2022-06-21 CC Agenda Packet - PRESENTATION - ITEM D19 -Sales TaxCity of El Segundo
Consideration for a Tax Measure for the November Ballot
One-time Capital Needs:
Large Capital Projects
For example: The Plunge Rehab
➢ Recreation Park Needs Assessment
➢ Facilities Needs Assessment
Public Infrastructure Projects
Annual ongoing need of -$2M in street/sidewalk improvements &repairs
Recurring operational and maintenance needs
Recurring costs of Public Safety
Unfunded Technology needs: "$3M - $4M
Ensure fiscal sustainability
Ensure healthy reserves
Total unfunded fiscal need for the City over the next 20-30 years
$150M-$200M
$5M — $10M per year
Not factored into the above discussion:
Unfunded Labor negotiations
Future labor negotiations will need to be funded
Fiscal impact: unknown
QA\/ANI Ie
0
Sales Tax (local use and transaction tax)
Business License Tax (BLT)
in ■..■in
5
An additional tax levy on top of the 1% Bradley -Burns local sales tax
Authorized by CA Constitution Article XIII section 25.5(a)(6)
Requires 75% of governing body approval
Requires an affirmative vote by four members of City Council to place the
measure on the ballot
May be levied as a general tax (unrestricted)
Requires voter approval: 50% + 1
May be levied as a special tax (restricted for a specific use)
Requires voter approval: 66.666% (2/3rds approval)
Examples of restricted use: Capital & infrastructure, Parks, Public Safety
Can be in perpetuity or include a sunset provision
Can be levied in .125% increments ($1.5 million)
.25% local sales tax would generate about $3M per year to the City
.50% local sales tax would generate about $6M per year to the City
.75% local sales tax would generate about $9M per year to the City
ALLOCATION Current Rate (%)
State 6.00
Local
to City General Fund 1.00
to County for Transportation 0.25
Total State Rate 7.25
Voter -approved - LA County Tax
Proposition A 0.50
Proposition C 0.50
Measure R 0.50
Measure M 0.50
Measure H 0.25
Voter approved additional County sales tax 2.25
Total Sales Tax Assessed in the City of El
Segundo 9.5o
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Leave Measure Cunchanged — no actively assessed local sales tax; or
Direct staff to look into modifying Measure C and enact:
A general (unrestricted) or special (restricted) local sales tax
At what percent
0.25% will generate ^'$3M per year
b. 0.50% will generate ^'$6M per year
r 0.75% will generate ^'$9M per year
➢With a sunset date or no sunset date
Update Language in Municipal Code
Redefine business types and categories
Exclude old business models (circus, Wild West shows, etc.)
Add shared economy business types (virtual offices, shared rides, etc.)
Revision to base fee (currently at $111.30), revision to calculation for base square foot (5,000 sq.
ft. + $.25/sq. ft. thereafter), and revision calculation for base headcount (10 employees +
$128/employee thereafter)
Revision of Sales Tax and Penalty Credit
Eliminate current sales tax credit of 40%
New credit for business attraction
Valid for 1-3 years and then sunset
Requires an affirmative vote by four members of the
Council to place the measure on the ballot
Update current language in code that is outdated
Update the methodology used to calculate BLT
Revision to sales tax credit
Revision to base rate/calculation of square feet & head count
Possibly add small business credit
Potentially generate $1.5M-$2M per year ongoing
Wrap-up & Questions
9. -
MOL