On November 6, 2012, the Carmel-by-the-Sea electorate voted to approve a sales tax initiative known as Measure D. Measure D authorized a 1% increase in the City’s transactions and use (sales) taxes for ten years to fund capital needs; libraries, the Sunset Center and other public facilities; pension liability and various City services. The authorization to collect the 1% sales tax sunsets on March 31, 2023.
Measure D generates about $3 million in annual revenue. In the current fiscal year, Measure D accounts for 13% of the City’s total revenue of $24 million and funds the debt service payment of the City-issued pension obligation bond, capital projects and City services. Recognizing the significance of maintaining this funding source to the City’s financial health, Council directed staff to place a sales tax renewal measure on the March 3, 2020 ballot to extend the duration of the sales tax in advance of Measure D’s expiration date.
Additionally, as there is remaining capacity within the allowable sales tax rate that may be imposed by the City and County, Council also instructed staff to draft a measure to increase the City’s existing sales tax by .5% to a new rate of 1.5%. If approved, an increase in the amount of sales tax revenue generated will assist the City in addressing known budgetary shortfalls. The City faces financial constraints due to declining revenues and increased operational expenses, including escalating pension and healthcare costs. Such budgetary challenges will require the City to make spending reductions in capital projects and City programs and services.
In order to consolidate the proposed sales tax measure with the Presidential Primary election on March 3, 2020, Council must approve all required documents and file the local measure with the County of Monterey by no later than December 6, 2019. This item, therefore, is on the Council agenda so that Council may initiate the required actions needed to move forward in placing the measure on the March 3, 2020 ballot. Specifically, Council must adopt a resolution that codifies the following actions: (1) calls for the election; (2) makes findings declaring an emergency exists that requires the election to be held before the next regularly scheduled general election for members of the governing body; (3) requests the County of Monterey to consolidate the election on the proposed sales tax measure with the March 3, 2020 Presidential Primary election and to permit the County of Monterey Elections Department to conduct the election; (4) directs the City Clerk to take all necessary action and to coordinate with the County of Monterey to place the sales tax measure on the March 3, 2020 ballot; (5) authorizes argument and rebuttal argument for and against the proposed sales tax measure; and (6) directs the City Attorney to prepare an impartial analysis.
Because the proposed sales tax measure involves the adoption of a general tax that only requires a majority vote of the City of Carmel-by-the-Sea electorate, approval of the resolution to place the measure on the ballot requires a 2/3rd vote of the City Council, or 4 of 5 members of the City Council. Furthermore, because the election on the proposed sales tax measure is to be held other than at the same time as the regularly scheduled general election for members of the City Council, the adoption of findings declaring an emergency requires a unanimous vote by Council.
Council will also be approving the ballot measure language as part of the adoption of the resolution. The intent of the ballot measure is to increase the existing 1% sales tax, which expires in 2023, to a new rate of 1.5% and impose the new rate for a 20-year term that would begin in 2020. The proposed ballot measure is written as follows:
“Shall the Ordinance to increase the City of Carmel-by-the-Sea’s current 1% sales tax to 1.5% to generate an estimated $4.5 million per year for 20 years to enhance the City’s green infrastructure of parks, trails, beaches and trees; invest in community facilities and spaces; maintain public safety and emergency preparation; fund capital needs; address pension liabilities and provide general City services, with all funds staying local, and with an annual independent audit, be adopted?”
Yes ( )
No ( )
The resolution also confirms the following actions: (1) requests that the County of Monterey Elections print the full text of the measure, which is the ordinance imposing a transactions and use tax, within the voters’ guide; (2) confirms that the measure is a general tax and requires approval by a majority vote of the voters voting in the election; (3) authorizes the Council to prepare a written argument in favor of the measure to be signed by such members of the City Council that wish to do so; (4) establishes the deadline of 5:00 p.m. on Friday November 8, 2019 for the filing of arguments for and against the measure; (5) authorizes the City Council, or member(s) of the City Council, to prepare a rebuttal argument; (6) establishes the deadline of 5:00 p.m. on Friday November 22, 2019 for the filing of rebuttal argument; (7) authorizes individual members of the City Council to release their rebuttal argument to other persons; and (8) directs the City Attorney to prepare the impartial analysis no later than Monday November 25, 2019. Council may wish to determine which member(s) of Council will be preparing and signing the written argument as part of its October 8, 2019 meeting. In addition, in accordance with Elections Code Section 9285(a), Council may confirm that the author or a majority of the authors of an argument in favor of the City measure may prepare and submit a rebuttal argument or Council may authorize in writing another person or persons to prepare, submit, or sign the rebuttal argument.
Upon adoption of the resolution, staff will coordinate with the County of Monterey to submit the local measure and commence with undertaking other necessary action related to the forthcoming election, including, but not limited to, the submittal of arguments and the impartial analysis to the County and public noticing as required by the State Elections Code.