Hercules voters this summer will decide whether to increase their own taxes to bring an extra million dollars in revenue to the city.
The Hercules City Council on Tuesday night voted 4-1 to call for a special election in June to ask voters to increase the utility users tax from 6 percent to 8 percent, and to include cable in the utilities taxed.
If passed, the increased tax would go into effect two months after the election results are certified and sunset in five years. The ballot measure will need only a 50-percent-plus-one-vote majority to pass, because the city has declared a state of fiscal emergency.
"I think our residents in time will understand in order to provide the services that we need, we need that extra million dollars and we're not getting it from the county," Mayor John Delgado said. "So if we want those services, a tax like this is how we're going to do it from now on."
The city faces a $1.2 million budget deficit; it plugged a similar gap in this year's budget with one-time funds.
City Manager Steve Duran said if the ballot measure fails, it will be difficult to cut enough to make up that $1.2 million.
"The elephant in the room has been, how do you cut a million dollars out of a budget?" Duran said. "And the answer we keep coming back to is, given the extensive cuts to staffing we've had to this date … the only way to save that kind of money would be to outsource police to the sheriff's department and make some other cuts to our own staffing."
Smaller cuts will still be required if the ballot measure passes, he said.
Council Member Dan Romero was the sole no vote Tuesday night. He supported the tax measure, but wanted it to sunset in six or eight years. He pointed out that in three and a half years, the city's Measure O sales tax increase will expire.
"We're not going to be OK in five years," Romero said. "The loss of $500,000 from Measure O is going to hurt."
Council Member Bill Kelly also argued for a seven or eight-year measure, saying he didn't want to have to ask for another tax increase.
"I think they're probably getting ready to get their shotguns out seeing this coming now," Kelly said of residents. "We told them last year we wanted to do something and we were going to solve our problem and that didn't work."
But a majority of voters surveyed by the Lew Edwards Group do support the tax increase, the consulting firm told the council Tuesday night. That group's survey of 361 voters showed a majority of residents surveyed supported the tax increase for five years, but that majority dropped when respondents were asked about a 10-year increase.
Sixty-six percent of respondents were "more likely" to support the tax with a five-year sunset, and 51 percent were "more likely" to support it for 10 years, they said. Overall, 56 percent of respondents said they would vote for an increase.
Delgado argued it would be better to go for a shorter sunset, because of the risk associated with the measure failing. Duran said with a 2018 sunset, the council could place the measure on the 2018 gubernatorial ballot to be renewed.
"We're still in survival mode," Duran said. "We have to win or we lose big."
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