Title
Report regarding a resolution approving a comprehensive plan to address long-term pension obligations. (Christina Crosby, Interim Director of Finance)
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RECOMMENDATION
Recommendation
It is recommended that the City Council adopt a resolution approving a comprehensive plan to address long-term pension obligations.
Body
BACKGROUND
In Fiscal Year 2017-18 the San Mateo County Civil Grand Jury issued a report, "Soaring Pension Costs - Time for Hard Choices." The report recommended that cities develop a financial plan to address rising pension costs. At a special City Council meeting on April 9, 2019, Finance Department staff presented a financial review of the City, including the escalating cost of pensions, and recommended options the City could take to begin addressing escalating pension costs.
DISCUSSION
Like other general law cities of its kind, the City of South San Francisco (City) obtains the majority of its funding through taxes to provide services to the community. The City's primary taxes are property tax, sales tax, and transient occupancy tax (TOT), all of which are accounted for in the City's General Fund. The General Fund serves as the City's primary operating fund, and as such, is the primary focus of the study session.
Major Revenues
Property Tax
Since 1978, the property tax framework has been guided by Proposition 13, which includes the following principal tenets:
1. Annual property tax assessment is limited to one percent (1%) of the assessed value (AV) of land and improvements.
2. Annual increase in assessed value is limited to no more than two percent (2%).
3. Allocation of the 1% property tax between public entities is largely static. In San Mateo County, on average, school districts receive 43 percent, the County receives 26 percent, and local municipalities receive 18 percent. In other words, for every dollar paid in property tax, local cities receive $0.18.
4. Property is reappraised to current full value immediately upon...
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