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Home My WebLink About05/17/2016 08 General Government Revenue Enhancement Options ReportBUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDASTATEMENT Item No. 8. For Meeting of: May 17, 2016 ITEM TITLE: Report on General Government Revenue Enhancement Options SUBMITTED BY: Jeff Cutter, Interim City Manager Cindy Epperson, Director of Finance & Budget SUMMARY EXPLANATION: In response to the City's recent General Government (i.e. tax - supported funds) financial position, members of City Council have requested a report on potential new or enhanced revenue sources currently authorized by Washington State law. Attached is a comprehensive list of tax revenues that can be imposed or increased. Each revenue option includes the statutory authority; any limitations in the purpose; how to establish or change the basis for the revenue; and an estimate of what the revenue would generate annually. Please note there is no recommendation or prioritization suggested by inclusion of or sequence of items included in the chart. It is not intended to be a complete list of all possible options- - although we believe it includes the most viable. Staff is in the process of summarizing other revenues, including fines and fees for services provided, with the intent of bringing a report to City Council on June 7, 2016. This is a report on the generally available options. Should Council desire to further research any of these revenue sources, staff would need to be directed to bring back applicable information. ITEM BUDGETED: NA STRATEGIC PRIORITY: Public Trust and Accountability APPROVED FOR SUBMITTAL: Interim City Manager STAFF RECOMMENDATION: Accept report. Direct staff to bring back appropriate reports and legislation if desired. BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description Upload Date Type D Rewnue Option Transmittal Memo 511012016 Cowr Memo D R&,enue Chart 5110/2016 Exhibit MEMORANDUM Date: May 12, 2016 To: The Honorable Mayor and Members of Yakima City Council From: Jeff Cutter, Interim City Manager Cindy Epperson, Director of Finance & Budget Subject: Revenue Enhancement Options Transmittal The City's recent General Government (i.e. tax - supported funds) financial picture has had some challenges which were reported in the Five -Year Financial Plan that went to City Council on February 23, 2016, and the 2015 Year -end Budget Report that went to City Council on April 5, 2016. In response to these reports, City Management identified budget reductions in the amount of about $750,000 to help us balance the 2016 budget — this report also went to City Council on April 5, 2016. Since the updated Five -Year Financial Plan did not have "room" in the future annual budgets for debt service or operating expenses for new projects, in order to accomplish these initiatives there are basically two options — reduce existing expenditures or add revenues. (Discussions on current revenue streams are found in the Five -Year Financial Plan and Section II in the 2016 Preliminary Budget Summary. The 2016 Adopted Budget also details every General Fund revenue account at the end of the Citywide Summaries section.) Members of the City Council have requested a report on potential new or enhanced revenue sources currently authorized by Washington State Law. Enclosed you'll find a comprehensive list of revenue sources available to the City. The list includes a short name /description of the revenue option; a reference to the legal authority for the revenue option (RCW stands for the Revised Code of Washington — if the City already has the revenue in place at a rate that is less than the statutory maximum, a reference to the Yakima Municipal Code or YMC is also included); a summary of the authorized purposes and limitations; a summary of how the revenue could be established (i.e. vote, Council action, etc.); and an estimate of potential yield that the revenue may generate based on 2016 conditions. In addition to the tax options, City Management is also reviewing fee structures to see if there are some updates needed. The City's adopted Financial Management Policy indicates that all fees should be reviewed at least every two years. We are still compiling the information on General Government fees, and hope to bring a follow -up report at the June 7, 2016 City Council meeting. The attached report shows resource options that the City could implement to generate additional funds to maintain core, essential services for our citizens, if it is determined that expenditure reductions (i.e. service /program reductions) may be less acceptable than revenue enhancements. Enclosure — "Major Sources of Revenue Authorized for Municipal General Government Operations" Major Sources of Revenue Authorized for Municipal General Government Operations [This chart presents some options provided by existing state law. No recommendation pro or con or prioritization is intended to be suggested by inclusion of or sequence of items in this chart.] REVENUE AUTHORITY PURPOSES AUTHORIZED HOW ESTABLISHED POTENTIAL YIELD OPTION LIMITATIONS [2016 estimate] Property Tax —Levy General Government Only $219,000 available. Lid Lift By Voter Approval $0.0375/ thousand raises RCW 84.55.050 To bring the levy to the statutory max. -2 Simple Majority Election $219,000 annually options, both can be multi -year $3.75/yr on $100,000 AV Property Tax -Voted General Government- Capital $0.20/ thousand raises Bond Issue -- WA Const., By Voter Approval $1,166,000 annually Maximum 1 % added Art 8 Sec 6 Debt Service supported by excess $20 /yr on $100,000 AV to 1.5% non -voted RCW 39.36.020 property tax levy 40% Voter Turnout -60% super - majority Pays for $16m project over Available Debt Capacity ($55m) 20 years Tax > 6.0% on Private By Voter Approval Utilities, i.e. Electricity, Telephone RCW 35.21.870 5.50.050- 060 YMC General Government Simple Majority Election $1,220,000 annually per each 1 % Natural Gas to exceed 6% Tax > 6.0% on Cable TV (rate currently at Cable Communications Rate is not restricted, but must not be Ordinance passed by City Council $110,000 annually 6 %- -the same as other Policy Act of 1984 y unduly discriminatory against cable (may require voter approval if deemed "discriminatory") o per each 1 % private utilities) 5.50.065 YMC operators and subscribers. Local Business and $4,600,000 annually Occupation Tax [$2,300,000 per each .1 %] Tax < 0.2% of gross Ordinance passed by City Council (less $500,000 -loss of receipts RCW 35.21.710 General Government Subject to Referendum Business License Fees) (needs $250,000 in new admin cost for collection) Cje Revenue option chart 5/10/201611:58 AM Page 1 of 3 REVENUE AUTHORITY PURPOSES AUTHORIZED HOW ESTABLISHED POTENTIAL YIELD OPTION LIMITATIONS [2016 estimate] 5.52 YMC Fees increased in 1988 for Sundome Debt Ordinance Passed by Ci ty Council Currently sliding scale Business License Fee increase RCW 35.22.280 32 ( ) Service. (about 20% currently obligated (can only be imposed and increased as long as no B &O tax is enacted —see based on employee count- - (no cap in RCW) for this purpose) above) 10% = $55,000 In Lieu Tax on Public General Government Utilities, i.e.Refuse, Water, Wastewater, Ch. 7.64 YMC o Current rates — 20 /o Water and $440,000 annually Stormwater (No cap in RCW) Wastewater, 15% City Refuse, 16% Ordinances Passed by City Council per each 1% Yakima Waste, 6% Stormwater (Parks now receives 3.5 %) Tax < 6.0% on Private Ordinance by City Council to Remove $820,000 annually if Utilities, i.e. RCW 35.21.870 General Government $4,000/customer/mo. lid removed totally Electricity, Telephone 5.50.050- 060 YMC (affects primarily larger Natural Gas Note: $4,000 lid unchanged since 1994 mfg. businesses) Impose Brokered $113,000 annually if Natural Gas Utility RCW 35.21.870 imposed with no lid -- Tax—up to 6% General Government Ordinance Passed by City Council $54,000 w /$4k lid WAC 458 -20 -17902 (affects primarily larger mfg. businesses) Admissions Tax $450,000 annually Max 5 % RCW 35.21.280 General Government Ordinance Passed by City Council (estimate based on similar cities) Gambling Taxes- RCW 9.46.110 Primarily for law enforcement $760,000 annually Social Card Games Ordinance Passed by City Council (from 10% to 20 %) 5.49.020 YMC Maximum 20% of gross receipts ($76,000 each 1 %) Transportation Ordinance Passed by City Council (up Benefit District -- RCW 36.73 & Transportation Purposes to $50 per vehicle -only after $20 fee in effect for 24 mos. & $40 for 24 mos. $1,100,000 annually Vehicle License Fee 82.80.140 including streets Over $40 subject to referendum ($20 /Vehicle) (up to $100 per qualified vehicle) Simple Majority Election -$50 -$100 Cje Revenue option chart 5/10/201611:58 AM Page 2 of 3 REVENUE AUTHORITY PURPOSES AUTHORIZED HOW ESTABLISHED POTENTIAL YIELD OPTION LIMITATIONS [2016 estimate] Transportation By Voter Approval Benefit District— RCW 36.73.040 & Transportation Purposes Simple Majority Election $1,900,000 annually Sales & Use Tax 82.14.0455 including streets Per 0.1% (up to 0.2 %) 10 year limit, except to repay debt Commercial Parking Tax- Various RCW 82.80.030 Transportation Purposes including streets Ordinance Passed by City Council Unknown methodologies Reimbursement Contracts for Street, Street projects which the owners elect to Ordinance Passed by City Council that Road, and Highway RCW 35.72 install as a result of ordinances that requires certain projects as a Can only be determined in Projects re q uire the projects as a prerequisite to prerequisite to further property relation to specific projects further property development development Local Improvements, including streets, Local Improvement alleys, streetlights, sidewalks, etc. Petition by effected Landowners, Districts (LIDs) RCW 35.43 "...levy and collect special assessments Then Enacted by City Council by Can only be determined in relation to specific projects on property specially benefited thereby Ordinance to pay the whole or any part of the expense " RCW 35.43.040 Fire, Parks, Schools, Street Capital Impact Fees to pay RCW 82.02.050 - Projects for Improvements Necessitated b New Y .090 cities ... that plan under RCW 36.70A.040 i.e. Growth M t Act are ( � ) Ordinance Passed by City Council Can only be determined in relation to specific projects Development authorized to impose impact fees on development activity as part of financing for public facilities' Cje Revenue option chart 5/10/201611:58 AM Page 3 of 3