Loading...
HomeMy WebLinkAbout05/26/2005, B1 - RESULTS OF REVENUE BALLOT MEASURE FEASIBILITY ANALYSIS council Mft64°= 5-1 -2005 agenda- nE oRt ,�N� j P � CITY O F SAN LUIS O B I S P O FROM: Ken Hampian, City Administrative Officer Bill Statler, Director of Finance& Information Technology SUBJECT: RESULTS OF REVENUE BALLOT MEASURE FEASIBILITY ANALYSIS CAO RECOMMENDATION 1. Review and discuss the results of the revenue ballot measure feasibility analysis. 2. Direct staff to return in July 2005 with an action plan, schedule and budget for proceeding with the next step of initiating a public information program. DISCUSSION Overview The results of the revenue ballot measure feasibility analysis show that a general-purpose sales tax ballot measure of no more than ''h% in 2006 is viable, provided it has strong fiscal accountability provisions accompanied by an effective public information and community education/outreach program. Accordingly, given the tough fiscal outlook facing us, we recommend taking the next of step initiating a public education information program, and returning to the Council in July 2005 with a detailed action plan and budget for doing so. It is important to stress that this next step is just that: the next step in the process of seriously considering a ballot measure in 2006. Decisions regarding actually placing a measure on the ballot, and any specifics regarding such a possible measure, are many months away. In short, we are still early in the planning process, and will be updating the community and getting their input along the way. Background The City continues to face a very difficult fiscal outlook. On the heals of closing a $7 million General Fund budget gap two years ago, we are facing a$2.4 million gap in 2005-07, largely due to continued State takeaways. In the short-term, we will be able to balance the budget in 2005- 07. However, this will require service reductions in all areas of the City's operations, including public safety and basic infrastructure maintenance like street paving. In the long run, we need to develop a stable new revenue source because: 1. The State has taken $22 million of our City revenue over the past 15 years and continues to take $3 million from us each year to help balance the state budget. This measure would give us more local control and keep local tax dollars here to pay for essential services. - f y I Results of Revenue Ballot Measure Feasibility Analysis Page 2 2. For the first time in 15 years, the City has been forced to use millions of dollars from our emergency reserves to provide essential City services. Without additional funds, we will no longer be able to provide important services, such as paving streets and upgrading the 100- year-old storm drains. 3. Calls for fire and paramedic services have increased by 65% in the last decade, but our emergency services have not been able to keep up. Without this measure, rather than adding needed firefighters and paramedics, we will have to cut back emergency services even more. 4. Budget cuts have forced the City to reduce spending on infrastructure and facility upkeep by 50 percent. If a funding measure is not passed, the City infrastructure, including parks, roads, and storm drains, will deteriorate. Addressing the City's Fiscal Challenges in the Long-Term: Assessing the Feasibility of a Revenue Ballot Measure. As part of the 2005-07 Financial Plan process, the Council considered the results of a five-year fiscal forecast for the General Fund in December 2004, which showed that the City was facing a $2.4 million annual gap in 2005-07, in simply maintaining current service levels and continuing a very constrained; maintenance-only capital improvement plan (CIP). This gap followed a very tough budget season two years ago, when we closed a $7 million budget gap. Given the severity of the fiscal problems facing us in adequately maintaining essential services and accomplishing important CIP goals, the Council directed us to return at the mid-year budget review in February 2005 with a proposal to analyze the feasibility of a revenue ballot measure in 2006. At that time, the Council authorized the CAO to contract with Fairbank, Maslin, Maullin and Associates (FMMA) and The Lew Edwards Group for this purpose. FMMA is one of the leading public opinion research firms in the nation, with extensive experience in local government. For example, they worked closely with "LOCAL" on the very successful outcome of Proposition IA. The Lew Edwards Group has extensive experience in assisting local agencies in California with public education programs in preparation for possible revenue ballot measures. Over 90% of the measures they have been associated with have been successful. Summary of Key Findings The findings of the evaluation team are provided in Attachment 1 (FMMA) and Attachment 2 (The Lew Edwards Group), summarized as follows: 1. There are early indications of voter support for a revenue measure. When initially queried, over half (52%) of the Between March 19 and likely voters surveyed said they would favor a local ballot 21, 2005, FMMA conducted a scientific measure asking voters to "provide additional funds in order telephone surrey of 400 to maintain and protect the level of essential services randomly-sampled likely currently provided by the City of San Luis Obispo." Thirty- 2006 voters in the City. one percent (31%) said they would oppose the measure, with The resulting margin of 16% undecided. error is plus or minus 5%. Results of Revenue Ballot Measure Feasibility Analysis Page 3 2. Support increases with information. After hearing a brief paragraph providing the City's rationale for a possible revenue enhancement measure, support increased to 56 percent. Following a set of positive messages arguing in favor of a revenue measure, support rose to 59 percent. The gap between those in favor and those opposed rose from 21 points initially, to 26 points after hearing the City's rationale, to 30 points after hearing pro-measure arguments. 3. Support for sales tax measure. Sales tax and transient occupancy tax gained the most support as funding mechanisms. A majority of the respondents supported dither a '/a% or 'h% sales tax measure. 4. Sunset provision strengthens support. Nearly six in ten (59%) voters said they would be more likely to support the measure if it included a five-year sunset provision. 5. Top voter concerns. Repairing and maintaining City streets, reducing traffic congestion, and improving levels of police, fire and emergency services are among the top funding priorities. 6. Favorable opinions about the community and City government pose a challenge as well as an opportunity. 96% of the respondents said that San Luis Obispo is an excellent (67%) or good (28%) place to live; and two-thirds said this would get better or stay the same over the next five years. A similar number (68%) said that the City is doing an excellent or good job providing services (only 4% thought we were doing a poor job). As noted by FMMA in their report, the high value that voters place on the quality of life in San Luis Obispo and the confidence they have in City government should translate into support for a revenue ballot measure. On the other hand, this could also mean that voters might be less likely to believe there is a need to provide more money for current services. This reinforces the importance of telling our fiscal story to the community in a compelling way through an effective public information program. 7. General-purpose sales tax ballot measure is feasible. However, its success will depend upon strong fiscal accountability provisions accompanied by an effective public information and community education/outreach program. Too Soon for Specifics There are a number of decisions yet to be made about the specifics of a potential revenue ballot measure in 2006. Until we have had an opportunity to better share our fiscal story with the community, and heard their thoughts and comments about how we can best respond to their concerns, it is too soon for specifics. However, we should seriously consider the following concepts fora general-purpose revenue ballot measure in supporting essential service needs. Funding Source. The best funding mechanism is sales tax with no more than a half-cent increase. Even with this increase, the City's sales tax rate would still be lower than that paid by 87% of the state's residents. Results of Revenue Ballot Measure Feasibility Analysis Page 4 June or November 2006. There are pros and cons to each of these dates. At this point, we are leaning towards November 2006. However, we will make a recommendation on this in the follow-up report to the Council in July 2005. General Purpose Measure. The fact is that we need an added, stable revenue source to fund essential services in all areas of the City operations, including police, fire, streets, parks and flood protection. This argues for a general-purpose tax measure. However, with this approach, we cannot commit to specific uses of funds. For this reason, it will be essential for any ballot measure to include accountability safeguards, such as citizen review, full disclosure of how funds are spent and possibly a sunset provision. Similar Interest by Other Cities in the County Given the similar fiscal challenges faced by other cities in recent years, other cities in the County may consider pursuing revenue ballot measures, too. While it is too soon to know if they will proceed further, there are possible advantages in holding similar revenue ballot measures at the same time, including mitigating concerns that one city might have a competitive edge over another due to a lower sales tax rate. The survey results also support this approach: 55% of the respondents said that they would be more inclined to support a sales tax measure if all other cities in the County were also considering this. Next Steps As outlined in the attached 2005-07 major City goal work program for Long-Term Fiscal Health (Attachment 3), there are three essential steps in preparing for a successful revenue measure: 1. Feasibility assessment. Conduct scientifically-based public opinion research and assess the likelihood of a successful revenue measure. With this report, we have completed this step. 2. Public information program. If the public opinion research is favorable, develop and implement a public information educational program on why new revenues are needed. As noted in the attached work program, gaining voter support for a revenue measure=in evidence on Election Day—requires more than a compelling need: it also requires communicating this need in a compelling way. And this requires effective preparation by the City—doing our homework, and allocating adequate time and resources to this endeavor— before placing a revenue measure on the ballot. This is the next step if we want to pursue a revenue ballot measure in 2006. 3. Ballot measure. Place the measure on the ballot if there is a community-based group that will aggressively campaign for its passage. As noted above, it is important to stress that while the City can take the lead on the first two tasks in preparing for the measure, once it is placed on the ballot we can no longer be an active participant in the process or commit resources to its passage in any way. For this reason, even though the results of the first two Results of Revenue Ballot Measure Feasibility Analysis Page 5 steps may have been very positive, placing the measure on the ballot should only occur if a community-based group has emerged that will campaign for its passage. FISCAL IMPACT There are no direct fiscal impacts associated with the CAO's recommendation. However, when we return in July 2005, we will be proposing a detailed "next steps" action plan — and the resources necessary to fund it. On the other hand, while we will need to invest some resources in the near term, there will be significant adverse fiscal consequences in the long-run if we are unsuccessful in educating our community about the need for added revenues in funding essential services. ALTERNATIVES Do not proceed with the next step of initiating a public information program. Given the serious fiscal challenges facing us, and the favorable results of the revenue ballot measure feasibility analysis, we do not recommend this option. ATTACIUdENTS 1. Survey Results and Recommendations from FMMA 2. Strategic Recommendations from The Lew Edwards Group 3. Major City Goal Work Program: Long-Term Fiscal Health G:Ballot Measure Prepatation/2006/Feasibility Analysis/Council Agenda Report/5-17-05 Attachment 1 Fairbanks Maslin, Maullin Associates Opinion Research & Public Pnlim-Analysis MEMORANDUM TO: City of San Luis Obispo FROM: Fairbank, Maslin, Maullin & Associates DATE: May 5, 2005 SUBJECT: Survey Results and Recommendations KEY FINDINGS Fairbank, Maslin, Maullin & Associates (FMM&A) conducted a telephone-based survey of 400 randomly selected likely votersin the City of San Luis Obispo.' The survey results suggest that a funding measure can win a majority in the City of San Luis Obispo. However, there are several challenges towinning voter approval. Positive Findings ■ When initially queried, over half (52%) of voters said they would favor a local ballot measure asking voters to "provide additional funds in order to maintain and protect the level of essential services currently provided by the City of San Luis Obispo." Thirty-one percent (31%) said they would oppose the measure, with 16 percent undecided.. ■ Support increased with information. After hearing a brief paragraph providing the City's rationale for a revenue enhancement measure; support increased to-56 percent. Following a set of positive messages arguing in favor of a revenue measure, support rose to 59 percent. The gap between those in favor and those opposed rose from 21 points initially, to 26 points after hearing the City's rationale, to 30 points after hearing pro-measure arguments. The survey was conducted March 19 and 21,2005. The margin of error for the sample as a whole is+/-5 percentage points. 'The margin of error for subgroups within the sample will be higher. Attachment 1 City of San Luis Obispo, Voter Survey Summary page 2 ■ The survey showed that including a sunset provision could increase support for the measure. Nearly six in ten (59%) voters said they would be more likely to support the measure if it included a five-year sunset. Forty-nine percent gave this response for a ten-year sunset. ■ Voters are most amenable to a city sales tax or an increase in the local Transient Occupancy Tax (TOT) as the funding mechanism for a revenue enhancement measure. Two-thirds (66%) of voters said they would support a one-quarter cent sales tax measure and 54 percent a one-half cent sales tax measure, while 61 percent would support raising the TOT from 10 percent to 12 percent. Support was far weaker for increasing the Utility User's Tax (30%) or Property Transfer Tax (43%). ■ Fundamental to support for a funding measure — or specifically a sales tax measure — is the belief among voters that "the City needs additional funds to provide the level of city services that residents need and want" By a 2-to-1 ratio, voters agreed with this statement more than disagreed, 61 percent to 31 percent. ■ Overall, voters give City government high marks. Nearly seven in ten (68%) give the City government an "excellent" or "good" rating for providing services to residents. lust 31 percent give City government an "only fair" or"poor"rating. ■ Reflecting the positive sentiment about city record in providing of services, a positive rating for the City Council outweighs the negative by more than 3-to-1. Fifty-seven percent (57%) of voters give the City Council a favorable review, while only 16 percent have an unfavorable impression. One-quarter(26%) are neutral in their view (3% could not give a rating). ■ Ratings for City departments are highly positive. Nine out of ten voters (89%) have a favorable impression of the Fire Department, 82 percent of the Parks and Recreation Department, and 74 percent for the Police Department. Lesser known departments also have positive favorable to unfavorable rating ratios: the Natural Resources and Open Space program received positive ratings from 53 percent and negative reviews from just I l percent and the Public Works Department received favorable reviews from 57 percent and unfavorable ratings from just eight percent. ■ City government gets positive marks for the specific services it provides. When asked to rate how satisfied they are with a number of specific services, including street repair, maintenance of public parks, police protection, building code enforcement, and fire prevention, to name a few, average ratings indicated generally positive views. Only "traffic management to reduce congestion" received a rating indicating that voters are, on balance, more negative than positive about it(a 3.9 average score on a seven-point scale). In all other areas, ratings were at or above 4.5, indicating that positive reviews outweighed negative sentiments. ■ Voters believe that City government does a good job managing city funds. ■ Forty-nine percent (49%) believe City officials are doing an "excellent" or "good"job managing City funds. While 33 percent believe they are doing an "only fair"job,just four percent consider City officials'job performance in this regard to be "poor" (14% are uncertain).. 2425 Colorado Are.. Ste. 180 1999 Harrison Street. Ste. 1290 Sawa Monica, CA 9 0 4 0 4 Oakland_, CA 9 4 6 1 2 Phone: (3/0) 828-1183 Phalle: (510)451-9521 Fax: (3101) 453-6562 Pax: (510)451-0,380 Attachment 1 City of San Luis Obispo, Voter Survey Summary page 3 ■ When asked to volunteer the most serious issues facing the City (in an open-ended question where no response options were provided), there were no comments related to waste and inefficiency in City government. ■ When asked directly about "waste or inefficiency" in city government,just 16 percent considered it a "very" serious problem. However, 46 percent considered it at least a "somewhat" serious problem. While this finding suggests there is some concern about waste and inefficiency when it is brought to voters' attention, ten other issues were judged more pressing concerns. • Reflecting these positive views of the City government, 75 percent of voters would consider the City Council's position on a funding measure to be believable and 70 percent would be attentive to Mayor Dave Romero's views on this issue. ■ Positive feelings about the general direction of affairs in San Luis Obispo are another positive indicator and add strength to the view that local financial problems are caused by state government actions. ■ By a 2-to-1 ratio, voters believe things in San Luis Obispo are heading in the right direction (53%) rather than going off on the wrong track (23%). Voters, however, have a more negative sentiment about the direction of the state,41 percent wrong track to 33 percent right direction. ■ Nearly all voters (95%) believe San Luis Obispo is an excellent (67%) or good (28%) place to live. • Not only do voters strongly believe San Luis Obispo is a good place to live, but 24 percent think it will get even better and 42 percent believe it will stay as is. Just three in ten (30%) believe the quality of life in San Luis Obispo will get worse in the next five years. ■ Three out of four (76%) voters said state budget cuts that reduce the money available to cities for essential services such as police and fire protection is a serious problem. Nearly half (45%) consider this a very serious problem—making it the third most mentioned concern.. ■ Further, :two of the strongest arguments for the measure (as indicated by regression analysis) focus on state takeaways. The strongest argument overall reminds voters of the 22 million dollars that the state has taken from San Luis Obispo over the years, as well as the three million dollars it continues to take each year. The statement went on to say that passing a funding measure would give San Luis Obispo local control to keep tax dollars in the City to pay for essential services. 2425 Colorado Are., Ste. 180 1999 Harrison Street, Ste. 1290 Santa .-Wonica, CA 9 0 4 0 4 Oakland, CA 9 4 6 1 2 Phone: (310)828-1183 Phone: (5/0)451-9521 Fax: (310)453-6.562 Fax: (510)451-0384 Attachment 1 City of San Luis Obispo, Voter Survey Summary page 4 Challenges and Less Positive Findings ■ The high satisfaction level with City services and the quality of life in San Luis Obispo suggests a challenge as well as an opportunity. The confidence voters have in City government should translate into support for a ballot measure that it sponsors. However, it could also mean that voters might be less likely to believe there is a need to provide more money for current services. ■ In response to the survey's initial vote question, support for a funding measure was soft. Just 24 percent said they would strongly favor a funding measure when first queried — only slightly greater than the proportion who said they would strongly oppose it (18%). Weak supporters combined with opponents and undecided voters constitute 58 percent of the voters, underscoring that a majority is less than certain about the need for a revenue enhancement measure. • All the gains made after hearing a strong arsenal of positive arguments were erased after hearing negative statements about the measure. After hearing negative messages, support dropped back to its initial levels, with 25 percent strongly in favor and 53 percent in favor overall. • Some of voters' top concerns will not be directly addressed by a funding measure, including affordable housing and the availability of good paying jobs. Recommendations o San Luis Obispo should seek a sales tax increase of with a sunset provision. The survey results do not say, however, that a one-half cent sales tax measure cannot be passed or that a five-year sunset (rather than a ten-year sunset) is imperative. FMMA recommends that further testing may be needed before a final decision is made. ■ FMMA believes the central argument for a sales tax increase measure should be the negative impact state takeaways are having on San Luis Obispo's budget and its ability to support services over the long term. The urgency of this situation will come across best by talking about how the City has had to reach into its emergency reserves to continue to fund essential services. The objective of the revenue enhancement measure should be to"preserve and maintain" vital services. ■ Furthermore, communications should also highlight the effects of increased workloads. Examples such as emergency service budgets not being able to keep up with the 65 percent increase in fire and paramedic calls and the City having to reduce spending on infrastructure and facility upkeep by 50 percent because of state takeaways resonated strongly with voters. • FMMA also recommends linking this measure to "local control" and not making local services hostages to the vagaries of state budgets. ■ The City Council and Mayor should be used prominently in communications, as they test well as spokespersons on this revenue enhancement issue. 2425 Colorado Ave.. Ste. 130 1999 Harrison Street, Ste. 1290 Santa Monica, CA 9 0 4 0 4 O( and, CA 9 4 6 1 2 Phone: (310)323-1133 Phone: (510)451-1521 Fax: (310)453-6562 Fax: (510)451-0334 I, Attachment 2 i To: San Luis Obispo City Council City Manager Ken Hampian Finance Director Bill Statler From: The Lew Edwards Group Date: May 5, 2005 Re: Strategic Recommendations Election Timing and Feasibility: Our analysis of the recent Public Opinion Research conducted by FMM&A shows that a San Luis Obispo general-purpose sales tax measure (requiring a simple majority) to support essential services is feasible among November 2006 voters, provided that it is properly_focused to reflect community priorities. In the initial ballot question, the measure demonstrates just over the simple majority threshold when combining those who "strongly and somewhat" favor it. After some information and education about the needs, potential support reaches 59%. However, support is evenly split between those. who "strongly" favor such a measure versus those who only "somewhat" favor it. Therefore, a comprehensive cit-funded, nonpartisan Public Education program, as typically implemented by other cities considering such measures, must be conducted in San Luis Obispo to further educate your constituents and solidify "definite" yes support before your measure can be assured of success. - I - Attachment-2 Additionally, after hearing possible concerns about the Measure, support drops back down to just over 51%. Therefore, the QU must proactively build consensus among all stakeholders to be successful. Key Considerations Although strong potential exists for the feasibility of the Measure, an inclusive, team-building approach among stakeholders and community opinion leaders is key. Consensus is critical for any finance measure attempted in San Luis Obispo. For example: • There is a lack of urgency around the need for specific service improvements. This is most likely due to the City's excellent management of funds and your efforts to shield San Luis Obispo residents from the effects of state budget cuts. Respondents feel that the city is spending the right amount money on most services. Only when asked about street repairs and maintenance did 42% of people feel the city spends too little. Protection of open space is the only service that received a double-digit ranking for the city spending too much (10%). • The City is vulnerable to accusations that they are just "crying wolf' about having to reduce essential services because of budget cuts, with 40% of voters being much/somewhat more inclined to vote against a measure based on that statement. This reflects the previous , point about voters having not yet experienced service reductions due to state budget takeaways. • The issues that voters perceive as San Luis Obispo's most serious problems would not be addressed by this measure. The availability of affordable housing (93% very/somewhat serious) and availability of good paying jobs (82% very/somewhat serious) are the top two problems cited by respondents. Effective Messaging It is important to identify and utilize the main messages that garner over a majority vote in _positively educating your constituents. The following statements should be used virtually exclusively: -2- Attachment • Calls for fire and paramedic services have increased by 65 percent in the last decade, but San Luis Obispo's emergency services have not been able to keep up. Without this measure, rather than adding needed firefighters and paramedics, we will have to cut back emery services even more. • If San Luis Obispo passes a sales tax increase of either one quarter or one half cent, the City's sales tax rate would still be_lower than that paid by 87 percent of the state's residents. • For the first time in 15 years, the City has been forced to use millions of dollars from its emergency reserves to provide essential City services. Without additional,funds, the City will_no_longer be able to provide important services, such as paving streets, upgrading the 100 year old storm drains, and keeping up local parks. • The State of California has taken 22 million dollars of City revenue from San Luis Obispo over the past 15 years and continues to take three million dollars from the City each year to help balance the state budget. This measure gives San Luis Obispo more local control and keeps local tax dollars here to pay for essential services, such as police and fire protection, senior programs, park maintenance, and street repair. Additionally,. based on the survey, we would recommend including the following specific components to augment the message. These items are important to voters: • Budget cuts have forced the City to reduce spending on infrastructure and facility upkeep by 50 percent. If a funding measure is not passed, the City infrastructure, including parks, roads, and storm drains, will deteriorate. • Emphasize City plans to repair and maintain City streets and alleviate traffic congestion. • A focus on maintaining and protecting the level of essential services. -3- Attachment 2 • Issues surrounding homelessness are also a very high concern with 70% of voters seeing this as very/somewhat serious. Funding a General Purpose.Finance Measure A simple-maiori!y finance measure is feasible at no more than a half-cent sales tax increase. Both the quarter and half=cent increase amounts garnered over the 50%plus one threshold. A comprehensive, city-funded and nonpartisan Public Information Program can solidify strong support for either increase amount. These programs are implemented in other jurisdictions during the pre-election phase, when planning for a measure. The City should proceed with a Public Information Program for a sales tax measure that would be "no more than a half-cent increase.." Only..after conducting a follow-up-poll_towards .the end of.the Public Information phase, should the final rate of the increase be determined. If the City plans_ to proceed for a November 2006 sales tax measure, it is critical that you begin the pre-election planning phase immediately. Many other cities represented by our firm have already begun their Public Information Programs for 2006 elections, since the typical planning period for a successful Public Information Program is 12-16 months in advance of a partisan campaign. The Importance of Fiscal Accountability Strong fiscal accountability provisions are extremely important to the success of your measure; including independent oversight in the Measure will be necessary to ensure funds are.spent as promised. We recommend: • A sunset provision, which increased voter support of a measure • Published independent performance and fiscal audits • Additional accountability safeguards -4- Attachment 2 ELEMENTS OF.A SUCCESSFUL FINANCE MEASURE Provide Specific Examples of Why Funds are Needed Though we are recommending a General Purpose Measure, it is effective to cite examples of why funds are needed, which will better your chances of success. As shown in the survey, support increases with specific information. What you have to sell are the benefits of the plan. We recommend that your Public Information Program provide education and anecdotal examples of the essential services that could be funded by your Measure, such as: • Specific examples of essential services • Improving the level of police, fire and emergency services • Adding additional firefighters and paramedics • Repairing and maintaining City streets • Reducing traffic congestion • Upgrading the storm drainage system • Keeping up local parks and City facilities Consistent Use of Key Messages & Message Control Communications must be centralized to a designated City representative and messa eg discipline imposed to ensure consistent, centralized information. It is not unusual in cities of a similar size to San Luis Obispo to designate one individual as the primary media spokesperson for the City's planning efforts, in order ensure message consistency. The Public Information Program An effective nonpartisan, city-funded Public Information Program includes the following communications components: • Personal meetings with community Opinion Leaders and Stakeholders to build awareness of the needs and update them on next steps; • A series of City mailings to Opinion Leaders and Stakeholders to update and educate on the measure; • A series of nonpartisan, informational mailings to inform and educate constituents; -5- Attachment 2 • Earned (non-paid) Media; • A Speakers.Bureau to make informational presentations to key community organizations as needed; and • Development of an Ad Hoc Citizens Committee carefully composed of a defined group of key stakeholders who can provide the City with additional input. Timeline Considerations & Recommendation Survey results display support for a potential simple majority-requirement measure, and do not highlight any potential demographic deterrents to moving forward on the November 2006 ballot. A November 2006 election commonly turns out more voters in general and specifically attracts more Democratic voters, your strongest base of support. However, having a larger electorate would require investing more funds on a Public Information Program to educate those additional voters. Please note that a measure needs to be placed on any ballot by your City Council a minimum of 88 days in advance of the election. Therefore, the Council should wait to place a Measure on the ballot in August 2006 (deadlines should be confirmed by your City Attorney). However, as noted above, the Council should act now to authorize funding and deployment on its Public Information Program, so that this important groundwork is laid and activities conducted in the balance of 2005. SAMPLE NOVEMBER 2006 ELECTION TIMETABLE APRIL 2005 0 Conduct Public Opinion Research Z Analyze Survey Results &Assess Measure Feasibility MAY—JUNE ❑ Authorize planning for a potential November 2006 Ballot 2005 Measure El Authorize expenditures for the City's Public Information Program, using November 2006 as a planning benchmark ❑ Finalize Strategic Communications Plan ❑ Develop/Refine Communications Messages/Themes ❑ Refine Database of Opinion Leaders ❑ Conduct Speakers' Bureau/Messaging Training ❑ Brainstorm Citizens Task Force Members ❑ Identify Speakers' Bureau Hit List -6- Attachment 2 Launch Speakers' Bureau ❑ Add additional experts to the team as needed ❑ Issue Opinion Leader update#1 ❑ Implement Earned Media JULY— O Continue Speakers' Bureau deployment AUGUST 2005 ❑ Issue Opinion Leader update#2 ❑ Implement Earned Media SEPTEMBER— ❑ Continue Speakers' Bureau deployment OCTOBER ❑ Implement nonpartisan public mailer#1 (September) 2005 ❑ Convene first meeting of Citizens Task Force ❑ Issue Opinion Leader update#3 ❑ Implement Earned Media NOVEMBER— ❑ Continue Speakers' Bureau deployment DECEMBER ❑ Issue Opinion Leader update#4 2005 ❑ Implement nonpartisan public mailer#2 (December) ❑ Implement Earned Media JANUARY— ❑ Continue Speakers' Bureau deployment FEBRUARY ❑ Convene second meeting of Citizens Task Force 2006 ❑ Implement nonpartisan public mailer#3 (February) ❑ Im lenient Earned Media MARCH ❑ Continue Speakers' Bureau deployment APRIL 2006 ❑ Convene third meeting of Citizens Task Force ❑ Implement nonpartisan public mailers #4 (April) ❑ Finalize ballot question and impartial analysis ❑ Earned Media MAY—JULY ❑ Final Citizen's Task Force Meeting 2006 ❑ Finalize Speakers' Bureau outreach efforts ❑ Implement nonpartisan public mailers#5 (June) ❑ Conduct Tracking Poll for feasibility (July) ❑ Finalize all resolution and voter hand-book materials ❑ Build momentum for City Council Presentation ❑ If feasible, City Council acts to place Measure on November 106 Ballot AUGUST 2006 ❑ Final Informational Community Mailer (July/August) ❑ Phase two Partisan Campaign begins in earnest, work transfers to a non-City sponsored volunteer campaign committee for all partisan activities ❑ Ballot argument is submitted on behalf of Measure -7- - ' Attachment 3 MAJOR • LONG-TERM FISCAL HEALTH OBJECTIVE Continue developing and implementing a long-term plan that will deliver desired service levels, adequately maintain existing infrastructure and facilities, and preserve the City's long-term fiscal health. DISCUSSION Overview Accomplishing the Major City Goals for 2005-07 will require a continued commitment to protecting the City's long-term fiscal health. Given the significant fiscal challenges facing us based on the recently prepared five-year forecast, this will mean developing a comprehensive strategy for delivering desired service levels and adequately maintaining existing facilities and infrastructure, while at the same time protecting the City's fiscal health. Since the forecast is based on a"maintenance-only"Capital Improvement Plan (CIP),the challenge becomes even greater in achieving other important CIP goals such as implementing the Laguna Lake Park Master Plan, relieving traffic congestion, preserving open space and improving sports fields. Background Results of the Five-Year Fiscal Forecast. As part of the goal-setting process for 2005-07, a detailed five-year forecast for the General Fund was prepared and presented to the Council in December 2004 in order to assess the City's fiscal environment and gain some initial insights on the "order of magnitude" difficulty we would likely experience in balancing the budget for 2005-07. The results showed that the City is facing another difficult fiscal future. The forecast projected an annual average budget gap of$2.4 million for the 2005-07 planning period and an ongoing short-fall of approximately $700,000 for each year after that, even if all we do is maintain current service levels and continue to severely limit infrastructure and facility maintenance. This is excluding a one-time shortfall of $1.4 Forecast Budget Gap:2005-10 million in the City's minimum reserve in 2004-05 that will carryover into 2005-06 as 2005-06 2006-07 2007-08 2008-09 2009-10 the result of taking our reserve level to 16% $250,000 of operating expenditures rather than the -$500,000 li i policy minimum of 20%. -$1,250,000 - Tough Fiscal Past, Tough Fiscal Future. $2,000,000 a The fiscal situation facing the City two years -$2,750,000 ago in 2003-05 was the toughest in over ten -$3,500,000 bZ' years, since the "one-two punch" of the -$4,250,000 recession and State budget takeaways of the mid-1990's. We were facing a General Fund -$5,000,000 budget gap of $7 million—about 20% of our p Annual Gap o Carryover Gap from2004-05 General Fund revenues—which we successfully closed through a combination of expenditure reductions in operations and capital improvements, new revenues and use of reserves. Because of added State takeaways totaling $1.5 million, we had to revisit the General Fund budget in 2004-05. To accommodate this, we made further expenditure cuts (most notably in our paving program); reinstated the hiring - 1 - - Attachment 3 MAJOR • LONG-TERM FISCAL HEALTH and training chill; and for the fust time since we adopted our minimum reserve policy fifteen years ago of 20% of operating expenditures, we went below this level to 16%. While this is significant in signaling the tough fiscal times facing us, it is also consistent with the strategy adopted as part of the 2003-05 Financial Plan: to maintain reserves at policy levels as our first line of defense against even more State budget grabs. Fewer Budget Balancing Options Remain. While the amount of the gap is significantly lower than the one facing us two years ago, there are aspects of the current situation that are even tougher. In closing the $7 million budget gap two years ago,we: 1. Reduced operating expenditures (and related 2003-05 Budget Balancing Strategy services)by$1.7 million. Closing the General Fund Gap 2. Implemented$1.1 million in new revenues a Reserves (primarily user fees). 11% 0 Revenues 3. Significantly reduced our capital improvements 15% > ..x .:,, , ; ; o CIP (by about$3.5 million from target levels). 49% 4. Used$800,000 in reserves. Expenditures:74%.- O Operating In short, we have already used these budget- Prograns balancers and they are now part of our current base: °�° we can't "count them twice." Coming on top of these, this means that any further service reductions will be much more difficult to implement, especially in light of the fact that police and fire protection accounts for over 50% of General Fund operating costs; and new revenue options under Proposition 218 are few and far between. Lower Reserves. As noted above, we went below our policy level in 2004-05 for the first time since we adopted our minimum reserve policy fifteen years ago. While this was consistent with our adopted strategy of using reserves as our first line of defense against even more State budget grabs, it means we will go into the 2005-07 Financial Plan process with a lower level of reserves than we did two years ago: we began 2003-05 with General Fund reserves that were 30% of operating expenditures, compared with our current projection of 16% at the end of 2004-05. In summary, the gap facing us in 2005-07 follows a series of tough budget-balancing actions over the past two years. One Bright Spot: Passage of Proposition IA. The recent passage of Proposition IA on November 2, 2004 significantly improves our fiscal situation by shielding us from more State budget raids, and thus provides us with greater certainty and stability on this front than we've experienced in many years. However, it is important to stressthat it only helps prevent added State budget cuts to cities in the future: it doesn't return any past takeaways, which currently cost the City over$3 million each and every year (and total over$22 million over the past sixteen years). It is also important to note that Proposition IA does not create an impervious firewall from more State raids: they are still possible, but they are much harder to do. The Ground Rules: If two-thirds of the legislature declares a fiscal emergency, then funds can be taken away from local government, but only as a loan that must be repaid -2- Attachment 3 MAJOR CITY GOALS LONG-TERM FISCAL HEALTH within three years; the amount cannot be more than $1.3 billion; it cannot occur more than twice in a ten-year period; and no new takeaways can be made if a past takeaway has not been repaid. This is a high hurdle to overcome, certainly,but not an impossible one.. In exchange for this reasonable assurance (but not guarantee) of "no mas, no mas" in the future, local governments agreed to give the State $1.3 billion per year for two years (in 2004-05 and 2005-06), for a total of$2.6 billion. The City's share of this is about$680,000 per year; or$1.36 million over two years. After this, we should return to our prior situation, which, as noted above, is continuing to lose $3 million per year to the State. In short, while passage of Proposition 1A was essential for our future fiscal health and stability, it does not improve our current fiscal situation: it simply deters the State from making it worse. Preparing for 2005-07. Steps Already Taken. In addition to the budget-balancing actions taken as part of the 2003-05 budget process, we have taken a number of steps in positioning the City for.2005-07. We have a Fiscal Health Contingency Plan in place, and have already taken a number of cost saving steps, including a hiring freeze, ongoing reductions in operating costs and deep cuts in CIP projects. Additionally,while many people say that they want"less government,"the fact is that our surveys—and our daily experience—show that we face requests for more service, not less. So, while our immediate goal for 2005-07 is to bring expenditure and revenues into balance for the next two years, we will have to continue to work on ways of "re-tooling" the organization and developing new revenues if we want to meet our community's needs and hopes for the long term. Challenges We Will Face in Achieving this Goal Our short-term strategy for balancing the 2005-07 budget and closing the projected $2.4 million annual gap consists of the following four components: 1. Developing a General Fund CIP that is the lowest possible in reasonably mairitaining our existing infrastructure and facilities. 2. Strategically using our reserves. 3. Implementing selected new revenues as allowed under Proposition 218. 4. Reducing operating program costs and related service levels. Each of these components will be evaluated further and refined as we prepare the Preliminary Financial Plan. However, this short-term strategy will not serve us well in the longer term if we want to deliver desired service levels, adequately maintain existing infrastructure and facilities, and achieve longer-term, already-adopted CIP goals. As such, we need to identify and implement other strategies for preserving service levels, achieving CIP goals and maintaining our fiscal health. These include: 1. Organizational Vitality. Making our organization more productive, delivering current or higher levels of service for less in response to community needs. 2. Economic Development. Helping our economy perform better than our forecast projections. Generating additional revenues from two of our top three General Fund revenues—sales tax and transient occupancy tax—are both the topics of a separate Major City Goal. -3- Attachment 3 MAJOR CITY GOALS LONG-TERM FISCAL HEALTH 3. User Fees. Ensuring that the City's user fees recover costs in accordance with adopted user fee policies. 4. Legislative Advocacy. Working closely through our legislative program to prevent further adverse fiscal impacts on the City by state, federal or County agencies. 5. Citizen-Supported Revenue Options. Developing strategies for a possible revenue ballot measure in June or November 2006. ACTION PLAN In concert with the related Major City Goal of generating additional revenues from sales tax and transient occupancy tax,there are five proposed components to this action plan for long-term fiscal health: O Increase Organizational Productivity Staffing costs are the largest part of the City's budget, accounting for 75% of operating costs in the General Fund. Continuing our Organizational Vitality program, which identifies and supports methods of improving organizational effectiveness and customer service on an ongoing basis,is a key component of our long-term fiscal health strategy. © Continue Legislative Advocacy We need to continue working closely with our employee associations, the League of California Cities, other local governments, professional associations and other groups to prevent further State raids on city revenue sources, unfunded mandates, reductions in key grant programs such as the Community Development Block Grant and other State or federal actions that limit our fiscal independence. © Review and Monitor the City's Fiscal Condition Effective reporting and monitoring of the City's fiscal condition on an ongoing basis is an essential, fundamental component of managing our finances and assuring our long-term fiscal health. O Update the 2000 Cost of Services Study Under the City's user fee policy, a comprehensive cost of services study should be prepared at least once every five years in ensuring an appropriate cost in setting City fees. In the interim,fees are adjusted by changes in the consumer price index as well as adjustments due to significant changes in the method, level or cost of delivering specific services. We performed our last comprehensive review of service costs and related revenues in 2000;as such, it is timely to update this analysis for 2006 by an independent cost accounting firm specializing in this type of work. This update will answer four basic questions: I. How much does it cost us to provide various City services? 2. Are these costs reasonable? 3. What are our current revenues and cost recovery levels? 4. What should our revenue levels be given our adopted user fee policy? -4- i Attachment 3 MAJOR • LONG-TERM FISCAL HEALTH © Consider Preparing fora Revenue Ballot Measure in 2006 As noted above, the recommended budget balancing strategy for 2005-07 will go a long way towards stabilizing our budget situation for the long-term, assuming the problem stays about where it is as of April 2005. However, it is based on a significantly reduced General Fund CIP that will not be good for the community over the long term. In short, without draconian reductions in day-to-day services, additional resources will be needed to address our long-term CIP goals—both to adequately maintain what we already have as well as to make reasonable progress in achieving our General Plan objectives. Proposition 218: The Need for Voter-Supported New Revenues. Under Proposition 218, which was approved by California voters in November 1996, new or increased general-purpose taxes require majority voter approval, and the measure must be held at the same time as Council elections unless the Council unanimously decided to hold a ballot measure sooner. Special taxes require two-thirds majority approval, but the election can be held at any time. This means that any significant new revenues require community support—in evidence on Election Day. Gaining this support requires more than a compelling need`. it also requires communicating this need in a compelling way. And this requires effective preparation by the City before placing the measure on the ballot; and an effective community-based group that will campaign for its passage afterwards. The fust pre-condition—effective preparation—is within the control of the City; the second one—an effective community-based group—is not. Stated simply, the City will need broad-based community support– in evidence on Election Day–to implement new revenue sources. Creating support among elected officials and community leaders – even if it broadly crosses a number of interest groups – is no longer enough. With these profound changes in voter approval requirements, cities must communicate a compelling vision for new revenues at a grass roots level among likely voters. Even though this may seem a high-hurdle, many cities throughout the State have been successful in gaining voter approval for revenue measures, even at the two-thirds level. However, based on the experience of many other communities, achieving this support at the ballot box (the only place it matters) requires two key ingredients: a compelling vision of how the new revenues would be used; and an effective way of communicating this vision to likely voters. Although they were driven by very different factors, communities in California that have been successful in generating broad-based voter support for new revenues share one thing in common: they were the result of extensive community-based efforts, which included a combination of outreach tools, and professional assistance to use them effectively. Based on the experience of many cities and other local government agencies throughout the State, if the need is compelling and is effectively communicated, this effort is likely to be successful. However, it requires commitment, resources (more on this later), time, and most importantly, a strong community-based advocacy group that will aggressively raise funds and campaign for the issue once it is on the ballot. This last issue cannot be stressed enough. Under State law, cities have broad discretion in using their funds for professional assistance in researching issues, conducting surveys and developing voter support strategies. However, once an issue becomes a formal ballot measure, cities cannot participate as an advocate in any way. In short, unless there is a strong community-based group that is willing to aggressively raise funds and campaign for the measure, it is not likely to pass. -5- Attachment 3 MAJOR CITY GOALS LONG-TERM FISCAL HEALTH Elements of a Successful Revenue Measure. There are three major steps in preparing for a successful revenue measure: 1. Feasibility assessment. Conduct scientifically-based public opinion research and assess the likelihood of a successful revenue measure. 2. Public information program If the public opinion research is favorable, develop and implement a public information educational program on why new revenues are needed. 3. Ballot measure. Place the measure on the ballot if there is a community-based group that will aggressively campaign for its passage. As noted above, it is important to stress that while the City can take the lead on the first two tasks in preparing for the measure, once it is placed on the ballot we can no longer be an active participant in the process or commit resources to its passage in any way. For this reason, even though the results of the fust two steps may have been very positive, placing the measure on the ballot.should only occur if a community-based group has emerged that will campaign for its passage. Summary. Gaining voter support for a revenue measure—in evidence on Election Day—requires more than a compelling need: it also requires communicating this need in a compelling way. And this requires effective preparation by the City—doing our homework, and allocating adequate time and resources to this endeavor— before placing a revenue measure on the ballot (which is within the control of the City); and an effective community-based group that will campaign for its passage afterwards (which is not). Tasks and Schedule Task bate I. . - I. Organizational Productivity. Continue organizational vitality program in improving Ongoing productivity and customer service. 2. Legislative Advocacy. Continue working closely with our employee associations, the Ongoing League of California Cities,other local governments, professional associations and other groups to prevent further adverse fiscal impacts on the City by State, federal or County agencies. 3. Review and Monitor the City's Fiscal Condition. Continue to effectively review and Ongoing monitor the City's fiscal condition on an ongoing and timely basis, including on-line access to financial data,quarterly newsletters, focused reporting on key revenues, mid-year budget reviews and preparation of annual financial reports in accordance with generally accepted accounting principles and nationally recognized excellence in financial reporting guidelines. 4. Update the 2000 Cost of Services Study. Consistent with the City's user fee policy of preparing a comprehensive cost of services study at least every five years: a. Develop workscope and issue request for proposals. 10/05 b. Select consultant, award contract and begin preparing study. 12/05 c. Complete draft report. 3/06 d. Present findings to Council. 4/06 e. Implement cost recovery policies. 7/06 -6- • Attachment 3 MAJOR CITY GOALS LONG-TERM FISCAL HEALTH Task 5. Consider Preparing for a Revenue Ballot Measure in 2006. Complete analysis of the 7/05 feasibility of a revenue ballot measure and present the results to the Council for a"go/no- go"decision in taking the next step in preparing for a revenue measure in 2006. If the Council decides to go forward,follow-up action steps will be determined at that time. RESPONSIBLE DEPARTMENTS All departments play a critically important role in ensuring the City's long-term fiscal health through their management and use of City resources; however, Administration, Human.Resources and Finance & Information Technology will be especially involved in achieving this goal. FINANCIAL AND STAFF RESOURCES REQUIRED TO ACHIEVE THE GOAL 1. Updating the cost of services study will cost$47,500 in 2005-06. 2. Analyzing the feasibility of a 2006 revenue ballot measure has already been funded in the amount of$35,000 as part of the 2004-05 Mid-Year Budget Review. Depending on the results of this analysis, an additional $75,000 to $150,000 will be needed if we proceed to the next step in this process of conducting a public education program. If the Council decides to place a measure on the ballot, then $20,000 to $60,000 will be needed in contracting with the County to hold this election. 3. All other tasks can be achieved within existing resources. Cost Summar Operating Programs Capital Improvement Plan 2005-06 2006-07 2005-06 1 2006-07 Update 2000 Cost of Services Study 47,500 Total $47,500. $0 $0-1 $0 Only funding for the cost of services study is recommended at this time as part of the 2005-07 Financial Plan. Any funding decisions in preparing for a revenue ballot measure should wait until the Council decides to do so, which is likely to occur after the Council approves the 2005-07 Financial Plan. In the event that the Council approves going forward with a public information program as "Step 2: in this process, we believe that this would be an appropriate use of the reserve as a one-time cost that positions us for an improved long-term fiscal outlook. 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 delivering desired service levels, adequately maintaining existing infrastructure and facilities,.and accomplishing important community goals. -7- Page 1 of 1 SLO Citycouncil-Sales Tax Increase? RED FILE MEETING AGENDA From: "Kevin"<Raknaman@charter.net> DATE ITEM #� To: <slocitycouncil@slocity.org> Date: 5/17/2005 11:37 PM Subject: Sales Tax Increase? San Luis Obispo City Manager Ken Hampian says the city thinks the people are ready for an increase. I think Mr.Hampian and the city need to ask the people of San Luis Obispo this first! I _J C_OUNCIL CAC CDD DIR FIN DIR FIRE CHIEF _ F.TT:-,,Ey PVV DIR -91G POLICE CHF i pS E. REC DIR UTIL DiR I-IR DIR file://C:\Documents%20and%2OSettings\slouser\Local%2OSettings\Temp\GW}000O1.HTM 5/18/2005 Page 1 of 1 - RED FILE SLO Citycouncil-city sax MEETING AGENDA c From: "Dan"<drinavila@hotmail.com> To: <slocitycouncil@slocity.org> Date: 5/17/2005 6:21 PM Subject: city tax You got to be kiding me.No money,We had lots for spending on cops to keep kids from drinking beer and showing their boobs. tam sorry but you guys are crazy. CNZ COUNCIL CDD DIR f CAO FIN DIR ACAO FIRE CHIEF iJ ATICRNEY PW DIR _ CLERK.CRIG POLICE CHF ] of nc. DS REC DIR --.U-/�-_____ UTIL DiR ��.--- ❑ SIR DIR file://C:\Documents%20and%20Settings\slouser\Local%2OSettings\Temp\GW IOOOOI.HTM 5/18/2005