay for police and fire protection.
Morgan Hill, with every other city and county in California, is having to make unwanted but necessary cuts to services and revenue searches because the persistent economic situation is still affecting sales and hotel taxes, two significant sources of money. The continuing siphoning of local taxes to smooth out the fiscal crisis in Sacramento has made the problem worse.
The most likely increases, so far, are a one-quarter percent add to the sales tax, which would need approval by a majority of voters, and an emergency dispatch fee, sometimes called a 9-1-1 fee, which would only need council approval. Everyone would pay the fee – it would not be charged to people calling 911. Before council decides exactly what to raise, it wants to hear from the voters.
To begin the discussion, residents will be able to voice their opinions at Wednesday’s meeting.
Paperwork for any increase needing voter approval in the Nov. 2 election must be ready for the Registrar of Voters by July 21, though City Manager Ed Tewes said a reliable revenue source was more important to fiscal stability than an immediate revenue source. Council will be asked to decide whether to wait for a later election until more public comment can be gathered or to sprint ahead to make the July 21 deadline.
Council could also consider “revenue enhancement” to pay for a third fire station, which was strongly recommended in the Fire Master Plan.
Besides any new taxes, council will take a look at whether it is always important to get full cost recovery – making fees pay the total cost of a service – and identify problems with city functions that inhibit new business.
Possibly most important of all, council will discuss the voters’ willingness to endure higher fees and taxes to avoid the blight of big box stores, maintaining the city’s oft-stated pleasing and semi-rural ambiance.
City staff has already cut $900,000 from the 2004-05 budget and council has approved a $1.9 million borrow from the reserve fund to take care of the remaining deficit.
Council has already set standards for its revenue enhancement.
• Fairness and equity – similarly situated taxpayers should be taxed similarly
• Transparency and visibility – taxpayers must know what the tax is and how it works
• Neutrality – the effect of a tax on business and consumption decisions should be minimal
• Certainty – tax rules specify when and how to pay and how the amount is determined
• Economic growth and efficiency – the tax shouldn’t bar production or business
• Appropriate revenue – the tax or fee must prove adequate and reliable
When increased fees and taxes were discussed at a previous council meeting, City Treasurer Mike Roorda and Finance Director Jack Dilles took council through the numbers for upcoming years.
“We will need $800,000 in new revenue in the 2005-06 budget,” Roorda said, “and $400,000 more (on top of the $800,000, equaling $1.2 million) in 2006-07.”
Dilles explained that the total ongoing and permanent need will be for $1.2 million in new revenues each year, starting in 2006-07. Two new facilities coming on line and needing maintenance and operating funding – the community center and the aquatics center – have inflated the expense column, the aquatic center adding $1 million to the 2004-05 budget alone, Dilles said.
If the proposed indoor recreation center is built, taxpayers will need to open their wallets even further.
Dilles said Monday that a quarter-percent increase in sales tax translates to $.25 per $100.
On $200 worth of wood from Johnson Lumber, the buyer would pay $.50 more.
Carol Holzgrafe covers City Hall for The Times. She can be reached by e-mail at
ch********@mo*************.com
or phoning (408) 779-4106 Ext. 201.
