City's Argument for Sales Tax and HMU Ballot Measures

Below is a message from Hercules City Manager Steve Duran regarding Measure O and Measure N:

Dear resident,

Our city is experiencing a fiscal emergency. In addition to the mismanagement of past administrations, Sacramento lawmakers have recently raided local funding across the state, siphoning off much needed resources to address their own budget mess. Measure O and Measure N are part of a strategic effort by the new City Council and new staff to give the community an opportunity to decide on whether these measures are the right strategies to correct the financial mistakes of the past, stabilize the budget, and get our City on sound financial footing.

As background, last year the City trimmed its budget by $6 million and has cut another $1.5 million since July 1, 2011 to eliminate a structural deficit. Over the last year, we have had to reduce the City’s workforce by over 40%, reduce salaries and benefits for remaining employees, cancel all City special events, and cut many basic services including police protection, library hours, general maintenance, and senior services. Additionally, Hercules’ revenues have dropped over 30% over the last two years.

Unfortunately, we have reached the point where the City is simply out of areas to cut without dramatically affecting our community’s safety and quality of life. Police staffing has already been reduced below recommended levels to ensure the safety and security of the community. This is why the City Council took recent action to declare a fiscal emergency and place Measure O on the June ballot, to help ensure the City’s financial stability during these challenging times.

Measure O is a temporary emergency funding measure that must legally expire after 4 years. It is not a tax on property owners. It is a ½ cent sales tax that visitors and out-of-town shoppers to Hercules share in paying. Any money raised by Measure O will be locally-controlled and will be used only for local needs, which include:

• Hercules police officers and crime investigators
• Local crime prevention programs
• Youth sports and recreation programs
• Maintaining essential city services and maintenance
• Helping the City become more financially stable

Measure O includes tough fiscal accountability provisions including an Independent Citizen’s Oversight Committee and annual, published financial audits. These fiscal safeguards will ensure funds are used efficiently, effectively, and as promised.

In addition to Measure O, the City also placed measure N on the June ballot, which would allow the City to sell Hercules Municipal Utility (HMU). HMU loses money and is a drain on the City’s resources. The projected profitability that HMU was based upon never materialized due to the downturn in the economy and lack of a sound business plan. Measure N will stop the City from having to subsidize the utility, and any proceeds from the sale would be used to repay its debts and to satisfy other contractual obligations owed by the Utility.

Measure O and Measure N will not eliminate the City’s fiscal challenges, but they will help stabilize the budget, get the City back on sound financial footing, and help to protect essential City services such as police protection.