Title
Report Regarding Options for Revenue Enhancement. (Rich Lee, Assistant City Manager & Wing-See Fox, Urban Futures, Inc.)
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BACKGROUND/DISCUSSION
The City's General Fund has a growing structural deficit for the foreseeable future due to expenditures growing at a faster pace than revenues. The current estimate of the structural deficit for the upcoming fiscal year is $14 million. While South San Francisco voters approved an amendment to the City's business license tax in November 2024, the projected additional revenue will not solely resolve the General Fund structural deficit. In order to avoid service level reductions, the City will need to consider additional revenue enhancement.
Revenue Needs and Considerations
To assist the City in evaluating its revenue enhancement options, the City retained the consulting team of Urban Futures, Inc. (UFI) and NBS. Over the past six weeks, the consulting team has worked with City staff to select and analyze four potential revenue enhancement options based on these key considerations:
* Adequacy & Certainty. Sustainable revenue generation of at least $14 million with low volatility and opportunity to grow with City operating expenses.
* Equity & Competitiveness. Appropriate distribution of tax burden and comparable tax rate to surrounding communities.
* Transparency & Voter Approval. Clear structure and likelihood of voter approval.
* Simplicity. Ease of administration and implementation.
Summary of Revenue Enhancement Options
Based on analysis in the attached presentation, the key details for each of the four selected revenue enhancement options are summarized below. The four options are presented in rank order based on how well each satisfies the key considerations listed above. The rates presented for each option are the estimated rates required to generate at least $14 million in the first year of implementation.
1. Transaction and Use Tax (TUT)
* 0.50% increase to current rate (would increase total rate t...
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