AgdaPkt 2011-05-23 - Laserfiche WebLink

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8.C. - Page 1 To the Honorable Mayor and City Cou nci I From the City Manager May 23, 2011 SUBJECT Receive Report and Provide Direction Regarding Proposed Ballot Measures Increasing Transient Occupancy Tax (TOT) and Business License Tax RECOMMENDATION By motion direct staff to prepare documents necessary to place measures on the November 8, 2011, ballot to increase Redwood City's Transient Occupancy Tax and Business License Tax. BAC KG RO U N D Staff is recommending that two revenue measures be placed on the November 8, 2011 ballot— one to increase the City's TOT by two percentage points, and one to increase the Business License Tax by 16.67% each year for three years, and annually thereafter by the Consumer Price Index (CPI) for the San Francisco-Oakland-San Jose area. The need for revenue enhancement is driven by the decrease in general fund revenues. As a result of the recession that began in late 2007 the general fund's largest single source of revenue, property tax, has stagnated, while sales tax, the second largest source of revenue, has declined by $2.7 million. Other revenues have been similarly affected. Concurrently, employee costs, which account for roughly 80% of the general fund expenditures, have pressed upward due in large part to the rising costs of benefits. The net result is forecasted operating deficits in the foreseeable future to which the Council has responded by negotiating salary freezes with employees and reducing budgets by $11 million in FY 2009-10 and FY 2010-11. A total of 70 positions have been eliminated during these reductions. Given the tepid pace of the economic recovery and the corresponding anticipated slow rebound in our revenues, it is clear that the city will not just "grow" its way out of this situation with higher revenues in the near to medium term. Accordingly, the Council has directed staff to pursue a three-pronged approach to achieving financial stability: • Pursue organization efficiencies and effectiveness, • Restructure employee costs, particularly benefits, and • Revenue enhancements.