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Hercules Council May Ask for Utility Tax Increase & Tax Cable TV

The Hercules City Council may also declare a fiscal emergency for the second year in a row.

Less than a year after voters approved a half-cent sales tax increase, the Hercules City Council on Tuesday showed support for asking voters to raise another tax.

The council is faced with a $1.2 million budget deficit for the coming 2013-14 fiscal year, and indicated support during a special meeting Tuesday for putting a measure on the ballot to increase the city's utility users tax from 6 percent to 8 percent and include cable in the utilities that are taxed.

"I can't sit here as a councilman and see the reduction of our city," Council Member Dan Romero said.

The council will discuss any possible ballot measure at a future meeting, and if council members want to place it on a June ballot they would have to act by March.

The council will also discuss the idea of declaring another fiscal emergency, which would allow a tax increase to pass by a 50-percent-plus-one-vote margin instead of the usual two-thirds margin.

Last year, the city faced a similar budget deficit, but transferred more than a million dollars into the general fund as a one-time way to fill the gap.

"This time last year, the discussion was that we knew we wouldn't get it all in one bite," City Manager Steve Duran said of the city's deficit. "Even with a 1 percent sales tax [increase] we wouldn't have gotten all of it, and we went with a half-percent sales tax. We didn't eliminate a structural deficit last year."

The city also faces an increase in its expenses: CalPERS, medical insurance and legal expenses will all rise, Finance Director Nickie Mastay said. 

Hercules' current 6 percent utility users tax is lower than Pinole, El Cerrito, Richmond and San Pablo. Most other cities' taxes already include cable, Duran said.

Each of the council members said any potential utility users tax increase should sunset after a few years, but Vice Mayor Myrna de Vera was hesitant to ask for another tax hike.

"This year we have to face that we have a structural deficit, and I don't know if we can keep coming back to the community and asking them for more taxes," de Vera said. "I have a hard time paying my taxes, and I think I have a better income than a lot of people."

Among other ideas, she said the city should look into replacing some city staff with contractors as a way to save money.

In the past two years, Hercules has gone from 30 police officers and about 25 administrative city employees to 20 cops and nine administrative workers, Duran said. The city is hoping to renegotiate a contract with its solid waste contractor and last year, voters approved the sale of the Hercules Municipal Utility.

Mayor John Delgado hoped that with those other measures, increasing the utility users tax would fill the budget gap and provide for an increase in cops.

"To go back and ask for another tax we have to promise them something," he said. "Two percent [and] we fill the hole, there's no more layoffs–I don't think that's good enough."

During Tuesday's meeting, the city council also discussed the idea of allowing an LED sign in Hercules to try to earn revenue, but opted to send that item to the planning commission for more discussion and public input.

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Steve Spilman January 30, 2013 at 05:21 AM
While I am not a fan of ANY tax, at least it is not a property tax increase.
Susan D.Keeffe January 30, 2013 at 06:35 AM
There were other options discussed although it seemed as if the CM had an agenda coming in which was basically they knew a year ago they would be coming back with another "fiscal emergency" which allows them to hold an election for another tax which can win with 51% instead of a 2/3 vote. Herculeans who are property owners might want to look at their property tax bills - there are 21 taxes on there. I applaud DeVera's comments about "thinking outside the box" and McCoy's clear, lucid questions and thinking.
Harpreet sandhu January 30, 2013 at 06:37 AM
Please do not increase anymore taxes. The citizens of Hercules have their own financial hardships and we cannot consistently be used as the savior of the city. The council needs to think outside the box and find a creative solution to the city's financial woes because we, the people, are tired of bailing out the city, state and country. I urge the city council to find an alternative solution because at the end of the day - the city is in this situation due to the gross mis-management of city funds.
Giorgio C. January 30, 2013 at 02:40 PM
What's troubling for me is that I feel there is more transparency (some minor tweaks needed) with our city government than there is with the WCCUSD school district, but no one wants to pay another tax for our own city because of all the current WCCUSD taxes. The WCCUSD has violated laws (unintentionally or otherwise) mandated by the state of California to ensure accountability and transparency and the Dept. of Ed has no one enforcing these laws. For example, see p. 198 and 199 of the following document. They are p.74 and 75 of the audit report in this packet document. http://www.wccusd.net/cms/lib03/CA01001466/Centricity/domain/16/packets/2012-2013/20130109_BOE_Packet.pdf Add the lack of oversight regarding school bond programs. The Hercules City Council is voting on the debt limit waiver to approve increasing the debt ceiling for a program that the CA Senate Subcommittee on Education believes is lacking oversight as is seen in these documents. http://citiesandschools.berkeley.edu/reports/CCS2012CAK12facilities.pdf http://www.cde.ca.gov/nr/ne/yr13/yr13rel12.asp After listening to last night's discussion, I would support this tax as the argument was persuasive. It's that other agency that needs to be given more scrutiny, in my opinion.
Giorgio C. January 30, 2013 at 03:06 PM
Although they have made much progress, maybe Parks and Rec needs to do more to become budget neutral. Any services not being paid for by the user should be eliminated. Are we renting out the park picnic tables? Pinole does and they are very popular.
Phil Simmons January 30, 2013 at 04:23 PM
It s a tax increase on anyone that uses water, electricity, gas, cell phones, phones, cable, or internet.
Phil Simmons January 30, 2013 at 04:27 PM
The quote in this article from Steve Duran: "Hercules' current 6 percent utility users tax is lower than Pinole, El Cerrito, Richmond and San Pablo. Most other cities' taxes already include cable, Duran said." is simple not true. Most cities in CC County and most cities in the Sate of California have zero, 0, nada, no, UUTax of any kind including cable. Only a few in CC County have any sort of UUTax.
Toni Leance January 30, 2013 at 04:33 PM
Kill the LED sign except mabe up in the hills where Dan lives. And can Romero crawl up Duran's a$$ further? Oh poor Mr. Duran I can't ask him to do any more. REALLY? If he would stop playing real estate developer and stop tying to create policy instead of executing council policy he would have lots of time. And why are there 8 managers for 20 employees anyone think maybe that is excessive? Get rid of the fat buracrates and save money without raising taxes on the backs of hard working Herculeans. ENOUGH IS ENOUGH!
Susan D.Keeffe January 30, 2013 at 04:49 PM
If Mr. Duran truly needs help, why does it have to be a Deputy City Manager? Is he grooming his replacement? Why can't it be an Administrative Assistant? And, am I wrong - it seemed last night Ms. Mastay stumbled - repeatedly. At one point Mayor Delgado and the audience were able to add better than she! There seemed to be fluid values for increases in employee benefits which indicated to me she really has no idea of what those increases are. Why can't they negotiate for a cheaper level of medical care, or having the employees shoulder at least half of the benefit increases or have bigger deductibles? Or like WCCUSD, provide limited choices for their medical plans including Kaiser which has lower rates than many. And why shut down options without first finding out about them? There seem to be some closed minds at City Hall! Let's keep all options open! For example, since the CM and his followers love the LED sign and they were talking about taxing pot dispensaries - let the LED sign say "get your pot here"! That should bring in some revenue.
Susan D.Keeffe January 30, 2013 at 04:53 PM
We heard this argument a year ago and I bought it then too. And I really believed them when they said it would save police jobs. But it didn't. And then it turns out that for a year they have known they would have to come back with the same playbook. Fool me once......
DutchandCarol January 30, 2013 at 05:09 PM
Susan (or anyone else at the meeting), Was there any mention of when the sale of the municipal utility would take place? It is my understanding that the proceeds of the sale would: 1). Defease the outstanding 2010 bonds 2). With any excess funds going to the city's general fund. Thanks in advance!
Susan D.Keeffe January 30, 2013 at 05:16 PM
DutchandCarol, Yes, they said it could be at least another year! And then the proceeds would most likely just go to pay off the Municipal Bonds used to start it in the first place. The benefit is losing the million dollar drain on the General Fund.
Selina Williams January 30, 2013 at 07:45 PM
We use Woodruff Sawyer to broker our Clients employee benefits, D&O, general liability and Fiduciary coverages. They provide a variety of options for our clients each year that have greatly reduced the cost of providing these benefits, much less than a 20% increase each year. BTW, this illusion the council floated last year of solving the budget crisis would easily have been dispatched with a multi-year budget/projection. The council and the citizens need to understand that the structural deficit has no end with the current scheme. Using one time money (essentially our rainy day funds called "fiscal neutrality") is a temporary and desperate fix. A properly functioning entity has 3 to 6 months of operating expenses set aside. As for the "expedient sales" of land, all of the land projects will net approximately zero return, if not negative, when the increase in costs are tallied. The construction of 350 rental units and 140 tiny apartments at Town Centrale will be a drain on city services. Because of the ongoing blight, home values in Bayside have not rebounded at the same rate as other districts. Ms. Mastey needs to present projections showing all the revenue streams and projected costs over time. I suggest that time period be the same as the time that they ask for the UUT tax. They need to show us how this tax will make our city solvent, not just this year, but for every year they collect it.
Giorgio C. January 30, 2013 at 08:57 PM
8 managers for 20 employees means that the managers are doing the grunt work, too. This is evidence of cutting staff, and having the qualified experts fly their respective programs almost solo. Manager positions do not exist for managing worker bees. Their primary function is to manage their part of the program, and in better times, we hire people to help them do it.
Toni Leance January 30, 2013 at 09:53 PM
GC you are so wrong why pay a director 150k for doing the job that someone can do for 50k THERE ARE TOO MANY MANAGERS getting too much of our tax dollars it would be like the school district had all administrators or principals and no teachers
Phil Simmons January 30, 2013 at 09:58 PM
So we are paying upper level management pay rates for grunt work. That is exactly the problem. We need less people paid as managers managing more people paid at grunt labor rates. You have summed up the problem nicely. Thanks, Phil
Susan D.Keeffe January 30, 2013 at 10:00 PM
To clarify, that's a million dollar A YEAR drain on the General Fund!
Phil Simmons January 30, 2013 at 10:02 PM
And I wonder how all of those low paid grunt workers feel about lossing their jobs so that someone making triple their pay could keep theirs?
DRM January 30, 2013 at 10:29 PM
There are only nine employees INCLUDING the managers. Not sure where this "8 managers for 20 employees" idea came from. Just sayin'.
Giorgio C. January 30, 2013 at 11:20 PM
You still need the subject content qualified experts to manage a program. A rank and file worker bee will not possess the knowledge. Maybe we need to break out job descriptions. If we pay Duran the standard CM salary and then tell him that he also has to clean the toilets, are you saying no way, that we need to hire a janitor with benefits to clean those toilets instead of having Duran clean them on Superbowl Sunday? I thought the idea was to extract every ladt bit of sweat from our employees. Isnt that what you want, Toni? Where were you last night? You should communicate your ideas to them instead of me. Obviously I dont know feces from shinola.
Phil Simmons January 30, 2013 at 11:23 PM
DRM The number of employees and management came from a current updated org chart on the city website. Perhaps you are not considering that there are works at the City Corp Yard as well as city hall. Here is the 2012-2013 Org Chart from the city website (link about 1/3 of the way down the page): http://www.ci.hercules.ca.us/index.aspx?page=180 I can personally say that I have meet and talked with at least 15 of the total. Just Sayin
Toni Leance January 30, 2013 at 11:28 PM
DRM Nicky has 3 1/2 accountants working for her, parks and rec has workers managed by Pedro, John has workers in public work dept. you are wrong ... Just sayin
Phil Simmons January 30, 2013 at 11:34 PM
Giorgio, My message is consistent. I said a year ago that if the CM is going to hire a financial person, given our financial emergency status at the time, then at least hire that person in as a Municipal Accountant or at the most a Municipal Senior Accountant, not a Finance Director. The city also paid good money, $135K, for a consulting firm to make recommendations. One recommendation was to contract a CM not hire one. There are cities that share those resources. If on the other hand we must have a CM then find one that can handle several top level jobs and also manage fewer middle managers and more worker bees.
Toni Leance January 31, 2013 at 12:18 AM
Something tells me Duran isn't cleaning the toilets. but think about the absurdity of calling for a fiscal emergency but I need a deputy city manger! And by the way the reason it s a deputy is be ause another council in its wisdom cut the asst. city manager position but Duran just used semantics to change the title to get his way. also the whole fiscal emergency is a farce just a way to get around the 2/3 bar the legislation mandated for tax increases. What is going on is obscene. How different it would be if Charlie Long was hired. But the council heeded the staff who said they would quit if Charlie was hired. The same staff that was there for the malfeasance at city hall. And how do you give Warmerdam a proclamation when she sat at the right hand of every city manger that mismanaged the city and it's funds? You ask why I didn't come last night it is because I am too angry over the current stupidity.
Giorgio C. January 31, 2013 at 05:55 AM
Phil, Will you be getting some sort of clarification on this quote? Thanks.
gelainet February 02, 2013 at 06:50 PM
Wow, more taxes? Can't our leaders be a little more creative about solving our financial problems other than sticking it to the residents again? This is a very troubling trend.
Phil Simmons February 03, 2013 at 03:13 PM
gelainet Two of our 5 Councilmen came to the last council meeting prepared with solutions other than new taxes. But the other 3 had no ideas or any interest in discussing other solutions. .

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