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AGENDA BILL Agenda Item No. 7(A) Date: March 4, 2014 To: El Cerrito City Council From: Scott Hanin, City Manager Subject: Presentation of Survey Results Related to the Reauthorization of the Measure R Sales Tax ACTION REQUESTED Receive a presentation from Bryan Godbe of Godbe Research on a recently completed survey related to the possible reauthorization of Measure R, the Preservation of Citywide Services measure passed by El Cerrito voters in 2010, and provide comments and possible direction to staff regarding next steps. BACKGROUND/ANALYSIS The City’s Strategic Plan identifies “Achieve Long-term Financial Sustainability” as a primary goal. The strategies outlined for this goal include continuing to pursue opportunities for new funding as well as the development of a plan to ensure that revenue meets the cost of providing the services identified in the Strategic Plan, including adequate reserve funds. The voters of El Cerrito have approved two transactions and use taxes (also known as “sales taxes”) in recent years. Measure A, the Pothole Repair, Local Street Improvement and Maintenance Measure, was passed in 2008 and is a 0.5% tax that generates funding strictly for the comprehensive street repair and maintenance program in El Cerrito. Measure R, the Preservation of Citywide Services measure, was passed in 2010 and is a seven-year general tax of 0.5% which is due to sunset in 2018. Based on a recent survey, November 2016 was identified as the best time for the City to consider a ballot initiative to fund a new library. Because Measure R is a general tax, it can only be considered by the voters at a general election (one in which members of the Council are up for election). With that being the case, November 2014 would be the optimal time to consider a reauthorization of the Measure prior to its expiration. The survey was undertaken to help inform the City Council’s direction. As discussed during recent budget sessions, the City has struggled to maintain its high level of services. A number of departments have lost positions through attrition and others have carried vacancies for quite some time. Cutbacks in landscaping and maintenance have recently occurred and reserves will be used to balance the General Fund budget. As previously described, the General Fund contribution towards capital and public works has decreased dramatically over the last few years, resulting in reduced reinvestment in our community. With the loss of a number of significant sales tax ---PAGE BREAK--- Agenda Item No. 7(A) generators, the dissolution of the Redevelopment Agency by the State, and the significant decrease in assessed values of property in El Cerrito, the General Fund is strained. Continued reductions in services or staffing are possible. Additionally, the City's reserves are lower than is arguably prudent and no funds are being set aside for capital reinvestment. The survey data indicates that the overall favorability results for the City are very high, as is the support for an extension and potential increase in the sales tax rate. It should be noted that any increase in the sales tax rate would require an exception to the 2% cap on transactions and use taxes for local agencies with overlapping boundaries, which would be available only through special State legislation. A request of Skinner for such special legislation was approved by the City Council at its February 18, 2014 meeting. However, as was mentioned in the accompanying staff report to that request, this does not bind the City Council to a specific tax amount, and staff is not making a recommendation as to the details of a potential ballot measure at this time. NEXT STEPS Based on the comments and possible direction received from the City Council, staff will return as appropriate with a recommendation, schedule and proposed budget for any potential initiative. At the March 18, 2014 City Council meeting, staff will provide another update on the current fiscal year budget. In March, staff will also be convening four community meetings throughout the City and will introduce an online survey to better engage the community about the budget and seek community input on budget priorities. Staff anticipates holding a budget workshop at the April 22 City Council meeting to help shape the fiscal year 2014-15 budget. FINANCIAL CONSIDERATIONS There is no impact at this time. The survey was funded within the current years appropriation limit. Should the City Council ultimately decide in the future to place an initiative of up to 0.5% increase in the sales tax rate before voters and the initiative is approved, the increase in annual revenues could be as much as $1.5 million. Reviewed by: ren Pinkos, Assistant City Manager Attachment: 1. Presentation of survey results Page 2 ---PAGE BREAK--- City of El Cerrito: 2014 Sales Tax Renewal Survey February 2014 Agenda Item No. 7(A) Attachment 1 ---PAGE BREAK--- Page 2 February 2014 Overview and Research Objectives The City of El Cerrito commissioned Godbe Research to conduct a survey of local voters with the following research objectives: Gauge satisfaction with City services and financial management; Assess potential voter support for a sales tax renewal measure to continue to protect and maintain City services; Identify the optimum tax amount and duration at which voters will support the measure; Prioritize projects and programs to be funded with the proceeds; Test the influence of supporting and opposing arguments on potential voter support; and Identify any differences in voter support due to demographic and/or voter behavioral characteristics. ---PAGE BREAK--- Page 3 February 2014 Methodology Overview Data Collection Telephone Interviewing Universe 10,528 likely November 2014 voters in the City of El Cerrito Fielding Dates February 1 through February 9, 2014 Interview Length 18.5 minutes Sample Size 400 Margin of Error ± 4.8% Note: The data have been weighted to reflect the actual population characteristics of likely voters in the City of El Cerrito in terms of their gender, age, and political party type. ---PAGE BREAK--- Key Findings ---PAGE BREAK--- Page 5 February 2014 Opinion on Job City is Doing to Provide Services (n=400) Very favorable 35.2% Somewhat favorable 49.8% Somewhat unfavorable 6.4% Very unfavorable 1.9% DK/NA 6.7% Ratio Fav to Unfav: 10.2 to 1 ---PAGE BREAK--- Page 6 February 2014 Opinion on Job City is Doing to Manage Public Funds (n=400) Very favorable 23.1% Somewhat favorable 43.3% Somewhat unfavorable 10.6% Very unfavorable 5.9% DK/NA 17.2% Ratio Fav to Unfav: 4.0 to 1 ---PAGE BREAK--- Page 7 February 2014 Uninformed Support (n=400) To continue to protect and maintain City services, including • fire prevention and emergency services; • neighborhood police patrols; • emergency response times; • crime prevention and investigation resources; • firefighter and police staffing; • library hours and programs; • afterschool programs for children and teens; • senior services; • open space, parks, paths and playfields; and • other general City services; shall El Cerrito extend the existing voter- approved sales tax and set the future rate at one cent for 12 years, with citizens' oversight, annual audits, and all funds staying local, none to Sacramento? Probably No 10.4% Definitely No 9.5% DK/NA 6.9% Definitely Yes 42.1% Probably Yes 31.1% Total Support 73.2% ---PAGE BREAK--- Page 8 February 2014 Features of the Measure (n=400) Note: The above rating questions have been abbreviated for charting purposes, and responses were recoded to calculate mean scores: “Much More Likely” = “Somewhat More Likely” = “No Effect” = 0, “Somewhat Less Likely” = and “Much Less Likely” = 0 1 2 Maintain swim center facilities and programs Maintain pedestrian and bike paths Maintain and improve open spaces Increase library hours Maintain city parks, paths and playfields Maintain senior services Improve firefighter and police staffing Maintain senior services and facilities Recruit and retain police officers Maintain earthquake & disaster preparedness programs Maintain library programs for children, adults & families Maintain after-school programs for children and teens Maintain crime prevention and investigation resources Maintain neighborhood police patrols Maintain rapid 9-1-1 emergency response times Maintain fire protection and emergency medical services Maintain current levels of firefighters & police officers 0.65 0.79 0.82 0.85 0.88 0.96 0.96 0.98 0.98 1 1.03 1.05 1.07 1.11 1.15 1.24 1.29 Split Sample A Split Sample B No Effect Somewhat More Likely Much More Likely Tier 1 Tier 2 Tier 3 ---PAGE BREAK--- Page 9 February 2014 No Effect Somewhat More Likely Much More Likely Influence of Supporting Statements (n=400) Note: The above rating questions have been abbreviated for charting purposes, and responses were recoded to calculate mean scores: “Much More Likely” = “Somewhat More Likely” = and “No Effect” = 0. 0 1 2 State has taken >$25 million dollars over 20 years Maintain excellent quality of life, character of community Losing highly trained police officers to other cities Residents live in EC because of high quality of life Provides a protected and reliable source of local revenue Restore park maintenance including playfields Not a property tax, and visitors will pay their fair share Independent citizen oversight, mandatory audits Property crimes have increased in El Cerrito City services for children and teens are critical Needed to maintain current levels of public safety Maintain rapid 9-1-1 response times for police Give EC local control over local funds for local needs 0.9 1 1.03 1.03 1.04 1.04 1.05 1.06 1.08 1.11 1.12 1.19 1.2 Split Sample A Split Sample B Tier 1 ---PAGE BREAK--- Page 10 February 2014 Potential Opposition Statements (n=400) Note: The above rating questions have been abbreviated for charting purposes, and responses were recoded to calculate mean scores: “Much More Likely” = “Somewhat More Likely” = and “No Effect” = 0. No Effect Somewhat More Likely Much More Likely 0 1 2 Increasing the sales tax will drive shoppers out of EC Economic recovery is very fragile General fund budget increased from $17 MM - >$28 MM City broke promise to fully fund police department Administrator & public employee salaries out of control Voters asked to approve property tax for schools Sales tax in EC will be 10 1/2 among highest in State No rules that direct the spending of sales tax dollars 0.51 0.59 0.62 0.7 0.72 0.75 0.85 0.88 Split Sample A Split Sample B Tier 1 Tier 2 ---PAGE BREAK--- Page 11 February 2014 Informed and Uninformed Support (n=400) To continue to protect and maintain City services, including • fire prevention and emergency services; • neighborhood police patrols; • emergency response times; • crime prevention and investigation resources; • firefighter and police staffing; • library hours and programs; • afterschool programs for children and teens; • senior services; • open space, parks, paths and playfields; and • other general City services; shall El Cerrito extend the existing voter-approved sales tax and set the future rate at one cent for 12 years, with citizens' oversight, annual audits, and all funds staying local, none to Sacramento? 0% 20% 40% 60% 80% 100% Initial Ballot Test Final Ballot Test 42.1% 41.3% 31.1% 29.5% 10.4% 11.0% 9.5% 12.9% 6.9% 5.3% Definitely Yes Probably Yes Probably No Definitely No DK/NA 70.8% 73.2% ---PAGE BREAK--- Page 12 February 2014 Support for Different Durations (n=400) 46.3% 49.7% 52.7% 57.5% 16.5% 17.5% 16.2% 19.7% 0% 51% ongoing 12 years 9 years 5 years Probably Yes Definitely Yes ---PAGE BREAK--- Page 13 February 2014 Support for ½-Cent Sales Tax Alternative (n=400) If you heard that the measure to maintain City services, including fire prevention and emergency services; neighborhood police patrols; emergency response times; crime prevention and investigation resources; firefighter and police staffing; library hours and programs; afterschool programs for children and teens; senior services; and open space, parks, paths and playfields would be a one-quarter cent increase instead of a half cent would you vote yes or no on this measure? Probably No 11.2% Definitely No 10.8% DK/NA 3.8% Definitely Yes 52.3% Probably Yes 21.9% Total Support 74.2% ---PAGE BREAK--- Page 14 February 2014 Support for No Increase, Extension Only Alternative (n=400) If you heard that the measure to maintain City services, including fire prevention and emergency services; neighborhood police patrols; emergency response times; crime prevention and investigation resources; firefighter and police staffing; library hours and programs; afterschool programs for children and teens; senior services; and open space, parks, paths and playfields would just extend the existing rate, without increasing it would you vote yes or no on this measure? Probably No 7.6% Definitely No 8.9% DK/NA 3.4% Definitely Yes 61.4% Probably Yes 18.7% Total Support 80.1% ---PAGE BREAK--- Summary and Recommendations ---PAGE BREAK--- Page 16 February 2014 Summary and Recommendations The survey revealed a very strong base of voter support for a general sales tax renewal with a rate adjustment, and Godbe Research recommends that City of El Cerrito consider preparing to place a sales tax measure on the November 2014 ballot. The survey also suggests that an in perpetuity measure may be possible, although a 12 year sunset might be a more acceptable risk level. The survey results indicate potential voter support for a variety of City services, including: Maintaining current levels of firefighters & police officers. Maintaining fire protection and emergency medical services. Maintaining rapid 9-1-1 emergency response times. Maintaining neighborhood police patrols. Maintaining crime prevention and investigation resources. Maintaining after-school programs for children and teens. Maintaining library programs for children, adults & families. The survey results indicate the City of El Cerrito should: Begin the necessary steps to place a general sales tax renewal measure on the ballot in the November 2014 election. Begin a community outreach and public information effort to explain the City’s service needs. Be prepared to head off voter concerns, explaining the accountability features and the residents’ service needs and priorities. ---PAGE BREAK--- www.godberesearch.com Northern California and Corporate Offices 1660 South Amphlett Boulevard, Suite 205 San Mateo, CA 94402 Southern California Office 4695 MacArthur Court, 11th Floor Newport Beach, CA 92660 Nevada Office 59 Damonte Ranch Parkway, Suite B309 Reno, NV 89521 Pacific Northwest Office 601 108th Avenue NE, Suite 1900 Bellevue, WA 98004