City seeking revenue for facility fund

As for potential revenue sources, Public Works Director Ramana Chinnakotla said staff is exploring a utility users tax increase that may also apply to video streaming services, various bond measures and the creation of a new storm water utility fund as well as improvement districts. He also pointed to Proposition 68 on the upcoming June ballot, which would provide $1.69 billion statewide for various park and water-related projects, and he said staff is researching revenue opportunities related to Senate Bill 231, which expanded the definition of sewer to include storm systems.

“These are areas we’re actively studying and we’ll likely be asking you to consider,” said City Manager Melissa Stevenson Diaz. “We’re making really good progress on both identifying the longer term needs and coming up step by step with the right strategies to fund them.”

Some of those strategies already appear to have council support at a Monday study session. 

“If it (utility users tax) doesn’t keep up, it becomes useless in the future,” Councilman John Seybert said. “I would encourage looking at some of these by the next election cycle in 2020. I think we need to look very critically at doing that or we’ll get behind if we’re not already headed there.”

Vice Mayor Diane Howard said the utility users tax doesn’t need to be raised, but expressed interest in “modernizing” the tax so it applies to video streaming. She also mentioned bond measures for future projects.

The conversation comes at a time when the council is also considering a sales tax for the upcoming ballot.

The list of infrastructure projects was warmly received by councilmembers — many of whom wanted to add to it and not remove projects — and Chinnakotla said the city’s existing infrastructure is in “very good shape,” however he also outlined budget gaps and “causes for concern.”

Chinnakotla said the huge funding gap is largely due to costly new projects and two transportation projects in particular, adding that federal and state funds will cover a “big portion” of those costs.

“But it still leaves some portions that we need to firm up on our side,” he said.

Chinnakotla said threats to capital revenue include efforts to repeal the Senate Bill 1 gas tax, which brought in nearly half a million dollars this fiscal year and will likely bring in $1.4 million the following fiscal year. And he said utility users tax revenue, which funds a “big portion” of the CIP, is stagnant while capital project costs are escalating.

Funding for capital projects comes from a variety of sources beyond the utility users tax and transportation funds, including park impact and traffic mitigation fees as well as water and sewer enterprise funds, among others.

Monday’s study session was on current and proposed projects as well as the capital budget, which will return to council in June when the budget is officially adopted. While the five-year capital improvement program was a focus of the study session, in June the council will only approve funding for fiscal year 2018-2019. 

For fiscal year 2018-2019, capital project requests from all city departments totaled $55.8 million, while staff identified just $34 million for the highest priority projects; others have been pushed back for consideration in future years, according to the report.

As for the five-year plan extending to fiscal year 2022-2023, staff estimates only $93.5 million in funding is available for 284 proposed projects estimated at $402 million.

In addition to costly transportation projects, other areas, including sewer, parks, water and stormwater will need significant investment in the future, according to the report. Chinnakotla said water and sewer have their own funding sources, while stormwater does not, adding “we have quite a bit of need on the stormwater front.” 

Beyond budget challenges, councilmembers requested greater involvement in the capital improvement program, and suggested formalizing some process whereby the council could nominate projects for consideration. 

Councilman Jeff Gee specifically wants to see improved lighting in the city’s older neighborhoods, while Councilwoman Shelly Masur called for a curb painting efforts to prevent cars from parking near street corners. Howard also said she wants additional resources dedicated to technology moving forward.

zachary@smdailyjournal.com

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