MC Core Tax Cmte 7-7-10
-
Upload
markkerrward5 -
Category
Documents
-
view
220 -
download
0
Transcript of MC Core Tax Cmte 7-7-10
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 1/18
Framing Discussion of theCore Tax and Permanent
Override Review Committee’sRecommendations
Mayor and Council
July 7, 2010
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 2/18
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 3/18
3
FY 2011 General FundBALANCED Budget
$443 million
7%
32%61%
Stable - $139.7
Million
Non-recurring
$34.1 Million
Volatile - $269
Million
City sales tax,
state-shared taxes
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 4/18
4
Recession = Revenue Declines
$202.3
$196.1
$169.7
$159.0 $159.0
2007 2008 2009 2010
(estimated)
2011
(projected)
Fiscal Year
CITY BUSINESS PRIVILEGE TAX
(millions)
$43.3 million, 21% reduction
(Sales tax)
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 5/18
5
Recession = Revenue Declines
State Shared Revenues
(millions)
$ 62.5
$ 74.6$ 77.5
$ 68.4
$ 51.6
$ 37.3$ 36.3$ 41.6
$ 48.3$ 50.3
$ 21.1$ 23.4 $ 23.4 $ 22.1 $ 21.5
2007 2008 2009 2010
(estimated)
2011
(projected)Fiscal Year
State Income Tax State Sales Tax Auto Lieu Tax
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 6/18
6
Projected Fiscal Year 2012Structural Deficit ($ millions)
The future cost of supporting our currentservices is projected to exceed current
recurring revenues by at least $40 million peryear for the next several years. Revenueshortfalls caused by the economic recession
have been covered in the recent fiscal yearsby the use of one-time fixes to fill the gap.Existing deferred maintenance needs onlywiden the gap.
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 7/18
7
Projected Fiscal Year 2012Structural Deficit ($ millions)
One-time actions used to balance FY 2011 budget:$ 9.4 debt restructuring
24.7 land sales/asset leaseback
Starting Shortfall $ 34.1Increased benefit costs ?
Retiree payouts (VL/SL) ?
Elimination of furloughs ?Increased debt costs ?
Decrease in state-shared income tax ?
Critical deferred infrastructure needs ?
Projected Structural Deficit $ 40 and counting…..
(OUT OF BALANCE)
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 8/18
8
Aging Infrastructure Needs Contributeto the City’s Structural Deficit
No long-term plan or fiscal reserves to replace,maintain, or address infrastructure needs
Continuous “deferral” in making decisions, settingpriorities, and investing in critical components
Reduced investment to balance the budget or shiftfunds to other priorities (e.g. elimination of vehicle
replacement fund)
Critical needs should be addressed prior toincreasing City services or staffing levels
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 9/18
9
The Structural Deficit Remains Despite ExpenditureReductions Already Made During Fiscal Years 2009-11
Employee Layoffs and Reduced Compensation (furlough days; increasedpublic safety pension contribution; increased medical premium costs)
Suspension of street paving; Reduced roadway maintenance (i.e.potholes)
Debt restructuring
Suspension of Back to Basics and Youth funding
Closure of 17 Swimming Pools in Summer; Decrease in Leisure Classesand Elimination of Teens Program and Most Adult Sports Programs
Reduction in neighborhood center hours; Closure of OrmsbyNeighborhood Center
Reduced Prosecution of Graffiti, Prostitution, Criminal Nuisance
Deferred Infrastructure Replacement and Maintenance: Streets, Facilities,
Vehicles, Equipment, and Technology Reduction in Outside Agencies Funding
Reduced Neighborhood Mailings and Support
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 10/18
10
4154
3862
3675
3000
3500
4000
4500
FY 2009
Adopted
FY 2010
Adopted
FY 2011
Recommended
F u l l T i m e
E q u i v a l e n t s ( F T E s
479 FTEs, 11.5% Reduction
FY 2011 includes 82 vacant police department staff positions that arenot funded: 72 commissioned officers and 10 civilians
General Fund Positions
The Structural Deficit Remains DespiteSignificant Staffing Cuts
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 11/18
11
Not Enough “Permanent Solutions” Have BeenImplemented to Address the Structural Deficit
Non-Permanent Solutions
• Use of reserves; non-recurringrevenues
• Debt restructuring (3 years inrow)
• Employee furloughs (2 years inrow)
• Deferred and reducedmaintenance and investment
• Service suspension (e.g., streetpaving, pool closures, reduced
operating hours)• Land sales and asset leasebackfinancing
Permanent Solutions
• Increased fees and taxes
• Service cutbacks and elimination
• Efficiencies, consolidations, andcost saving improvements
• Higher benefit costs passed on to
employees
• Layoff of 51 existing employees
• Elimination of vacant positions
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 12/18
12
Committee Scope
Whether, and if so, how best to take a sales tax increase to voters
Potential ballot language and tax increase amount
How sales tax revenues would be programmed
“Plan B” alternative options
Consideration of placing a permanent expenditure base adjustment
on the ballot
Appointed by the Mayor and Council May 25, 2010 todevelop recommendations for addressing the GeneralFund structural deficit
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 13/18
13
Committee Process andRecommendations
6 meetings held (20 hours) between June 2–June 28
Reviewed, identified, and discussed potential revenue
increases and expenditure reductions; maderecommendations on specific options to pursue now
independently of sales tax
At its 6/24/10 meeting, the Committee voted (11-3) insupport of placing a increased sales tax measure on
the November 2010 ballot
Voted (14-0) to not recommend placing a permanentexpenditure base adjustment on the ballot
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 14/18
14
Core Services Tax
Draft Charter Amendment Language presented to Mayor and Council on 4/6/10:- operation of the police department and provision of its services,- operation of the fire department and provision of its services;- care and improvement of city streets
Mayor and Council motion on 4/6/10 defined “core services” as:- Public Safety- Transportation, and- Parks and Recreation
Draft Charter Amendment Language presented to Committee on 6/28/10:- Public Safety including police, fire, and court services- Maintenance of city streets, and
- Parks and recreation programs and facilities
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 15/18
15
Proposed Ballot Language thatAmends the Tucson City Charter
Increases sales tax from 2% to 2.5% for five years
Dedicates the portion over 2% to maintaining and
preserving staffing and programs for: public safety including police, fire, and court
services;
maintenance of city streets; and parks and recreation facilities and programs
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 16/18
16
City Charter vs. Policies/City Code
Charter – Proposed voter-approved amendment toChapter IV “Powers of the City” that addressesimposition of business privilege tax; proposed
language indicates increased amount with sunsetprovision
Implementation Policies/Tucson Code - Used toprovide further specificity and direction regardingCore Services Tax (e.g. citizen oversight)
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 17/18
17
Charter Amendment
Sales tax rate increased from 2 to 2.5%; increased portion is CoreServices Tax.
Core Services Tax funds appropriated annually for specificpurposes
Finance Director prepares annual accounting of Tax.
Included in annual independent financial audit.
Sunsets after 5 years.
8/9/2019 MC Core Tax Cmte 7-7-10
http://slidepdf.com/reader/full/mc-core-tax-cmte-7-7-10 18/18
18
Next Steps
Date Task
July 7 Mayor and Council consideration of placinga sales tax increase on ballot
July and August Committee will continue meeting to discuss“Plan B” alternative options
- If a sales tax increase is not placed onthe ballot
- If a sales tax increase is not approved byvoters
- To be pursued in addition to a sales taxincrease
September “Plan B” recommendations presented toMayor and Council