City Council - Regular Meeting

All right, we good to go. Oh, sounds like you can hear me and I can see me as well. And um in terms of putting the presentation up, is that here we go. I appreciate your guys patience. Thanks so much for being with us tonight. Uh my name is Rob. I'm here on behalf of the city and um what gathers us here this evening is to talk a little bit about the city budget in the city of Bmont. Um and I want to thank you one more time for taking some time out of your evening to learn about this um and welcome anyone who may be watching us um online or on a recording. We are here to talk talk about the budget. Yes, it's budget season um for the city of Bowmont like it is for most cities. Most cities operate on a fiscal year that starts uh starts in July. So, we're nearing the end of the current fiscal year and preparing the budget for the next year. And as part of that, also looking um years into the future as well. And uh as the city is going through that process, uh it's trying to do some planning, gather community feedback. Thus, we are here this evening. Um but we thought a good way to talk about the budget would be to first talk about exactly what the city does. Um so it's not just numbers and pie charts. Um we want to kind of level set with the community about what services does the city provide? Um what kind of infrastructure does it maintain? and then we'll talk a little bit about the numbers um and some of what the future may hold. So, what does the city do? There are about 500 cities in the state of California. Most of them provide similar services. Um at the at the core of that for most communities is public safety, your police, your fire, your emergency medical response. Um there's also public works, that's the streets, the roads, other kinds of infrastructure you may not see, storm drains, sewers, etc. There's parks and recreation. There's community development um for not just

planning for uh new housing in the community, but also if you're upgrading your home, you have to go to the planning department, etc. Building and safety. Uh there's an animal shelter in Bowmont. There's senior services. This is not everything that the city does, but it's a lot of what we talk about when we talk about um core city services. And of course, the city has a lot of projects underway uh related to those services. Some of those are infrastructure related improvements to our streets and parks. Um, others relate to public safety. There's a new fire station that's recently been completed. Um, and in fact, the single largest uh expenditure of the city in its general fund, its main budget, uh, is public safety, economic development, um, that's, uh, infrastructure redevelopment for the downtown, additional community events, and efforts to try and attract new businesses to Bulmont. Parks and wreck, the city manages all the city parks. Uh, but that includes sports fields, trails, and other facilities. um their annual park improvements and expanding the sports programming that the city has. And the city has a lot of work underway in terms of uh the transparency around its financial management. It of course publishes its budget annually. It tries to conduct community events like the one we're having this evening. And um believe it or not, there are uh organizations that give awards for city budgeting um and transparency. The government finance finance officers association and the city of Bowmont's been receiving that award pretty consistently in recent years. I want to talk a little bit about some of the demands for service, right? Like a business has customers, cities have residents, and they um and they're delivered services. And there can be trends that go along with that in terms of the volume of services. Uh in public safety, first and foremost, police, fire, paramedics, they respond to about 16,000 calls for service annually in the city of Bulma. And uh when you're talking about fire responses, a big portion of that, about threequarters of them or 75% are for medical emergencies,

heart attacks, strokes, accidents, um and other issues like that. Um the calls, the number of calls for service have been going up quite a bit in recent years. Calls to 911 have doubled in the last 5 years. Police calls uh have tripled over the last 10 years, and fire responses alone have tripled also over the last 10 years. The city also maintains a lot of physical assets. We're in the city hall, of course, right? But the city also maintains its police station. There are three fire stations. There are nearly 150 miles of streets and roads in the community. Um, and add to that probably a similar amount of underground infrastructure, pipes, storm drains, etc. The city has 18 parks and 21 playgrounds. Um, and of course, city facilities like the city hall and others. And there is a lot going on with that as well. Certainly, road and traffic improvements um are a big one um related to to public infrastructure. That can include um just general u maintenance of the city's streets and roads, but also larger projects like grade separations that help separate the uh the uh train tracks from the street so that both of those can proceed without having to wait for one another. There are parks improvements going on. Um the city is currently trying to rehabilitate um about eight miles of it roughly 150 miles of streets and roads. It is uh making upgrades to its traffic signals. It is making improvements to its sidewalk, adding 1,000 new feet of sidewalk plus um additional accessibility for ADA um improvements to parks. I mentioned the grade separation, the Petroa Boulevard um SR60 uh interchange improvements. All of these are projects that are underway and the city's also trying to plan for other improvements it would like to make in the future such as a new police station, a new animal shelter, another fire station, um a new community center, recycled water program, trail and park enhancements. These are things the city

would like to do in future years if resources are available. So, where do we get the dollars to support these? And again, I've given you like a very brief overview of what the city does. Um but uh the city like you may at home has multiple different uh funds, right? You may have a checking account, a savings account, etc. The city has uh different funds that fund its services, but the main one is the general fund. That's you can almost think of as like your checking account. It's like the the big account that pays for most of the services that we're talking about this evening. And it may not surprise you to learn that that is funded uh predominantly by taxes. And I'll talk a little bit more about that. We have a pie chart that shows um the specific sources of revenue for the city of Oman, its general fund. And you could see that sales tax and property taxes comprise about half of the general fund. They're the two largest sources of revenue. But this pie chart would look different actually in almost any community you would go to. Any of the 500 cities, they have a little bit of a different blend of revenues. And that has a lot to do one with, you know, sometimes somebody's keep knocking on this thing. Sometimes when the city was founded, right? that can affect how much property tax those cities receive. Kind of how old is the city and what were the laws for incorporating at the time. Another big factor obviously is the local economy, right? What kind of businesses do you have in town? What kind of taxes do those generate? If you were to go out to Palm Springs um or certain coastal cities, you may find hotel taxes to be a really big driver um of the city's local budget. In um other cities that have big industrial um refineries and other kinds of things, you might find um utility taxes to be um a big driver for those communities. Having sales tax be the number one source of revenue is is relatively common in uh local cities. And it's particularly important in Bowmont because one of the features of the local economy here is the logistics industry and um the warehouses, right, that hold

goods that when people shop online, the city gets um a pretty big portion of the sales tax revenue from those sales uh which benefits the city currently, but there's some uh things on the horizon that could alter that. How are these funds then turned around and invested? I mentioned earlier that public safety is the single largest uh line item for the city and indeed that's about half of the city's general fund um is devoted to public safety and that's pretty common too if you go from city to city um that's followed by public works your streets, roads, sewers, etc. um community services and then community development. The city um is of course working hard to reduce its costs and try and be as efficient as possible. It does maintain a reserve. I mentioned the city has different accounts has a reserve account like a savings account and um by policy uh those reserves are required to be at least 25% of its operating cost. So it's a rainy day fund so to speak. I mentioned also that the city's been receiving awards for its accounting and financial transparency. And the city is also trying to take a long view um looking at economic conditions, the sources of revenue that the city has and how certain costs may be rising vis uh sources of revenue um and trying to anticipate um any deficits that the city would have in out years and try and plan for those. Now, one of those and I mentioned a moment ago about um the logistics industry and uh you warehousing for lack of a better phrase uh and how how important that is underlying the sales tax revenue in the community here. Again, there are warehouses in Bumont that hold goods that people buy online. They buy a television or a bottle of shampoo or whatever and they get it delivered to a neighboring city. Right now, Bulmont gets to keep a larger share of that sales tax because the sale, you know, originated here and the and the goods were hosted here. There is a conversation in the state capital about

changing that equation and essentially um making it so more of the taxes go to where the bottle of shampoo went versus where it was sold, right? Um that would have a uh instant and pretty dramatic effect on Bumont's uh budget if it were to go forward. And I want to be clear, it's not going forward at the moment, but it is being discussed. If those discussions advanced, it could mean as much as a 25% hit or 9 to10 million annually to the city of Bowmont's general fund. So, this is an example of the kind of thing that the city is trying to anticipate and plan for. That's an example of something that um is not determined yet, but is a is a potential factor down the road. The other issue is rising costs. And I mentioned that the number of calls for service have been going up. um for public safety, but even independent of the rise in just the number of calls that the police and firemen and EMTs are responding to, the cost for maintaining those services is also been going up in recent years. And that's not um specific to Bowmont. It's something that's affecting really all communities in Southern California, probably Northern California as well. Um it has to do with the cost for the personnel to recruit and retain quality officers. Um that's going up. It has to do with the cost for insuring um those operations, the cost for the equipment itself. There's actually not that many uh companies that make firetrs, believe it or not. Um and the cost for those, they call them apparatus, has gone up um quite a bit in recent years. So, I think in the same way at home at your kitchen table, you're seeing rising costs for utilities, for groceries, for fuel. um that if you have a small business, the way you may be seeing increased costs for uh labor and other factors, those those issues are affecting the local government as well. Um and again, it's not specific to this city, but the number in this city that is specific to our town is uh public safety costs are up by about 75% over the last four or

five years. And in light of the fact that um certain costs are going up, revenues um are not going up at a similar pace. And there could be um questions about the sort of blend of revenues that the city gets. The city is considering um proposing to voters, voters would have the last say on this, the possibility for a uh 1 cent sales tax um locally here for the city of Bowmont. If it were passed by voters and voters would have the the final say on this, it would support anything that is funded by the city's general fund, kind of that main fund I talked about. That includes public safety services, streets and roads, parks and wreck, economic development, and others. Some facts about um sales tax in Bowmont. Some fun facts. One is Bowont has one of the lowest sales tax rates in Riverside County. Um it's I think tied for the lowest um and has indeed has one of the lowest um around California and it does and that's because it does not currently have a city dedicated sales tax and I'll walk through a little bit how some of these um revenues are divvied up by different levels of government. I mentioned there's about 500 cities in California. Most of them provide public safety streets, roads, parks, etc. There are many other kinds of local governments in the state. school districts, water districts, cemetery districts, counties, etc. They all rely on those same kinds of taxes and they get different portions of them. Um, and with property tax, as an example, you could see that the Bowmont Unified School District gets close to 40% of the property taxes locally. Riverside County gets 19%. And then there's a host of smaller agencies like I mentioned uh junior college, library, uh park, uh flood control, um park districts. Those all get smaller percentages. The amount that comes to the city is just under 12%. 11.7% of the

property taxes paid by the residents and the businesses in the community um come back to the city. That's the city's second largest source of revenue for its general fund. But it only but it has to make do with a relatively small proportion of the total taxes uh paid by its residents. The same is true of sales tax. The current sales tax rate in town is 7.75%. That means if you go to Walgreens and you buy $100 worth of taxable goods, um you'll pay about $7.75 in taxes. certain things are exempt like medicine, but $100 purchase generally is going to run a $7.75 tab for sales tax. However, the state of California um gets six uh $6 of that 775 or 6%. Uh the county of Riverside gets 75% um which I think goes mostly for transportation. The city receives actually just 1%. And this is um not a bad deal specific to the city of Bumont. This is kind of the standard deal that cities get in California um is that 1%. It's called the Bradley Burn sales tax rate. But if the city enacts a local sales tax, um if the voters were to approve that, it would take that $7.75 on 100 to $8.75, but 100% of that extra dollar would stay in the city of Bowmont. The amount that goes to California uh to the state uh remains unchanged at 6%. The amount that goes to the county is unchanged at 75% but the amount that goes to the municipality um goes to 2%. And that's by law.

Uh another fun fact about sales tax is that about half of the sales taxes collected in the city of Bowmont are paid by visitors um and non-residents. So there people passing through filling up for gas, there people coming to town to eat in restaurants or shop at the Walgreens. Roughly speaking, for about every dollar that a resident pays in sales tax, a visitor or or a non-resident's paying another dollar. You might be wondering how Bumont compares to other communities. I mentioned that currently it has one of the lowest sales tax rates in the county. I believe it's tied for the lowest uh banning is at that same number, 7.75%. But a number of surrounding communities have enacted one of these locally controlled sales taxes. Hemtt, Meny, Myrietta, Marino Valley, Riverside, San Hisento, Ukipa, all of those are at 8.75% and that's because they've gone through a process to enact a local uh a local sales tax. I also mentioned that there are things that are uh certain certain goods are exempt from sales tax. most groceries, prescriptions, uh, and medical supplies, um, rent, utilities, services, anything that's purchased with, um, uh, public assistance, CalFresh benefits. Uh, there's no sales tax charged on those now, and nor would there be under any potential proposal from the city. And again, what would um, what would the process look like if the city proceeded with this? Well, as I mentioned, the voters have the final say. Prior to that, the city council would actually have to consider whether to even put it on the ballot. And it actually requires a supermaajority of them, four of the five members would have to vote to place it on the ballot first. And then the voters would have an opportunity to consider it um at a regular election such as the one taking place this November. If it were on the ballot, it takes a majority of the city's voters. Only city voters can vote on it um to enact. And it would generate about $15 million a year to support the city's uh

general fund. So, these are our slides. I think to the degree you guys may have questions on any of this, um, we do our best to try and answer them. We have other city staff here. If you have difficult questions, I'll direct them to them. Sir, thanks for being here. Just want to go over make sure I have people that do not live in our city. Correct. They account for half of our So if I was to pay 1% more they would have to pay 1% more correct.

So my 1% becomes 2% and I could be added services from

Yes. I was an English major so I have to be careful with numbers but let me repeat um what you said so uh especially people online could hear it. Um your your question comment has to do with the fact that visitors currently account for about 50% of the sales tax uh collected in town. And if the voters were to enact a measure um that increase the sales tax, would the visitors pay that new tax? The answer is yes. Right? So the the math essentially stays the same. Um you know theoretically the the visitors would continue to pay 50%, the residents would continue to pay 50% based on current economics. Um, and if the uh the rate of the tax were to double, that wouldn't change at all.

That that I don't know. Um, those cities may keep those stats like uh Banning may have a stat on how many uh outside visitors, but I don't know that they would be able to specifically tell you how many are from Bowmont. Um, and indeed I don't think that we could tell you precisely where all those visitors are from. It's it's just a calculation based on in city residents versus everybody else. Because I do have an issue when I go out of town because I can't buy everything that I want to buy that I support other cities. That irritates me. Um,

other people come into our town and they really don't support us the way I have to support them because have to pay sometimes 8 and 12% I have up to 94% tax some cities are that high um just uh so I get to support other people's services without being um and again just to you know for posterity for folks online um the gentleman is saying that when he goes to other cities um to buy things that he couldn't necessarily find in Bowmont he's paying sometimes higher sales tax rates that support those communities as part of that purchase because you couldn't find those goods here in town.

And that is including gas. I need to fill up in LA. I'm paying a higher sales tax rate than I would. Indeed. It's not that I really go out of town to buy stuff. It happens. Uh so it may not be just because there's something you couldn't find in town, but just as you're traveling around, right? Same way with people that come into our town. They stop at the Taco, they're hungry. They don't realize that they're supporting us or they really don't even care what the sales tax is. They buy their burritos or whatever. They want a chicken soft taco. Yes. Right.

Thank you. Other questions or comments. along that same line and that if we changed it that some of that it's just going to go elsewhere. I think it's a fair question. I mean the the gentleman um is aware of the sales tax rates that he pays when he goes around. I don't know that the the average bear um has knowledge of that pre-nowledge of that. It may be um it may be that certain people do, but I don't know that that's a that's a broad

of all the people that I've known, nobody really concerns with sales tax when they need to purchase something. They accept it as it is and question it when they purchase it. But if you went to a fast food place in another city, you really don't look and people when they're less when they're less than a quarter of a pay aren't really concerned sales tax they're paying sometimes if we speak to the Chamber of Commerce they're small business owners they know exactly what the sales tax is right because they see it on their receipts all the time I think that um members of the general community may not have that knowledge but um certainly we're hoping to share that and educate people There's so few people. Don't make me call on you. Any other questions or comments, folks?

I can't think. I do have Okay, please. Yep. Go ahead. I think this is really It's more about the sales tax issue of the city than it is about the budget. Okay. Thanks for that. I mean, I It's a little bit direction. That's fair. Thank you. Um,

but I think it's important for the citizens to understand that if they pay $1 more, it gets matched by somebody outside of this city and they get the benefit of that. Because most people that leave this city and purchase someplace else, they're paying for services for another for other citizens that they don't get the benefit of. So, it's just a reciprocation. So, the uh again, I'll just say it under the mic um for folks at home. The gentleman was saying um first he feels like in the promotion of our event, we should um highlight more that we'll be talking be discussing about the sales tax and that's good feedback. Thank you. And then the other is is that the um one piece that stands out is the notion that um visitors to the city paying that um their share that half of the sales tax revenue is generated by them. That more people should know that, right? Because when people come here, they're supporting um the local community, but also as you go out and you go to neighboring cities and buy things, the people should know that they're supporting those cities with those purchases. Is that fair?

That is true. Thank you. I take my kids to my grandkids to Disneyland. I think the sales tax over in Anaheim is like 9.5%. See the hotel tax Anaheim people get pretty good services. Thank you. Did you have another comment? I was just I thought about it more, but is this potentially going to be discussed and possibly on the ballot?

I think that we're in a mode of kind of gathering feedback and still developing the budget um for this year. If it were discussed by the council, it would have to be if it were going to happen this year, they'd have to take it up sometime this summer. Um, I think before August, probably. So, if it if it is going to happen, it will happen by then. Thank you so much. I appreciate you guys. Well, personally, the budget is boring. You get more feedback on sales tax. what the what the issue is and what needs to be discussed. I attempted to make the budget interesting, but thank you.

All right. Thank you so much. Thanks everybody.