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11/04/2003, BUS 4 - RESULTS OF REVENUE MEASURE FEASIBILITY ANALYSIS
9 council. M�°nap 11-4-03 � j acEnoa nEpoRt �N 4 CITY OF SAN LUIS OBISPO FROM: Bill Statler, Director of Finance&Information Technology yn SUBJECT: RESULTS OF REVENUE MEASURE FEASIBILITY ANALYSIS CAO RECOMMENDATION 1. Review and discuss the results of the revenue measure feasibility analysis prepared by The Lew Edwards Group. 2. .Direct staff to further evaluate the possibility of forming an assessment district to help fund creek and flood protection improvements and maintenance, including storm drain repairs. DISCUSSION Overview Provided in Attachment 1 is the report prepared by The Lew Edwards Group (LEG) on the feasibility of a revenue ballot measure to help the City finance services in light of the reductions made as part of the 2003-05 Financial Plan, and the likelihood that further reductions will be needed without additional revenues. LEG's findings and recommendations are based on the results of the public opinion research conducted by their team partner Fairbank, Maslin, Maullin & Associates (FMMA), which are provided in Attachment 2. They conclude that a revenue measure requiring two-thirds voter approval is not feasible at this time. While there are a number of reasons for this, significant factors include: 1. Two-thirds of likely voters believe that the City is "headed in the right direction, and three- quarters rate City services as excellent or good. These beliefs translate into a lack of urgency regarding the need for new City revenues. 2. On the other hand, voters are very concerned about the direction the State is headed. This may further reinforce uncertainty about support for any new initiatives locally. And this uncertainty is likely to continue for some time, given the results of the recall and election of a new governor(which occurred after the survey was taken). However, there are three issues where there is possible voter support for new revenues in the future: storm drainage repairs, traffic safety/congestion reduction and affordable housing. Accordingly, LEG recommends that the City further study these to determine the financial viability, if any, of a finance measure targeted to any of these projects. As noted in their report, the future success of any voter-approved revenue measure depends upon developing an expenditure plan that addresses the key concerns of our community as reflected in the survey results, as well as appropriately increasing awareness among our voters of the critical, urgent I Results of Revenue Measure Feasibility Analysis Page 2 financial needs facing the City. However, as also noted in their report, the benefit of more time— or simply choosing to suspend planning for an indefinite period — may not increase our chances for success at a later date. As we saw in the differences between the May 2000 and August 2003 surveys, the feasibility for an appropriately crafted voter finance measure was actually higher in 2000. For this reason, we recommend quickly moving forward with additional analysis on forming an assessment district for creek and flood protection, with a special emphasis on storm drainage repairs. As discussed in greater detail below, there is strong voter interest in this, with 61% saying that they would definitely or probably support a modest level of funding for this purpose. Since an assessment district approach only requires majority voter approval (rather than two- thirds), this may be a viable funding approach. However, as discussed below, there are many special nuances in forming an assessment district under Proposition 218, which we need to further evaluate. For this reason, we do not recommend .taking steps to start forming an assessment district at this time: we plan on returning to the Council in March 2004 with this analysis, in conjunction with a detailed report on storm drainage needs, which is currently scheduled for presentation to the Council at that time. This will give us time to further research what would be necessary to form an assessment district. Moreover, with completion of the Storm Drainage Master Plan, we will have a better definition of our improvement funding needs at that time. Background In light of the results of the five-year General Fund forecast, which concluded that the City will face significant challenges over the next five years in just providing current service levels and adequately maintaining existing infrastructure—let alone achieving adopted capital improvement goals or funding new initiatives—the Council adopted "Long-Term Fiscal Health" as a Major City Goal for 2003-05. As detailed in the excerpt from the 2003-05 Financial Plan provided in Attachment 3, analyzing the feasibility of a revenue ballot measure is an integral part of the work program for this goal. In implementing this part of the work program for this major City goal, the Council approved a contract with The Lew Edwards Group on July 1, 2003, with FMMA as their team partner in conducting the public opinion research component. Summary of Report Findings The good news: Our residents are very positive about the community and City services: 1. 94% believe that the quality of life in San Luis Obispo is excellent (64%) or good (30%). FMMA reports that similar quality of life assessments for comparable cities in the Los Angeles or San Francisco Bay metropolitan areas would be in the mid-fifties percent range. 2. 68% believe that the City is headed in the right direction. In contrast with other surveys taken on a statewide basis at the same time as ours, two-thirds of the state's voters think that California has been on the "wrong track" Results of Revenue Measure Feasibility Analysis Page 3 3. About the same percent (63%) think that things will be the same or better 5 years from now. 4. 73% rate City services as excellent or good. In short, likely voters are generally very satisfied with the way things are, and they are not concerned that this is likely to change in the next five years. Generally, positives like this provide the foundation for a successful revenue measure. In our case, however, it is likely that they result in a lack of urgency to fund any new initiatives locally, especially in light of concerns at a higher governmental level about where the State is headed. As summarized below, none of the day-to-day service areas or improvement projects surveyed closely approach two-thirds voter support: Definitely or Possibly Yes 'Updated police facility 51% Updated police facility and flood protection improvements 49% Replacetrepair deteriorating bridges 63% Improve fire emergency response services 58% Continue high level of street resurfacing 55% Improve police emergency response services 50% Repair storm drain services to protect creeks and prevent flooding 54% Improve traffic signals/City signals/Cityintersections to prevent gridlock/improve safe 49% At 63%, the project attracting the most support is replacing/repairing bridges (although this is still short of the 67% needed). While this is probably skewed by the "high profile" of the Foothill Street Bridge, it does reflect the need for compelling, graphic examples of why new revenues would be needed. Without these, two-thirds voter support is unlikely, Majority Vs Two-Thirds Voter Approval especially given the high satisfaction with the way things are. As noted in the The focus of this analysis is on two-thirds voter approval measures, since that is what is FMMA report: required to "earmark"the proceeds for specific purposes. "The responses to these questions reveal something of a paradox for City leaders: Majority voter approval is allowed for"general Voters have a favorable view of City purpose" revenues, where the use of the government and living conditions in San proceeds cannot be specified. However, most Luis Obispo, so much so that the sense of measures go the "two-thirds" route, because although the voter approval threshold is higher, urgency that underlies most successful the need can be better articulated. local ballot measures asking for additional funding support is lacking, except in a As discussed in Attachment 3, the exception to more limited and insufficient number of this is a fiscal crisis, where new revenues are voters. In short, .professionals in the needed to immediately avoid draconian cuts in business of planning for the City's future day-to-day services. We have worked hard to avoid this in San Luis Obispo, and we will fiscal needs are aware of needs that are continue to do so. To the extent we are not apparent to an adequate number of successful, this means that general-purpose, voters." majority voter-approval measures are unlikely. �-3 Results of Revenue.Measure Feasibility Analysis Page 4 This does not mean that there are not major community concerns. The following are the "top five" issues, which are consistent with the results of the much more informal, open-ended survey we conducted via the utility bills as part of the 2003-05 Financial Plan process. "To 5"Serious Problems Facing the Ci Very Serious Serious Total Serious Availability of affordable housing 78% 13% 91% Local impact of State budget crisis 49% 31% 80% Traffic congestion 32% 42% 74% Rapid growth and development 28% .36% 64% Speeding cars on City streets 1 28% 1 36% 64% It is interesting to note that while the level of street maintenance is still a concern (it's "Number 11" on the survey list), it has fallen from being one of the top concerns in past surveys. This is probably due to the major improvements that we have made in this area over the past several years. Paradoxically, without new revenues, continued funding at the level that made these improvements possible is one of the areas most at risk in the future. For example, in balancing the budget for 2003-05, we reduced funding for street resurfacing by 40% ($1 million annually). Where to From Here? As noted previously, the results show three areas where more analysis is warranted in terms of possible revenue measures: traffic safety/congestion reduction; storm drainage repair; and affordable housing. Storm drainage repair warrants special attention at this time for three reasons: 1. We know we have significant unfunded needs in this area. For example, until 2001-03, the City had not funded any significant level of storm drain repairs in 15 years. Further, the recently approved Waterways Management Plan, and the upcoming Storm Drainage Master Plan, document the need for added resources in this area. 2. Providing added resources for creek and flood protection, including storm drain maintenance and repair, was a major factor behind formation of the Creek and Flood Protection Enterprise Fund in 2002-03, and adopting a multi-year rate program. Unfortunately, due to an adverse appellate court ruling on a similar fee program in Salinas, we rescinded this funding program. However, while the funding went away, the need did not. 3. In this case, we have the option of forming an assessment district, which has the advantage of specifying the use of the proceeds with majority rather than two-thirds voter support. However, there are a number of procedural requirements that are unique to forming an assessment district compared' with other revenue ballot measures, especially in a post- Proposition 218 environment. For example, while majority voter approval is required, in this case the "voters" are not registered voters with the County Clerk, but those property owners upon whom assessments will be made. Moreover, votes are weighted by the amount of the assessment: a property owner with an annual assessment of$100 will have twice the votes as an owner with $50 in annual assessments. And because of this, individual votes are public, l �� Results of Revenue Measure Feasibility Analysis Page 5 not private. Lastly, because of its unique nature, an assessment measure can be held at any time, and there are no particular economies of scale in costs in consolidating with another election. As noted above, we recommend focusing on further evaluation of the concept of forming an assessment district to help fund creek and flood protection improvements and maintenance, including storm drain repairs, and returning with the results of this analysis in March 2004, when Council consideration of the Storm Drainage Master Plan is already scheduled. If the Council decides in March 2004 to further pursue this concept, the next step would be to conduct a public information program and follow-up public opinion research. This would take between 6 to 12 months, and depending on the nature of the public information campaign, cost between $50,000 to $75,000 for preparing, printing and mailing educational materials, and conducting a follow-up survey. At the end of this period, the Council would decide whether to go forward with an election to form an assessment district for this purpose. As stressed in Attachment 3; while the Council has significant resource discretion in the evaluation and education phase, once this becomes a formal measure, no City resources can be used for its advocacy. For this reason, one.of the key needed outcomes from the education phase is the emergence of a community-based group that will aggressively campaign for its passage. On Affordable Housing. The City is on record as encouraging the Affordable Housing Trust Fund to pursue a countywide revenue ballot measure to assist with funding affordable housing programs. While no specific revenue measures were tested in this survey, the findings indicate that there is a strong basis for the Affordable Housing Trust Fund to conduct further research into this possibility. FISCAL IWACT There are no fiscal impacts associated with the recommended action. However, as noted above, if we subsequently go forward with a public information program on the possibility of forming an assessment district to help fund creek and flood protection improvements and maintenance, including storm drain repairs, this is likely to cost between $50,000 to $75,000. ATTACHMENTS 1. Report from The Lew Edwards Group 2. Voter Opinion Survey by FMMA 3. Major City Goal Work Program, 2003-05 Financial Plan: Long-Term Fiscal Health G:2004 Ballot Measure Preparation/Feasibility Assessment/Council Agenda Report. Attachment 1 ! i� ri �f EDWARDS To: Bill Statler, Director of Finance & Information Technology City of San Luis Obispo From: Catherine Lew, Esq. Sarahjane Sacchetti Date: October 21, 2003 Re: Feasibility of a City Finance Measure Overall Assessment The following constitutes our analysis and recommendations on the feasibility of specific finance measure concepts evaluated in the baseline survey conducted in the City on August 25, 2003 by our team partner, Fairbank, Maslin, Maullin & Associates. FMM&A will provide the City with an Executive Summary of survey results under separate cover. Our overall review and subsequent assessment leads us to the opinion that several of the expenditure concepts tested in .the August survey_are not feasible for consideration as voter finance measures in the near ,future, including an updated public safety facility, expanded street paving, more traffic signals,-and storm drain improvements. However, the survey also identified other key proiects that your public.max support in the future. These projects, in our opinion, warrant further consideration. Some of the many key findings include: 1 A^significant degree of voter satisfaction with.Quality of LiLe and Quality of City Services. Overall, your public is very pleased with the quality of life in San Luis Obispo. 94% of respondents rated the City a Good or f '�P Attachment 1 Excellent place to live, a finding consistent with the level of satisfaction expressed by respondents to the May 2000 voter survey. When asked if the City is "doing an excellent, good, just fair or poor job providing municipal services to residents," 74% responded Excellent or Good, again a finding consistent with the level of job rating given by respondents in the 2000 survey. These findings are an affirmation of the excellent standards for community services that the City prides itself on. 2. A lack of urgency for the need to improve or expand specific.services tested in the survey. Perhaps because of the fact that voters are satisfied with their local quality of life and rate City services well, there appears to be corresponding lack of urgency for the need to improve or expand some of the services. This perceived lack of urgency from voters clearly affects their willingness to pay for improvements in services or projects. For example, expenditure projects for Public Safety building upgrades tested in the poll appear not to be feasible for consideration as voter finance measures at this time, as support is well below the necessary two-thirds requirement for a successful measure. Other strategic considerations, among others, include the facts that: o Only 57% say they'll support a sales tax increase — a two-thirds requirement measure; o Only 40% are supportive of a general obligation bond financing mechanism. The numbers shown above may reflect not only the levels of satisfaction with local quality of life and services, but also a growing sensitivity to economic uncertainties, resulting in a reluctance to increase taxes. In reviewing the survey conducted by our team in San Luis Obispo in May 2000, it would appear that voter support for a Quality of Life Measure (potentially encompassing open space, recreation, public safety, and traffic reduction) was at a two-thirds level of support, provided that the measure proposed did not exceed an annual cost of$50. Unfortunately, the external climate has changed dramatically in 2003. Voter support may have decreased with concerns about the domestic economy, the 4 �q Attachment 1 effects of war abroad and international events, the State fiscal crisis and even the recent Recall election. However, it is important to note that the 2003 survey did exhibit higher levels of concern, and thus potential support for new funding sources, in three areas: • .fordable Housing, • Storm Drainage Repairs: • Traffic Safe /Congestion Reduction. Although the City may not have previously considered development of a finance measure encompassing or supporting the above policy/infrastructure areas, we recommend further study to determine the financial viability, if any, of a finance measure targeted to any of these projects. The future success of any Finance Measure is incumbent upon the development of an Expenditure Plan that addresses the key concerns your public has expressed in the Survey, as well as appropriately increasing awareness among your electorate of the critical, urgent financial needs facing the City and its residents. Unfortunately, the benefit of more time — or, simply choosin,, t�pend planning for an indefinite period — may not increase your chances for success at a later date. As we saw in the differences between the May 2000 and August 2003 surveys; the feasibility for ail appropriately crafted voter finance measure was actually higher in 2000. Next Steps: We recommend that the City take ample time to review its current funding prams to determine if a Measure including bridge repair, storm drainage and creek protection, and traffic safety and street maintenance would. effectively address current fiscal challenges in a viable manner. Of course, the Survey shows that a critical component of any voter finance measure will be its cost to voters. L[ Attachment 1 We encourage the City to carefully study and consider the specific programs below as options for a future revenue measure or measures: 1) Storm Drainage Repairs Out of all potential measures respondents were asked to consider, a monthly fee of $1.00/month to repair and expand the City's old and inadequate storm drain system received the greatest amount of support, at 61% Probably or Definitely Yes. When asked if they would support a $3 increase to the monthly bill for the same project, support drops to 45%. We recommend that the City consider a future Storm Drainage Finance Measure. 2) Affordable Housing Affordable housing topped the issue list in both the open ended and listed issues facing the City. An overwhelming 91% of those .surveyed see "The availability_of affordable housing for middle-class families" as a Very or.Somewhat.Serious problem. Although those surveyed showed a high level of concern for this issue, no specific projects to address affordable housing were tested in the Survey. Voters may not react to added revenues to fund new affordable housing initiatives with the same degree of intensity. 3) Traffic Congestion and Safety Throughout the survey, traffic congestion, bridge repair and street maintenance projects were rated as more important than other types of public safety projects. This reinforces the trend among local voters in the 2000 baseline survey, where we found that traffic and parking were identified as serious issues by two-thirds of respondents. It is clear that this voter concern about this issue has remained consistent over time.. If the City is able to develop a financially viable measure or measures encompassing or,addressing the above projects, the next step would be to conduct a second public opinion survey to test the public's support for this retooled concept in a more focused and comprehensive manner. In order for the City to take the time necessary to undergo its own planning, and to conduct worthwhile assessment, we advise the City to wait for the current "recall madness"_to subside before assessing the electorate again. If a different measure encompassing the program(s) above is determined to be feasible, it will be essential for the City to build in time for a pro-active. - 6 r� Attachment 1 non:partisan public information pram to educate residents on the needs addressed by the measure in question. Again, we recommend that the City take the time necessary to thoroughly review the possible funding avenues and expenditure projects available. Sample Timeline for a Future Finance Measure: We normally recommend that the team take a year to thoroughly plan a measure, include the public in the process, and build community awareness on your particular needs. Phase 1: Refine Potential Measure & Determine Feasibility: 4 months City Staff conducts further study and investigation of funding options identified in August poll and described above: 60 days Conduct second poll to test feasibility of retooled measure Analyze poll results, refine measure, develop Strategic Plan: 60 days Phase 2: Implement Public Information Program (nonpartisan): 6-8 months Community Advisory Group reviews Measure Opinion Leader Mailing #1 Community Educational Mailings Earned Media Program Speakers Bureau Council Acts to place Measure on Ballot Work transfers to Partisan Volunteer Committee Z+- f D - r- Attachment 2 city of San WIS OBISPO VOTER OPINION SURVEY RELATIVE TO POTENTIAL BALLOT MEASURES FOR FUNDING CITY SERVICES August 2528, 2003 220-1482 Fairbank, Maslin, Maullin & Associates Opinion Research & Public Policy Analysis Santa Monica, CA —Oakland, CA—Madison, WI - Mexico City Attachment 2 SUMMARY REPORT VOTER OPINION SURVEY RELATIVE TO POTENTIAL BALLOT MEASURES FOR FUNDING CITY SERVICES August 25-28,2003 220-1481 Methodology The City of San Luis Obispo commissioned a telephone survey of a random sample of voters likely to participate in the November 2004 to test support for various ballot initiatives that would fund capital and operating expenditures. The survey was conducted between August 25 and 28, 2003. Four hundred respondents participated in the survey, and the margin of error for the sample as a whole is plus or minus 4.9 percent. The survey questionnaire included a battery of introductory questions asking for respondents' assessment of the quality of life in San Luis Obispo and respondents' opinions about the issues and problems faced by local residents and city government. Voters were also asked specifically to rate the importance of sustaining or improving various City of San Luis Obispo services with additional funds, assuming that the current. and future state budgets will reduce funds available for local government services. In addition, voters rated the importance of the City of San Luis Obispo undertaking various one-time improvement projects. The final part of the survey questionnaire provided respondents with several ballot measure concepts for generating new funds for municipal services and projects. Importance of the City Undertaking One-Time.Improvement Proiects and Imnortance.of Sustaining or Improving Services with Additional Funds Table 1 and 2 show that there is little enthusiasm among voters fora list of one-time improvement measures or for sustaining or improving services with additional funds, under the assumption that the state budget will reduce funds available for local city services. -- Attachment 2 Voter Opinion Survey,City of San Luis Obispo August 25-28 20too page 2 Using a scale of one to seven, where one "means not at all important" and seven means "very important only one of the seven one-time improvement projects—replacing older, deteriorating bridges—obtained a mean score higher than five, or one point greater than four, the point on a seven-point scale that indicates indifference or neutrality. In all, barely half(51 percent) scored "replacing older, deteriorating bridges," the highest scoring item on the list, as either six or seven, indicating high importance. "Purchasing and permanently preserving open space" was the only other item on this list that voters rated important enough to suggest that it might win support if it were part, or the focus, of an expenditure initiative measure. As Table 1 shows,47 percent rated it either six or seven on the seven point scale of importance. Table 2 reports that none of the four items tested for voter interest in sustaining or improving with additional funds scored highly on the importance scale. Each item barely obtained a mean score above four, the indifference point, and the range scoring six or seven on the seven-point importance scale was between 26 and 31 percent. Table 1 Importance of City of SLO "Undertaking and paying for One-Time Improvements" (1-7 scale with 1= "Not Important"and 7="Very Important") C3�i1 C30 Replacing older,deteriorating bridges In Sen Luis Obispo that are beyond making repairs,such as the Foothill Bridge 5.4 51% 4% Purchasing and permanently preserving key areas of open space In San Luis Obispo 4.9 47% 2% Repairing and expanding the City's old and Inadequate storm drain system to protect local creeks and prevent floods In severe rainy years 4.3 1 21% 3% Building the Railroad Bicycle Trail tocreatea cross-city bike path 4.2 29% 3% Creating a central emergency operations center for police,fire and paramedic services for better emergency coordination 4.2 27% 2% Buying a fire engine truck that is specifically designed for fighting wild land fires 4.1 23% 5% Replacing San Luis Obispo's Inadequate and overcrowded police headquarters building with a modem headquarters that Is safe from flooding,meets modem security and handicap accessibility standards, and has an adequate emergency 9.1-1 dispatch center 1 3.9 19% 6% - Attachment 2 Voter Opinion Survey,City of San Luis Obispo,Aueust.25-28,20tr.y pat=e 3 Table 2 Importance of Sustaining or Improving Various City of SLO Services with Additional Funds, Assuming New State Budget Will Reduce Funds for Local Government Services (1-7 scale with 1= "Not important"and 7= "Very Important') Mean %6 Score or 7 DK Continuing the City's street pavement resurfacing program, to keep streets smooth and safe for motorists and pedestrians 4.5 28% 2% Creating a dedicated paramedic squad in the Fire Department so that emergency response times can be reduced 4.4 31% 2% Improving traffic signals at many city Intersections to prevent gridlock and improve motorist and pedestrian safety 4.3 28% 1% Providing more police patrols and reducing police response time in residential neighborhoods 4.2 26% 1% In short, for the items tested, there is little, if any, sense of urgency or importance in so far as public spending is concerned. Even when told to assume major cutbacks in state support for municipal services, voters failed to respond by saying it was important for the City to find additional funding. Support Specific Ballot Measure concepts The survey provided respondents with two basic ballot measure concepts: a quarter-cent increase in the local sales tax to sustain or improve paramedic services, provide more police patrols and reduce police response times and a G.O. bond to fund the replacement of the current police headquarters facility with a modern building, including an updated emergency response center. The new police facility concept was further tested by pairing it with other types of physical improvements or augmented city services. In addition, the police facility measure was tested according to whether it was financed by a G. O. bond or by a sales tax increase. In addition, the concept of financing storm drain repairs or repair and maintenance for parks with either a one or three dollar property owner fee was also posed to respondents. Attachment 2 Voter Opinion Survey,City of San Luis Obispo,August 25-28,2000-' page 4 The quarter-cent sales tax increase concept Graph 1 shows that the quarter-cent sales tax increase proposal for sustaining or improving police and paramedic services obtains support from 57 percent, substantially below the necessary two-thirds margin for passage. Further, little more than a third says it would"definitely" vote for such a ballot measure. Graph 1 Vote Yes/No on V Cent Local Sales Tax Increase to"Sustain or Improve"Paramedic Services,Provide More Police Patrols and Reduce Police Response Times Definitely yes 38% NMI 4% Probably yes 19% Definitely no 26% Probably no 13% Table 3 provides the volunteered responses to a follow-up question asking for reasons for supporting or opposing the quarter-cent sales tax increase concept. The most frequently mentioned reason to oppose this measure is adversity top a new tax (31 percent) and its compliment, "can't afford it" (8 percent). Interestingly, other responses imply that many voters do not sense a need for additional funding because they do not perceive a problem to be solved or a need for additional service. 4 - fS� Attachment 2 Voter Opinion Survey,GSty of San Luis Obispo,August 25-28,20tr., page 5 Table 3 Reasons for Yes/'No Vote on t/4 Cent Local Sales Tax Increase to "Sustain or Improve" Paramedic Services,Provide More Police Patrols and Reduce Police Response Times (Volunteered, Open-ended Response, Top 6 Reasons) mzlm wm 4b Reasons No % Important/necessary/high priority 29% Taxes are too high/no more taxes 31% Affordable/Small amount of money Current service levels are to,pay/Worth the money 21% satisfactory/improvement not needed 18% Funding support/Money is Already have enough money/Need needed/Want services to continue 19% better use of funding 15% Improve police response time/safety/public protection/Feel Lower priority/Not as important as safer 12°k other things 11% Feel safe enough/Crime rate not too Improvements/upgrades 8% high/Current response time Is good 11% Up to us/State won't pay for it/Our Can't afford/Costs too much/On fixed responsibility 8% 1 Income 8°/0 On the support side, less than one in ten link the sale tax measure to the likelihood of less state money for the City government operations, while larger fractions either found the amount of the tax increase to be trivial or said there was a service maintenance or improvement need. Table 4 shows the demographics of support and opposition related to the quarter-cent sales tax increase proposal. Although there are variations in support and opposition to the sales tax concept among voter subgroups, none are statistically or strategically important except for"political party" and voter segments sorted by assessment of the job being done by the City of San Luis Obispo in providing municipal services. As the graph indicates, there is an important difference between Democrats—who are more favorably disposed to the sales tax idea—and Republicans and those registered"decline-to-state (DTS)." Democrats and Republicans are about evenly split in the potential local November 2004 electorate—40 and 39 percent respectively -- and DTS voters are about 14 percent. Attachment 2 Voter Opinion Survey, City of San Luis Obispo,August 25-28.20kp., page 6 Table 4 Analysis of Demographic and Attitudinal Differences on 1/4 Sales Tax Increase Measure for Paramedics,More Police Patrols and Faster Police Response Time DEMOGRAPHIC GROUP TOTAL YES TOTAL NO NMUDK • Men 55% 43% 3% Women 58% 35% 7% MM 18-49 53% 43% 40/6 50+ 59% 35% 6% • $0$30K 54% 40% 6% $30K-$70K 59% 37% 40/6 >$70K 62% 36% 2% JRACEIETHNICITY White 57% 37% 6% Non-white 60% 38% 3% o • Non-college 56% 36% 80/0 College+ 57% 41% 30/6 IZIP • • 93401 570/6 39% 40h 93405 56% 38% 6% HOME Own 57% 39% 4% Rent 54% 39% 7°k e Democrats 68% 29% 3% Republicans 49% 46% 5% DTS/Other 47% 43% 10% DIRECTIONIWRONG Right Direction 580/0 38% 40/6 Wrong Track 58% 37% 5% ICUkhtENT QUALITY • Excellent 60% 34% 5% Good 48% 47% 5% Excellent/Good 570/6 38% 5% Fair/Poor 54% 46% 0% ICITY SERVICES RATING Excellent 68% 27% 5% Good 58% 379'6 5% Excellent/Good 600/0 35% 5% Fair/Poor 48% 49% 3% Attachment 2 Voter Opinion Survey,City of San Luis Obispo,August 25-28,20uo page 7 Support for the sales tax concept is substantially lower among the 24 percent of the November 2004 electorate that rates the City's job performance unfavorably. The low level of support in these two elements of the electorate, understanding that there is a certain amount of overlap, is significant enough to drive support levels well below the 70 percent level voter opinion researchers usually find associated with an ultimately successful financial ballot measure. This is not to say that a quarter-cent sale tax increase to support police and paramedic services would never win two-thirds voter support in San Luis Obispo. Looking to the future, a sense of urgency could increase within the local electorate as new, post-Recall Election events materialize, such as a repeal of the recent vehicle license tax increase without another source of state subvention funds taking its place. And, if a compelling, comprehensive communications campaign in favor of a sales tax measure were mounted, it might possibly convince some of those who are now reluctant on this measure to change to a position of support. However, as of time of the survey, support for the sales tax increase initiative concept for police and paramedic services is far from the necessary two-thirds vote required for passage. The G.O. Bond Concept The survey tested the feasibility of a G.O. bond to build a new police facility including a coordinated police, paramedic and fire emergency operations center. By splitting the sample into two equal randomly-selected segments, this concept was tested in conjunction with, and independent of, flood control capital improvements. As Graph 2 shows, neither concept—with or without the flood control element—gained anywhere near the two-thirds support needed for passage. Further, as Graph 3 illustrates, after hearing election campaign style arguments for and against the G.O. bond concept, support diminished even further. There is even less inclination to support a new police facility ballot measure if it were funded by a quarter-cent sales tax increase, as Graph 4 shows. -� Attachment 2 Voter Opinion Survey.City of San Luis Obispo,August 25-28,200jo ease 8 Graph 2 Initial Vote Yes/No on New Police Facility Measure Without Flood Control Program With Flood Control Program oennKey Dwriltey Yes Yes 23% 23% Probably yes Probably yes 25% 28% DK/NA DKMA 2% 2% KU N50 10% Th Probably no Probably no Daflnitey no 17% Denn�ly no 14% 22% Graph 3 Final Vote Yes/No on New Police Facility Measure Without Flood Control Program With Flood Control Program Dennnely Dennnely yea yea 22% 22% Probably yes P robably yes 21%24% DKMA DK/NA 4% 4% NE NN8% 8% Probably no 15% a blyy no De0naoly no 22% 20% Definitely no 30% �—� Attachment 2 ( I Voter Opinion Survey,City of San Luis Obispo,August 25-28,20b-, nage 9 Graph 4 Inclination to Support New Police Facility Measure if Bond or Sales Tax Funded by a General Obligation Funded by Increasing the Sales Tax in Bond Measure the City of San Luis Obispo by One- quarter of One Percent Somewhat Definitely more Somewhat more Inclined Definitely more Inclined 2495 more Inched 15% incl 16% 16% DKINA DK/NA 2% Makes no Need d marekdo difference Makes no 12% difference 4% NMI 17% 11% Somewhat Somewhat Definitely lase Inclined less Inclined Definitely 15% less Inclined 6% less Inclined 17% 31% Returning to the G.O. bond police facility measure concept, Table 5 shows that more than four in ten opposing this ballot measure believe that the current police facility is satisfactory as is, or that it can be repaired. Another one in five believes that a new police facility is a lesser priority than other needs. The anti-tax argument is less frequently volunteered in comparison to opposition to the sales tax measure discussed above, but more than one in ten volunteer it as a reason to oppose the G.O. bond measure. Table 5 Reasons for Initial Yes/No Vote on New Police Facility Measure (Volunteered,Open-ended Response,Top 6 Reasons) CX,9 4b Reason N_o % Current service levels are satisfactory/no Improvement Important/necessary/high priority 270/6 needed 21% New police facilities aren't Improve police response needed/Use or repair existing time/safety/public protection 18% building _ 20% Improve police facilitiestheadquarters Lower priority/Should spend building 13% money on other things 18% Improve emergency/911 services/Emergency preparedness 12% Taxes are too high/no more taxes 12% Storm drain Improvement not Improvements/updates/upgrade needed/Police facility cannot be services 10% flooded 9% Coordinatiorilcombining of Already have enough servlces/Dispatch centers 7% money/Need better use of funding . 6% Attachment 2 Voter Opinion Survey,City of San Luis Obispo,August 25-28,200.3 page 10 On the positive side, supporters of the G.O. bond measure—who make up a plurality or a slim majority of the voters, depending on the version of the measure—without prompting volunteered reasons related to need and improvement of police service. In contrast to the sales tax measure, as illustrated by Table 6, the demographics of support and opposition for police facility G.O. bond measure show a number of important differences among voter subgroups. There is a significant difference according to gender and income, and the latter is further reflected in differences by zip code and home owner or renter status. (Higher income homeowners are clearly less likely to vote"yes" on this measure than lower or moderate income renters.) Party affiliation is much less of a factor associated with support or opposition, but again, the perception of how well the City delivers services effects support and opposition for the G.O. bond measure. Table 6 Analysis of Demographic and Attitudinal Differences on Initial Police Facilities Measure Vote DEMOGRAPHIC GROUP TOTAL YES TOTAL NO NMI/DK GENDER Men 42% 48% 10% Women 56% 31% 13% AGE 18-49 50% 41% 9% 50+ 50% 36% 14% INCOME $0-$30K 57% 32% 11% $30K-$70K 54% 379/6 9% >$70K 44% 44% 12% RACE/ETHNICITY White 51% 37% 12% Non-white 55% 33% 13% _ . Attachment 2 Voter Opinion Survey,City of San Luis Obispo,August 25-28,20ty, page 11 Table 6 Continued: DEMOGRAPHIC GROUP TOTAL YES TOTAL NO NMVDK EDUCATION Non-college 51% 36% 13% College+ 49% 41% 11% ZIP CODE 93401 54% 37% 9% 93405 45% 41% 14% OWN/RENT HOME Own 46% 41% 13% Rent 57% 35% 9% POLITICAL- PARTY Democrats 53% 36% 12% Republicans 50% 39% 11% DTS/Other 41% 46% 13% CITY: RIGHT DIRECTION/WRONG TRACK Right Direction 49% 40% 11% Wrong Track 53% 37% 10% CURRENT QUALITY OF LIFE Excellent 50% 37% 13% Good 49% 42% 9% Excellent/Good 50% 38% 12% Fair/Poor 46% 46% 8% CITY SERVICES RATING Excellent 60% 31% 10% Good 50% 38% 13% ExcellenVGood 52% 36% 12% Fair/Poor 41% 50% 9% The survey also asked respondents if they would support or oppose the G.O. bond measure if it also included funds for other capital improvements. Table 7 summarizes the results of this battery of questions. Of the six additional items that were combined with the police facility, only one gained support greater than 60 percent of the vote—still 10 percent below the ideal feasibility test result number—but four others added support beyond the levels obtained for the police facility or the police facility plus flood control improvements alone. i Attachment 2 Voter Ovinion Survey,'t,.cv of San Luis Obisuo,Auf!ust.25-28,20%.- ' pate 12 Table 7 Vote Yes/No if Police Facility Measure Also Included Other Items Total Total Yes No DK Police Facility with flood control 51% 40% 10% Police Facility alone 49% 39% 14% Replace older,deteriorating bridges In San Luis Obispo that are badly In need of repairs,such as the Foothill Bridge 63% 32% 6% Create a dedicated paramedic squad In the Fire Department so that emergency response times can be reduced 58% 35% 7% Continue the City's street pavement resurfacing program,to keep streets smooth and safe for motorists and pedestrians 55% 39% 6% Provide more police patrols and reducing polis response time In residential neighborhoods 50% Repair and expand the CWs old and inadequate storm drain system to protect local creeks and prevent floods in severe rainy years 54% 36% 9% Improve traffic signals at many city Intersections to prevent gridlock and improve motorist and pedestrian safety 49% 44% 7% Again the perception that repairs are needed for deteriorating bridges asserted itself in response to this question. As noted earlier, this item ranked the highest in importance on the list of"one-time" capital improvements voters rated in an earlier survey question. Further, there is a coincidental agreement in the percentages—58 and 57 percent respectively --that would support a G. O. bond that included funds for a dedicated paramedic squad and the quarter-cent sales tax increase that would fund paramedic operations, along with police services. Like the sales tax increase concept, the G.O. bond concept for replacing the current police headquarters, whether linked to other needs or not, lacks enough public support to make it viable as the present time. At a minimum for such a ballot measure to be successful, a substantial education campaign would be needed. It is possible that the effects of reductions in state support for local government inherent in the current state budget and their likely continuation for the foreseeable future will create a greater sense of urgency among voters now resistant to this ballot measure concept. Nevertheless, as of the moment, appreciation of the need for these capital improvements in not widespread enough in the electorate to make any of the G.O. bond ballot measure concepts tested in this survey viable without a major public education effort. 4 -43 ,- Attachment 2 Voter Opinion Survey.%-.cy of San Luis Obispo.August.25-28,201..._ page 13 Increase in monthly property owners'fee The survey also asked voters if they would support a one-dollar or a three-dollar monthly increase in property owner's monthly fees for either storm drain repairs or the repair and maintenance of public parks. Graph 5 shows that the one-dollar fee level is more acceptable than three dollars and that storm drain repairs are more likely to receive support than park maintenance and repairs.. None of the proposals, however, reaches the two-thirds level required for voter approval. Graph 5 Yes/No Vote on either a$1 or$3 Monthly Property Owner's Fee to Support Either Storm Drain Repairs or City Parks Repair and Maintenance. $1 a Month for Storm Drains $3 a Month for Storm Drains Probably Daflnbary yea Probably Definitely yea yea yea 21% 5296 29% 2d% . UKRIa - ... Probably 2% DKIN A Probably 13% 5% NAD NMI 8% 5% Daley DerinUly no m 23% 31% $1 a Month for Parks Repair and Maintenance $3 a Month for Parks Repair and Maintenance Probably Definitely yea Definitely Probably Yes 23% yea YO° 32% 26% 19% D A - - Probably DKINA - Probably 3% m 2% ro NMI - 18% NMI 15% 7% 7% Daflnbey Definney b ro 21% 29% The current voter opinion context in San Luis Obispo The survey asked a number of questions regarding voters' assessment of the quality of life in San Luis Obispo, the performance of City government and the perception of needs and problems that City government should attend to. The responses to these questions reveal something of a paradox for City leaders: Voters have a favorable view of City government and living conditions in San.Luis Obispo, so much so that the sense of urgency that underlies most successful local ballot measures asking for additional funding support is lacking except in a more limited and insufficient number of voters. In Attachment 2 i Voter Opinion Survey,%..,.y of San Luis Obispo,August 25-28,20%,_ nage 14 short, professionals in the business of planning for the City's future fiscal needs are aware of needs that are not apparent to an adequate number of voters. Graph 6 shows that two-thirds of voters in,San Luis Obispo believe the City is generally "going in the right direction." By comparison, other surveys, taken on a statewide basis at the same time as the City's, showed that two-thirds of the state's voters think that California more generally has been on the "wrong track." Graph 6 San Luis Obispo: Right Directio&Wrong Track Right Sdrection 88% DK/NA 11% g track 21% Graph 7 shows that more than nine in ten voters think that the quality of life in San Luis Obispo is "excellent" or `good." Comparable figures for suburban cities of similar size in the Los Angeles or San Francisco Bay metropolitan areas would be in the mid-fifties percent range for the same quality of life assessment. -� Attachment 2 C � Voter Opinion Survey,l-ity of San Luis Obispo,August 25-28,20t,,, page 15 Graph 7 Quality of Life in San Luis Obispo Current Assessment Five Years From Now Better 19% DK Exce0ent 4% 64% Good 30% Current Assessment Excel/Good On/v Same BeIDm Worse 44% T0% 33% P�tluattaU DK 1% 5% 5% WorseSame 31% 44% Graph 8 indicates that by a margin of three to one, voters believe the city of San Luis Obispo is doing an excellent or good job of providing municipal services to its residents. Graph 8 San Luis Obispo Job Rating for Providing Municipal Services Excellent 16% DK/NA 3% Good Poor g-r/o 5% Just fair 19% - Attachment 2 I Voter Opinion Survey,trrry of San Luis Obispo,August 25-28,20tw paae.16 Nevertheless, there are issues that concern San Luis Obispo voters, and as Table 8 shows, there is a general appreciation by a substantial majority of voters—and a definite concern by nearly half--that the state budget crisis does or will have a local impact on San Luis Obispo. Nevertheless, as can also been seen in Table 8,just 19 percent think that"the cost of basic city services exceeding future City revenues" is a very serious problem. Table 8 Serious Problems facing City of San Luis Obispo (Closed-end,Battery of Issues) Total Very Total Not Serious Serious Serious DKINo Mean Problem. Problem Problem Opinion Score The availability of affordable housing for middle-class families 76% 91% 8% 1% 8.8 The local impact of the State budget crisis 49% 80% 13% 1 8% 7.3 Traffic congestion 32% 74% 26% 1% 6.6 Rapid growth and development 28% 64% 35% 3% 5.9 Speeding cars on local city streets 28% 64% 36% 1% 6.1 Parking downtown 28% 61% 38% 2% 5.9 Having enough City funding to sustain high quality pollee,fire and paramedic services 21% 55% 39% 6% 5.2 The cost of basic city services exceeding future city revenues 19% 59% 22% 20% 5.1 Loss of open space 19% 53% 46% 2% 5.1 Homelessness 18% 67% 31% 3% 5.9 City streets in need of repair 15% 56% 43% 1% 5.3 The amount of taxes and fees people have to pay for city services 15% 43% 51% 7% 4.4 Crime Involving drunkenness and alcohol abuse 14% 55% 42% 4% 5.1 The quality of public schools 14% 43% 450/6 14% 4.0 Noise in residential neighborhoods 13% 43% 56% 2% 4.3 [The danger of flooding from local creeks 3% 27%6 71% 2% 32 Attachment 2 Voter Opinion Survey,t .,.v of San Luis Obispo,August 25-28,20�,_ cage 17 Both volunteered responses,reported in Table 8, and follow-up rating of the seriousness of issues, shown in Table 9, indicate that the availability of affordable housing for middle-class families is a major concern in San Luis Obispo. The effects of rapid growth and development and traffic-related issues -- which include congestion and street repair and improvements to aid traffic flow—are also concerns to more than just a relatively few voters. Table 9 Most Serious Issue Facing San Luis Obispo Residents (Volunteered, Open-ended Response; Top 6 Responses) f1�D Q3 Affordable housing 40% Growth and development 14% Traffic flow 9% Educationtpublic schools 4% Jobs/keeping businesses 4% Water/water supply 4% Prudent fiscal management in an environment of diminishing state subventions to local government and disadvantageous state local-government tax exchanges requires looking for opportunities for local revenue enhancements. It would seem that this survey points to opportunities that lie with bridge repair, traffic and street improvements, storm drain repairs, open space preservation and possibly housing. 4- 9 r9 POLICIES OBJEUTIVES Attachment 3 MAJOR CITY GOALS—LONG-TERM FISCAL HEALTH OBJECTIVE million (above our policy minimum) from 2002-03 that helps offset this somewhat, the fact is that we Develop a comprehensive strategy for preserving are facing an ongoing problem, which means that essential services, adequately maintaining existing "one-time" fixes won't work. We need to either facilities and infrastructure, and protecting the City's decrease costs or increase revenues (or some fiscal health. combination of the two)on an ongoing basis. DISCUSSION Since then, we have updated the forecast to reflect new information, most notably the expenditure and Overview revenue changes presented to the Council in February 2003 as part of the Mid-Year Budget Accomplishing the Major City Goals for 2003-05 Review. As reflected in the sidebar chart, the Will require a continued commitment to protecting ongoing shortfall has increased significantly, and the the City's long-term fiscal health. Oven the carryover from 2002-03 has decreased by $700,000. significant fiscal challenges facing us based on the For 2003-05, assuming the use of the carryover recently prepared five-year forecast, this will mean (above our policy minimum), the gap increases by developing a comprehensive strategy for preserving $1.2 million on an annual basis, to about $6.4 essential services and adequately maintaining million. existing facilities and infrastructure, while at the same time protecting the City's fiscal health. Projected Budget Gap:200348 $x.000.000 Since the forecast is based on a "maintenance-only" P.M.= Capital Improvement Plan (CIP), the challenge $0 becomes even greater if the Council wants to ($1.000.000) achieve other important CIP goals, such as open ($Z000.000) space preservation, bikeway and pedestrian paths, =1000.00D) pavement maintenance, other transportation system (K000'°M) _ improvements, creek and flood protection, parks and (M'000'000) x6,000.000, public safety improvements. (s,,C00,000) Li Background o Fowwt:Decom0or 202 0 Fpe 1:R04W•MMx000 Results of the Five-Year Fiscal Forecast. As part of the goal-setting process for 2003-05, a detailed Threat of More State Budget Grabs. The last time five-year forecast for the General Fund was prepared the State faced a similar budget crisis ten years ago, and presented to the Council in December 2002 _ the result was that the City lost$1.5 million annually order to assess the City's fiscal environment, and in State takeaways. While none are assumed in the gain some initial insights on the "order of forecast, the threat is very real, and if it happens, it magnitude" difficulty we would likely experience in will make our local situation that much worse. balancing the budget for.2003-05. There are a number of ways that State can take funds The results showed that the City is facing our away from us, but the "likely suspect" is the "VLF toughest fiscal outlook in many years. The forecast Backfill." Just a few short years ago, the State had a projected an ongoing budget gap of $5.5 million significant budget surplus, and it flirted briefly with annually beginning in 2003-04, even if all we do is the notion of a State tax cut. Instead, it decided to continue current service levels and adequately reduce city and county revenues by reducing vehicle maintain existing facilities and infrastructure. While license fees (VLF) by 65%. However, the State the forecast projected a"one-time"carryover of$1.9 agreed to"backfill"these lost revenues,thus keeping cities and counties "whole." The cost to the State in B-62 -1 • • = Attachment 3 MAJOR CITY GOALS—LONG-TERM FISCAL HEALTH meeting this commitment, which it can undo 3. Implementing selected new revenues as allowed tomorrow, is $4 billion. For the City, the VLF under Proposition 218. Backfill is worth about$1.8 million annually. If this 4. Reducing operating program costs and related is taken away, our projected gap grows to $8.2 service levels. million annually for 2003-05. What Are We Doing About This? We have a Fiscal BUDGET BALANCING STRATEGY Heath Contingency Plan in place, and have already Closing the Gap taken a number of cost saving steps, such as a hiring D New freeze and $1.8 million in budget reductions to-date. Revenues Additionally, at the April 10, 2003 budget workshop 15% the Council approved the budget-balancing strategy for 2003-05. D Reserves D CIP 11% 49% Assuming the problem stays about where it is as of --- March 2003, this proposed budget strategy will go a Expenditures:74% long way towards stabilizing our budget situation Opeafter 2003-05. However, it is based on a °PProro amg grrams significantly reduced CIP that will not be good for 25% the community over the long term. And funding a sufficient CIP beyond 2003-05 will be even harder, since the proposed budget-balancing strategy for Each of these components will be evaluated further 2003-05 uses projected reserves that are above our and refined as we prepare the Preliminary Financial policy minimum (about$1.2 million). This won't be Plan. However, this short-term strategy will not available after 2003-05: we can only use reserves serve us well in the longer term if we want to once. maintain current service levels, adequately maintain existing infrastructure and facilities, and achieve Additionally, while many people say that they want longer-term, already-adopted CIP goals. As such, "less government," the fact is that our surveys—and we need to identify and implement other strategies our daily experience—show that we face requests for preserving service levels, achieving CIP goals for more service, not less. So, while our immediate and maintaining our fiscal health. These include: goal for 2003-05 is to "stop the bleeding," we will have to continue to work on ways of"re-tooling"the 1. Organizational Vitality. Making our organization and developing new revenues if we organization more productive, delivering current want to meet our community's needs and hopes for or higher levels of service for less in response to the long term. . community needs. Challenges We Will Face in Achieving this Goal 2. Economic Development. Helping our economy perform better than our forecast projections. Our short-term strategy for balancing the 2003-05 Generating additional revenues from two of our budget and closing the projected $6.4 million gap top three General Fund revenues—sales tax and consists of the following four components: transient occupancy tax—are both the topics of separate Major City Goals. 1. Developing a General Fund CIP that is the lowest possible in reasonably maintaining our 3. Legislative Advocacy. Getting back what was existing infrastructure and facilities. taken-away from us by the State; and preventing any further budget grabs like the VLF Backfill. 2. Using fund balance that is available above Given the current State budget situation, we minimum policy levels. cannot rely upon restoring past State budget U B-63 _.5V • • = Attachment 3 MAJOR CITY GOALS—LONG-TERM FISCAL HEALTH grabs from cities as either a short or long-term March 2003. However, it is based on a significantly fiscal health strategy. In fact, if are successful in reduced General Fund CIP that will not be good for simply minimizing any further State takeaways, the community over the long term. In short, without we will have accomplished a significant feat. draconian reductions in day-to-day services, additional resources will be needed to address our 4. Citizen-Supported Revenue Options. long-term CIP goals—both to adequately maintain Developing strategies for a possible March or what we already have as well as to make reasonable November 2004 election. progress in achieving our General Plan objectives. ACTION PLAN Proposition 218: The Need for Voter-Supported New Revenues. Under Proposition 218, which was In concert with the other two related Major City approved by California voters in November 1996, Goals of generating additional revenues from sales new or increased general-purpose taxes require tax and transient occupancy tax, there are four majority voter approval, and the measure must be proposed components to this action plan for long- held at the same time as Council elections. Special term fiscal health: taxes require two-thirds majority approval, but the election can be held at any time. This means that O Increase Organizational Productivity any significant new revenues require community Staffing costs are the largest part of the City's support—in evidence on Election Day. Gaining this budget, accounting for 75% of operating costs in the support requires more than a compelling need: it also General Fund. Continuing our Organizational requires communicating this need in a compelling Vitality program, which identifies and supports way. And this requires effective preparation by the methods of improving organizational effectiveness City before placing the measure on the ballot; and an and customer service on an ongoing basis, is a key effective community-based group that will campaign for its passage afterwards. component of our long-term fiscal health strategy. © Continue Legislative Advocacy The first pre-condition—effective preparation—is within the control of the City; the second one—an We need to continue working closely with our effective community-based group—is not. employee associations, the League of California Cities, other local governments, professional Background. Shift from Representative to Direct associations and other groups to prevent further Democracy. For the past thirty years, California has State raids on city revenue sources. been on the path to a new era of governance, with fundamental changes in the way that decisions — 0 Review and Monitor the City's Fiscal especially financial ones—are made. While this is Condition occurring at all levels, this paradigm shift from Effective reporting and monitoring of the City's "representative democracy" to "direct democracy" is fiscal condition on an ongoing basis is an essential, perhaps most pronounced for local agencies, since they are the level of government closest to the fundamental component of managing our finances people, and the one most susceptible to these and assuring our long-term fiscal health. changes. 0 Analyze the Feasibility of a 2004 Revenue Ballot Measure proposition 13 did not start this trend,but it certainly resulted from it. Since its passage almost twenty- As noted above, the recommended budget balancing five years ago, there have been an increasing number strategy for 2003-05 will go long way towards of citizen-approved limits on the ability of elected stabilizing our budget situation for the long-term, officials at the local level to make resource decisions assuming the problem stays about where it is as of on behalf of the community. While Proposition 218 B-64 �^ • • = :Attachment3 MAJOR CITY GOALS—LONG-TERM FISCAL HEALTH was the most recent (and sweeping) of these, it was With these profound changes in voter approval simply the last in a long line of expenditure and requirements, cities must communicate a compelling revenue limitation ballot measures. vision.for new revenues at a grass roots level among likely voters. There are a number of possible explanations for this change: Even though this may seem a high-hurdle, many cities throughout the State have been successful in 1. Lack of leadership (or at least the perception) by gaining voter approval for revenue measures, even at elected and appointed officials on important the two-thirds level. There are excellent examples issues to the nation,state and community. here in San Luis Obispo County: the City of Arroyo 2. Increasing distrust of government in general. Grande, Lucia Mar Unified School District, the City of Paso Robles and the City of Pismo Beach have all 3. Loss of community identity (and support) as recently approved revenue measures requiring two- places of work and home have become thirds voter approval. increasingly separated. 4. Increasing frustration with the inability to affect However, based on the experience of many other government at the state and federal level, and an communities, achieving this support at the ballot box over-compensation at the one level—local (the only place it matters) requires two key government—where voters feel they can make a ingredients: a compelling vision of how the new difference. revenues would be used; and an effective way of communicating this vision to likely voters. 5. Improved information about public issues, Communities in California have been successful in resulting in less reliance on others to make generating broad-based voter support for new decisions on our behalf. revenues when: 6. Increased influence of highly-organized and well-financed special interest groups through the 1. There has been a major community-wide focus initiative process. on desired programs. In these cases, revenue increases have followed these "visioning" Whatever the reason, the reality is that there has efforts, not driven them. Cities in this category been a major shift to direct citizen decision-making come in a lot of sizes, and include El Cerrito, in a broad range of issues previously thought to be Duarte, Brea,Torrance and Claremont. too"technical" for this. While this has occurred in a 2. There are serious fiscal or service problems of number of areas such as insurance and campaign crisis proportions. Locally, the passage of a financing, it is especially prevalent in "ballot box bond issue several years ago in the Lucia Mar budgeting." Citizens are no longer willing to give School District also falls into this category. their proxy on financial issues to elected officials, or to their interest group representatives on "blue Although they were driven by very different factors ribbon" committees. City finance is an issue they – hopes versus fears – all of these successful efforts want to decide directly for themselves. share one thing in common: they were the result of extensive community-based efforts, which included How does this paradigm shift affect the City's long- a combination of outreach tools, and professional term fiscal health? Stated simply, the City will assistance to use them effectively. Based on the need broad-based community support – in evidence experience of many cities and other local on Election Day – to implement new revenue government agencies throughout the State; if the sources. In this new model of direct democracy, need is compelling and is effectively communicated, creating support among elected officials and this effort is likely to be successful. However, it community leaders – even if it broadly crosses a requires commitment, resources (more on this later), number of interest groups – is no longer enough. time, and most importantly, a strong community- B-65 "i _ �� • • = Attachment 3 MAJOR CITY GOALS—LONG-TERM FISCAL HEALTH based advocacy group that will aggressively raise results of the public opinion research are invaluable funds and campaign for the issue once it is on the in assessing at the very beginning if there is ballot. adequate voter support for a new revenue measure. While support can subsequently be built (or This last issue cannot be stressed enough. Under maintained) through an education program, if there State law, cities have broad discretion in using their is very low support initially, an education campaign funds for professional assistance in researching is unlikely to be successful in gaining voter support issues, conducting surveys and developing voter on Election Day. support strategies. However, once an issue becomes a formal ballot measure, cities cannot participate as The public opinion survey will typically surface an advocate in any way. In short, unless there is a three key issues: strong community-based group that is willing to aggressively raise funds and campaign for the 1. How does the community feel about the City measure, itis not likely to pass. and the services it delivers today? The experience from revenue measures in other Elements of a Successful Revenue Measure. There communities show that it is very difficult to gain are three major steps in preparing for a successful voter support for new revenues where there isn't revenue measure: already a high level of satisfaction with City services and trust in its government. In short, if 1. Feasibility assessment. Conduct scientifically- voters do not feel that current revenues are being based public opinion research and assess the used wisely, they are not likely to approve more. likelihood of a successful revenue measure. 2. What programs are most likely to attract 2. Public information program If the public voter support? What do voters see as the opinion research is favorable, develop and biggest problems in the community, and would implement a public information educational be likely to approve additional funding for: program on why new revenues are needed. Public safety? Street maintenance? Parks and 3. Ballot measure. Place the measure on the ballot recreation? What messages would be most if there is a community-based group that will effective in community the need for additional aggressively campaign for its passage. resources? On the other hand, which service areas are least likely to attract voter support? The following further summarizes the components And what are the reasons why voters would not of each of these steps. It is important to stress that support a revenue measure? while the City can take the lead on these three tasks in preparing for the measure, once it is placed on the 3. What revenues would voters most likely ballot we can no longer be an active participant in support? There is a wide range of new revenue the process or commit resources to its passage in any options available to the City. Which of these is way. For this reason even, though the results of the most likely to attract to attract the most voter fust two steps may have been very positive, placing support? And how does support change based the measure on the ballot should only occur if there on the rate and level of revenue generated? In is a community-based group has emerged that will the final analysis, each of these revenue options campaign for its passage. has underlying philosophical reasons that might make them desirable, such as added revenue Feasibility Assessment diversity (like utility users tax), stability (parcel tax) or shifting the tax burden to non-residents The first step in preparing the feasibility assessment (transient occupancy tax or sales tax). However, is to hire a qualified team of a public opinion the best candidate for a successful measure is research firm and a revenue measure advisor. The probably the one that voters are the most B-66 4,3` ) i • s • = Attachment 3 MAJOR CITY GOALS—LONG-TERM FISCAL HEALTH supportive of at the outset. Lastly, how would measure would appear "numerically" easier; other competing revenue ballot measures or however, since its proceeds cannot be earmarked for possible budget-balancing actions by other a specific purpose, it can be difficult to communicate agencies (like the State) affect support for a City the need for the measure, when in essence it calls for revenue measure? raising taxes for no particular reason. On the other hand, while it is obviously a greater challenge to From the results of this research, the City can gain two-thirds than majority voter approval, it has evaluate the.feasibility of a revenue measure; and if the advantage of communicating a more focused it is, determine the elements of an effective (and compelling)reason for added revenues. education program (which is the next step). Completing this first step will cost $37,500 and take In general, majority-voter approval measures are 90 to 180 days to complete. more successful when the purpose is to address a "fiscal crisis" in just meeting revenue needs to The City completed a similar analysis in May 2000 continue delivering essential day-today services. with the assistance of The Lew Edwards Group and Two-thirds voter approval measure are more likely Fairbank, Maslin, Maullin & Associates (FMMA). when the purpose is to improve services or make While the results were generally favorable, the community improvements, like a police station, Council decided not to go forward with a revenue transportation improvements, senior center or measure at that time. Due to significant changes in athletic fields. the economic and fiscal environment since then, we do not recommend relying upon the results of this One variation on this approach is the "A/B" three-year old analysis. However, if we go forward measure, which has been successfully used in a few With this analysis, we recommend retaining the same cases. This is a dual-component measure: the "A" team based on the quality of their work and their measure function is simply an "advisory" vote on familiarity with the City. specific projects, asking of voters would support certain uses if new revenues were to become • •• available. The `B" measure asks voters to approve a general-purpose revenue measure, but in the context Before placing a measure on the ballot, this next step of the specific project or programs identified in is essential in communicating the need for additional Measure "A," with the expectation that elected revenues to likely voters. It would include: officials would be committed ("morally" but not legally) to using the new general revenues for these 1. Refining the new revenue purposes and uses, specific purposes. including selecting the financing mechanism and developing key messages. As such, "A/B" measures provide some specificity— although via a non-binding advisory measure- 2. Building community support, including which can be appealing to the electorate. However, developing and implementing a public education they need to be carefully structured from a legal program. standpoint; and because they are two separate measures with slightly different messages, it may be 3. Conducting additional public opinion research more difficult to conduct an effective campaign. (tracking poll) to assess shifts in support. In short, regardless of whether it is a majority or Refining the measure. Based on the result of the two-thirds measure, the City needs to communicate a public opinion survey, the City will need to decide compelling reason for why it needs added revenues. which items to fund in the measure. This includes making a key strategic decision: should this be a Developing key messages. Once the City has majority or two-thirds voter approval measure? On determined the basic strategy (majority or two-thirds its surface, passage of a majority voter approval B-67 4- i 1 12914 IQ MMUUMIX610 Attachment 3 MAJOR CITY GOALS—LONG-TERM FISCAL HEALTH voter approval) and refined the funding items, representatives table or otherwise distribute non- assigned costs and select a funding mechanism, key partisan information about a potential revenue messages are developed that: measure. 6. A Speakers Bureau primarily led by constituents 1. Address the need for such a measure: "Why to make presentations to key community now?" And make the case that this is a needed, organizations as needed. fiscally responsible plan. 2. If a two-thirds measure, include specifics of the As part of the City's Media/Communications Plan, items to be funded. information-only fact sheets, brochures, letters, 3. Establish protections for ensuring money will be newsletters and guest columns are developed for spent responsibly, such as outside audits and a mailing and distribution. Where time permits, these communications seek citizen input in an Citizens Oversight Committee. "interactive" manner. Opinion leaders. Depending on the funding Ideally, before placing a revenue measure on the mechanism and uses identified for the measure, ballot, the City's public information program has: building community consensus is essential. Early in this process, key constituents, stakeholders, business 1. Shifted public opinion further towards support leaders and other public officials should be of a possible revenue measure. contacted and their support, questions or opposition evaluated. This also begins to identify possible 2. Yielded letters and cards providing the City with members of the community-based group that will be guidance on how to further refine the measure. essential later in advocating for passage of the. 3. Answered questions about the City's funding measure. needs. Public information program. An effective public 4. Generated greater community awareness before information program includes the following taking action to place a revenue measure on the communications components: ballot. 1. Personal meetings with external "Opinion Additional public opinion research. Following the Leaders" to educate them on the funding needs public information program, the City should conduct contained in the measure and obtain input. another scientific public opinion survey—an abbreviated version also known as a "tracking 2. A series of non-partisan, information-only about the poll"just before placing the measure on the ballot. mailings di Opinion Leaders, again about the The purpose of this tracking poll is a final "litmus City's funding needs. test" in ensuring that there is substantial voter 3. A series of non-partisan, information-only approval at this point, and confirm financial mailings to constituents determined by the thresholds: that the City is not asking for too little or public opinion survey as needing more too much money for the measure. Conducting a information about the City's funding needs. tracking poll close to the time that the City makes a 4. A "free media" plan that includes (but is not final decision in going forward with a ballot measure limited to): non-partisan guest columns, "op- is the final opportunity to evaluate where the eds" and stories in neighborhood newsletters or electorate is,and to make adjustments in the measure other local outlets about the City's funding as necessary—including not going forward at all. needs. Cost and timing. An effective public information 5. Where appropriate, "fixed site visibility" program will take 90 to 180 days before placing a activities where constituents and/or City measure on the ballot, and cost $50,000 to $75,000 B-68 �"3� POLICIES OBJECTIVES Attachment 3 MAJOR CITY GOALS—LONG-TERM FISCAL HEALTH for direct mailings, tracking poll and professional 3. Legislative Advocacy. Continue Ongoing assistance in preparing the public information working closely with our program employee associations, the League of California Cities, other ' local governments,professional The City's final action is to place the item on the associations and other groups to ballot. As noted above, after this the City cannot prevent further State raids on city commit any resources in advocating for its passage. revenue sources. For this reason even if all the other factors to-date 4. Review and Monitor the City's Ongoing have been favorable, the City should seriously Fiscal Condition. Continue to consider not placing the measure on the ballot if by effectively review and monitor this time an effective community-based group has the City's fiscal condition on an not emerged that will be campaign aggressively for ongoing and timely basis, its passage. including on-line access to financial data,quarterly Summary. Preparing for a successful revenue newsletters, focused reporting on measure in this era of "direct democracy" requires key revenues, mid-year budget an approach that will engage the City's voters in the reviews and preparation of annual decision-making process. Gaining this support—in financial reports in accordance evidence on Election Day—requires more than a with generally accepted compelling need: it also requires communicating this accounting principles and need in a compelling way. And this requires nationally recognized excellence effective preparation by the City—doing our in financial reporting guidelines. homework, and allocating adequate time and resources to this endeavor—before placing revenue 5. Analyze.Feasibility of Revenue measure on the ballot (which is within the control of Ballot Measure in 2004. Use the City); and an effective community-based group professional assistance in that will campaign for its passage afterwards (which analyzing the feasibility of a is not). revenue ballot measure in March or November 2004: Tasks and Schedule a. Enter into an agreement with 7-03 The Lew Edwards Group. 1. Organizational Productivity. Ongoing b. Complete the feasibility 11-03 Continue organizational vitality analysis and present the results to the Council for a program in improving "go/no-go"decision in taking productivity and customer the next step in preparing for service. a revenue measure in 2004.. 2. Fiscal Independence. Support Ongoing AB 1412 (Wolk), which would RESPONSIBLE DEPARTMENTS allow local voters to approve an increase of 0.25% or 0.5% in the All departments play a critically important role in local sales tax rate without special ensuring the City's long-tetra fiscal health through legislation. their management and use of City resources; however, Administration, Human Resources and Finance will be especially involved in achieving this goal. l B-69 4_&tp • :Attachment 3 MAJOR CITY GOALS—LONG-TERM FISCAL HEALTH FINANCIAL AND STAFF RESOURCES REQUIRED TO ACHIEVE THE GOAL 1. Analyzing the feasibility of a 2004 revenue ballot measure will cost $37,500 in 2003-04 from the General Fund. All other tasks can be achieved within existing resources. 2. Depending on the results of this analysis, an additional $50,000 to $75,000 will be needed from the General Fund in 2003-04 if we proceed to the next step in this process of conducting a public education program. GENERAL FUND REVENUE POTENTIAL Each of these action plans is designed to enhance General Fund resources. OUTCOME—FINAL WORK PRODUCT Strategies, programs and systems for assuring our long-term fiscal health in continuing current service levels, adequately maintaining existing infrastructure and facilities, and accomplishing important community goals. B-70 "t r q Richard Schmidt 125444247 MU 1113/3 CI OV 0 4 2003 ' RICHARD SCHMIDT r+ RK 112 Broad Street, San Luis Obispo, CA 93405 (805) 544-4247 November 3, 2003 Re: Agenda Item 4, Nov. 4 Meeting RED FILE Via Fax To the City Council MT�G AGENDA DA �M - 5 ITEM # 7 Dear Council Members, Please stop wasting city funds on surveys to ask the populace whether they want you to tax them more. You already know the answer! Dressing up this tomfoolery in professional trappings doesn't make this exercise legitimate. It just makes the city look the more outrageous for continuing to waste money this way while pleading poverty. I'd like to comment on the items before you pertaining to the survey. 1. 1 find the entire process repugnant and politically dishonest. If the city had some major project for which it needed an infusion of funds, and if the city felt that project had legitimacy in the public's eye, the thing to do is to go to the public and say we need money for this, please help us. That is the honest way. Instead, the city went on a fishing expedition to see if there was any ordinary part of city government the people could be snookered into paying extra for. The people see through this, and demonstrate that they aren't ready to be snookered. Please stop wasting public funds on consultants for this, and take the high road. 2. The poll itself was a dreadful instrument -- I think Prof. Settle's undergraduates could have done better. I know this because our household was called (and also for the similar one done by the school district), and after 20 minutes of enduring amateurish, incoherent, complex, confusing, repetitive questions our brains were mush. (I exaggerate neither the length of the poll nor the hair-splittingly tiresome nature of its questions.) And we know the issues! I cannot imagine the value of results garnered from people who don't know were the police station is located, or where storm water goes, which is probably the majority. The polling instrument was absurd, and any conclusions based upon it obviously without value. The page after page of "analysis" provided by the consultant is the Emperor's new clothes of this exercise -- they are utterly meaningless. Again, you paid a lot of money and got yourselves some junk. 3. Finally, the notion of paying such a consultant another $50,000 to $75,000 to determine if an assessment district for flood maintenance would be supported makes me really angry. Where does this stop? The city has already bought two worthless surveys. Are we to do yet another? With the price tag going up each time? This is irresponsible. 4. The city's neglect of flood maintenance is entirely the city's fault, and not a legitimate Page 1 Richard Schmidt 16 5444247 t'$i11113/3 04:33 PM D 212 t reason for an assessment district. I have been trying to get the city to maintain the floodway adjacent to my property since 1996, and it's one excuse after another. One of the excuses is lack of funds. Yet the council has authorized this most recent poll (How much did it cost? I've heard $35,000. Is that correct?) and is being asked to consider yet another, by which time you'll have spent more than $100,000 on consultants to find out if the people will pay more for flood maintenance. That $100,000 would be more than enough to remove the debris, garbage, and vegetative flood obstructions from every creek in the city. Why doesn't the city just do what it should instead of funnelling its "action" funds to consultants and pollsters? Here is yet another rundown of conditions on my section of Old Garden Creek. A. The exit of the Broad Street culvert is more than half blocked by weed trees the city allowed to grow there, root balls, and silt gathered by the above. I have been asking for action on this since 1996. The record of the city's non-response is clear. B. The upstream entrance to that culvert is silted in and largely blocked by a bar of silt. Now weed trees are taking a stand on that bar, which will magnify the obstruction. (When the culvert backs up, which it does even when fully functional about once every 5-8 years, the backup used to flow out over the Village parking lot, and when that was filled it spread into the street and flooded yards and homes and garages in the Broad- Murray area. Now that the city allowed the Village to fill the parking lot flood plain and build the assisted living facility there, where will the backup go? Want to guess with me that it will go right into and through the ground floor of the Village at Garden Creek? Do you want to have to deal with the fact that city negligence caused the evacuation of frightened grandmothers in walkers and wheelchairs?) C. I recently tried to walk downstream from my property. I couldn't go 100 feet. The creekway is overgrown with palms and low willow branches, a neighbor has cut and dumped willow trees into the creek, and debris has piled up so that the creek is blocked. D. The inlet to the probably inadequate culvert at Mountain View is completely blocked by years of growth of tules. That will cause the creek to back up, overflow the street, and flood homes. E. Tne Inlet to the Lincoln culvert is liKewlse blocKed by low-hanging willow branches. I'm not advocating that the city clearcut the creeks -- only that you tend to maintaining them so that they can do the best they can to carry the water they must. We have been very lucky not to have had any floods of late. The so-called flood of 1995 that so impresses Pulbic Works was child's play -- it was nothing, probably about a 5-year storm. Apparently there's nobody at Public Works with a memory of a real flood, or they wouldn't be so impressed with that puddle-filler. I fully expect a major flood soon — it's been 30 years. And then we'll hear about how the city needs major flood control projects, when in fact, what we most needed was to call the roto-rooter, but were too cheap to do for a decade. COUNCIL �(d�CDD DIR Sincerley, fRrtAO _21FIN DIR ,2�CAO M-FIRE CHIEF Richard Schmidt j2-ATTORNEY ERK/ORIG �SLICE CHF ❑ DEET HEADS EC DIR DIR Page 2 � ..8 HR HR DIR