HomeMy WebLinkAboutFinance Committee 2025-01-22 Agenda PacketSAN RAFAEL CITY COUNCIL
FINANCE SUBCOMMITTEE MEETING
Wednesday, January 22, 2025 | 10:00 AM – 11:00 AM
THIRD FLOOR CONFERENCE ROOM
SAN RAFAEL CITY HALL
1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA
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AGENDA
1. Call to Order
2. Open Time for Public Expression
The public is welcome to address the Subcommittee at this time on matters not on
the agenda that are within its jurisdiction. Please be advised that pursuant to
Government Code Section 54954.2, the subcommittee is not permitted to discuss
or take action on any matter not on the agenda unless it determines that an
emergency exists, or that there is a need to take immediate action which arose
following posting of the agenda. Comments may be no longer than two minutes
and should be respectful to the community.
3. Voter-Approved Tax Oversight Committee Annual FY2023-24 Report (Finance)
The Subcommittee will receive a preview of a City Council agenda item related to the
FY2023-24 Annual Report submitted by the Voter-Approved Tax Oversight Committee.
This report is schedule for the City Council meeting of 2/3/25.
4. FY 2024-25 Mid-Year Budget Update (Finance)
The Subcommittee will receive a preview of the FY 2024-25 Mid-Year Budget Update
scheduled for the City Council meeting of 2/18/25.
5. Next Sub-Committee Meeting Planning – March 2025
Discuss possible alternative dates for the March Subcommittee meeting.
6. Adjournment
Any records relating to an agenda item, received by a majority or more of the Council less than 72
hours before the meeting, shall be available for inspection in the City Clerk’s Office, Room 209, 1400
Fifth Avenue, and placed with other agenda-related materials on the table in front of the Council
Chamber prior to the meeting. Sign Language interpreters and assistive listening devices may be
requested by calling (415) 485-3066 (voice), emailing Lindsay.lara@cityofsanrafael.org or using the
California Telecommunications Relay Service by dialing “711”, at least 72 hours in advance of the
meeting. Copies of documents are available in accessible formats upon request. Public transportation
is available through Golden Gate Transit, Line 22 or 23. Paratransit is available by calling
Whistlestop. Wheels at (415) 454-0964. To allow individuals with environmental illness or multiple
chemical sensitivity to attend the meeting/hearing, individuals are requested to refrain from
wearing scented products.
____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting: February 3, 2025
Disposition: Accepted report
Agenda Item No:
Meeting Date: February 3, 2025
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Finance
Prepared by: Shawn Plate
Finance Manager
City Manager’s Approval _______________
TOPIC: VOTER-APPROVED TAX OVERSIGHT
SUBJECT: VOTER-APPROVED TAX OVERSIGHT COMMITTEE ANNUAL REPORT FOR
FY2023-24
RECOMMENDATION:
Accept the Annual Report from the Voter-Approved Tax Oversight Committee.
BACKGROUND
The Voter-Approved Tax Oversight Committee was formed in September 2022 to consolidate
oversight of the City’s voter-approved tax measures into one five-member committee. The committee
provides independent oversight of all San Rafael voter-approved tax measures, Measures D, E, G,
and R, to ensure the funds have been expended in accordance with the authorized purposes and
prepares and submits to the City Council an annual report on the audited expenditures and revenues
from each tax measure from the previous fiscal year.
At the meeting of October 24, 2024, the Committee received unaudited financial information for each
of the voter-approved tax measures under its oversight purview. At their meeting of December 17,
2024, the Committee reviewed final, audited, FY2023-24 financial results for Measures D, E, G and
R, as well as provided supplemental information responsive to requests made by the Committee at
the October meeting. Note: There were no changes to the financial statements related to any of the
referenced funding sources between the unaudited data presented at the October 24th meeting and
the audited financial information presented at the meeting of December 17, 2024.
Furthermore, at their meeting of December 17th, the Committee considered a draft of its annual report
to the City Council, as required by the Committee’s charter, and approved the forwarding of their
annual report to the City Council via this agenda item (See Attachment 1).
DISCUSSION
During the course of the Committee’s review of the FY2023-24 financial information subject to the
purview of the Committee, a number of comments and questions arose in relation to the Committee’s
Charter for which the Committee is seeking clarification from the City Council. Specifically,
VOTER-APPROVED TAX OVERSIGHT COMMITTEE STAFF REPORT / Page: 2
1) Clarification of Committee responsibility related to General Tax measures (Measure E and
Measure R).
Resolution 15118, approved September 6, 2022, establishing the By-Laws for the current
Voter-Approved Tax Oversight Committee provides that the Committee is responsible for,
among other things, the review of collections and expenditures of the City’s Transaction and
Use Taxes (Measure E and Measure R). As these tax measures authorize the imposition of a
general tax, revenues and expenditures related to these measures are tracked within the City’s
General Fund.
While the Committee has reviewed the amount of revenues collected each year from the City’s
two voter-approved Transaction and Use Taxes, with the exception of the portion of Measure
E allocated each year, per City Council policy, for support of Essential Facilities, the Committee
notes that it does not have the ability to monitor and report on the expenditure of funds provided
by Measures E and R. These two funding sources support the General Fund budget and, as
such, the City does not track expenditure of funds collected through Measures E and R
separately from other General Fund revenue sources. In preparation for the Committee’s role
related to oversight of financial results for the 2024-25 fiscal year, the Committee is
contemplating scheduling a special meeting to conduct a workshop on the City’s General Fund
budget.
Questions:
• How can the Voter-Approved Tax Oversight Committee best fulfill the requirements of
its bylaws as it relates to review of expenditures supported by voter-approved General
Fund revenues?
• Should the Voter-Approved Tax Oversight Committee Bylaws be updated to clarify such
role, as intended by the City Council?
2) Clarification of Committee’s oversight role related to the City’s voter-approved Paramedic Tax
(Measure I).
The current Voter-Approved Tax Oversight Committee was established in 2022, via
Resolution 15118. This action effectively consolidated the role’s of three precursor oversight
bodies (Measure E, Measure D – Library, and Measure G – Cannabis), and added to the new
Committee oversight responsibilities related to Measure R. At the time of the establishment
of the current Voter-Approved Tax Oversight Committee there was no requirement for, nor
oversight role established for Measure I, the City’s voter-approved Paramedic Tax. While
this tax is not specifically referenced in the Committee Bylaws, Resolution 15118 as well as
the Committee bylaws state that the purpose of the Committee is to review the collection and
expenditure of voter-approved tax revenues collected under the authority of voter-approved
City tax measures
Question:
• Should the Voter-Approved Tax Oversight Committee have any oversight
responsibilities related to Measure I – Paramedic Tax?.
3) Potential role of existing Voter-Approved Oversight Committee related to recently approved
parcel tax for construction of new library and community center (Measure P).
VOTER-APPROVED TAX OVERSIGHT COMMITTEE STAFF REPORT / Page: 3
Resolution 15188, approved on September 16, 2022, which established the current Voter-Approved
Tax Oversight Committee, includes a provision whereby the City Council, “Appoints the Voter
Approved Tax Oversight Committee as the independent oversight committee over all other voter
approved City tax measures that may hereinafter be enacted, except where otherwise expressly
specified.” At the general election of November 5, 2024 San Rafael voters passed Measure P that
establishes a new voter-approved special tax for the purpose of construction of a new main library and
expanded Community Center,
Question:
• Does the City Council intend to have the existing Voter-Approved Tax Oversight
Committee fulfill the independent oversight responsibilities required by Ordinance
2044, establishing the Measure P parcel tax?
ANALYSIS
Measure D: Library Parcel Tax
In 2016, San Rafael voters renewed an annual parcel tax to fund opening hours and services for the
San Rafael Public Library. As a special-purpose tax, the revenues from Measure D can only be spent
for library services in San Rafael to maintain hours of operation and provide services, equipment,
programs and materials at the San Rafael Public Library. Measure D is scheduled to expire in 2027.
The audited financial statements for FY 2023-24 report Measure D revenues of $1,183,140,
expenditures of $1,164,340, and an ending fund balance of $852,746. The accumulation of fund
balance is a result of two primary factors over the life of the tax: vacant staff positions funded by the
Parcel Tax, and the growth of small amounts being underspent in various line items over the life of the
tax.
The audited capital set-aside fund balance was $100,338. This capital set-aside was earmarked for
new and improved library facilities as directed by the City Council as part of the previous Measure C,
and was capped at $500,000.
Measure G: Cannabis Business Tax
In 2018, San Rafael voters approved Measure G, a business excise tax on cannabis businesses.
Measure G allows for a tax on cannabis businesses operating in the City of up to 8% on gross receipts,
and taxes different types of businesses at different rates. Current rates can be found on the City’s
website. Measure G funds can be used for a variety of purposes, including police and fire services,
street repair and improvements, and enhancing community centers. Measure G does not have an
expiration date.
During FY 2023-24, total revenues reported in the Measure G Fund (216) were $237,420, including
$215,231 in tax revenues and $22,189 in interest earnings. Expenditures charged to Measure G for
the fiscal year totaled $117,023. The decrease in Measure G revenues from FY 2022-23 to FY 2023-
24 can be attributed to ongoing challenges in the cannabis market as well as the temporary decrease
in the cannabis tax rate from 4% to 2% for delivery non-storefront license types, effective January 1,
2023. For FY 2024-25, staff have budgeted for $225,000 in Cannabis Industry Tax revenues and
$170,386 in expenditures.
On January 27, 2023, the San Rafael City Council committed the majority of the existing fund balance
of $968,251 to support the pilot Specialized Assistance For Everyone (SAFE) Team, which began in
late FY 2022-23. The program has been initially supported using funds from the City’s opioid
VOTER-APPROVED TAX OVERSIGHT COMMITTEE STAFF REPORT / Page: 4
settlement and grant funds, after which cannabis tax revenues are being utilized. Staff plan to return
to Council at mid-year based on actual program needs and adjust transfers out to support the
program’s operations.
Measure E: Essential Facilities Transactions and Use Tax (0.75%)
San Rafael voters passed Measure E in 2013. Measure E is a three-quarter cent general purpose
transactions and use tax that supports essential facilities in San Rafael, including making critical
improvements to our public safety facilities in San Rafael. Construction of the Public Safety Center
was completed in 2020, and a variety of other facility construction and improvements are underway.
Measure E is scheduled to expire in 2034.
During FY 2023-24, a total of $14,361,735 of Measure E revenues collected by the City. The majority
of Measure E tax proceeds ($9,574,490) are considered discretionary general fund revenues. This
funding makes up a significant portion of the City’s General Fund revenues supporting general
government, public safety, community development and library/recreation programs and services.
The City does not track expenditures specific to Measure E revenues collected within the General
Fund.
For FY 2023-24, $4,787,245 in tax proceeds (one-third) represents funding earmarked for essential
facilities. A majority of the funds allocated for essential facilities are utilized to pay debt service for the
Public Safety Center, totaling $4,398,250. Since debt service payments are presently budgeted within
the General Fund, the remaining portion of Measure E funds earmarked for essentially facilities, net
of debt service payments, are in turn transferred to the Measure E – Essential Facilities Fund (420).
For FY 2023-24 a total of $384,188 was transferred to the Essential Facilities Fund.
The FY 2023-24 budget included $3,367,904 in Capital Project appropriations within the Essential
Facilities Fund. Capital expenditures recorded at year-end totaled $580,082, or $$2,787,822 below
budget. Capital expenditures included funding to complete renovations at Fire Stations 54 & 55 as well
as re-purposing of space within City Hall. The balance of funds are anticipated to be carried-over to
complete projects identified in the Phase 1 Essential Facilities Master Plan.
For FY 2024-25, staff have budgeted for total Measure E revenues of $14,520,000 based on
projections from HdL. A transfer of $353,500, net of debt service payments, is budgeted within the
Essential Facilities Fund for FY 2024-25. The FY 2024-25 Capital Budget includes appropriations of
$858,961 to support ongoing projects as well as a new project to upgrade the Public Safety Building
antennae and communications network.
In addition, per discussion at the Committee meeting of October 22nd, staff has include information
related to the debt service schedule for the bonds being supported through Measure E. For more
information related to the Measure E strategic plan approved by the City Council in 2015, see the
following link:
https://www.cityofsanrafael.org/documents/essential-facilities-strategic-plan-volume-1/
Measure R: Transactions and Use Tax (0.25%)
Measure R was passed in 2020 by San Rafael voters. Measure R is a one-quarter cent general
purpose transactions and use tax, often referred to as a local sales tax. Funds from this measure go
to the General Fund and support a variety of City operations, including public works, recreation and
library, administrative services, and public safety. Measure R is scheduled to expire in 2030.
VOTER-APPROVED TAX OVERSIGHT COMMITTEE STAFF REPORT / Page: 5
FY 2023-24 was the third full fiscal year of Measure R tax receipts, during which $4,713,640 of
revenues were received. For FY 2024-25, staff have budgeted for $4,840,000 in Measure R revenues
based on projections from the City’s sales tax consultants, HdL.
ATTACHMENTS:
1. Voter-Approved Tax Oversight Committee Annual Report (FY2023-24), dated December 17,
2024
2. Voter-Approved Tax Oversight Committee Bylaws
Voter Approved Tax Oversight Committee Bylaws
Page 1 of 2
VOTER APPROVED TAX OVERSIGHT COMMITTEE BYLAWS
ARTICLE I. NAME AND PURPOSE
Section 1.1. Name. The name of this body shall be the City of San Rafael Voter Approved
Tax Oversight Committee, hereinafter referred to as the “Committee.”
Section 1.2. Purpose. The Committee’s purpose is to review the collection and expenditure
of voter approved tax revenues collected under the authority of voter-approved City tax
measures and Resolution 15118 adopted by the San Rafael City Council on September 6 ,
2022.
Section 1.3. Committee Responsibility. The Committee’s authority is oversight only.
The responsibilities and duties of the Committee shall be limited to:
1.2 Review expenditures of Measure tax revenues to ensure the monies have been
expended in accordance with the authorized municipal purposes of each Measure.
To complete this review, the Committee shall:
1.2.1 Understand allowable expenses of each existing Measure’s tax funds (as
identified in the enacting Municipal Ordinance)
1.2.2 Review documentation from City Council and from City Council-appointed
advisory committees that pertain to the prioritization of use of each
Measure’s tax funds.
1.2.3 Review annual reports prepared by the City’s Finance Department that track
the receipt and spending of each Measure’s tax funds.
1.2.4 Prepare and submit to the City Council and the community an annual public
report on the expenditures of each Measure’s tax revenues for the previous
fiscal year.
1.2.5 Fulfill the final responsibilities of each Measure’s responsibilities at the
Measure’s termination, repeal or extension: Before submitting a final report:
Review and report on the final expenditures of each Measure during the
previous fiscal year, through its termination, to ensure that monies have
been expended consistent with the authorized purposes of the Measure.
The Committee shall not:
1. Have any budgetary decision authority, shall not allocate financial res ources, and shall
not make budget or service recommendations to the City Council.
2. Have authority to direct, nor shall it direct, City staff or officials.
Voter Approved Tax Oversight Committee Bylaws
Page 2 of 2
ARTICLE II. MEMBERSHIP
Section 2.1. Number of Members. The Voter Approved Tax Oversight Committee shall
consist of five (5) voting members.
Section 2.2. Eligibility. Members of the Committee shall be at last 18 years of age and
reside within the City limits.
Section 2.3. Appointment of Committee Members. Members shall be appointed by the
City Council. Appointments shall be published on the website for the City of San Rafael in
accordance with Government Code Section 54973, as amended from time to time .
Section 2.4. Terms of Appointment. Each member shall serve a minimum term of four (4)
years. An effort will be made to ensure that the terms are staggered, and not all of the
appointments expire in the same year.
Section 2.5. Term Limits. Members shall be limited to two (2) consecutive four -year terms.
Additional terms may be served if there is a break between terms.
Section 2.6. Absence and Removal. An unexcused absence from two (2) consecutive
Committee meetings without notification to the Staff Liaison will constitute an immediate
vacancy and shall be considered a voluntary resignation from the Committee. Previously
dismissed Committee members may be eligible for reappointment.
Section 2.7. Compensation. Members shall serve without compensation.
ARTICLE III. MEETINGS
Section 3.1. Time and date of Regular Meeting. Notification of meeting place, date, and
time shall be rendered to the public through posting on the City of San Rafael website.
