HERCULES -- The City Council this week unanimously declared a fiscal emergency, paving the way for a simple-majority tax measure on the ballot as early as June.
The council has been discussing a possible hike in the utility user tax, which goes directly into the general fund, by 2 points, from the current 6 percent to 8 percent of utility bills, to raise an additional $1 million a year. The city faces a $1.2 million deficit in the coming fiscal year, according to Finance Director Nickie Mastay.
The city's current $12.65 million general fund budget faced a similar deficit at the beginning of the fiscal year, which it made up by tapping into other funds: $300,000 from the Fiscal Neutrality Fund; $450,000 from the Vehicle Replacement Fund; and $450,000 from the Equipment/IT Fund. But there are no one-time sources of funds available for next fiscal year, officials say.
Absent a unanimous council declaration of a fiscal emergency, a general tax election requiring a majority vote would have had to be consolidated with the next general election involving City Council members; that would be November 2014. The restriction does not apply to special taxes that require a two-thirds majority.
Last June, following a council declaration of a fiscal emergency, voters approved an increase of one-half cent on the dollar in the city sales tax that is supposed to raise about $500,000 a year. Meanwhile, the city's retirement and medical benefit costs are rising, officials said.
The June sales tax hike got 70.8 percent yes-votes, which would have been enough even for a two-thirds-majority special tax. But officials predict a utility users tax hike would be a tougher sell to voters.
Councilman Bill Kelly warned that without additional revenue, Hercules might have to take "some very drastic steps," such as "dissolving the municipal corporation and getting the sheriff's department in here."
Police protection in the county's unincorporated areas is handled by the Contra Costa County sheriff.
Councilman Dan Romero shared Kelly's concerns.
"I don't want the city of Hercules to become the county," he said.
Councilwoman Myrna de Vera, noting that the city had made cuts in prior years, said, "What have we cut in the last year?"
Over the past two years, the city has cut staff by more than 40 percent and eliminated special events. Employees now pay the full employee contribution for retirement benefits. The administrative staff is down to nine people, and the police department is down to 20 officers.
De Vera said she was "struggling" with the notion of another tax hike.
"There's more cutting that we could do," de Vera said, but in the end, she joined the rest of the council in agreeing to put the issue to voters.
Hercules Police Association President Earnest Taylor and Dale Robbins, secretary-treasurer of Teamsters Local 315, which represents most of Hercules' non-police employees other than senior managers, urged the council to call the emergency.