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HomeMy WebLinkAboutSp. Library Parcel Tax Committee 2019-03-11 AgendaAGENDA Special Library Parcel Tax Committee, Special Meeting March 11, 2019 6:00 p.m. City Manager’s Conference Room, 2nd Floor San Rafael City Hall 1400 5th Ave, San Rafael, CA Committee Members: Phyllis Brinckerhoff, Pamela Cook, Gregg Kellogg, Peter Lee, Robert Ross City Staff: Henry Bankhead (Interim Library Director), Nadine Hade (Finance Director), Susan Andrade-Wax (Community Services Director) 1. Approval of February 19, 2019 minutes 2. Public Comment: This portion of the meeting is reserved for persons desiring to address the Committee on all items, agendized or not. Presentations are generally limited to two minutes. 3. Review of Report from City Attorney regarding proportionality between Library General Fund Budget and Library Parcel Tax Budget. 4. Open discussion Library Parcel Tax Committee February 19, 2019, 6:00 PM: Meeting Minutes Members Present: Phyllis Brinckerhoff, Pamela Cook, Gregg Kellogg, Peter Lee, Gil Pruit Members Absent: none Others present: Glenna Coleman Staff Present: Henry Bankhead (Interim Library Director) 1. Call to Order: The meeting was called to order at 6:00 PM 2. Approval of November 26 minutes: Cook moved, Kellogg seconded 3. Review of Report from City Attorney regarding proportionality between Library General Fund Budget and Library Parcel Tax Budget. This item was postponed till the next meeting due to the absence of the Finance Director, Nadine Hade. 4. Review of 2018/2019 Q2 budget report – Cook commented that for readability the formatting of the numbers should not include decimal places. 5. Open Discussion: Additional concerns were raised about the proportionality of the Measure D funds for the library and the City’s general fund. Brinkerhoff and Bankhead re-iterated the conversation they had about the proportionality issue with the Finance Director and the City Manager. Bankhead acknowledged the concerns of Brinkerhoff about the definition of the term “augment” in the language of the measure. Bankhead suggested that the committee wait for the report from the City Attorney’s office about the proportionality question before continuing the ongoing discussion. Coleman commented as a member of the public about the concerns with regards to proportionality that were raised when the initial measure was passed. 6. Adjournment: The meeting was adjourned at 6:58 p.m. CITY OF SAN RAFAEL City Attorney’s Office INTERDEPARTMENTAL MEMORANDUM DATE: March 8, 2019 TO: JIM SCHUTZ, City Manager NADINE HADE, Finance Director HENRY BANKHEAD, Interim Library Director FROM: ROBERT F. EPSTEIN, City Attorney LISA A. GOLDFIEN, Assistant City Attorney RE: Library Special Services Parcel Tax: Question About Effect on City’s Discretionary Authority Over General Fund ISSUE Due to questions raised by the Library Special Services Parcel Tax Committee, you have asked our opinion whether in adopting its yearly budget, the City Council is required by the terms of the tax, or by the circumstances of its enactment, to maintain a fixed amount or percentage of the general fund moneys allocated to the Library. We conclude that the City Council is not bound by such a requirement. BACKGROUND In 2010, the City Council placed a measure on the June ballot, designated as “Measure C,” asking the voters to approve an ordinance imposing a Library Special Services Parcel Tax (the “Library Tax”) to fund library services. The Staff report for the February 16, 2010 City Council meeting explained that the ballot measure was being proposed in response to an anticipated loss of funding from the general fund: The San Rafael Public Library, facing a 10% budget reduction in the current fiscal year, and a projected 10% cut in the next fiscal year, with no prospect of an improved budget situation in ensuing years, has made the determination that a reduction in services, in the form of a loss of open hours to the public, is inevitable. By a two-thirds vote, the San Rafael electors approved the proposed Library Tax ordinance, which is now codified as Chapter 3.36 of the San Rafael Municipal Code. In 2016, the voters approved another ballot measure, “Measure D,” revising and increasing the Library Tax and extending it through Fiscal Year 2025-2026. Jim Schutz, City Manager Nadine Hade, Finance Director March 8, 2019 Page 2 Both measures required the City Council to appoint an independent citizens’ oversight committee, with duties established by the Council, to review the collection and expenditure of Library Tax revenues. As determined by the Council, the Committee’s “sole function shall be to review expenditures of the revenues from the Special Library Services Parcel Tax adopted by Measure D on June 7, 2016 to ensure the monies have been expended in accordance with the authorized purposes of Measure D”; however, “the Committee shall not have any budgetary decision authority, shall not allocate financial resources, and shall not make budget or service recommendations to the City Council.” (Exhibit A to Resolution No. 14323 establishing Measure D Committee.) In recent discussions, Staff has been advised by some Committee members that they have been operating under the understanding that the City Council is required to allocate the same percentage of the general fund to library services every year as was allocated in Fiscal Year 2009- 2010. Phyllis Brinckerhoff, who has served on both the Measure C and the Measure D Committees, has drawn Staff’s attention to the fact that the Committee has in the past relied on this understanding in making its reports to the City Council. Finance Staff has responded that the Library Tax contains no such limitation, and Ms. Brinckerhoff has responded that she is quite concerned to hear from Finance Staff that they do not believe the City is bound by such a limitation. In a February 5, 2019 email to the Finance Director, Ms. Brinckerhoff explains her position: Attached is the page from the voter's guide that summarizes Measure D. Note that it says "....augmenting current general fund allocations for the San Rafael Public Library...". Augmenting means to increase, make larger than the general fund allocations. General fund allocations could be a percentage or, I suppose a fixed dollar amount, although it would not be right to change the method during the life of the parcel tax. Percentage is more fair, because, should we have a recession, the Library would get to keep its fixed dollar amount (thus depleting the amount available for other City functions) plus Parcel Tax funds. A previous Library Director did contact the then City Attorney, who said the percentage to be used would be that of the year in which the vote was taken, and the members of the Measure C committee agreed with the method, which has been used annually since then. We believe the City Attorney advice Ms. Brinckerhoff is referring to is an inquiry former Library Director David Dodd made to the City Attorney’s office on October 25, 2011. Mr. Dodd posed the following question: The Library Special Parcel Tax Committee, in looking at the original resolution passed when Measure “C” was approved [Resolution No. 12917], has a question about the meaning of the wording used: “WHEREAS, a local parcel tax dedicated to public library services and facilities would augment the capacity of the City of San Rafael to provide quality library services to its residents, over and above the proportional amount of the City’s general fund currently allocated to the Library; and” Jim Schutz, City Manager Nadine Hade, Finance Director March 8, 2019 Page 3 They wonder whether “currently allocated” would refer to the fiscal year in which the measure was written and passed (2009-2010), or to the fiscal year in which the Council ratified the ordinance (2010-2011). In a brief response, the Deputy (now Assistant) City Attorney opined that the reference in the resolution should be interpreted to refer to the general fund allocation in 2009-2010. The request did not elaborate on why the Committee was asking this question, however, since this was asked in connection with the first reporting year of the Committee, it was perhaps considered appropriate for the Committee to have reviewed whether the initial tax revenues were indeed used to augment the current general fund allocation to the Library, as represented to the voters. Importantly, however, Mr. Dodd did not ask whether the cited language was meant to fix the measure of general plan allocations for Library services after the first tax year--effectively freezing the “current general fund allocation” throughout the life of the tax--and the Deputy City Attorney did not attempt to analyze or answer that question, which is the question before us now. ANALYSIS In analyzing this question, we have examined applicable law, as well as the Library Tax itself and the official representations made by the City regarding this tax, namely the staff reports and resolutions adopted to place the Library Tax on the 2010 and 2016 ballots, the actual ordinances adopted as Measure C and Measure D, and the Impartial Analysis included with the ballot materials for each measure. The provisions of San Rafael Municipal Code Chapter 3.36 added by Measure C do not contain any express limitation on the City’s discretion over the general fund, nor are there any references to the general fund or other sources of Library funding at all. The Chapter only provides that the tax proceeds “shall be deposited into a separate ‘library special services parcel tax’ account to be used exclusively locally for the library for the purposes set forth in this chapter.” The purposes set forth in Section 3.36.010 are to “staff, provide, and maintain hours of operation, services, equipment, and materials” and to “provided programs and materials for children, teens, adults, seniors, literacy learners and people with disabilities.” The finding in Resolution No. 12917 that “a local parcel tax dedicated to public library services and facilities would augment the capacity of the City of San Rafael to provide quality library services to its residents, over and above the proportional amount of the City’s general fund currently allocated to the Library” is also a finding made in the full ordinance included in the ballot measure that the voters passed as Measure C. However, the staff report for the resolution contains no reference to this language, nor does it indicate in any way that one of the effects of the measure would be that the City is obligated to allocate the same percentage of the general fund to the Library throughout the life of the tax. The same language is also present in Resolution No. 14070 which placed Measure D on the ballot, although notably it is not present in the full ordinance included with the ballot materials and Jim Schutz, City Manager Nadine Hade, Finance Director March 8, 2019 Page 4 passed by the voters as Measure D. Again, the staff report is silent as to the measure placing a limitation or condition on the City Council’s discretion over the general fund. However, in any city election, one of the most significant representations to the voters of the effect of a ballot measure is the Impartial Analysis prepared by the City Attorney. The Elections Code requires that, whenever a city measure qualifies to be placed on the ballot, the City Attorney must prepare an Impartial Analysis “showing the effect of the measure on the existing law and the operation of the measure.” (Elec. Code §9280.) Therefore, the Impartial Analysis prepared by the San Rafael City Attorney for both Measures C and D should have advised the voters of any legal effect the measures would have on the City Council’s discretion over the allocation of moneys from the general fund to the Library. The City Attorney’s Impartial Analysis for Measure C and his Impartial Analysis for Measure D are both silent as to any nexus between the proposed Library Tax and the general fund. Indeed, our office was aware at the time of these ballot measures of the “familiar principle of law that no legislative board, by normal legislative enactment, may divest itself or future boards of the power to enact legislation within its competence. [Citations omitted.]” City and County of San Francisco v. Patterson (1988) 202 Cal.App.3d 95, 105. The determination of the appropriate uses of the city’s general fund for current municipal services is one of the fundamental duties assigned to the discretion of a city council. Had either Measure C or Measure D purported to limit the San Rafael City Council’s discretion over San Rafael’s general fund, or had our office been aware when the measures were proposed, of an assertion that they were meant to tie the Council’s hands with respect to its use of the general fund, we would not have failed to advise the City Council of this principle. In contrast, in connection with San Anselmo’s Measure B, also on the June 2010 ballot, the desire to tie collection of the proposed library tax to the Town’s general fund allocations to its library was expressed when the measure was being considered. The Town Attorney for San Anselmo (who was at the same time the San Rafael City Attorney), advised the Town of his concern about binding the discretion of a future Council, and as a result, Measure B was drafted to contain an express provision concerning the nexus with the Town’s general fund. Although the measure did not purport to control the Town’s discretion over its general fund, it did tie the collection of the tax to the Town’s general fund allocations to the Town library: 8-7.04 Impact of Town Funding of the Library on the Tax. The express purpose of this tax is to augment funding currently provided by the Town of San Anselmo, and not to supplant or replace such funding. Therefore if, during the term of the tax set forth in Section 8-7.03, the Town should determine that conditions warrant a reduction in its annual funding of the Library, the tax will continue to be levied only if Town funding of the library remains above 90% (ninety percent) of the amount budgeted for 2008-2009, which is $420,000. If the Town Council adopts a budget that reduces funding below that amount, this Chapter will immediately become invalidated in its entirety and the tax will no longer be levied. Reflecting the presence of this provision in the ballot measure, the San Anselmo Town Attorney’s Impartial Analysis for Measure B stated, in pertinent part: Jim Schutz, City Manager Nadine Hade, Finance Director March 8, 2019 Page 5 The purpose of the tax would be to augment Library funding currently provided by the Town of San Anselmo, and not to replace such funding. Accordingly, if the Town were to reduce its annual funding of the Library, then the tax would continue only if the Town’s funding of the Library were to remain above 90% (ninety percent) of the amount budgeted for 2008-2009. That amount is $420,000. If the Town Council were to adopt a budget that reduced Library funding below that amount, then the tax would no longer be levied. Neither Measure C nor Measure D contain a provision similar to that in San Anselmo’s Measure B or expressly tie the Library Tax to the City’s use of its general fund. Moreover, the absence from any of the public documents, especially the Impartial Analyses, of any discussion about a binding nexus between the proposed Library Tax and the City’s discretion over its general fund, is another indication to us that such a nexus was never contemplated by the City Council in placing those measures on the ballot. CONCLUSION For the reasons set forth above, it is our opinion that a statement in the Library Tax findings about the Library Tax augmenting the proportional general fund allocation to the Library can be deemed to be at most, an expression of intention, not a binding constraint on the City Council’s discretion over the general fund or the City’s ability to collect the Library Tax.