Concord City Council (CA) Considers New Tax July 27

8/9/2019 Concord City Council (CA) Considers New Tax July 27

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AGENDA ITEM NO.___4.a _

REPORT TO MAYOR AND COUNCIL

TO THE HONORABLE MAYOR AND COUNCIL:

DATE: July 27, 2010

SUBJECT: REVENUE MEASURE FEASIBILITY STUDY

The purpose of this staff report is to present information to the City Council about the feasibility of severalrevenue options for addressing the remaining $5 million structural budget deficit. This report was prepared in

response to City Council direction during budget deliberations which have occurred over the past ninemonths. The report is outlined as follows:

I. History of the budget deficitII. Actions taken in response to the deficit

III. Budget balancing optionsIV. Evaluation of potential revenue optionsV. Summary of public outreach efforts

VI. Process for placing a revenue measure on the ballotVII. Recommendation

I. HistoryImpact of State takeaways

Over the past decade, the State of California has taken over $33 million of revenue from the City of Concord.The impact of these takeaways has been to reduce City funds for public safety, maintenance and recreationalprograms, as well as the primary source of funds used to promote job growth and economic revitalization inConcord.

The Great RecessionDuring good economic times, the City has been able to survive State takeaways of Concords revenuesthrough economic growth. The downturns of the mid-1990s and the early 2000s were of relatively shortduration, and the City was able to weather them through sound fiscal management and long-range planning.There were many instances where the City Council, despite public pressure to do otherwise, did not moveforward with projects if funding could not be identified to operate and maintain the project over the long term.


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Revenue Measure Feasibility Study

July 27, 2010Page 3 of 12

Elimination of crossing guards at multiple locations Reduced storm drain maintenance Reduced hours of operation in all City facilities

The City also partnered with all of its employees to achieve significant wage and benefit concessions whichwill result in annual, ongoing savings of $3.6 million. A complete list of all of the expenditure reductions todate is included as Attachment 3 to this report.

In order to prevent more devastating and disruptive cuts to City services and programs, the City has also used$15.7 million of reserves during this period. This has left the City with a projected reserve level at the end ofFiscal Year 2009-10 of just $9.6 million, or approximately 2 months of operating expenses for the City.This is a dangerously low reserve level for a City of 125,000 people, equal to just 12.7% of the General Fund.

Even after making over $18 million in reductions to the budget, the City continues to face a projected $5million imbalance between revenues and expenditures.

III. Budget Balancing Options

Additional Expenditure Reductions

Clearly one option still available to the City for resolving the remaining budget deficit is through additionalexpenditure reductions. As a part of the recent budget deliberations, the City Council asked staff to prepare alist of the most likely recommended expenditure cuts if the remaining deficit were to be resolved through cuts

alone. Attached to this staff report as Attachment 4 is the list created by the Executive Team of the additionalcuts necessary to close the Citys $5 million budget gap. This list was presented to the Council at both of itsbudget hearings in June. All of the cuts would represent drastic and painful changes in the Citys current levelof services, including:

Reducing neighborhood police patrols Eliminating District Command Program and Downtown Officer reducing capacity for Community

Policing

Eliminating Police officers from special enforcement and special victims units slowing responsetime to major crimes and reducing the ability to investigate crimes

Eliminating school resource officers police officers who serve in each public high school andmiddle school in Concord

Reducing gang/drug prevention programs Eliminating all school crossing guards Reducing pothole repairs and suspending street maintenance activities Reducing maintenance of parks, playgrounds, athletic fields Reducing programs at the Senior Center, including recreation and nutrition services


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Closing or severely reducing hours at Cowell Pool Reducing youth and teen after-school/summer programs, including closing the youth camp at Camp

Concord

Potential Revenue Options

During the budget deliberations, Councilmembers expressed strong concerns about the potential impacts ofthese further expenditure cuts on the community. Staff was directed to evaluate potential options for anemergency revenue measure to address the remaining budget deficit. This section will describe three revenueoptions a parcel tax, a sales tax increase, and a utility user tax. In defining each, staff used the followingassumptions:

1) The revenue measure must create enough new revenue to resolve a majority of the Citys $5 millionstructural budget deficit in each of the next 10 years, consistent with the Citys ten-year financialmodel.

2) In order to ensure continued fiscal discipline and the eventual return to a sustainable, balanced budget,the revenue measure must be temporary with a 5-year sunset clause.

3) The revenue measure must restore the Citys reserve levels to 15% as soon as possible to reduce therisk of an unexpected emergency.

Parcel Tax

A local parcel tax is defined as an additional tax that is levied on all privately held property in the City ofConcord for the sole purpose of supporting the City of Concords programs and services.

The City of Concord has approximately 37,400 taxable parcels in its jurisdiction. To meet the goals describedabove for an emergency revenue measure, the parcel tax would need to generate between $8 and $10 million ayear for five years. If the City desired to do this through a flat parcel tax, it would need to establish a parcel taxof between $214 per year and $267 per year, with a 5-year sunset.

To establish a parcel tax, state law requires an affirmative 2/3rds (66 2/3%) vote of the electorate. In thecommunity priorities survey conducted in January 2010, only 56% of Concord respondents were in support ofa local parcel tax option.

Were the voters to pass such a tax, it would be collected by the County Treasurer-Tax Collector at the sametime that the County collects all other property tax.

Local Sales Tax Increase

Although referred to as a local sales tax throughout this staff report, this revenue source is formally knownas a transactions and use tax in State law. A transaction and use tax is imposed on the same goods andmerchandise as sales tax; however, a sales tax (formally known in State law as a Bradley Burns sales and usetax) is allocated to the jurisdiction where the sale is negotiated or the order for the sale is taken. A transactionsand use tax, on the other hand, is allocated to the City where the goods are delivered or placed into use.Merchandise purchased in a walk-in retail store is assumed by the state to be used within the city in whichthe store is located, unless the retailer is asked to ship the merchandise outside the city as part of the sale or it


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is a motor vehicle that can be driven away. For sales contracts that require shipment of merchandise, the localsales tax (transactions and use tax) is levied for the city to where the merchandise is shipped. A similarsituation exists with vehicles that require registration: the local sales tax (transactions and use tax) of the city

in which the vehicle is registered applies, regardless of where it was purchased.

To meet the goals described above for an emergency revenue measure, a local sales tax (transactions and usetax) would need to be established at a rate of between .50 and .75 for five years. This equates to an additional50 to 75 for every $100 of taxable purchases. Added to the current Contra Costa County sales tax rate of9.25%, this would result in a City of Concord sales tax rate between 9.75% and 10% for five years. Adoptionof an increase to the local sales tax rate for general municipal services requires a majority vote of theelectorate (50% plus one).

In California there are approximately 100 cities and counties with local sales tax measures, and many morespecial districts and counties. In fact, 90% of the States population resides in at least one district that has a

local sales tax (transactions and use tax). In Contra Costa County there are currently three cities with a localsales tax: El Cerrito, Pinole and Richmond. Additionally, the cities of El Cerrito and Antioch have placedlocal sales tax measures on their November 2010 ballots.

Local sales tax measures have enjoyed recent popularity because constituents feel that the cost increment islow, it is not a property-based tax, out-of-town visitors share in the cost, and the sales tax is not applied togroceries or prescription medication.

Utility User Tax

A utility tax is a tax on utilities provided to properties or individuals. A utility user tax can be applied toa broad variety of utilities, including cellular and landline phone services, cable, satellite, trash, sewer,water, gas and electric services. The Council would have discretion to decide what rate to propose in aballot measure and to which services it would apply.

In order to estimate the rate necessary for a utility user tax to produce between $8 and $10 million forfive years, staff has assumed Concords tax would mimic the recently adopted City of Hayward utilityuser tax. The Hayward utility user tax applies to natural gas and electricity, phone service - land linesand cellular, and cable. Were Concord to adopt a similarly structured measure, the tax rate would needto be set between 4% and 5%, for five years.

Adoption of a utility user tax requires a majority vote of the electorate. This type of funding mechanismwas not the preferred method when Concord constituents were surveyed in January. Were the voters to

pass a utility user tax, the companies that provide the services would collect the tax and remit it to theCity.

IV. Evaluation of Potential Revenue OptionsThe following table and discussion evaluates the three revenue options in greater detail. For evaluation

purposes, staff considered the following factors as most important for deciding amongst the three choices:

stability of the revenue, participant diversification (does the tax affect a broad or narrow range of people),

likelihood of voter support, impact on low and fixed-income individuals, impact on the business community


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(including retailers, office tenants, and industrial users), and impact on the resident community (including

homeowners and tenants of rental properties). Staff recommends a revenue option which is stable, has broad

participant diversity, enjoys high voter support, and has the least impact on businesses, residents, and low and

fixed income residents.

Criterion Parcel Tax Sales Tax Utility User Tax

Primary PayersConcord PropertyOwners

Purchasers of RetailTaxable Goods inConcord

Concord UtilityCustomers

Voter Requirement 662/3% 50% plus one 50% plus one

Stability Highly stable Moderately stable Highly stable

Participant Diversity Low High Moderate

Likelihood of VoterSupport Low High Low

Impact on Low and

Fixed Income

High (if they own theirhome)

Low High

Impact on Business

Community

Low Low High

Impact on Resident

Community

Moderate to High Moderate to Low High

Primary Payers:

Parcel tax is paid by all owners of real property semi-annually as a part of the property tax bill, andtherefore includes all types of land uses including residential, commercial and industrial properties.

Sales tax is paid by purchasers of retail taxable goods from businesses located in Concord (anexception is purchasers of motor vehicles; only those registering a newly purchased motor vehicle inConcord would pay the increased tax, regardless of where the vehicle was purchased).

Utility user tax would be paid by all Concord customers of gas/electric, telephone, cellular and cableutilities.

Voter Requirement:

In accordance with Proposition 13, a parcel tax would require a yes vote of two-thirds (66 2/3%) of the

voting electorate for passage.

An increase in the sales tax rate, and the institution of a utility user tax, for general municipal serviceswould require a majority vote (50% plus one) of the voting electorate for passage.

Stability:

A parcel tax would have high stability due to the fact that it would be assessed upon a fixed number ofparcels in the City which would not change significantly from year-to-year. As an assessment on realproperty, the City would realize substantially the same amount of revenue from one year to the next.


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As sales tax is paid only on the purchase of taxable goods from businesses in Concord, this revenuewould fluctuate in response to changes in the local, state and national economy, as well as therelocation of retailers into and out of the Citys boundaries. As the economy continues to fluctuate, the

City would see both positive and negative variations in this revenue source.

A utility user tax would have medium to high stability due to the fact that all utility customers wouldbe required to pay the tax each month as a part of their utility bills. While some utility bills willfluctuate through the year in response to the seasons (i.e., gas/electric), overall utility bills do notchange much on a year-to-year basis except to increase as rates change.

Participant Diversity:

A parcel tax would apply only to property owners in Concord. In some cases, the cost of a parcel taxmay be passed on to tenants (i.e., office tenants), but the primary source for this revenue would beowners of real property in the City. A parcel tax would have the fewest number of payers relative tothe other revenue options.

Sales tax is paid on a wide variety of goods, excluding (primarily) groceries and medicine. It istherefore a highly diversified source of revenue. A sales tax would be paid by a wide variety ofindividuals, including residents, local businesses, and workers in the City, and individuals fromoutside the City who purchase taxable goods in Concord. Sales tax on motor vehicle purchases wouldbe paid only by individuals registering the vehicle in Concord, regardless of where the vehicle waspurchased. The sales tax would be paid by the highest number of payers relative to the other revenueoptions, and therefore has the most participant diversity of the three options.

Utility user tax, if applied to gas/electric, telephone, cellular and cable bills, would be paid only byConcord resident users and Concord business users of those utilities. Consequently, there would befewer numbers of utility tax payers than sales tax payers.

Likelihood of Voter Support:

Community surveys in Concord, as well as actual results from other parcel tax elections in Californiaover the last twenty years, indicate that parcel taxes are consistently the least favored source of newrevenues by voters. As noted above, only 56% of Concord respondents favored this option in aJanuary 2010 survey, approximately 11 points below the necessary passage rate.

Recent community surveys in Concord indicate strong support for a limited duration, emergency salestax measure at the mid-sixty percentiles for a simple majority requirement measure. In addition, actualresults from numerous sales tax elections in California over the last twenty years show consistentstrong support by city electorates. For example, in the June 2010 election, five cities proposed localsales tax measures, and all five passed. A sixth sales tax measure was adopted in the City of Cotati in aspecial April 2010 election.

Recent community surveys in Concord indicate very weak support for a utility user tax measure.Additionally, actual election results for recent utility tax measures in California suggest onlylukewarm support, even for the reauthorization of existing utility user taxes.


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Impact on Low/Fixed Income:

As a parcel tax would apply to all properties in the City, the impact on property owners who are lowincome and/or on a fixed income would be very high. This tax would particularly impact seniorcitizens who own property, many of whom are on a fixed income and would not have the option ofavoiding the tax unless the City built in an exemption for low-income residential property owners.

A sales tax increase would be paid only by purchasers of taxable goods in Concord. Because lowincome and fixed income individuals spend a large proportion of their incomes on non-taxable goodsand services, a sales tax increase would not have a significant impact on these individuals. Further,many purchases subject to sales tax are discretionary purchases, allowing low and fixed incomeindividuals to minimize the impact of the new tax.

A utility user tax would have a significant negative impact on low and fixed income residents, as they

would be unable to avoid paying the tax on their utility bills.Impact on Business Community:

A parcel tax would likely have a low impact on the business community, as the majority of the parceltax would be collected from residential properties in the City. In some cases, tenants of retail or officeproperties may be required to pay a portion of the tax if passed through by property owners.

A sales tax increase would have a low impact on the business community, as the tax would be paid bypurchasers of taxable goods rather than the business itself. Most office and service businesses wouldsee little impact except for their own purchases of taxable goods in Concord. Anecdotal data fromother California counties where city sales tax measures have been adopted indicates these measureshad virtually no impact on the retail sales volumes in those cities, when comparing periods prior to

and after adoption of a sales tax.

A utility user tax could have a high impact on the business community, as office buildings, retailcenters and institutional uses (i.e., hospitals) are generally large consumers of electricity and phoneservices. The increased cost of these utilities would likely be passed through to tenants where possible.

Impact on Residential Community:

A parcel tax would have a medium to high impact on residents, depending on whether they areproperty owners who would have to pay the tax, and if not, whether landlords would be able to passthrough the cost of the tax to tenants through increased rents. As there are many more residentialparcels (35,700) than non-residential parcels (1,700) in Concord, the majority of the parcel tax wouldbe borne by residents.

A sales tax would have a medium to low impact on residents. It would apply only to taxable purchasesand not to mortgage, other debt payments, utilities, services, medicine and most grocery purchases,which make up the majority of resident spending. Individuals purchasing a vehicle that is registered inConcord would pay the increased tax, regardless of whether the vehicle was purchased in Concord oranother city.

A utility user tax would have a high impact on residents, as nearly all residential households consumethe four categories of utilities to which the tax would apply electric/gas, telephone, cellular andcable. Most would consider these utilities non-discretionary in todays society. At a rate of 4%, a


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household with typical utility bills totaling $350 per month would pay $14 per month in utility tax. Bycomparison, to pay the equivalent amount through a half-cent sales tax, a household would need tospend $2,800 on taxable goods per month.

Recommendation:

In summary, based upon these six criteria, the sales tax is the preferred option for a limited duration,emergency revenue measure. Although subject to greater volatility than either a parcel tax or a utility tax,the sales tax would be a highly diversified revenue source and would be paid by many users of City services,both resident and non-resident. It would have the least negative impact on low and fixed-income households, alow impact on businesses, and a low to moderate impact on residents in general. Additionally, all funds from alocal sales tax measure are required to stay in Concord, providing a relatively stable source of funding to helpmaintain local services; no funds can be taken by Sacramento. Finally, a sales tax measure would enjoy the

highest level of voter support and is the preferred funding mechanism of Concord residents, increasing thelikelihood that a ballot measure would be successful. Given the urgency of the Citys budget problem, it isclear that achieving a successful result in November will be very important if the City is to avoid devastatingcuts to City programs and services in the next year.

Any sales tax measure placed on the ballot should include stringent fiscal accountability measures, includingcitizens oversight, mandatory financial audits, and yearly reports to the community to ensure the funds arespent appropriately.

Attachment 2 is a Ten-Year Budget Projection assuming successful passage of a one-half cent sales taxmeasure in November, 2010.

V. Summary of Public Outreach Efforts

A comprehensive public outreach effort has been conducted since the first of the year to educateresidents, business owners and employees about the Citys budget challenges, engage them inconversation about their priorities for City services, collect input and explore solutions that wouldaddress the budget deficit.

In the first four months of 2010, the City Council and staff reached out to residents to gather informationabout community priorities for City services. In light of the budget deficit, it was important tounderstand which City services were most valued by residents before decisions about service reductions

were made.

In February and March, seven Living Within Our Means Workshops were conducted for residents,employees, the Chamber of Commerce and Concord senior citizens. The goal of the workshops was toelicit feedback from residents about their priorities for City services. In addition to workshops, astatistically valid Community Priorities Telephone Survey was conducted in January and a companionon-line survey was available on the Citys website during the month of March. Respondents to thetelephone survey and participants in the workshops identified similar priorities: maintaining publicsafety services (911 response time, gang prevention, police patrols) and preservation of the Citys


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July 27, 2010Page 10 of 12

infrastructure (streets, storm drains, sewer, parks) as well as after-school and summer programs foryouth and senior services including recreation and nutrition programs.

Respondents were also asked about their interest in a local solution to protect and maintain essential cityservices. The survey showed that almost four out of five voters supported balancing the budget at leastin part by a local funding measure.

The community responded very positively to the outreach program with more than 1,350 people takingpart in the workshops, telephone survey or the online survey. Several hundred more sent emails andletters to the City Council.

In the last three months, a concentrated communications effort has been underway to educate the publicabout the potential service reductions that would be necessary due to the depth of the structural budgetdeficit and elicit input on the possibility of a revenue measure on the November 2010 ballot.

The City Council conducted a budget workshop in May and two budget hearings in June. More than 20presentations were made to business organizations, neighborhood associations, service organizations,City boards and commissions, and community groups, reaching several hundred residents and businessowners. Residents have been educated about the deficit through letters to community leaders, a featurearticle in Concord City News, Concord eNews distributions and Community Budget Update mailers.The clear message expressed by residents through the outreach effort is that they want to protect theservices and programs that they and their families value. When faced with the prospect of additionalservice reductions next year, many have asked if there is another option and expressed support for a newrevenue measure. The results of two telephone surveys bear this out. The surveys found that there wassupport from approximately two-thirds of respondents for an emergency revenue measure to protectpublic safety and other programs of value to residents. (See Attachment 6)

VI. Process for Placing a Revenue Measure on the November 2010 Ballot

Should the Council decide to place an emergency revenue measure on the November 2010 ballot, thefollowing steps must occur:

July 27, 2010: Council passes resolution 10-72 (Attachment 1), formally placing the measure on theNovember ballot. While the final cost will depend upon many factors and cannot beknown at this time, staff estimates that it will cost $30,000-37,000 to place themeasure on the ballot.

August 6, 2010: Primary arguments must be filed with the county through the City offices.

August 13, 2010: Rebutting arguments must be filed through the City offices.

November 2, 2010: Election.

If the local revenue measure passes:

Concord will enter into two contracts with the State: the first to set up the tax and the second forongoing administration.


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July 27, 2010Page 12 of 12

Attachments:

1. Resolution No. 10-722. 10-Year Financial Plan Model that Assumes the Passage of the Recommended Sales Tax Measure3. List of all Budget Cuts Made to Date4. List of Necessary Budget Cuts if the Remaining Budget Deficit Solved Through Cuts Alone5. List of Public Outreach on the Budget6. Survey Results

For More Information on This Report Please Contact: Valerie Barone

Assistant City Manager

925/671-3150

[email protected]


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Attachment 1

Res. No. 10-72 1

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BEFORE THE CITY COUNCIL OF THE CITY OF CONCORDCOUNTY OF CONTRA COSTA, STATE OF CALIFORNIA

A Resolution Calling for and Giving Notice of aNovember 2, 2010 Election on a Proposed Ballot

Measure Seeking Voter Approval of a One-Half ofOne Percent (0.5%) Transactions And Use (Sales)Tax For Five Years to Fund General MunicipalServices, Establishing the Policies and Procedures forSuch an Election and Requesting That the County ofContra Costa Conduct Such an Election Resolution No. 10-72

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WHEREAS, State takeaways and the current recession have resulted in a $23 million decline

in City revenues, jeopardizing the Concord communitys essential services including 9-1-1 response,

police, senior, street and park maintenance, after-school and youth programs, and other services; and

WHEREAS, without additional revenue the City cannot maintain public safety services

including 9-1-1 emergency response times, police officers, gang prevention and crime investigation

services, and neighborhood police patrols; and

WHEREAS, the City needs to maintain after-school programs, anti-gang activities, and

recreation programs to keep youth and teens off the streets, out of trouble and away from gangs and

drugs; and

WHEREAS, Concord has had to cut $18 million in funding to city services, eliminating 25%

of the workforce, including police officers, parks, recreation, and maintenance staff, and a local

revenue measure would prevent another $5 million in deeper cuts to local services; and

WHEREAS, all funds from a local revenue measure must stay in Concord to maintain local

services and cannot be taken by the State; and

WHEREAS, a local revenue measure would ensure fiscal accountability by requiring

independent citizens oversight, mandatory financial audits, and yearly reports to the community; and

WHEREAS, at its June 22, 2010 meeting, the City Council adopted a budget for FY 2010-11

that recognized the need for additional revenue to maintain and preserve the level of services desired

by residents of the City; and

WHEREAS, at a public hearing on July 27, 2010, the Council considered calling a special


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Attachment 1

Res. No. 10-72 2

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election to seek voter approval of a proposed general transactions and use tax (commonly referred to

as a sales tax), as authorized by Revenue and Taxation Code section 7285.9; and

WHEREAS, after that hearing, the City Council concluded that all of the information

presented indicated that, to obtain the revenue necessary to maintain and preserve service levels, the

Council should call an election to ask the voters of the City to approve a 5-year local transactions and

use tax, the revenue from which could be used to support general municipal services and could not be

taken away by the State; and

WHEREAS, on the basis of the foregoing, the City Council determined that it was appropriate

to place a measure regarding a general transactions and use (sales) tax before the voters at the

November 2, 2010 general election; and

WHEREAS, the tax, if approved, would be imposed on the sale of tangible personal property

and the storage, use, or other consumption of such property. The tax rate would be one-half of one

percent (0.5%) (a half cent for each dollar) of the sales price of the property. The tax revenue would

be collected by the State Board of Equalization and remitted to the City. The tax would be in effect for

5 years, and would then expire automatically, unless extended by the voters. The tax shall be

approved if the measure receives at least a simple majority of affirmative votes; and

WHEREAS, the Concord City Council is authorized by California Elections Code Section

9222 to place measures before the voters; and

WHEREAS, Elections Code Sections 9281 through 9287 set forth the procedures for primary

arguments in favor of and in opposition to any City measure and for rebuttal arguments; and

WHEREAS, on April 27, 2010, the City Council adopted Resolution No. 10-32, calling for

the Citys General Municipal Election to be held on the same day as and consolidated with the

Statewide Election to be held on November 2, 2010. It is desirable that the election called by this

Resolution be consolidated with the General Municipal Election and Statewide Election, and that

within the City, the precincts, polling places and election officers of the two elections be the same, and

that the Election Division of the County of Contra Costa canvass the returns of the General Election

and that the election be held in all respects as if there were only one election.


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Attachment 1

Res. No. 10-72 3

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NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CONCORD DOES

RESOLVE AS FOLLOWS:

Section 1. The foregoing recitals are true and correct and are hereby incorporated by

reference.

Section 2. Pursuant to California Constitution Article XIIIC, Section 2; Government Code

Section 53724; and Elections Code Section 9222, the City Council of the City of Concord hereby calls

an election at which it shall submit to the qualified voters of the City, a measure that, if approved,

would adopt a temporary general transactions and use tax, as authorized by Revenue and Taxation

Code section 7285.9. This measure shall be designated by letter by the Contra Costa County Elections

Department. Pursuant to Election Code Section 10400 et seq., the election for this measure shall be

consolidated with the General Municipal Election to be conducted on November 2, 2010.

Section 3. The question to be presented to the voters shall be as follows:

YES

To provide funding that cannot be taken by the State and helpprotect/maintain Concords city services, including 911emergency response times, police officers, gang prevention,crime investigation, neighborhood police patrols, citystreets/pothole repair, senior services and nutrition programs,youth/teen programs, and other general city services shall the

City of Concord enact a half-cent sales tax for 5 years, withcitizens oversight, mandatory financial audits, reports to thecommunity, and all funds staying local?

NO

This question requires the approval of a majority of qualified electors casting votes.

Section 4. The ordinance authorizing the general tax to be approved by the voters pursuant to

Sections 2 and 3 of this Resolution is as set forth in Exhibit A hereto. The City Council hereby

approves the ordinance, the form thereof, and its submission to the voters of the City at the November

2, 2010 election, as required by Revenue and Taxation Code section 7285.9. The Board of Supervisors

of the County of Contra Costa is requested to order the County Clerk to set forth in the voter

information portion of all sample ballots to be mailed to the qualified electors of the City the full text

of the Ordinance and to mail with the sample ballots to the electors printed copies of the full text of

the Ordinance, together with the primary arguments and rebuttal arguments (if any) for and against the

measure, and to provide absent voter ballots for the election for use by qualified electors of the City


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Attachment 1

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who are entitled thereto in the manner provided by law. The Ordinance specifies that the rate of the

transactions tax shall be one-half of one percent (0.5%) of the gross receipts of any retailer from the

sale of all tangible personal property sold at retail in the City; it specifies that the rate of the use tax

shall be one-half of one percent (0.5%) of the sales price of tangible personal property stored, used or

otherwise consumed in the City, and that the tax shall be in effect for five years . The State Board of

Equalization shall collect the tax from retailers subject to the tax and remit the funds to the City.

Section 5. The City Clerk is authorized, instructed and directed to work with the County

Elections Division as needed in order to properly and lawfully conduct the election. The ballots to be

used in the election shall be in form and content as required by law. The County Elections Division is

authorized to canvass the returns of the general municipal election. In all particulars not recited in this

Resolution, the election shall be held and conducted as provided by law for holding municipal

elections.

Section 6. The Board of Supervisors is requested to instruct the County Elections Division to

provide such services as may be necessary for the holding of the consolidated election. The election

shall be held in all respects as if there were only one election. The City of Concord recognizes that the

County will incur additional costs because of this consolidation and agrees to reimburse the County

for those costs. The City Manager is hereby authorized and directed to expend the necessary funds to

pay for the Citys cost of placing the measure on the election ballot.

Section 7. The polls for the election shall be open at 7:00 a.m. on the day of the election and

shall remain open continuously from that time until 8:00 p.m. that same day, when the polls shall be

closed, except as provided in Section 14401 of the Elections Code of the State of California. The

notice of the time and place of holding the election is hereby given, and the City Clerk is authorized to

give further notice of the election, as required by law.

Section 8.

(a) The last day for submission of primary arguments for or against the measure shall be

by 5:00 p.m. on August 6, 2010.

(b) The last day for submission of rebuttal arguments for or against the measure shall be by

5:00 p.m. on August 13, 2010.


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Attachment 1

Res. No. 10-72 5

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(c) Primary arguments shall not exceed three hundred (300) words and shall be signed by

not more than five persons.

(d) Rebuttal arguments shall not exceed two hundred fifty (250) words and shall be signed

by not more than five persons; those persons may be different persons than the persons who signed the

primary arguments.

(e) Pursuant to California Elections Code Section 9280, the City Council hereby directs

the City Clerk to transmit a certified copy of the measure to the City Attorney. The City Attorney

shall prepare an impartial analysis of the measure, not to exceed 500 words in length, showing the

effect of the measure on the existing law and the operation of the measure, and transmit the impartial

analysis to the Elections Division by August 6, 2010.

(f) Pursuant to California Elections Code Section 9285, when the City Clerk has selected

the arguments for and against the measure, which will be printed and distributed to the voters, the City

Clerk shall send copies of the argument in favor of the measure to the authors of the argument against,

and copies of the argument against to the authors of the argument in favor. Rebuttal arguments shall

be printed in the same manner as the primary arguments. Each rebuttal argument shall immediately

follow the primary argument, which it seeks to rebut.

Section 9. The City Clerk is directed to file certified copies of this Resolution with the Board

of Supervisors and the County Clerk of the County of Contra Costa, together with the attached ballot

measure.

Section 10. The jurisdictional boundaries of the City of Concord have not changed since the

last general municipal election.

Section 11. The approval of this Resolution is exempt from the California Environmental

Quality Act (Public Resources Code 21000 et seq., CEQA, and 14 Cal. Code Reg. 15000 et

seq., CEQA Guidelines). The transactions and use tax to be submitted to the voters is a general tax

that can be used for any legitimate governmental purpose; it is not a commitment to any particular

action. As such, under CEQA Guidelines section 15378(b)(4), the tax is not a project within the

meaning of CEQA because it creates a government funding mechanism that does not involve any

commitment to any specific project that may result in a potentially significant physical impact on the


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Attachment 1

Res. No. 10-72 6

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environment. If revenue from the tax were used for a purpose that would have either such effect, the

city would undertake the required CEQA review for that particular project. Therefore, under CEQA

Guidelines section 15060 review under CEQA is not required.

Section 12. This Resolution shall become effective immediately upon its passage and

adoption.

PASSED AND ADOPTED by the City Council of the City of Concord on July 27, 2010, by

the following vote:

AYES: Councilmembers -

NOES: Councilmembers -

ABSTAIN: Councilmembers -

ABSENT: Councilmembers -

I HEREBY CERTIFY that the foregoing Resolution No. 10-72 was duly and regularly

adopted at a regular joint meeting of the City Council and the Redevelopment Agency of the City of

Concord on July 27, 2010.

Mary Rae Lehman, CMCCity Clerk

APPROVED AS TO FORM:

Craig LabadieCity Attorney

Exhibit A Ordinance 10-3


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Exhibit A

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ORDINANCE NO. 10-3

AN ORDINANCE AMENDING CONCORD MUNICIPAL CODE CHAPTER 98(TAXATION), ADDING ARTICLE VI (TRANSACTIONS AND USE TAX) BYIMPOSING A TRANSACTIONS AND USE TAX TO BE ADMINISTERED BYTHE STATE BOARD OF EQUALIZATION.

RECITALS

WHEREAS, State takeaways and the current recession have resulted in a $23 million decline

in City revenues, jeopardizing the Concord communitys essential services including 9-1-1 response,

police, senior, street and park maintenance, after-school and youth programs, and other services; and

WHEREAS, without additional revenue the City cannot maintain public safety services

including 9-1-1 emergency response times, police officers, gang prevention and crime investigation

services, and neighborhood police patrols; and

WHEREAS, the City needs to maintain after-school programs, anti-gang activities, and

recreation programs to keep youth and teens off the streets, out of trouble and away from gangs and

drugs; and

WHEREAS, Concord has had to cut $18 million in funding to city services, eliminating 25%

of the workforce, including police officers, parks, recreation, and maintenance staff, and a local

revenue measure would prevent another $5 million in deeper cuts to local services; and

WHEREAS, all funds from a local revenue measure must stay in Concord to maintain local

services and cannot be taken by the State; and

WHEREAS, a local revenue measure would ensure fiscal accountability by requiring

independent citizens oversight, mandatory financial audits, and yearly reports to the community; and

WHEREAS, at its June 22, 2010 meeting, the City Council adopted a budget for FY 2010-11

that recognized the need for additional revenue to maintain and preserve the level of services desired

by residents of the City; and

WHEREAS, at a public hearing on July 27, 2010, the Council considered calling a special

election to seek voter approval of a proposed general transactions and use tax (or sales tax), as

authorized by Revenue and Taxation Code section 7285.9; and


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Ord. No. 10-3 2

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WHEREAS, after that hearing, the City Council concluded that all of the information

presented indicated that, to obtain the revenue necessary to maintain and preserve service levels, the

Council should call an election to ask the voters of the City to approve a 5-year local transactions and

use tax, the revenue from which could be used to support general municipal services; and

WHEREAS, on the basis of the foregoing, the City Council determined that it was appropriate

to place a measure regarding a general transactions and use (sales) tax before the voters at the

November 2, 2010 general election; and

WHEREAS, the tax, if approved, would be imposed on the sale of tangible personal

property and the storage, use, or other consumption of such property. The tax rate would be one-

half of one percent (0.5%) (a half cent for each dollar) of the sales price of the property. The tax

revenue would be collected by the State Board of Equalization and remitted to the City. The tax

would be in effect for 5 years, and would then expire automatically, unless extended by the voters.

The tax shall be approved if the measure receives at least a simple majority of affirmative votes.

THE PEOPLE OF THE CITY OF CONCORD DO ORDAIN AS FOLLOWS:

Section 1. The People of Concord find that all Recitals are true and correct and are

incorporated herein by reference.

Section 2. Concord Municipal CodeChapter 98 (Taxation) is hereby amended by addingArticle VI (Transactions and use Tax):

Section 98-161. Title. This ordinance shall be known as the Concord Transactions and

Use Tax Ordinance. The city of Concord hereinafter shall be called "City." This ordinance

shall be applicable in the incorporated territory of the City.

Sec. 98-162. Operative Date. "Operative Date" means the first day of the first

calendar quarter commencing more than 110 days after the adoption of this ordinance.

Sec. 98-163. Purpose. This ordinance is adopted to achieve the following, among

other purposes, and directs that the provisions hereof be interpreted in order to accomplish

those purposes:

A. To impose a retail transactions and use tax in accordance with the

provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue


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Ord. No. 10-3 3

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and Taxation Code and Section 7285.9 of Part 1.7 of Division 2 which authorizes the

City to adopt this tax ordinance which shall be operative if a majority of the electors

voting on the measure vote to approve the imposition of the tax at an election called for

that purpose.

B. To adopt a retail transactions and use tax ordinance that incorporates

provisions identical to those of the Sales and Use Tax Law of the State of California

insofar as those provisions are not inconsistent with the requirements and limitations

contained in Part 1.6 of Division 2 of the Revenue and Taxation Code.

C. To adopt a retail transactions and use tax ordinance that imposes a tax and

provides a measure therefore that can be administered and collected by the State Board

of Equalization in a manner that adapts itself as fully as practicable to, and requires the

least possible deviation from, the existing statutory and administrative procedures

followed by the State Board of Equalization in administering and collecting the

California State Sales and Use Taxes.

D. To adopt a retail transactions and use tax ordinance that can be administered

in a manner that will be, to the greatest degree possible, consistent with the provisions

of Part 1.6 of Division 2 of the Revenue and Taxation Code, minimize the cost of

collecting the transactions and use taxes, and at the same time, minimize the burden of

record keeping upon persons subject to taxation under the provisions of this ordinance.

Sec. 98-164. Contract With State. Prior to the operative date, the City shall contract

with the State Board of Equalization to perform all functions incident to the administration and

operation of this transactions and use tax ordinance; provided, that if the City shall not have

contracted with the State Board of Equalization prior to the operative date, it shall nevertheless

so contract and in such a case the operative date shall be the first day of the first calendar

quarter following the execution of such a contract.

Sec. 98-165. Transactions Tax Rate. For the privilege of selling tangible personal

property at retail, a tax is hereby imposed upon all retailers in the incorporated territory of the

City at the rate of one-half of one percent (0.5%) of the gross receipts of any retailer from the


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sale of all tangible personal property sold at retail in said territory on and after the operative

date of this ordinance.

Sec. 98-166. Place of Sale. For the purposes of this ordinance, all retail sales are

consummated at the place of business of the retailer unless the tangible personal property sold

is delivered by the retailer or his agent to an out-of-state destination or to a common carrier for

delivery to an out-of-state destination. The gross receipts from such sales shall include

delivery charges, when such charges are subject to the state sales and use tax, regardless of the

place to which delivery is made. In the event a retailer has no permanent place of business in

the State or has more than one place of business, the place or places at which the retail sales

are consummated shall be determined under rules and regulations to be prescribed and adopted

by the State Board of Equalization.

Sec. 98-167. Use Tax Rate. An excise tax is hereby imposed on the storage, use or

other consumption in the City of tangible personal property purchased from any retailer on and

after the operative date of this ordinance for storage, use or other consumption in said territory

at the rate of one-half of one percent (0.5%) of the sales price of the property. The sales price

shall include delivery charges when such charges are subject to state sales or use tax regardless

of the place to which delivery is made.

Sec. 98-168. Adoption of Provisions of State Law. Except as otherwise provided in

this ordinance and except insofar as they are inconsistent with the provisions of Part 1.6 of

Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 (commencing

with Section 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted and

made a part of this ordinance as though fully set forth herein.

Sec. 98-169. Limitations on Adoption of State Law and Collection of Use Taxes.

In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:

A. Wherever the State of California is named or referred to as the taxing

agency, the name of this City shall be substituted therefor. However, the substitution

shall not be made when:


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Ord. No. 10-3 5

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1. The word "State" is used as a part of the title of the State Controller,

State Treasurer, State Board of Control, State Board of Equalization, State

Treasury, or the Constitution of the State of California;

2. The result of that substitution would require action to be taken by or

against this City or any agency, officer, or employee thereof rather than by or

against the State Board of Equalization, in performing the functions incident to

the administration or operation of this Ordinance.

3. In those sections, including, but not necessarily limited to sections

referring to the exterior boundaries of the State of California, where the result

of the substitution would be to:

a. Provide an exemption from this tax with respect to certain

sales, storage, use or other consumption of tangible personal property

which would not otherwise be exempt from this tax while such sales,

storage, use or other consumption remain subject to tax by the State

under the provisions of Part 1 of Division 2 of the Revenue and

Taxation Code, or;

b. Impose this tax with respect to certain sales, storage, use or

other consumption of tangible personal property which would not be

subject to tax by the state under the said provision of that code.

4. In Sections 6701, 6702 (except in the last sentence thereof), 6711,

6715, 6737, 6797 or 6828 of the Revenue and Taxation Code.

B. The word "City" shall be substituted for the word "State" in the phrase

"retailer engaged in business in this State" in Section 6203 and in the definition of that

phrase in Section 6203.

Sec. 98-170. Permit Not Required. If a seller's permit has been issued to a retailer

under Section 6067 of the Revenue and Taxation Code, an additional transactor's permit shall

not be required by this ordinance.

Sec. 98-171. Exemptions and Exclusions.


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A. There shall be excluded from the measure of the transactions tax and the use

tax the amount of any sales tax or use tax imposed by the State of California or by any

city, city and county, or county pursuant to the Bradley-Burns Uniform Local Sales and

Use Tax Law or the amount of any state-administered transactions or use tax.

B. There are exempted from the computation of the amount of transactions tax

the gross receipts from:

1. Sales of tangible personal property, other than fuel or petroleum

products, to operators of aircraft to be used or consumed principally outside the

county in which the sale is made and directly and exclusively in the use of such

aircraft as common carriers of persons or property under the authority of the

laws of this State, the United States, or any foreign government.

2. Sales of property to be used outside the City which is shipped to a

point outside the City, pursuant to the contract of sale, by delivery to such point

by the retailer or his agent, or by delivery by the retailer to a carrier for

shipment to a consignee at such point. For the purposes of this paragraph,

delivery to a point outside the City shall be satisfied:

a. With respect to vehicles (other than commercial vehicles)

subject to registration pursuant to Chapter 1 (commencing with Section

4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance

with Section 21411 of the Public Utilities Code, and undocumented

vessels registered under Division 3.5 (commencing with Section 9840)

of the Vehicle Code by registration to an out-of-City address and by a

declaration under penalty of perjury, signed by the buyer, stating that

such address is, in fact, his or her principal place of residence; and

b. With respect to commercial vehicles, by registration to a

place of business out-of-City and declaration under penalty of perjury,

signed by the buyer, that the vehicle will be operated from that address.


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3. The sale of tangible personal property if the seller is obligated to

furnish the property for a fixed price pursuant to a contract entered into prior to

the operative date of this ordinance.

4. For the purposes of subparagraphs (3) and (4) of this section, the sale

or lease of tangible personal property shall be deemed not to be obligated

pursuant to a contract or lease for any period of time for which any party to the

contract or lease has the unconditional right to terminate the contract or lease

upon notice, whether or not such right is exercised.

5. A lease of tangible personal property which is a continuing sale of

such property, for any period of time for which the lessor is obligated to lease

the property for an amount fixed by the lease prior to the operative date of this

ordinance.

C. There are exempted from the use tax imposed by this ordinance, the storage,

use or other consumption in this City of tangible personal property:

1. The gross receipts from the sale of which have been subject to a

transactions tax under any state-administered transactions and use tax

ordinance.

2. Other than fuel or petroleum products purchased by operators of

aircraft and used or consumed by such operators directly and exclusively in the

use of such aircraft as common carriers of persons or property for hire or

compensation under a certificate of public convenience and necessity issued

pursuant to the laws of this State, the United States, or any foreign government.

This exemption is in addition to the exemptions provided in Sections 6366 and

6366.1 of the Revenue and Taxation Code of the State of California.

3. If the purchaser is obligated to purchase the property for a fixed price

pursuant to a contract entered into prior to the operative date of this ordinance.

4. If the possession of, or the exercise of any right or power over, the

tangible personal property arises under a lease which is a continuing purchase


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of such property for any period of time for which the lessee is obligated to lease

the property for an amount fixed by a lease prior to the operative date of this

ordinance.

5. For the purposes of subparagraphs (3) and (4) of this section, storage,

use, or other consumption, or possession of, or exercise of any right or power

over, tangible personal property shall be deemed not to be obligated pursuant to

a contract or lease for any period of time for which any party to the contract or

lease has the unconditional right to terminate the contract or lease upon notice,

whether or not such right is exercised.

6. Except as provided in subparagraph (7), a retailer engaged in

business in the City shall not be required to collect use tax from the purchaser

of tangible personal property, unless the retailer ships or delivers the property

into the City or participates within the City in making the sale of the property,

including, but not limited to, soliciting or receiving the order, either directly or

indirectly, at a place of business of the retailer in the City or through any

representative, agent, canvasser, solicitor, subsidiary, or person in the City

under the authority of the retailer.

7. "A retailer engaged in business in the City" shall also include any

retailer of any of the following: vehicles subject to registration pursuant to

Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code,

aircraft licensed in compliance with Section 21411 of the Public Utilities Code,

or undocumented vessels registered under Division 3.5 (commencing with

Section 9840) of the Vehicle Code. That retailer shall be required to collect use

tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft

at an address in the City.

D. Any person subject to use tax under this ordinance may credit against that

tax any transactions tax or reimbursement for transactions tax paid to a district

imposing, or retailer liable for a transactions tax pursuant to Part 1.6 of Division 2 of


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the Revenue and Taxation Code with respect to the sale to the person of the property

the storage, use or other consumption of which is subject to the use tax.

Sec. 98-172. Amendments. All amendments subsequent to the effective date of this

ordinance to Part 1 of Division 2 of the Revenue and Taxation Code relating to sales and use

taxes and which are not inconsistent with Part 1.6 and Part 1.7 of Division 2 of the Revenue

and Taxation Code, and all amendments to Part 1.6 and Part 1.7 of Division 2 of the Revenue

and Taxation Code, shall automatically become a part of this ordinance, provided however,

that no such amendment shall operate so as to affect the rate of tax imposed by this ordinance.

Sec. 98-173. Enjoining Collection Forbidden. No injunction or writ of mandate or

other legal or equitable process shall issue in any suit, action or proceeding in any court

against the State or the City, or against any officer of the State or the City, to prevent or enjoin

the collection under this ordinance, or Part 1.6 of Division 2 of the Revenue and Taxation

Code, of any tax or any amount of tax required to be collected.

Sec. 98-174. Annual Audit; Citizens Oversight. By no later than December 31st of

each year after the operative date, the city's independent auditors shall complete a report

reviewing the collection, management and expenditure of revenue from the tax levied by this

Article. Additionally, there shall be a committee consisting of no fewer than five members of

the public to review and report on the receipt of revenue and expenditure of funds from the tax

authorized by this Article. The committee members shall be either Concord residents or

representatives of Concord businesses. Prior to the operative date, the City Council shall

adopt a resolution establishing the composition of the committee, setting the terms of office of

the committee members, and defining the scope of the committees responsibilities, which at a

minimum shall include reviewing the annual auditors report and making recommendations to

the City Council for use of the tax revenue. The committees report and recommendations

shall be completed by a date to allow for it to be considered as part of the annual budget

process. The committees report and recommendations shall be a matter of public record and

shall be considered by the City Council at a public meeting. Also prior to the operative date,

the City Council shall appoint at least a quorum of the members of the committee; and the


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Council shall complete the appointment of members of the committee by the end of fiscal year

2011.

Sec. 98-175. Termination Date. The authority to levy the tax imposed by this

ordinance shall expire on the fifth anniversary of the last day of the calendar quarter preceding

the operative date.

Section 3. The findings for this ordinance in compliance with the California Environmental

Quality Act (CEQA) are the same as those set forth in the Citys Resolution No. 10-72 calling for

an election on this Ordinance. The CEQA findings in Resolution No. 10-72 are incorporated herein

by reference.

Section 4. If any provision of this ordinance or the application thereof to any person or

circumstance is held invalid, the remainder of the ordinance and the application of such provision to

other persons or circumstances shall not be affected thereby.

Section 5. This Ordinance relates to the levying and collecting of the City transactions and

use taxes and shall take effect immediately.

Guy S. BjerkeMayor

ATTEST:

Mary Rae LehmanCity Clerk

(Seal)


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Ordinance No. 10-xx was submitted to the People of the City of Concord at the November 2,

2010, general municipal election. It was approved by the following vote of the People:

YES:

NO:

Ordinance No. 10-xx was thereby adopted by of the voters at the November 2, 2010, election

and took effect upon adoption of a resolution declaring the results of the election at a regular joint

meeting of the City Council and Redevelopment Agency held on [month d, yyyy], by the following

vote:

AYES: Councilmembers -

NOES: Councilmembers -

ABSTAIN: Councilmembers -

ABSENT: Councilmembers -

I HEREBY CERTIFY that the foregoing is a true and correct copy of an ordinance duly and

regularly adopted by the People of the City of Concord, California.

Mary Rae Lehman, CMCCity Clerk

1480366.5


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Attachment 2


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Attachment 3

City of Concord Budget Reductions (2008 to 2010)

In light of the severe economic recession, City Council and the City Staff have been working diligentlyfor several years to address the need for reductions in service levels in light of declining revenues.Because the City has a tradition of long range fiscal planning, the City Council and staff began toimmediately address the budget challenges when they first appeared in FY 2008-2009. Below is anexplanation of the steps the City has taken:

The FY 2008-2009 budget was developed recognizing that a recession was beginning to occurand that measures would be necessary for the budget to remain in balance. As a result, $2.3million was cut from the budget, and, for the first time, $1.8 million in reserves was used to

balance the budget. The recession soon proved to be much deeper than originally anticipated.

In November 2008, City staff began work addressing the budget deficit. City department headswere asked to make budget reduction recommendations. Administratively, most non-laboroperating expenditure budgets were immediately lowered to FY 2007-08 levels. Additionally, abudget reduction task force composed of City employees was created and charged with lookingfor ways to reduce expenditures, increase revenues and/or enhance efficiencies.

In January 2009, City staff recommended and Council adopted approximately $4.0 million inrevenue enhancements and budget reductions. Additionally, the Council modified its budget andfiscal policy to lower the Citys operating contingency and other reserves to 15 percent of

operating expenditures; previously it had been 30 percent. Updated revenue and expenditureprojections indicated that an additional $5.2 million in revenue enhancements or expendituresreductions would be required in FY 2009-10 to achieve the new 15 percent reserve target by theend of the Ten-Year planning period. To allow additional time for staff and Council tostrategically assess revenue and expenditure projections, staff recommended, and the Councilimplemented, a three year phase-in of budget reductions. Due to the time value of money, thisapproach effectively increased the required additional budget reductions from $5.2 million to$6.2 million.

In April 2009, the budget reduction task force completed its work and produced the task forcereport, which consolidated over 1,000 ideas into 250 actionable items. The vast majority of these

ideas have already been implemented or are being considered for implementation this year. Ahandful of the ideas can only be addressed through negotiations, and the remaining were found tobe infeasible at this time.

In June 2009, the City recognized that revenues had decreased further than projected and that itsremaining structural deficit had climbed from $6.2 million to $13.7 million. The Counciladopted a budget reduction phase-in strategy of $4.0 million in cuts for FY 2009-10, anadditional $5.0 million in FY 2010-11, and $4.7 million in FY 2011-12. The proposed budget


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City of Concord Budget Cuts (2008-2010)Page 2 of 8

reductions are cumulative. The $4 million in FY 2009-10 cuts included non-sworn stafffurloughs, benefit concessions by non-sworn management and an early retirement incentiveprogram. The early retirement program was the primary tool for creating the vacant positionsincluded in the budget reduction strategy. By offering an incentive for employees to retire, it

was hoped that most of the vacancies created would be positions that would not need to be filledthereby generating significant budget savings over time. In addition, the early retirementincentive allowed the City to spread the costs of the incentive over a five-year period. The earlyretirement program was successful, with 64 individuals retiring. As a result, the number ofnecessary layoffs was significantly reduced to eight.

In April 2010 the City implemented an extensive outreach effort to ascertain the communitysservice priorities. The outreach effort incorporated a statistically valid telephone survey, a websurvey and five Living Within Our Means Community Workshops. The information obtainedthrough those efforts has been used by staff to guide the decisions regarding the budget cuts andrevenue enhancements incorporated into this proposed FY 2010-11 budget.

As of May 2010 the national and local economies continue to be in recession, resulting in furtherrevenue declines beyond those previously projected. General Fund revenues are expected to be$3.8 million less in FY 2010-11 than projected last year for the same time period. Reduced salesand property tax revenues, the Citys primary sources of General Fund revenues, make up thelions share of this reduction. As a result the estimated remaining budget deficit for the 10-Yearplanning period has increased to approximately $13 million from the $9.7 million projected lastyear.

In June 2010, the City reached agreements with all of its executive, represented andnonrepresented employees, resulting in $3.35 million in wage and compensation concessions.

Police officer and manager unions agreed to give back the scheduled 5 percent pay raise over thenext year by paying 5 percent toward retirement costs and pick up half of all future healthinsurance increases. Local 29, Local 1 and the Citys non-represented employees all agreed tocontinue last years reduction of 5 percent through 13 furlough days, forego raises, and pick uphalf of all future health insurance increases. All non-sworn employees will contribute 5 percentof their salary towards retirement costs by the end of the two year contract with a portion paid inyear 1, stepping up to a full 5% by year 2.

In June 2010, the City Council adopted the 2010-11 City Budget, which included staff andprogram reductions of approximately $5 million. Following is a summary of specific reductionsand enhancements made from Fiscal Year 2008-09 to 2010-11.

Budget Reductions and Enhancements Summary Fiscal Year 2008-09 to 2010-11

2008-09 - $4.1 million

Eliminate Community Action Corporal Position Eliminate Senior Building Inspector


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Eliminate Program Aide Eliminate Finance Administrative Clerk III Position Eliminate Two Police Department Administrative Secretary Positions Eliminate Vacant Lead Dispatcher Position Eliminate Two Police Department Dispatcher Positions Eliminate Two Police Department Forensic Specialist Positions Eliminate Vacant Traffic Signal Technician Eliminate Vacant Maintenance Worker Position Eliminate Vacant Custodian Position Reduce Consultant Contracts Reduce Administrative Support Hours Reduce Plan Check Services Reduce Part-time Clerical Support Reduce Part-time Administrative Support Reduce Part-time GIS Support Reduce Part-time Desktop Publishing Support. Reduce Police Department Intern Program by two authorized positions Reduce Vacant Police Department Call-Taker Position Reduce Vacant Police Department Community Specialist-Records Reduce Part-time Police Department CSI Technician Reduce Contract Police Department Family Violence Victim Advocate Eliminate the Contract Crime Analyst Position Reduce Part-time Contract K-9 Trainer Cancel 2009 Leadership Academy Realize Savings from Holiday Furlough Days Reduce Standalone Printer Replacement Delay Records Management System Replacement Reduce Funds for the Senior Transportation Program Reorganization Engineering Division Allocate Staff Costs Appropriately to Restricted Funds


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Reduce Employee Training Programs Allocate Planning Staff as appropriate to RDA funds Rent Reduced Due to Office Move Reduce Liability Reserves Reduce Citywide Survey Frequency Realign Senior Transportation Program Reassign Full-Time staff, Eliminate Part-Time Staffing at Keller House Reduce after-school program support to Mt. Diablo Unified School District Recognize unfunded mandate reimbursements Appropriately Allocate Finance Staff to CIP Program Reduce Recruitment expenditure Discontinue support for standalone printers Extend Enterprise system software to 12 years from 10 years Appropriately Allocate City Management Staff Costs to RDA funds Appropriately Allocate City Attorney Staff Costs to RDA funds Appropriately Allocate Planning Staff Costs to RDA funds Appropriately Allocate Planning Director Staff Costs to RDA funds Eliminate Police Department Street Smart TV program Eliminate Community Prosecutor Program Reallocate Parking Services unit resources Increase Traffic Enforcement Activities Reduce Police Department Overtime Usage Reduce Facility Maintenance Services Extend Vehicle fleet useful life Reduce Fuel budget Reduce Inflation Assumption

Fiscal Year 2009-10 - $4 million

Eliminate One Building Plans Engineer Position Eliminate Three Building Inspector Positions


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Eliminate One Permit Center Technician Eliminate One Associate Civil Engineer Position Eliminate One Construction Inspector Eliminate Two Assistant Civil Engineer Positions Eliminate One Neighborhood Services Specialist Position Transition Nuisance Abatement Legal Support to In-house Staff Eliminate Administrative Services Staff Half-Time Position Eliminate Two Duplicating/Offset Printer Positions Eliminate CRS Staff On-Site at the Keller House Decrease CRS Marketing Budget Eliminate Funding for Teen After-School and Summer Programs Eliminate General Fund Support for Community Service Grants Reduce hours at the Concord Senior Center to Four Days a Week Reduce Support for Special Recreation Program Eliminate Recreation Customer Service Coordinator Position Close Meadow Homes Pool Eliminate Purchasing Division Administrative Clerk II and Buyer Positions Eliminate on Accountant I Position Reorganize the Treasury Division Reorganize IT Desktop Support Reduce IT Software Related Costs Eliminate One Planner and One Assistant Planner Position Close Two Field Offices and Consolidate Operations in Headquarters Building and Southern Field

Office

Eliminate PD Captain and Administrative Lieutenant Positions Reduce PD Overtime Expenditures by $100,000 Eliminate Senior Crime Analyst Position Eliminate Two Administrative Clerk II Positions in PD Records Eliminate the Victim Violence Advocate Position Staff City Jail during Peak Periods Only Optimize Deployment of Crossing Guards


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Decrease Size of PD Special Enforcement Team (SET) and Special Investigation Bureau (SIB)Units

Reorganize Supervision in Parks Decrease Fleet Maintenance Service Levels Reduction in Administrative Support at the Corp Yard Reduction in Park Maintenance in Connection with Reduced Water Usage Reduce Maintenance Staff at Pool in conjunction with Upgraded Chlorine System Appropriately assign cost of Public Works Support of the Thursday Night Farmers Market and

Music to Redevelopment Agency (RDA)

One Time Equipment Auction Savings (revenue) Privatize Custodial Service Reduce Building Maintenance Service Levels Privatize Street Tree Services Suspend Traffic Calming Program Reduce Frequency of Residential Sweeping to Once a Month Eliminate City Sponsored Neighborhood Cleanups and Rely on Concord Disposal

Fiscal year 20010-11 $5.6 million

Reduce Community Service Desk Hours Reduce Part Time Hours in the Jail Reduce PD Crime Analysis Part Time Hours Implement Citation Sign-Offs Program Reduce Crossing Guard Contract Reduce PD Canine Team by One Canine and Handler Eliminate PD SWAT pagers Establish a Franchise Fee for Tow Operators Within the City (revenue) Reduce Police Officer Trainee Part Time Hours Reduce PD Overtime by $100,000 Manage Dispatch Hours Eliminate Vacant Community Action & Awareness Corporal position Freeze of Two Vacant Police Officer Positions


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Close Police Southern Field Office Implement Cost Recovery for Services Provided by Transportation Staff (revenue) Eliminate General Fund Subsidy to Stormwater Program Extend Useful Life of Vehicles by 25,000 Miles Eliminate all Part-time Custodial Positions Defer Building Maintenance Repairs and Replacement Eliminate the Vacant Administrative Analyst Position (ADA Coordinator) Eliminate Two Vacant CIP Construction Inspector Positions Eliminate One Parks Lead Worker and Two Landscape Gardener Positions Reduce Part-time Parks Seasonal Staff by 50% Reduce Parks Supplies Budget by 27% Eliminate the Vacant Maintenance Utility Mechanic Position Reallocate Costs to Other Funds As Appropriate Reduce the Number of Umpires Provided per Adult Softball League Game from Two Umpires to

One

Eliminate the Contribution to the Mt. Diablo Collaborative for Academics, Recreation &Enrichment for Students (CARES) After School Program

Reduce General Fund Support for Community Grant Program Redesign Camp Concord Operations to Emulate the Business Practices of an Enterprise Operation Downgrade One Senior Recreation Program Manager to Program Manager Eliminate One Program Manager Position Eliminate Vacant CRS Administrative Assistant Position Reduce Part-time Class Registration Clerk Support Adjust Cost Allocation as Appropriate Reorganize the Department Management Structure Terminate the Provisional Appointment of the Neighborhood Services Supervisor and Revert the

Position to a Neighborhood Services Specialist

Host Maintenance Work Order System in the Cloud (Cloud Computing) Replace Existing PBX based Telephone System with Voice Over Internet Protocol Implement Managed IT Print Services Reorganize IT System Programming & Document Services Support


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Simplify IT Desktop Management Approach Eliminate Maintenance Services Radios (Public Works & Engineering) Change Local and Long Distance Telephone Service Provider Lease Instead of Purchase Mobile Data Computers (MDCs) in Police Vehicles Reduce Lawson System Replacement Value by $1.5 Million Extend Desktop Computer Replacement by One Year to Five Years Enhance Business Licenses Compliance and Enhancement Program (revenue) Eliminate Vacant Finance Account Clerk III Position Eliminate Vacant Finance Budget Analyst Position Reduce the Employee Assistance Program (EAP) Budget to Reflect Fewer Budgeted Full Time

Employees (FTE)

Reduce Recruitment Budget to Reflect Lower City Staffing Level Reduce Employee Development Training to Fund Mandated Training Only Reduce Employee Service Recognition Awards Eliminate Two Vacant Human Resources Analyst II positions Realize Savings By Changing Records Storage Vendors Allocate Existing Administrative Staff to Support Grant Funded Base Reuse Efforts Reduce the City Council Travel Budget Reduce Video Services Coordinator to Half-Time Eliminate Part-Time Clerical Support Reduce Funds for Staff Development Miscellaneous Operating Expenditure Reductions


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MEMORANDUM

Date: May 11, 2010

TO: Honorable Mayor Bjerke and Members of the City Council

FROM: Daniel E. Keen, City Manager

SUBJECT: Chart of Additional Program Reductions/Fee Increases Necessary to Resolvethe Remaining Structural Budget Deficit

During Councils budget discussion at their April 13, 2010 meeting, Mayor Bjerke asked staff to

provide information on what additional program reductions would be necessary to resolve theremaining budget deficit in one year. The recommended budget for Fiscal Year (FY) 2010-11which has been submitted to Council, represents the second year of the Citys three-year LivingWithin Our Means budget strategy, and does not fully resolve the budget deficit until FY 2011-12. The recommended FY 2010-11 budget proposes $6.4 million dollars of program cuts, newrevenue, and employee concessions. Notably, it does not include lay-offs for regular employees.A deficit of $6.8 million dollars remains to be resolved in FY 2011-12. Council will beevaluating its options for resolving the remaining deficit over the next year. Clearly, the solutionlies in a combination wage and benefit concessions, program and service reductions and newrevenuethe exact balance between the three is what needs to be resolved.

The attached table represents a truly bleak picture and includes the elimination of 35 full timefilled positions and almost $1.4 million in part-time employees and other direct program support.I am not recommending these cuts as part of the Fiscal Year 2010-2011 budget; they areprovided to the Council for the purpose of clarifying the level of impact that would occur if weattempted to resolve the entirety of the budget deficit through cuts alone.

In preparing the attached list, the executive team took great pains to be realistic. However, giventhe short time frame available to prepare this list, the proposals have not been fully vetted aswould be necessary for a formal budget proposal.

Attachment 4


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CITY OF CONCORDADDITIONAL REDUCTIONS NECESSARY

TO RESOLVE REMAINING BUDGET DEFICITSOLELY THROUGH EXPENDITURE REDUCTIONS

Police

1 Eliminate District Commander Program

The level of services will be reduced with the elimination of alDistrict Commands and the Field Office concept, as well as thdedicated downtown officer. Staff reduced would include onelieutenant, two sergeants, one officer and one communityservices officer.

2Reduce size of Special Enforcement Team(SET)

The elimination of two officers from the SET team will lower thlevel of service by slowing down the response to major crimesand by providing less backup for staffing shortages.

3Reduce administrative support in the RecordsUnit and the Investigations Unit.

With the elimination of two Administrative Clerk II's, the level oservice will decrease as these support functions will be spreaamong remaining staff including sworn personnel anddispatchers.

4Reduce School Resource Officer (SRO)program.

The level of service to the schools will decrease as two lessofficers provide support to the schools in the district.

5 Reduce Traffic EnforcementThe level of traffic safety enforcement in the City will decreasewith the elimination of two traffic officers.

6 Elimination of Crossing Guard services No crossing guards would be provided for schools.

7 Reduce staffing in Financial Crimes UnitThe level of service provided by the financial crimes unit willdecrease because there will be one less officer to respond.

8 Reduce staffing in Special Victims Unit.The level of service provided by the Sp

Concord City Council (CA) Considers New Tax July 27

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