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2014-2015 Budget

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The 2014-2015 budget was adopted by the Davis City Council during their meeting on June 24, 2014. For an interactive view of the City of Davis Budget, please visit City of Davis OpenGov.

July 2, 2014 Report: Potential Tax Measure

June 24, 2014 Report: Potential Parcel Taxes

June 24, 2014 Report: Adoption of Fiscal Year 2014-2015 Annual Budget

June 17, 2014 Utility Tax Study Session

June 10, 2014 Presentation: 2014-2015 Proposed Budget

2014-2015 Proposed Budget

Recommended General Fund Reductions by Department (FY 2014-2015)

April 15, 2014 Presentation: Updated General Fund Projections Reduction

April 15, 2014 Staff Report: Consideration of General Fund Reductions and Revised Projections

February 11, 2014 Revenue Measure Staff Report

Recommendation

Provide Council feedback on preliminary staff/subcommittee recommendation(s) related to

  • placing a measure on the June 2014 ballot to increase the local half-cent transaction and use (sales) tax by three-quarters-cent for a maximum of ten years to address City structural deficit; and
  • placing an additional measure on the November 2014 ballot for an approximately $150/parcel tax to address infrastructure (paving, park capital improvements to reduce water consumption, etc) and recreation amenities (50 meter pool, acquisition of Nugget Fields, etc.).

Background

On December 17, 2013, the City Council received a mid-year budget briefing and a preview of issues for the upcoming FY14-15 budget. This briefing included information about the cost saving measures and cuts the City has taken over the past two budget cycles and previewed that, even with a projected increase in revenue of over $900,000, the General Fund is projected to have a $5.1 million shortfall for FY 14-15. This shortfall is due to the following factors:

  • Debt Service for Infrastructure $2,000,000
  • Additional funds for Street Maintenance Contract $505,000
  • Removal of Other Resource Savings value $770,000
  • Utility Increases Including Water and Sewer $94,000
  • Fleet Replacement Funding $110,000
  • Insurance Claims cost and Other $67,500
  • Wage Increases- $1,062,000
    • 2% COLA Based on current MOU’s $360,000
    • Removal of currently unfilled positions $250,000
    • Removal of Salary Savings Adjustment $447,000
  • Benefits and Other - $1,243,000
    • Retiree Medical Benefit $180,000
    • PERS Retirement $437,000
    • Leave Benefit funding $305,000
    • Medical Insurance, Cafeteria Other $321,000

A subcommittee of Mayor Pro Tem Dan Wolk and Councilmember Brett Lee has been working with staff to consider various revenue options. Options discussed included the following:

  • Increase to the local transaction and use (sales) tax - In March of 2004, Davis voters approved a one-half cent local transaction and use (sales) tax with a six year sunset, which was renewed in 2010, with a sunset of 2016. The tax was originally proposed as a means to address historical structural budget shortfalls as well as provided funding for a variety of expanded service demands. Because there are no other local countywide transaction and use taxes that affect Davis, the City has the ability to increase its local transaction and use tax up to a maximum of 2 percent.
  • Parcel tax
  • Bond measure

In addition, the subcommittee held two meetings of a focus group of community members to discuss the City’s financial situation and to review at the options. The focus group provided thoughtful input to the subcommittee, as well as insight regarding the fiscal opportunities and challenges to address the budget shortfall. The participants recognized that the City has made significant cuts over the past several years, is currently engaging seriously in economic development efforts to bring in new revenue sources and needs to make a choice of additional, drastic cuts to service or identifying immediate revenue sources. The group was generally supportive of the City pursuing tax measures as part of a larger and comprehensive fiscal strategy. The group indicated that the City needed to explain why revenue is needed, what will be done to ensure that revenue will be used in the most efficient manner possible and that other means of long-term revenue measures (economic development) will be pursued.

Over the past 6 years, staffing has been reduced citywide by 103 FTEs, with overall General Fund cuts totaling $5.8 million. In addition, employee cost-sharing and concessions have helped to reduce costs by another $5.2 million over the contract period for a total of $11 million in General Fund savings. In other words, if none of these measures had been taken, the General Fund would be at roughly $53 million instead of $42 million. Given cuts already made and efficiencies achieved, the next round of cuts that would be necessary to address the continuing $5.1 million General Fund shortfall would result in significant changes to current service delivery levels. While the City is working with the business community on ways to rapidly increase revenue through accelerated economic development, this process takes time to yield results at levels that can address the structural deficit. Because economic development requires considerable focus and leveraging of networks and partnerships, it is expected that it will likely require five to ten years to substantial results. Specific focus will be given to facilitating the growth of technology and manufacturing business and collaboration with industry that may lead to an innovation and tech park.

The result of the budget realities and the subcommittee activities is a preliminary staff/subcommittee recommendation for the City Council to consider a two-part revenue solution:

  • An increase to the local transaction and use (sales) tax (currently at one-half percent) by three-quarters-percent, for a local total of one-and-one-quarter percent or an overall total of 8.75%) through a measure placed on the June 2014 ballot. The additional three-quarter percent in sales tax would generate approximately $5.4 million. A Council election is the only ballot where a general purpose tax is allowed without making a finding of an emergency, so this June is the only opportunity to consider this option until June 2016. This type of tax requires a simple majority vote. The tax would pay to close the City’s structural deficit and would be for a maximum of 10 years, with a possibility of an earlier sunset if economic development activities yielded advanced success in addressing the structural deficit, or with the possibility of any “excess” funds going to replenish the General Fund reserve levels.
  • A parcel tax in November of 2014 for approximately $150 per parcel would generate approximately $4.1 million. This tax requires a 2/3 majority and would be targeted to address infrastructure needs such as roads; recreation amenities such as repairs and/or enhancements to existing pools, purchase of Nugget Fields from the Davis Joint Unified School District, etc.; money-saving irrigation expenditures and other potential enhancements to the community. This tax would be proposed for potentially longer term so that financing could be tied to the tax.
  • Alternatively, the City could propose a General Obligation Bond to address the capital needs noted above. However, the types of expenditures allowed with this type of financing are more limited, and maintenance costs would not be able to be funded via the measure. In addition, the tax would have to be imposed for a 25-30 year term.

Should the Council wish to pursue an option for the June 3, 2014 ballot, staff would return on February 11 with language for the Council to approve. This is the latest possible date for inclusion with the June ballot.

January 28, 2014 Presentation: Revenue Measures

January 7, 2014 Meeting With Revenue Focus Group

2013-2014 Midyear Budget and 2014-2015 Preview