HomeMy WebLinkAbout2009/01/20 Item 7w ~~~~ CITY COUNCIL
~~ AGENDA STATEMENT
ITEM TITLE: A. RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CHULA VISTA ENDORSING THE CITY
MANAGER'S PROPOSED "CHULA VISTA FISCAL
HEALTH PLAN"
B. ORDINANCE OF THE CITY OF CHULA VISTA
ADDING CHAPTER 3.38 TO TITLE 3 OF THE CHULA
VISTA MUNICIPAL CODE ESTABLISHING A
TRANSACTIONS AND USE TAX TO BE
ADMINISTERED BY THE STATE BOARD OF
EQUALIZATION
C. RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CHULA VISTA CALLING AND GIVING NOTICE
OF A SPECIAL MAIL BALLOT ELECTION TO BE
HELD IN SAID CITY ON TUESDAY, MAY 5, 2009, FOR
THE PURPOSE OF SUBMITTING TO THE QUALIFIED
ELECTORS OF THE CITY, A MEASURE RELATING
TO THE ESTABLISHMENT OF A LOCAL
TRANSACTIONS AND USE (SALES) TAX;
REQUESTING THE BOARD OF SUPERVISORS OF
THE COUNTY OF SAN DIEGO TO PERMIT THE
REGISTRAR OF VOTERS TO CONDUCT SUCH
ELECTION; AUTHORIZING THE CITY CLERK OR
HER DULY AUTHORIZED AGENTS TO CARRY OUT
THE NECESSARY PROCEDURES FOR SUCH
ELECTION; AND DIRECTING THE CITE' ATTORNEY
TO PREPARE AN IMPARTIAL ANALYSIS OF THE
MEASURE
SUBMITTED BY: CITY MANAGER
4/STHS VOTE: YES ~ NO
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SUMMARY
On January 13, 2009, the City Council of Chula Vista authorized the City Manager to
implement a budget reduction plan to mitigate projected budget shortfalls in the current and
next fiscal yeaz, totaling $3.9 and $20.0 million respectively. These reductions will have
significant impacts on delivery of public services thereby affecting the health, safety and
welfaze of the City. In order to reduce the impacts of these reductions and ensure the long-
term fiscal stability of the City, adoption of the City Manager's Proposed `Chula Vista
Fiscal Health Plan' is recommended. The first step in implementing the strategy is Council
consideration of an ordinance establishing a general purpose local transactions and use
(sales) tax, to be considered by the qualified electorate at a Special Mail Ballot Election to
be called and held on May 5, 2009.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has conducted a preliminary review of the
proposed action for compliance with the California Environmental Quality Act
("CEQA") and recommends that the City Council hereby find and declaze that the
proposed activity is statutorily exempt from environmental review pursuant to Articles 5
and 18 of the California Code of Regulations.
RECOMMENDATION
That Council:
1. Approve the resolution endorsing the City Manager's proposed "Chula Vista
Fiscal Health Plan"
2. Adopt the ordinance amending the Municipal Code to add Chapter 3.38
establishing a transactions and use tax to be administered by the State Boazd of
Equalization
3. Approve the resolution:
a. Calling and giving notice of a Special Mail Ballot Election to be held on
May 5, 2009;
b. Submitting to the qualified electors of the City a measure relating to
establishing a local transactions and use (sales) tax to be administered by
the State Boazd of Equalization;
c. Authorizing the City Clerk or her duly authorized agents to carry out the
necessary procedures for such election; and
d. Directing the City Attorney to prepare an impartial analysis of the measure
BOARDS/COMMISSION RECOMMENDATION
Not applicable
DISCUSSION
In December of 2007, the national economy officially entered a recession; now projected to
be the worst economic downturn since 1929. This significant decline in economic activity
has severely impacted all sectors; including govenunent agencies. As a result of reduced
revenues, local governments must identify other means of closing budget gaps (bringing
revenues in line with expenditures). Unlike the federal government, state and city
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JANUARY 20, 2009, Item
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governments aze unable to run deficits during economic downturns; they must draw down
reserves, cut expenditures, or raise taxes to balance budgets. The severity of the impacts
resulting from these budget shortfalls increase with each successive economic downturn, as
reserves aze exhausted and organizations aze streamlined to increase efficiencies. Many
governments are now turning to layoffs to reduce their expenditures; a decision which
further depresses consumer spending and the economy as a whole.
According to the Center on Budget and Policy Priorities, 44 states aze projecting shortfalls in
the current or next fiscal yeaz. Midyear shortfalls in fiscal year 2008-09 totaling $42 billion
are projected ut 41 states and the District of Columbia. The total projected shortfall
increases in fiscal yeaz 2009-10 to $80 billion, and is anticipated to reach as high as $145
billion. In total, state budget deficits over the next two and a half yeazs are likely to total
$350-370 billion. The State of California alone is projecting a budget shortfall in the current
fiscal year of $8 billion, increasing to $42 billion next yeaz. These same economic forces
are impacting cities throughout the country and Chula Vista is no exception.
CHULA VISTA BUDGET SHORTFALLS
Over the last few yeazs the City of Chula Vista has experienced a precipitous decline in
revenues resulting from the slumping economy, housing crisis, and slowdown in
development activity. The City has made significant program and personnel reductions
during this time in order to bring expenditures in line with diminished revenues.
Prior Budget Reductions
The Council adopted fiscal year 2007-08 budget incorporated a budget reduction plan
reducing net cost expenditures by approximately $10.1 million; eliminating 34.25 vacant
positions; extending the mandatory furlough to all staff; and increasing salary savings by
actively managing vacancies. The Council adopted fiscal year 2008-09 budget incorporated
a budget reduction plan reducing net cost expenditures by an additional $26.1 million and
eliminating 145 permanent benefited positions. Most recently, Council approved
elimination of 10.5 positions in the Development Services Fund in order to reduce
expenditures to mitigate revenue shortfalls resulting from the slowdown in development.
In total, the above budget reduction plans have resulted in a net reduction of 160.75
positions, including 12 employee layoffs to date. The number of layoffs would have been
much lazger if not for an ongoing hiring freeze, the elimination of most vacant positions, and
two early retirement programs. The impacts of these expenditure and staffmg reductions are
already being felt by the community, including elimination of the Fourth of July Fireworks
on the Bayfront, reduced hours of operation at recreation facilities, and reduced street and
pazk maintenance.
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JANUARY 20, 2009, Item
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Current Budget Shortfall
The City's fmancial outlook has continued to deteriorate as the entire nation has entered
what has become a global recession. General Fund revenues aze currently projected to
come in $5.5 million dollazs below budget (3.9%) in fiscal yeaz 2008-09 and are
projected to drop another $3.1 million (2.2%) in fiscal yeaz 2009-10. The anticipated
shortfalls aze primarily due to significant decreases in the City's top revenue sources -
Property Taxes, Motor Vehicle License Fees, and Sales Taxes.
• Property Taxes - In developing the budget for the current fiscal yeaz, property tax
revenues were projected to increase 3.9%, however, due to declining assessed
property values and the slow down in new home construction, the actual growth is
only 2.2%. Through January 2008 the City's aggregate property values have
dropped $1.1 billion as a result of reassessments. In the current yeaz the impact of
the decline in assessed values was partially mitigated by the addition of the SR
125 with an assessed valuation of $600 million. However, based on the most
current information provided by the County Assessor's Office, property tax
revenue is projected to decrease by 3.9% in fiscal yeaz 2009-10 as a result of the
continued decline in housing values and additional requests for reassessments of
residential properties.
• Motor Vehicle License Fees -Motor Vehicle License Fees aze based on the
ownership of a registered vehicle and aze administered through the State of
California. In 1998, the State Legislature reduced the fee from 2% to 0.65%,
resulting in a negative impact to local governments. The State replaced these
funds with offsetting property tax revenues. As a result of this change, MVLF is
susceptible to changes in assessed value -combined with property taxes 36% of
the City's total revenues aze now susceptible to fluctuations in property assessed
values.
• Sales Taxes -Decreases in sales tax revenue reflect historical lows being reported
for consumer confidence. The ongoing housing and credit crisis combined with
continued job loss do not point to a quick recovery in this revenue source. The
fiscal yeaz 2008-09 budget assumed a moderate 2% increase for sales tax revenue.
However, due to the worsening economic condition coupled with poorer than
expected sales tax numbers in the most recent quarter, sales tax revenue is now
projected to decrease by 5% in the current fiscal yeaz and an additional 2%
decrease next fiscal yeaz.
The City is now facing a $3.9 million deficit in fiscal yeaz 2008-09 and an estimated
$20.0 million deficit in fiscal yeaz 2009-10 for the City's operating fund. City
management has worked with department directors to develop a plan that addresses these
projected budget shortfalls. The process began with labor and employee briefmgs in late
October. These briefmgs were followed by an employee focus group that developed cost
saving ideas that were forwarded to department directors; department directors then
considered the feasibility of incorporating these measures into the overall budget
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JANUARY 20, 2009, Item ~-
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reduction plan for the department. Finally, as with previous processes, employee
suggestions were encouraged and sought at all levels of the organization. The process
resulted in the budget reduction plan presented by the Interim City Manager in December
of 2008. The plan reflects a significant reduction in force, as nearly 80% of the City's
budget is allocated to personnel costs.
Since the original presentation of the budget reduction plan in December, a number of
actions have been taken. First, the Council approved an eazly retirement program in
December. The total savings that will result from this program are not yet known; however,
the budget reduction plan will continue to evolve to account for vacancies created by
retirements. Next, the City Manager's office initiated a citywide organizational
restructuring. This reorganization condensed eight departments into three, eliminated two
department heads, and will result in annual savings of approximately $SOOK. Then, as a
result of the significant decline in revenues, the $3.9 million deficit in fiscal yeaz 2008-09
and an estimated $20.0 million deficit in fiscal yeaz 2009-10, as well as the ongoing budget
structural imbalance that requires permanent solutions, on January 8, 2009 the City Council
unanimously declazed a fiscal emergency by resolution.
In addition to these measures, the City has entered into negotiations with all represented
bargaining groups to discuss the elimination of Cost of Living Adjustments (COLAs)
scheduled to go into effect in January 2009 and 2010. Two of the City's four bazgaining
groups (Chula Vista Employees Association and the Western Council of Engineers) have
agreed to eliminate their COLAs for 2009 and 2010, saving the City approximately $640K
in fiscal year 2008-09, $1.9 million in fiscal year 2009-10, and as much as $2.6 million
annually beginning in fiscal year 2010-11. With these reductions, the City is now facing an
unmitigated budget shortfall in fiscal yeaz 2008-09 of $3.2 million, and an ongoing shortfall
of $16.8 million. These numbers will be reviewed in conjunction with the 2"d Quarter Fiscal
Report to Council.
On January 13, 2009, the City Council approved a resolution authorizing the City Manager
to implement a budget reduction plan to mitigate budget shortfalls projected in the current
and next fiscal year. The plan reflects the elimination of COLAs for the two applicable
bargaining urrits, but still results in the elimination of li6.5 positions, and may result in an
as many as 101 layoffs. The City will continue to work with the two remaining bargaining
groups in an effort to realize personnel expenditure savings via wage concessions, thereby
limiting the number of layoffs and service impacts.
The budget reduction plan as adopted will result in significant service impacts to the
community, including elimination of select programming at recreation facilities and reduced
hours of operation; elimination of all library programs and outreach; transfer of the
STRETCH and DASH program to another vendor; reduced traffic infrastructure and pazk
maintenance; and increased response times for public safety services.
In response to these anticipated service impacts and the input received during public
comment from the community, and with the goal of seeking long term financial stability, a
`Chula Vista Fiscal Health Plan' has been prepared Council is now being asked to endorse
this plan.
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CITY MANAGER'S `CHULA VISTA FISCAL HEALTH PLAN
The proposed `Chula Vista Fiscal Health Plan' is intended to preserve City services,
mitigate the current budget crisis, and provide long-term financial stability for the City of
Chula Vista. The plan fiu-ther proposes to accomplish these goals while engaging the
community and increasing transpazency and accountabIlity. To follow is a summary of the
proposed plan; an overview is included as Attachment 2.
Reduce Oroeratine Exroenditures
Although these departments aze as lean as possible, the City Manager's Office will bring in
an outside expert to conduct a thorough operational review. This unbiased analysis will
evaluate efficiency throughout the orgatrizafion. Additional discussions will be held with
the City's bargaining groups in an effort to identify other cost saving measures.
Increase Revenues
The fast step in implementing the Fiscal Health Plan is the adoption of 1.00% sales tax, for
a 10-yeaz period. This tax is projected to generate approximately $22 million annually. The
funds generated would first be used to mitigate the current budget gap and rebuild the City's
reserves. The remaining funds would be invested in the City, including infrastructure
improvements and other one-time projects.
Formation of a Citizens' Review Committee to provide oversight to the sales tax increase
program will be required by the sales tax ordinance. The committee will have two
important tasks: recommending to the City Council those areas where addifional monies
should be directed (after basic services and reserves are replenished); and annually
reviewing the expenditure of the additional sales tax monies.
Many sales tax measures cover a 20-30 yeaz time frame. The proposed 10-yeaz term is
anticipated to be a sufficient period to stabilize the City's financial condition.
Economic Develonment and Job Creation
The next component of the proposed Fiscal Health Strategy is the continued development
and diversification of the City's revenue base. Potential future growth areas include sales
tax and transient occupancy tax (TOT) from new and expanded commercial development in
the City's Bayfront and through a Western Chula Vista Revitalization Program.
Development of the Eastern Urban Center and the University and Technology Park will
further cement the City's fixture fiscal stability by providing high paying local jobs.
Budeet Reforms
In addition to securing additional revenues, the proposed Fiscal Health Strategy
recommends implementation of a number of budget reforms. The following concepts will
guide the City's budget reforms, ensuring the ongoing fiscal health of the City.
Incorporation of economic analysis and long-term planning into decision making;
• Spending within the organization's means;
^ Being transparent about the true cost of doing business;
Understanding variances between budgeted and actual expenditures; and
^ Establishing and maintaining reserves.
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Specific actions recommended in the short term include the following:
Implementation of azero-base budget process;
Cross-departmental analyst support;
^ Modify the existing General fund reserve policy;
Detailed analysis of short term and long term impacts of Council actions in staff
reports; and
^ Development of a City of Chula Vista Financial Strategy.
Approval of Resolution A will endorse the City Manager's proposed "Chula Vista Fiscal
Health Plan". The first step in implementing the plan is Council consideration of a local
sales tax increase.
AUTHORITY TO LEVY A LOCAL SALES TAX
The California Revenue and Taxation code authorizes the levy of a transactions and use tax
(a sales tax or `district' tax) by any county, city, city and county, or any other governmental
agency. More than one tax can be levied in a district, and both the City and the County have
the authority to levy a district tax. Section 7251.1 of the Code limits the total combined rate
at the city/county level to 2.00%. In 2004, the voters of San Diego County approved the
Transportation Sales Tax (TransNet) which imposed a 0.50% district sales tax throughout
the County. This leaves 1.50% of the 2.00% district tax cap available to the City of Chula
Vista. Any increase of the statewide rate does not impact the 1.5% available to Chula Vista,
but would result in a higher overall rate applicable within the district.
California Revenue and Taxation Code Section 7285.9 authorizes the City Council to lew
the district transactions and use tax at a rate of 0.25 percent or a multiple thereof, providing
the ordinance adopting the tax is approved by atwo-thirds vote of the City Council. In
Chula Vista, this equates to afour-fifths approval requirement. Approval of the tax then
requires either a majority vote (for a general tax) or atwo-thirds vote (for a special tax) of
the qualified voters of the city voting in an election on the issue.
Article XIII C of the California Constitution, established by Proposition 218, distinguishes
between a special tax and a general tax. The differences are described below.
Special Tax
Special tax revenues must be used for a specific purpose, and two-thirds of voters must
approve a new special tax, its increase, or extension. The ordinance creating a special tax
must also include an expenditure plan describing the specific projects which the revenues
from the tax may be expended on. A special tax may be placed on any election, with no
timing restrictions.
General Tax
General tax revenues may be used for any purpose, and a majority of voters must approve a
new general tax, its increase, or extension. While a general tax measure cannot identify
specific items to be funded with the resulting revenues, agencies are able to place a
companion advisory measure on the ballot. Such a measure would be subject to the same
majority approval. Lastly, pursuant to California Constitution Article XIII C Section 2(b), a
general tax election must be consolidated with a regularly scheduled election of the
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JANUARY 2Q 2009, Item
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members of the local government's governing body. A general tax may only be placed on a
special election, including a mail ballot election, if the governing body unanimously
declares a fiscal emergency. (Ibid. and Chula Vista Charter, Article 9 Section 902.)
The California Elections Code designates the dates of both general and special elections.
The next general election in Chula Vista will be held in June of 2010. The next special
election is May 5, 2009, a designated mail ballot election date (California Elections Code
Section 1500). As a result of this fiscal emergency and the imminent threat to public
services, consideration of a general tax on the May 5, 2009 special mail ballot election is
recommended. As discussed above, on January 8, 2009, the City Council approved
Resolution 2009-001 declaring a fiscal emergency in the City of Chula Vista (Attachment
A).
AUTHORITY TO CONDUCT A MAIL BALLOT ELECTION
Section 4000 of the California Elections Code details the requirements for conducting an
election wholly by mail. The election must meet the following three requirements:
1. The governing body of the local agency must authorize the use of mail ballots for
the election;
2. The election must be held on a designated mail ballot election date pursuant to
Section 1500 of the California Elections Code; and
3. The election must be one of eight authorized election types. Elections Code
Section 4000(c)(8) is an election or assessment ballot proceeding required or
authorized by Article XIII C or XIII D of the California Constitution.
Article IX, Section 902, of the Chula Vista City Charter defines the procedure for holding
elections in the City of Chula Vista. Per the Charter, all elections shall be held in
accordance with the California State Elections Code. The Charter further authorizes the
conduct of elections wholly by means of mailed ballot, except in the instances of
elections to select the mayor or members of the Council. The Chula Vista City Charter
therefore meets the first requirement of Section 4000 of the California Elections Code.
The final two requirements of Section 4000 aze also met by the City. The proposed
special mail ballot election date of May 5, 2009 is a designated mail ballot date pursuant
to Section 1500 of the California Elections Code. And, as described above, a general
local transactions and use (sales) tax measure is authorized and required by Article XIII C
of the California State Constitution.
PROPOSED CHULA VISTA TRANSACTIONS AND USE (SALES) TAX
The sales tax rate currently applied in the City of Chula Vista is 7.75%. This includes a
combined statewide amount of 7.25%, and a San Diego County district tax of 0.50% for
the TransNet program. Of the total 7.75% collected, the City receives 1.00%. Pursuant
to California Revenue and Taxation Code Section 7251.1, the combined rate of all taxes
imposed in any county may not exceed 2.00%. A general purpose tax increase of one
percent (1.00%) is recommended, with a 10 yeaz program sunset. This increase is
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JANUARY 20, 2009, Item
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projected to annually generate more than S20 million in additional revenues; with actual
revenues determined by economic conditions. The tax would go into effect on the first day
of the first calendar quarter commencing more than 110 days after the approval of the
ordinance by the electorate. (California Revenue and Taxation Code Section 7265). Staff
anticipates an October 1, 2009 effective date if approved. No companion advisory measure
is recommended.
The tax would be paid in addition to the existing sales tax and would be collected at the
same time and in the same manner as the existing sales tax. As with the existing tax, the
new district tax would be collected by the State Boazd of Equalization, however all revenues
generated by the tax would be dedicated to Chula Vista and could not be diverted to the state
or other agencies. Because the proposed tax would be a "general tax", the revenues from
the tax would go into the City's general fund and could be used for any legal municipal
purpose. Finally, the ordinance would require audits, operational reviews, and quarterly
reports to the Mayor and City Council.
The ballot language to be presented to the voters is as follows:
To prevent further cuts and preserve general city services,
including public safety staffng for emergency response, reducing
crime and criminal gang/drug activity, maintaining city
streets/parks, and preserving youtWafter-school programs; shall
the City of Chula Vista adopt an ordinance enacting a one cent
transactions and use (sales) tax, expiring in ten years, with
mandatory audits, quarterly reports to Mayor and City Council,
and a citizens' review committee?
If approved, the ordinance would impose a transaction (sales) tax at the rate of one percent
(1.00%) of the gross receipts of any retailer from the sale of all tangible personal property
sold in the City. The ordinance would also impose a use tax on the storage, use, or other
consumption in the City of tangible personal property produced from any retailer at the rate
of one percent (1.00%) of the sales price of the property. State law provides a variety of
exemptions to the sales and use tax, including resale, interstate sales, intangibles, food for
home consumption, candy, bottled water, natural gas, electricity and water delivered through
pipes, prescription medicines, agricultural feeds, seeds, fertilizers and sales to the federal
government.
Also of note is the allocation of transactions and use taxes in the instances of a sale or
lease of a vehicle, vessel, or aircraft. In these transactions, the tax is chazged and
allocated based on the location in which the property will be registered. For example, if
Chula Vista adopted a district transactions and use tax, Chula Vista citizens will pay that
tax when they purchase a vehicle, even if the purchase is made in a neighboring city that
has no local transactions and use tax (e.g. San Diego). In contrast, if they purchase a
book in San Diego they will not pay any district transactions and use tax, but they will if
they buy the book in Chula Vista.
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JANUARY 20, 2009, Item
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CROSS-.IURISDICTIONAL COMPARISON
Total Aprolicable Tax Rate -Statewide
As of January 1, 2009, there aze 1,773 cities in the state of California subject to a
transactions and use (sales) tax. Of this amount, 642 or 36%, collect only the statewide
rate of 7.25%. The remaining 1,131, or 64%, collect an additional district transactions
and use tax. These additional taxes may be levied at either the county or city level, but
may in no instance cumulatively exceed 2.00%. As previously described, the applicable
sales tax rate in Chula Vista is currently 7.75%. This includes the statewide rate of
7.25% and the San Diego County TransNet tax of 0.50%.
District Transactions and Use (Salesl Tax Rates -Statewide
As of January 1, 2009, there aze 62 California cities collecting a district transactions and
use (sales) tax at the city level. These taxes are in addition to any district transactions and
use (sales) taxes applied at the County level. The following table summarizes these city
district sales taxes.
0.25%
_...__. ,
. 9
........... 15%
0.50% .............
' 43 . .
___.
69%
0.75% 3 5%
1.00% 7. 11%
62 100%
Chula Vista does not currently collect acity-level district transactions and use (sales) tax,
and is therefore not reflected in the above table. If the proposed measure is approved by
the voters, Chula Vista will join the 62 other cities in the state collecting a citywide tax.
November 4. 2008 Election Results
Jurisdictions throughout the state took advantage of the anticipated increased voter
turnout for the November 4, 2008 election to present a number of district transactions and
use tax measures to the voters. In total, 35 district tax measures were placed on the
ballot. Of these, one measure related to the repeal of the National City sales tax, and two
measures were companion advisory measures. The repeal of the National City sales tax
was defeated, with 57.3% opposed to the measure. One advisory measure was approved
and one was defeated, both in accord with their subject sales tax measures. The
remaining 32 measures are summarized in the following table.
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JANUARY 20, 2009, Item
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Special Tax versus General Tax
Special Tax 13 7 54% 6 46%
General Tax 19 15 79% 4 21
32 22 10
Measures by Rate
0.125% 1 1 100% 0 0%
0.25% 7 5 71% 2 29%
0.50% 15 11 73% 4 27%
0.75% 6 3 50% 3 50%
1.00% 3 2 67% 1 33%
32 22 10
Measures by Duration
1 - 10 yeazs 4 3 75% 1 25%
11 - 20 yeazs 10 7 70% 3 30%
21 - 30 years 3 3 100% 0 0%
31 - 40 years 1 1 100% 0 0%
No sunset 14 8 57% 6 43%
32 22 10
The proposed Chula Vista district transactions and use tax is a general tax. As detailed in
the above table, 79% of the general tax measures on the November 4, 2008 ballot were
approved. The proposed Chula Vista rate is 1.00%, with a 10-year duration. Of the three
measures proposing a 1.00% increase on the November 4 ballot, two, or 67% were
approved. Of the four measures with a program duration of 10 years or less, three, or
75% were approved.
San Diego County
All cities in San Diego County collect a sales tax of 7.75% or higher, comprised of the
7.25% statewide tax and the 0.50% TransNet tax. Four cities in the County have
approved additional transactions and use taxes applicable within their jurisdictions: El
Cajon, National City, Vista, and La Mesa. The La Mesa tax is not yet in effect, as it was
approved by the voters in the recent November 4, 2008 general election. This same
election included a measure to increase the existing El Cajon rate of 0.50% by an
additional 0.50%, for a total district tax rate of 1.00%. The current effective rates and the
results of the November 4, 2008 election are summarized in the following table.
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JANUARY 20, 2009, Item
Page 12 0 13
t Cajon 8.25% 0.50% 04/01/2005 10 Years Special 68.9%
ational City 8.75% 1.00% 10/01/2006 10 Years General 59.0%
ista 8.25% 0.50% 04/01/2007 30 Years General 54.0%
ovember 4, 2008 Election
Cajon 8.75% 0.50% 04/01/2009 ZO Yeazs General 51.8%
r Mesa 8.50% 0.75% 04/01/2009 20 Yeazs General 55.5%
roposed May 5, 2009 E lection
Tula Vista 8.75% 1.00% 10/01/2009 10 Years General > 50%
If approved, the proposed Chula Vista district tax would result in the same applicable tax
rate as National City and El Cajon. The proposed 10 yeaz duration is consistent with
National City and the original El Cajon programs. The newly approved additional 0.50%
in El Cajon is effective for 20 yeazs.
PROCESS
In order to proceed, pursuant to California Revenue and Taxation Code Section 7285.9 and
other applicable state law, the City Council must fast enact an ordinance amending the
Municipal Code by adding Chapter 3.38, entitled "Transactions and Use Tax", thereto.
The next step is adoption of a resolution calling and giving notice of a Special Mail Ballot
Election to be held on May 5, 2009, and ordering the submission of a proposition to the
voters at said election, to consider approval of the ordinance. The estimated cost for a mail
ballot is $255,000 to $285,000. Savings have been identified for this purpose in the budget
reduction plan approved by Council on January 13, 2009. Staff recommends using these
savings to fmance an election, if authorized by Council.
Should an election occur on May 5 and the measure pass, the City would begin realizing
new revenues in late calendar year 2009 at an estimated value of at least $10 million for
fiscal yeaz 2009-10. The additional revenues resulting from a local general purpose tax
would be available to restore City services impacted by recent budget reductions. In the
community briefmgs and Council workshops, community members expressed support for
increasing sales tax in order to continue to fund public services.
Ballot Arguments
California Elections Code Section 9282 allows the legislative body, any member or
members of the legislative body authorized by that body, any individual voter who is
eligible to vote on the measure, or bona fide association of citizens, or any combination
of voters and associations, to submit an azgument for or against a measure placed on the
ballot by the legislative body. Arguments may not exceed 300 words in length, and must
be submitted to the City Clerk no later than Tuesday February 3rd, 2009.
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JANTJARY 20, 2009, Item ~'
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Pursuant to a resolution previously adopted by the Council allowing rebuttal arguments,
rebuttal azguments will be allowed, in accordance with Elections Code Section 9285.
Rebuttal arguments may not exceed 250 words, and must be submitted to the City Clerk
no later than Friday February 13`h, 2009.
DECISION MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is
not site specific and consequently the 500 foot rule found in California Code of
Regulations section 18704.2(a)(1) is not applicable to this decision.
FISCAL IMPACT
The estimated cost for a mail ballot is $255,000 to $285,000. Sufficient savings have
been identified to mitigate these costs.
Should an election occur on May 5, 2009 and pass, the City would begin realizing new
revenues in late calendar yeaz 2009 at an estimated value in excess of $10 million for fiscal
yeaz 2009-10. The increase is projected to generate over $20 million in additional revenues
on an annual basis; with actual revenues determined by economic conditions. The
additional revenues resulting from a district general purpose tax would be available to
restore City services impacted by recent budget reductions. In the community briefings and
Council workshops, community members expressed support for increasing the sales tax rate
in order to continue to fund public services.
ATTACHMENTS
1. Resolution 2009-001, Resolution of the City Council Declaring a Fiscal Emergency
2. Chula Vista Fiscal Health Plan Overview
7-13
ATTACHMENT1
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL FOR THE CITY OF
CHULA VISTA DECLARING A FISCAL EMERGENCY
WHEREAS, at the time the 2008-2009 Budget was enacted it reflected budget reserves
for Fiscal Yeaz 2008-2009 totaling $9.3 million; and
WHEREAS, at that same time, as a result of spending requirements embedded in law and
increased program costs as a result of inflation, workload and population-driven program growth,
the Finance Department projected shortfall between revenues and expenditures in Fiscal Yeaz
2008-2009 would be $3.9 million and for Fiscal Year 2009-2010 would be approximately $20.0
million; and
WHEREAS, since the enactment of the 2008-2009 Budget, the City has faced the same
economic challenges that are affecting the rest of the state and nation, in lazge part as a result of a
slowine housing mazket, down-turn in the economy and financial instability; and
WHEREAS, these economic challenges have resulted in a $5.5 million reduction in the
General Fund revenue forecast for Fiscal Yeaz 2008-2009 below the revenue forecast used when
the 2009 Budget was enacted, and
WHEREAS, expenditures from the Genera! Fund during Fiscal Year 2008-2009 aze
projected to be lower than the original adopted budget by approximately $1.6 million resulting in
a projected budget deficit of $3.4 million; and
WHEREAS, the Finance Duector now reports that this combination of lowered revenue
receipts and projections and anticipated expenditure savings has resulted in a projected budget
shortfall for Fiscal Year 2008-2009 of $3.9 million, as well as a cumulative budget shortfall in
Fiscal Yeaz 2009-2010 of $20.0 million; and
WHEREAS, due to the significant projected budget shortfall, City Council has reviewed
and discussed this matter, and has taken public input, at noticed public meetings on November
17, 2008 (Council Budget Workshop), December 4, 2008 (Co~,mcil Budget Workshop),
December 9, 2008 (Council Meeting), December 16, 2008 (Council Meeting) and January 6,
2009 (Council Meeting); and
WHEREAS, the City is negotiating with all of the City's bargaining groups in an effort to
reduce expenditures and declaring a fiscal emergency will assist in said negotiations; and
WHEREAS, ibis declaration of a fiscal emergency is being made to give the City Council
greater flexibility in establishing remedial measures including identifying potential state and
federal grants or other funding sources; and
=~4
WHEREAS, the Finance Director further reports that the available General Fund reserves
for Fiscal Year 2008-2009 would be reduced to $5.4 million and that for Fiscal Year 2069-2010
there would be insufficient reserves to offset the projected deficit in Fiscal Year 2009-2010.
NOW, THEREFORE, the City Council of the City of Chula Vista does hereby find and
declaze that a fiscal emergency exists and identifies the nature of this fiscal emergency [o be the
projected budget imbalance and reduced available General Fund reserves for Fiscal Year 2008-
2009 and insufficient available General Fund reserves to offset the projected hudgetary deficit in
Fiscal Yeaz 2009-2010, which aze anficipated to result from the lower than estimated General
Fund revenues in Fiscal Year 2008-2009 and increased Fiscal Year 2009-2010 expenditures.
Presented by Approved as to form by
James D. Sandoval ~ B Miesfie
City Manager City Attorney
PASSED, APPROVED, AND ADOPTED by the City Council of the City of Chula Vista
at its meeting held on the _ day of , 2009, by the following roll call vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ATTEST:
DONNA NORRIS, CMC
CITY CLERK
CHERYL COX, MAYOR
I, City Clerk of the City of Chula Vista, do hereby certify the foregoing to be a true and exact
copy of Resolution No. - A Resolution of the City Council of the City of
Chula Vista Declaring a Fiscal Emergency
CITY CLERK
1:~AtmmeyNAichae15h~8udget~.EiswlEmeryremyRssolution--r incl. doc
1715
ATTACHMENT 2
Chula Vista
FISCAL HEALTH PLAN OVERVIEW
Over the past two years, the City of Chula Vista has been grappling with a series of budget cuts that have
taken a toll on City staff and the services they provide to residents and businesses. Library hours and
recreation programs have been cut back, parks are no longer maintained at the same level, and patrol
officers have less time to address serious crime. The City Manager's Budget Reduction Proposal approved
by City Council January 13, 2009, calls for even more drastic cuts to close this year's $3.9 million gap and
fix an ongoing $20 million deficit.
It's time to stabilize our financial condition and preserve essential community services. That can be
accomplished by enacting an overall plan to ensure the fiscal health of our City.
A virtual halt in local development and the national housing and credit crisis took a disastrous toll on our
finances. The revenue base dropped dramatically while our operating expenses continued to climb. To
cope with this imbalance, Chula Vista reduced expenditures over the past two years by $26 million and cut
more than 160 positions.
Our City's financial woes worsened as the entire nation entered what has become a global recession, the
most serious economic crisis since the Great Depression. At the state level, the Governor and legislators
are describing the current condition as an economic meltdown. Cities across the state and around the
country are struggling to stay afloat. In Chula Vista, another 136 employee positions are in jeopardy,
threatening a further degradation of city services. To avoid this worst case scenario, I am proposing the
following four point plan:
I. Reduce Operating Expenditures - Following a reorganization that reduced eight departments down to
three and saved $500,000, we continue to look for other opportunities to streamline City operations. To
ensure that our departments are as lean as possible, I recommend a citywide independent operation
review, an unbiased analysis to evaluate efficiency throughout the organization. We will continue
working closely with employee groups to identify more savings. Recently, two employee groups voted to
eliminate their upcoming cost of living adjustments, a savings that allows the City to avoid approximately
30 employee layoffs, thereby restoring some community services slated for elimination.
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II. Increase Revenues - I propose that City Council authorize a special mail ballot election to ask
residents to approve a sales tax increase of 1 % for a I invited ten year period. Every year the increase
would provide the City with an estimated $20 million, enough monies to preserve the level of service
residents experience and expect today as well as allow Chula Vista to restore our depleted reserves.
Any additional funding will be used to address community needs such as infrastructure. Inthe interest
of transparency, I suggest the creation of a Citizens Review Committee to make recommendations to
City Council about how and where additional sales tax revenues should be spent.
III. Economic Development and Job Creation - In order to obtain long term fiscal sustainability, Chula
Vista must position itself for economic recovery and step up efforts to lay the groundwork for exciting
new projects that will attract high paying jobs and increase transient occupancy and sales taxes. From
building the Eastern Urban Center and establishing a university and technology park on the east to
developing the bayfront and launching a revitalization program on the west, the City has a number of
excellent opportunities to help stabilize our local economy. #
N. Budget Reforms - As the City continues to streamline operations, pursues an increase in the sales tax
and focuses on job creation, it must also enact budget reform and create a comprehensive city finan-
cial strategy. I will work with the City Council and the community to develop this strategy. I will
implement azero-based budgeting process and direct Department Heads to provide short and long
term budget ramifications of any recommended actions brought forward to Council. City budget
analysts will spend time in the operating departments to identify savings. In addition, I will ask the
City Council to revisit the reserve policy. If residents are being asked to pay a higher sales tax, they
need to be assured that the City is being fiscally responsible by increasing reserves to guard against
future economic fluctuations. #
~~
Jim Sandoval, City Manager
;~
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA ENDORSING THE CITY MANAGER'S
PROPOSED "CHULA VISTA FISCAL HEALTH PLAN"
WHEREAS, since the enactment of the 2008-2009 Budget, the City has faced the same
economic challenges that are affecting the rest of the state and nation, in large part as a result of a
slowing housing market, down-turn in the economy and financial instability; and
WHEREAS, the City is currently projecting General Fund budgetary gaps of $3.9 million and
$20.0 million for fiscal years 2008-2009 and 2009-2010 respectively; and
WHEREAS, staff previously presented City Council with a fmancial update and detailed
descriptions of potential budget reductions on November 17, 2008 (Council Budget Workshop),
December 4, 2008 (Council Budget Workshop), December 9, 2008 (Council Meeting), December 16,
2008, (Council Meeting), January 6, 2009 (Council Meeting) and January 13, 2009 (Council Meeting);
and
WHEREAS, at the Januazy 13, 2009 City Council meeting the City Council authorized
the City Manager to implement the Budget Reduction Plan to address the projected budget
deficits of $3.9 million in the current fiscal year and approximately $20.0 million in the next
fiscal yeaz; and
WHEREAS, the Budget Reduction Plan will result in the elimination of 136.5 positions
and may result in as many as 101 layoffs and significant reductions in city services; and
WHEREAS, at the January 20, 2009 City Council meeting, the City Manager and City
Staff presented the City Council with the "Chula Vista Fiscal Health Plan," outlining a multi-
faceted approach to mitigate the service impacts outlined in the Budget Reduction Plan.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula
Vista does hereby adopt a resolution endorsing the City Manager's Proposed "Chula Vista Fiscal
Health Plan," as presented by the City Manager at the January 20, 2009 City Council meeting,
and summarized in the accompanying Agenda Statement.
Presented by
James D. Sandoval
City Manager
Approved as to form by
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7-20
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF CHULA VISTA
ADDING CHAPTER 3.38 TO TITLE 3 OF THE CHULA
VISTA MUNICIPAL CODE ESTABLISHING A
TRANSACTIONS AND USE TAX TO BE
ADMINISTERED BY THE STATE BOARD OF
EQUALIZATION
WHEREAS, the City of Chula Vista ("City") may impose a local transactions and
use tax increase for general purposes with the approval of the majority of voters in the
city; and
WHEREAS, Chapter 3.38 of the Chula Vista Municipal Code establishes
transactions and use tax to be administered by the State Boazd of Equalization; and
WHEREAS, the City desires to add Chapter 3.38 to the Chula Vista Municipal
Code; and
WHEREAS, over the last few yeazs .the City of Chula Vista has experienced a
precipitous decline in revenues resulting from the slumping economy, housing crisis, and
slowdown in development; and
WHEREAS, the City has made significant program and personnel reductions
during this time in order to bring expenditures in line with a lower revenue base; and
WHEREAS, the City's financial outlook has continued to deteriorate and is facing
a $3.9 million deficit in fiscal year 2008-09 and an estimated $20.0 million deficit in
fiscal year 2009-10 for the City's operating fund; and
WHEREAS, because of these above factors and the ongoing budget structural
imbalance that requires permanent solutions, on January 8, 2009 the City Council
declazed a fiscal emergency by resolution.
WHEREAS, after preliminary review the City Council hereby fmds and declazes
that the proposed activity is statutorily exempt from environmental review pursuant to the
State of California Environmental Quality Act ("CEQA") Guidelines, Title 14, Division
6, Chapter 3, Article 18, Sections 15269 and 15273(a); and, the City Council hereby
further finds and declazes that pursuant to Title 14, Chapter 3, Article 5, Section
15061(b)(3), the proposed activity is covered by the general rule that CEQA applies only
to projects which have the potential for causing a significant effect on the environment;
and the City Council fmds and declares that, with certainty; there is no possibility that the
proposed activity in question may have a significant effect on the environment, therefore,
the proposed activity is not subject to CEQA.
7-21
NOW THEREFORE BE IT ORDAINED, the Council of the City of Chula Vista
does hereby adopt and add Chapter 3.38 of the Chula Vista Municipal Code establishing a
transactions and use tax as follows:
SECTION 1:
THE PEOPLE OF THE CITY OF CHULA VISTA do Ordain as follows:
That the City Council hereby adds Chapter 3.38 to the. Chula Vista Municipal Code to
read as follows:
CHAPTER 3.38
TRANSACTION AND USE TAX
Sections:
3.38.010 Title.
3.38.020 Purpose.
3.38.030 Definitions.
3.38.040 Operative date.
3.38.050 Contract with State Board of Equalization.
3.38.060 Transaction tax rate.
3.38.070 Place of sale.
3.38.080 Use tax rate.
3.38.090 Adoption of provisions of state law.
3.38.100 Limitations on adoption of state law and collection of use t
3.38.110 axes.
Permit not required.
3.38:120 Exemptions and Exclusions.
3.38.130 Independent committee.
3.38.140 Amendments.
3.38.150 Enjoining collection forbidden.
3.38.160 Severability.
3.38.170 Termination Date.
3.38.010 TITLE.
This Chapter shall be known and cited as the "City of Chula Vista Transactions and Use
Tax Ordinance". This ordinance shall be applicable in the incorporated temtory of the
City.
3.38.020 PURPOSE.
This ordinance is adopted to achieve the following, among other purposes, and directs
that the provisions hereof be interpreted in order to accomplish those purposes:
A. To impose a retail transactions and use tax in accordance with the provisions
of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation
Code and Section 7285.9 of Part 1.7 of Division 2 which authorizes the City to adopt this
7-22
ordinance with shall be operative if a majority vote of the electors voting on the measure
vote to approve the imposition of the tax at an election called for that purpose.
B. To adopt a retail transactions and use tax ordinance that incorporates
provisions identical to those of the Sales and Use Tax Law of the State of California
insofar as those provisions are not inconsistent with the requirements and limitations
contained in Part 1.6 of Division 2 of the Revenue and Taxation Code.
C. To adopt a retail transactions and use tax ordinance that imposes a tax and
provides a measure therefore that can be administered and collected by the State Board of
Equalization in a manner that adapts itself as fully as practicable to, and requires the least
possible deviation from, the existing statutory and administrative procedures followed by
the State Boazd of Equalization in administering and collecting the Califomia State Sales
and Use Taxes.
D. To adopt a retail transactions and use tax ordinance that can be administered in
a manner that will be, to the greatest degree possible, consistent with the provisions of
Part 1.6 of Division 2 of the Revenue and Taxation Code, minimize the cost of collecting
the transactions and use taxes, and' at the same time, minimize the burden of record
keeping upon persons subject to taxation under the provisions of this ordinance.
3.38.030 DEFINITIONS.
(a) "CITY" means the City of Chula Vista
(b) "TAX" means the transactions and use taxes, sometimes also referred to as
"SALES TAX", imposed under the provisions of this ordinance
(c) "OPERATIVE DATE" means the first day that the tax is imposed and
collected.
3.38.040 OPERATIVE DATE.
The operative date shall be the first day of the first calendar quarter commencing more
than 110 days after the later of the adoption of this ordinance and chapter, the date of such
adoption being as set forth below, and the approval of the voters of the City of a measure
approving the imposition of the transactions and use tax set forth herein, unless a later
operative date becomes effective under the provisions of Section 3.38.50.
3.38.050 CONTRACT WITH STATE BOARD OF EQUALIZATION.
Prior to the operative date, the City shall contract with the State Board of Equalization to
perform all functions incident to the administration and operation of this transactions and
use tax ordinance; provided, that if the City shall not have contracted with the State Boazd
of Equalization prior to the operative date, it shall nevertheless so contract and in such a
7-23
case the operative date shall be the first day of the first calendaz quarter following the
execution of such a contract.
3.38.060 TRANSACTIONS TAX RATE.
For the privilege of selling tangible personal property at retail, a tax is hereby imposed
upon all retailers in the incorporated territory of the City at the rate of one percent
(1.00%) of the gross receipts of any retailer from the sale of all tangible personal property
sold at retail in said territory on and after the operative date of this ordinance.
3.38.070 PLACE OF SALE.
For the purposes of this ordinance, all retail sales aze consummated at the place of
business of the retailer unless the tangible personal property sold is delivered by the
retailer or his agent to anout-of--state destination or to a common carrier for delivery to an
out-of--state destination. The gross receipts from such sales shall include delivery chazges,
when such chazges aze subject to the states sales and use tax, regardless of the place to
which delivery is made. In the event a retailer has no permanent place of business in the
State or has more than one place of business, the place or places at which the retail sales
aze consummated shall be determined under rules and regulations to be prescribed and
adopted by the State Board of Equalization.
3.38.080 USE TAX RATE.
An excise tax is hereby imposed on the storage, use or other consumption in the City of
tangible personal property purchased from any retailer on and after the operative date of
this ordinance for storage, use or other consumption in said territory at the rate of one
percent (1.00%) of the sales price of the property. The sales price shall include delivery
chazges when such charges aze subject to state sales or use tax regazdless of the place to
which delivery is made.
3.38.090 ADOPTION OF PROVISIONS BY STATE LAW.
Except as otherwise provided in this ordinance and except insofaz as they aze inconsistent
with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the
provisions of Part 1 (commencing with Section 6001) of Division 2 of the Revenue and
Taxation Code aze hereby adopted and made a part of this ordinance as though fully set
forth herein.
3.38.100 LIMITATIONS ON ADOPTIONS OF STATE LAW AND COLLECTION OF
USE TAXES.
In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:
7-24
A. Wherever the State of California is named or referred to as the taxing agency,
the name of this City shall be substituted therefor. However, the substitution shall not be
made when:
1. The word "State" is used as part of the title of the State Controller, State
Treasurer, State Board of Control, State Boazd of Equalization, State Treasury, or the
Constitution of the State of California;
2. The result of that substitution would require action be taken by or
against this City or any agency, officer, or employee thereof rather than by or against the
State Boazd of Equalization, in perfomung the functions incident to the administration or
operation of this ordinance.
3. In those sections, including but not necessarily limited to sections
referring to the exterior boundaries of the State of California, where the result of the
substitution would be to:
a. Provide an exemption from this tax with respect to certain sales,
storage, use or other consumption of tangible personal property which would not
otherwise be exempt from this tax while such sales, storage, use or other consumption
remain subject to tax by the State under the provisions of Part 1 of Division 2 of the
Revenue and Taxation Code, or;
b. Impose this tax with respect to certain sales, storage, use or other
consumption of tangible personal property which would not be subject to tax by the State
under the said provision of that code.
4. In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715,
6737, 6797 or 6828 of the Revenue and Taxation Code.
B. The word "City" shall be substituted for the word `'State" in the phrase "retailer
engaged in business in this State" in Section 6203 and in the definition of that phrase in
Section 6203.
3.38.110 PERMIT NOT REQUIRED.
If a seller's permit has been issued to a retailer under Section 6067 of the Revenue and
Taxation Code, an additional transactor's permit shall not be required by this ordinance.
3.38.120 EXEMPTIONS AND EXCLUSIONS.
A. There shall be excluded from the measure of the transactions tax and the use
tax the amount of any sales tax or use tax imposed by the State of California or by any
city, city and county, or county pursuant to the Bradley-Burns Uniform Local Sales and
Use Tax Law or the amount of any state-administered transactions or use tax.
7-25
B. There aze exempted from the computation of the amount of transactions tax the
gross receipts from:
1. Sales of tangible personal property, other than fuel or petroleum
products, to operators of aircraft to be used or consumed principally outside the county in
which the sale is made and directly and exclusively in the use of such aircraft as common
carriers of persons or property under the authority of the laws of this State, the United
States, or any foreign government.
2. Sales of property to be used outside the City which is shipped to a point
outside the City, pursuant to the contract of sale; by delivery to such point by the retailer
or his agent, or by delivery by the retailer to a carrier for shipment to a consignee at such
point. For the purposes of this pazagraph, delivery to a point outside the City shall be
satisfied:
a. With respect to vehicles (other than commercial vehicles) subject
to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the
Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities
Code, and undocumented vessels registered under Chapter 2 of Division 3.5
(commencing with Section 9840) of the Vehicle Code by registration to anout-of--City
address and by a declazafion under penalty of perjury, signed by the buyer, stating that
such address is, in fact, his or her principal place of residence; and
b. With respect to commercial vehicles, by registration to a place of
business out-of--City and declazation under penalty of perjury, signed by the buyer, that
the vehicle will be operated from that address.
3. The sale of tangible personal property if the seller is obligated to furnish
the property for a fixed price pursuant to a contract entered into prior to the operafive date
of this ordinance.
4. A lease of tangible personal property which is a continuing sale of such
property, for any period of time for which the lessor is obligated to lease the property for
an amount fixed by the lease prior to the operative date of this ordinance.
5. For the purposes of subsections (3) and (4) of this section, the sale or
lease of tangible personal property shall be deemed not to be obligated pursuant to a
contract or lease for any period of time for which any patty to the contract or lease has the
unconditional right to terminate the contract or lease upon notice, whether or not such
right is exercised.
C. There aze exempted from the use tax imposed by this ordinance, the storage,
use or other consumption in this City of tangible personal property;
1. The gross receipts from the sale of which have been subject to a
transactions tax under any state-administered transactions and use tax ordinance.
7-26
2. Other than fuel or petroleum products purchased by operators of
aircraft and used or consumed by such operators directly and exclusively in the use of
such aircraft as common carriers of persons or property for hire or compensation under a
certificate of public convenience and necessity issued pursuant to the laws of this State,
the United States, or any foreign government. This exemption is in addition to the
exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of
the State of California.
3. If the purchaser is obligated to purchase the property for a fixed
price pursuant to a contract entered into prior to the operative date of this ordinance.
4. If the possession of, or the exercise of any right or power over,
the tangible personal property arises under a lease which is a continuing purchase of such
property for any period of time for which the lessee is obligated to lease the property for
an amount fixed by a lease prior to the operative date of this ordinance.
5. For the purposes of subpazagraphs (3) and (4) of this section,
storage, use, or other consumption, or possession of, or exercise of any right or power
over, any tangible personal property shall be deemednot to be obligated pursuant to a
contract or lease for any period of time for which any party to the contract or lease has
the unconditional right to terminate the contract or lease upon notice, whether or not such
right is exercised.
6. Except as provided in subpazagraph (7), a retailer engaged in business in
the City shall not be required to collect use tax from the purchaser of tangible personal
property, unless the retailer ships or delivers the property into the City or participates
within the City in making the sale of the property, including, but not limited to, soliciting
or receiving the order, either directly or indirectly, at a place of business of the retailer in
the City or through any representative, agent, canvasser, solicitor, subsidiary, or person in
the City under the authority of the retailer.
7. "A retailer engaged in business in the City" shall also include any
retailer of any of the following: vehicles subject to registration pursuant to Chapter 1
(commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in
compliance with Section 21411 of the Public Utilities Code, or undocumented vessels
registered under Chapter 2 of Division 3.5 (commencing with Section 9840) of the
Vehicle Code. That retailer shall be required to collect use tax from any purchaser who
registers or licenses the vehicle, vessel, or aircraft at any address in the City.
D. Any person subject to use tax under this ordinance may credit against that tax
any transactions tax or reimbursement for transactions tax paid to a district imposing, or
retailer liable for a transactions tax pursuant to Part 1.6 of Division 2 of the Revenue and
Taxation Code with respect to the sale to the person of the property the storage, use or
other consumptions of which is subject to the use tax.
7-27
3.38.130 REPORTING.
Financial reports summarizing revenues generated by the tax shall .be presented to the
Mayor and Council on a quarterly basis.
3.38.140 AMENDMENTS.
All amendments subsequent to the effective date of this ordinance to Part 1 of Division 2
of the Revenue and Taxation Code relating to sales and use taxes and which aze not
inconsistent with Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code,
and all amendments to Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation
Code, shall automatically become a part of this ordinance, provided however, that no such
amendment shall operate so as to affect the rate of tax imposed by this ordinance.
3.38.150 ENJOINING COLLECTION FORBIDDEN.
No injunction or writ of mandate or other legal or equitable process shall issue in any suit,
action or proceeding in any court against the State or the City, or against any officer of the
State or the City, to prevent or enjoin the collection under this ordinance, or Part 1.6 of
Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to
be collected.
3.38.160 SEVERABILITY.
If any provision of this ordinance or the application thereof to any person or
circumstances is held invalid, such invalidity shall not affect other provisions or
applications of the ordinance which can be given effect without the invalid provision or
application, and to this end the provisions of this ordinance aze severable. This City
Council hereby declares that it would have adopted this ordinance irrespective of the
invalidity of any particulaz portion thereof and intends that the invalid portions should be
severed and the balance of the ordinance be enforced.
3.38.170 TERMINATION DATE.
The authority to levy the tax imposed by this ordinance shall expire ten (10) years
following the operative date.
7-28
SECTION 2:
This ordinance relates to the levying and collecting of the City transactions and use taxes
and shall take effect immediately.
Presented by
James D. Sandoval
City Manager
7-29
Approved as to form by
RESOLUTION NO. 2009-
RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CHULA VISTA CALLING AND GIVING NOTICE
OF A SPECIAL MAIL BALLOT ELECTION TO BE
HELD IN SAID CITY ON TUESDAY, MAY 5, 2009,
FOR THE PURPOSE OF SUBMITTING TO THE
QUALIFIED ELECTORS OF THE CITY, A MEASURE
RELATING TO THE ESTABLISHMENT OF A LOCAL
TRANSACTIONS AND USE (SALES) TAX;
REQUESTING THE BOARD OF SUPERVISORS OF
THE COUNTY OF SAN DIEGO TO PERMIT THE
REGISTRAR OF VOTERS TO CONDUCT SUCH
ELECTION; AUTHORIZING THE CITY CLERK OR
HER DULY AUTHORIZED AGENTS TO CARRY OUT
THE NECESSARY PROCEDURES FOR SUCH
ELECTION; AND DIRECTING THE CITY ATTORNEY
TO PREPARE AN IMPARTIAL ANALYSIS OF THE
MEASURE
WHEREAS; Section 4000 of the Elections Code of the State of Califomia
authorizes mail ballot elections when the governing body of the local agency authorizes
the use of mailed ballots, the election is held on an established mail election date pursuant
to Elections Code Section 1500, and the proceeding is required or authorized by Article
XIII C of the California Constitution; and
WHEREAS, Section 902 of the Chula Vista City Charter authorizes mail ballot
elections; and
WHEREAS, May 5, 2009 is an official mail ballot election date, as established by
Section 1500 of the Elections Code of the State of California; and
WHEREAS, Section 2(b) of Article XIII C of the California Constitution added
by Proposition 218 effective November 1996 requires that a measure proposing a general
tax be submitted to the voters at an election consolidated with the regulazly scheduled
general election for members of the governing body of the local government, unless a
fiscal emergency is declazed by unanhnous vote of the governing body; and
WHEREAS, by its Resolution No. 2009-001 adopted on January 8, 2009, the City
Council unanimously declared a fiscal emergency; and
WHEREAS, Revenue and Taxation Code Section 7285.9 authorizes the City of
Chula Vista, subject to approval by a majority vote of the qualified voters of the City
voting in an election on the issue, to levy a transactions and use tax pursuant to the
Transactions and Use Tax Law in multiples of 0.25% for general revenue purposes; and
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WHEREAS, the proposed ordinance, attached hereto and incorporated herein by
this reference as Exhibit "A" would establish the transactions and use tax (the
"Ordinance"), and if approved by voters the eazliest implementation date will be October
1, 2009; and
WHEREAS, pursuant to California Constitution Article XIII C Section 2(b) and
the Elections Code of the State of California, the City Council desires to submit the
Ordinance to the electorate at the Special Mail Ballot Election to be held in said City on
Tuesday May 5, 2009; and
WHEREAS, Section 439.1 of the Administrative Code of the County of San
Diego authorizes the Registraz of Voters of the County of San Diego to render specified
services relating to the conduct of an election to any city or district which has by
resolution requested the Board of Supervisors to permit the Registraz to render the
services, subject to requirements set forth in that section; and
WHEREAS, it is desirable that the County of San Diego Registrar of Voters
conduct the election and canvass the returns of said Special Mail Ballot Election, and that
the City Clerk be authorized to carry out all other necessary procedures for such election;
and
WHEREAS, sufficient funding is anticipated to be allocated as a separate action
for the payment of costs relating to the placement of the measure on the ballot.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA
VISTA does hereby resolve as follows:
SECTION 1. All of the foregoing recitals aze true and correct.
SECTION 2. Pursuant to the requirements of the Chula Vista Charter and the
laws of the State of California, there shall be and there is hereby called and ordered, held
in said City on Tuesday, May 5, 2009, a Special Mail Ballot Election for the purpose of
submitting to the qualified electors of said City an Ordinance to establish a local
transactions and use (sales) tax in the City of Chula Vista.
SECTION 3. The City Council, pursuant to its right and authority, does order
submitted to the voters at the Special Mail Ballot Election on May 5, 2009, the following
question:
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To prevent further cuts and preserve general city services,
including public safety staffing for emergency response, YES
reducing crime and criminal gang/dmg activity,
maintaining city streets/pazks, and preserving youth/after-
school programs; shall the City of Chula Vista adopt an
ordinance enacting a one cent transactions and use (sales)
tax, expiring in ten yeazs, with mandatory audits, quarterly NO
reports to Mayor and City Council, and a citizens' review
committee?
SECTION 4. The proposed Ordinance to be submitted to the voters is attached
as Exhibit "A."
SECTION 5. Pursuant to California Elections Code Section 9282, the City
Council hereby acknowledges its authority, and the authority of any individual voter who
is eligible to vote on the measure, or bona fide association of citizens, or any combination
of voters and associations, to submit a written argument, not to exceed 300 words, for or
against the measure. The City Clerk has set February 3, 2009 as the deadline for
submitting azguments, after which no azguments for or against the measure may be
submitted, withdrawn or changed.
SECTION 6. Pursuant to a resolution previously adopted by the City Council
allowing rebuttal arguments, rebuttal azguments will be allowed, in accordance with
California Elections Code Section 9285. The rebuttal arguments may not exceed 250
words. Rebuttal arguments must be submitted to the City Clerk no later than February
13, 2009, after which no rebuttal azguments for or against the proposed measure may be
submitted.
SECTION 7. Pursuant to California Elections Code Section 9280, the City Clerk
is directed to transmit a copy of the measure to the City Attorney. The City Attorney is
directed to prepaze an impartial analysis of the measure, not to exceed 500 words in
length, showing the effect of the measure on the existing law and the operation of the
measure, and transmit such impartial analysis to the City Clerk within ten days of the
adoption of this resolution.
SECTION 8. The Boazd of Supervisors of the County of San Diego is hereby
requested to permit the Registrar of Voters to perform and render all services and
proceedings, and to procure and furnish any and all official ballots, notices, printed
matter and all supplies and equipment and paraphernalia incidental to and connected with
the conduct of the subject election of the City of Chula Vista, in order to properly and
lawfully conduct such election.
SECTION 9. The Boazd of Supervisors of the County of San Diego is hereby
requested to permit the Registraz of Voters to canvass the returns of the subject election.
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SECTION 10. The County of San Diego shall be reimbursed in full for the
services performed by the Registraz of Voters for the City of Chula Vista upon
presentation of a bill therefor, and this City agrees to indemnify and save free and
harmless the County, its officers, agents and employees from expense or liability,
including reasonable attorneys' fees, as a result of an election contest arising after
conduct of this election.
SECTION 11. The City Clerk is hereby directed to forthwith file a certified copy
of this resolution with the Boazd of Supervisors and the Registrar of Voters of the County
of San Diego and to issue instructions to the Registraz of Voters to take any and all steps
necessary for the holding of the election.
SECTION 12. Mail ballots maybe mazked and returned any time after receipt but
no mail ballots postmazked after May 5, 2009 shall be accepted.
SECTION 13. That the ballots to be used at said election shall be, both as to form
and matter contained therein, such as may be required by law to be used therefor.
SECTION 14. That in all pasticulazs not recited in this resolution, said election
shall be held and conducted as provided by law for holding municipal elections in said
City.
SECTION 15. That notice of the time and place of holding the election is hereby
given and the City Clerk is authorized, instructed, and directed to give further or
additional notice of the election, in time, form and manner as required by law.
SECTION 16. That the City Clerk shall certify to the passage and adoption of this
resolution, and file it with the City's original resolutions.
Presented by Approved as to form by
James D. Sandoval
City Manager
~2Bart ies e
City Atto
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