Local Cities Looking for New Revenue, Possible Expense Cuts

Small Tulare County cities are continuing to look at ways to increase revenue and cut costs to try to balance their annual budgets.

Farmersville Seeking Sales Tax Increase & Cannabis Business Tax

In Farmersville, the city council has voted to place two tax measures on the November ballot. One for a ½ cent sales tax increase; and the second for taxation on potential cannabis cultivation and related businesses, not including retail sales of marijuana products. The tax would be $25 per square foot of the business site annually, or 10% of total income earned by a business.

Three different times the council held public hearings on the two potential measures. Generally, there was little comment on the proposed tax measure, and that which was made, understood the necessity. With regard to cannabis businesses, comments were made either in favor of or against allowing a business within city limits. No comments were actually made with regard to taxation for such a business.

These decisions were not easy to make, council members said, but a necessity for the city’s annual budget. The sales taxation measure was voted unanimously by council; the cannabis cultivation received a 4-1 vote, with Council Member Leonel Benavides voting no.

The city has imposed a wage freeze for city employees and City Manager John Jansons offered a 3% salary and compensation decrease for himself, which the council accepted.

“It’s to signal the seriousness of our situation,” Jansons said.

It is unclear just how long his pay reduction will last.

As for the employee wage freeze – “Employee groups have not agreed to this, so on-going negotiations with the City’s 5 bargaining units might lead to raises which would increase the deficit positon for fiscal year 17-18 and beyond,” Jansons said.

The city has avoided layoffs, at this time. Of main concern for Mayor Paul Boyer, is the city’s fire department.

“If you look at our fire chief and the second highest paid firefighter we have,” he said in an earlier interview, “that’s on a two-year grant that is going to run out in 2018, and I’ve got to say we have seen a dramatic improvement in the fire department since they’ve been here. We’ve had a lot of young people getting a lot of training and the responses, especially for medical emergencies, and that’s good. And, I really want to keep our fire department the way it is. And, that’s still depending on over 20 volunteers.”

Woodlake Also Looking for Sales and Cannabis Taxation

Some 14 miles northeast in Woodlake, that city council has also voted for November ballot measures – a one-cent sales tax and a cannabis taxation very similar to the one Farmersville council voted for the ballot. Currently, Woodlake does not have a city-implemented sales tax, according to City Manager Ramon Lara.

Like Farmersville, Woodlake council had a 5-0 vote for the sales tax measure, and a 4-1 vote for the cannabis tax measure, with Council Member Greg Gonzalez, Jr. voting against. The only difference between the two cities is that Woodlake is also considering the option of dispensaries.

Woodlake also held public hearings on each of the measures. As in Farmersville, no comments were made on potential taxation of cannabis-related business, but rather on the potential of such businesses altogether.

It is noted that in both cities – neither council has reached any decisions as to whether to allow any form of cannabis business. That conversation is ongoing. There is an urgency to get ballot measures to the County Elections office to meet deadlines for the November ballot – hence, the decision as to what types of tax to place on potential cannabis businesses, should the cities allow it. The $25 per square foot of business, or 10% of total annual income is a cap. Each city would not be required to charge the total amount, should voters elect to allow the taxation.

While revenue in Woodlake has been steady, Lara said, expenses have risen, such as insurance and workman’s compensation. In the past year or so, the city has seen a reduction of staff in city hall, the police department and outside consultants, he added.

Lindsay Has Recently Voted in a 1% Sales Tax

Down in Lindsay, similar increases in expenses are noted, said the city’s Finance Director Bret Harmon. Voters elected for a one-cent sales tax through a special ballot in June. The tax goes into effect the beginning of October with revenue from it first being seen in January, 2018, Harmon said.

According to a June 15 article in the Voice, “the city has regularly faced yearly deficits in the $500,000 range for most of the last decade. The city’s woes began when housing prices fell and the market collapsed, leaving it struggling to service its debt load. The new revenue will allow it to meet all its current obligations and start spending again to maintain services.”

The sales tax measure, according to Mayor Pam Kimball in the article, indicates “Our calculations, if they’re correct, and staff seems pretty confident about it, would be about $900,000 [annually].”

“They were preparing two budgets, depending,” Kimball said. “They get to junk one. We’re pretty glad because they were going to be pretty drastic cuts. I think it was something like 13% across the board. It probably would have meant some people’s jobs.”

Lindsay has suffered some layoffs in the finance department, police department, Wellness Center and McDermont Field House, Harmon said. No current employees are suffering furloughs, as had happened in the past. McDermont’s has yet to pay for itself, although it is carrying its own weight.

Exeter Looks to Reduce Expenses

For the first time in years, Exeter City Council voted to pass a budget without allotting any funds for the Chamber of Commerce. Traditionally, the city has designated $30,000 for the chamber. Last year, the city was only able to pay one quarterly payment of $7,500 of the $30,000 designated for the chamber.

“We’ve seen the same disturbing trend for a while,” said City Manager Randy Groom of Exeter’s financial status.

While people have somewhat bounced back from the recession, a lot of revenue is still not there, he said.

“Sales tax is still kind of flat for us,” he said. And, property tax income had really suffered. And, like other city officials indicated, expenses continue to rise.

Exeter has also held off on capital investments that can no longer wait, Groom said.

For example, the city needs new sludge bed lining at the waste water treatment plant and water lines all around the city that are leaking due to age and need repairs and/or replacement.

The city has also started putting away funds for other possible expenses that will someday arise, such as vehicle replacement including the city’s fire engine.

“I give them [city council] credit – when they have to make tough decisions, they do,” he said. “Telling the chamber, we love you, but we cannot give you any money – that’s tough to do.”

The chamber does not take it personally, said Sandy Blankenship, executive director.

“Mainly it’s dollars and cents,” Blankenship said, “their general funds are in need just like other cities. Our relationship is still good.”

It was not a big surprise on the tails of last year’s lack of financial support, she said.

“It wasn’t a vote to not support [the chamber],” she said, “It was a vote to approve their budget. They help us in other ways including in-kind services that the chamber has not had to pay for.”

The chamber works on a budget of roughly $180,000 per year. It, too, has had to make cuts including the loss of a part-time employee position. It, also, will have to look at alternative ways to increase its revenue.

One thought on “Local Cities Looking for New Revenue, Possible Expense Cuts

  1. This, while resident’s incomes are diminishing. Obviously city councils will want more tax money. They always do! A three percent pay cut? Who is he trying to kid?

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