Politics & Government
Looking at Hercules Tax Rates
The city may attempt to raise tax rates on sales or utilities. Here is some information on what Hercules will make with the increases and how its tax rates compare to nearby cities.
The city has two taxes it in a nearing election—the utility users tax and a transaction and use tax, which functions like a sales tax hike.
There is a six percent tax on Hercules utilities, covering water, electricity, gas and phone services. The average rate for Contra Costa cities implementing the utilities tax—not all do—is eight percent, city records show. Hercules is on par with the California utility user tax average.
Revenue from the utility users tax amounts to 17 percent of the city’s general fund income, Deputy City Manager Liz Warmerdam said at a recent city council study session. “For a utility users tax, you get a pretty big bang for your buck,” Warmerdam said.
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The city will see a $400,000 bump in annual revenue per one percentage point the utility users tax is increased:
- 1% increase (7% total) = $400,000
- 2% increase (8% total) = $800,000
- 3% increase (9% total) = $1.200 million
- 4% increase (10% total) = $1.4 million
(This information comes from the City of Hercules)
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City staff is also researching a transaction and use tax, or a sales tax add-on. Hercules’ current sales tax base rate is 7.25 percent, with a 0.5 percent add on for the Contra Costa Transportation Authority and a 0.5 percent add-on for the Bay area Rapid Transit District, which makes the city’s total sales tax rate 8.25 percent.
Most nearby cities have the same or lower sales tax rates than Hercules. The exceptions are El Cerrito with a 9.25 percent rate and Richmond and Richmond, with a nine percent rate.
Sales tax revenue makes up for about seven percent of the city’s general fund.
The city will take in an additional $180,000 and $220,000 per quarter of a tax rate percentage point increased:
- ¼% increase = between $180,000 and $220,000
- ½% increase = between $365,000 and $450,000
- 1% increase = between $725,000 and $890,000
(This information comes from the City of Hercules)
The Hercules City Council will hear more about proposed tax rate increases at its Tuesday, Feb. 14 meeting.
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