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HomeMy WebLinkAboutG.15 - Special Sales Tax Measure PowerPoint Presentation (2147570.2)CONSIDERATION OF SPECIAL TRANSACTIONS AND USE TAX PRESENTED BY: ADRIAN GUERRA CITY ATTORNEY BACKGROUND •A transactions and use tax measure has previously been considered by the City Council and voters in 2024 and was not approved. •On March 10, 2026, the City Council considered a proposed general transactions and use tax measure for the November 3, 2026 election. •The proposed measure did not receive Council approval to move forward. •Staff is returning to receive direction regarding whether to pursue a special transactions and use tax measure. CURRENT SALES TAX RATE •State law maximum allowable rate: 10.25% •Remaining available rate authority: 2.50% •City authority available under State law: up to 2.00% •Proposal: 1.00% increase Current Combined Sales Tax Rate = 7.75% California State Sales Tax 6.00% San Bernardino County 0.25% City of Grand Terrace 1.00% Special District Taxes 0.50% Combined Total 7.75% POTENTIAL SPECIAL TAX MEASURE •Potential Tax Rate: 1.00% •Estimated Annual Revenue: Approximately $1 million annually •If directed to proceed: Staff would return with draft resolutions Staff would prepare proposed ordinance Ballot language and expenditure purposes would be identified for Council consideration GENERAL TAX SPECIAL TAX •Revenues may be used for any lawful governmental purpose •Revenues deposited into General Fund •Requires majority voter approval (50% + 1) •Revenues restricted to specific purposes identified in the measure  May not be used for unrestricted general governmental purposes •Must clearly identify the specific purposes for which the tax revenues may be used, which will be incorporated into the ballot measure •Requires two-thirds voter approval unless initiated by citizens •Citizen initiated proposal required simple majority voter approval (50% + 1) VOTING REQUIREMENTS City Council Procedures •Two -thirds vote of the total membership of the Council pursuant to California Government Code § 53724(b). •Four out of five City Councilmembers City Council Proposal •Requires two-thirds of the voters voting on the special tax measure •Article XIII C, section 2(d) of the California Constitution was added by Prop. 218 o A special tax imposed, extended or increased by a “local government” must be approved by a two-thirds vote Citizen Initiative Proposal •Requires simple majority voter approval (50% + 1) •City of Fresno v. Fresno Building Healthy Communities held that the plain language of Section 2(d) indicates the citizen initiative power was not intended to be treated the same as initiatives placed on the ballot by local governments. CITY COUNCIL NEXT STEPS If directed by the City Council: •Preparation of election resolutions •Preparation of ordinance and ballot materials •Return to City Council for formal consideration •Coordination with San Bernardino County Elections •Submission deadline: August 7, 2026 RECOMMENDATION Staff seeks City Council direction regarding whether to proceed with preparation of a proposed special transactions and use tax measure for the November 3, 2026 General Municipal Election QUESTIONS? Thank you!