TRANSACTION TAX (MEASURE A/SF) TOWN HALL MEETING
The City Council established Transaction Tax (Measure A/SF) Town Hall meetings as an additional avenue for the community to receive important Transaction Tax related information and provide a forum to ask questions to staff and provide feedback to City Councilmembers.
At the Town Hall Meeting, you will:
- Receive a presentation of the FY 2021-2022 Transaction Tax (Measure A/SF) Annual report of revenues and uses, and
- Have an opportunity to provide feedback to City Council regarding future uses for Transaction Tax (Measure A/SF) funds.
THREE WAYS TO PARTICIPATE:
9/29/22 Local Transaction Tax Town Hall Meeting
LOCAL TRANSACTION TAX
With the passage of Measure SF in November 2020, which increased the Local Transaction Tax from 0.50 percent to 0.75 percent, Measure “A” and Measure “SF” will be collectively referred to as Local Transaction Taxes.
2/28/22 Local Transaction Tax Town Hall Meeting
9/21/21 Local Transaction Tax Town Hall Meeting
3/22/21 Measure A Town Hall Meeting
9/14/20 Measure A Town Hall Meeting
2/18/20 Measure A Town Hall Meeting
FREQUENTLY ASKED QUESTIONS
After declaring a fiscal emergency in June 2013, 60% of San Fernando voters approved an additional 0.5% local Sales Tax (Measure A), resulting in a 10% total Sales Tax in San Fernando. Consequently, the City currently receives 1.5% of the 10% Transaction Tax. To put this into perspective, for every $1.00 in Sales Tax paid in San Fernando, the City receives 15 cents and state/County agencies receive the remaining 85 cents.
In November 2020, San Fernando voters approved an additional 1/4 cent Transaction and Use Tax (Measure “SF”) for a total Transaction and Use Tax of 3/4 cents. This increase Transaction and Use Tax went into effect in April 2021.
With the passage of Measure “SF,” both Measure “A” and Measure “SF” receipts will be combined and reported on jointly in the Local Transaction Tax Annual Report.
Since voter approval of the local Sales Tax (Measure A) in 2013, the City has used the Local Transaction Taxes to:
- Eliminate the General Fund deficit from ($5.7 million) in fiscal year 2013-2014 to a projected reserve of approximately $6 million as of June 30, 2021.
- Repay more than $1.3 million in debt to outside agencies and $1.6 million in internal debt to other City funds.
- Establish more than $2.7 million in financial reserves for vehicle replacements, facility improvements, and self-insurance costs.
- Improve public safety reliability and response time by replacing thirteen (13) police patrol vehicles, upgrading in-car computers, and modernizing the City’s radio communication system.
- Support infrastructure improvements and maintenance through the annual residential resurfacing program, reconstruction of Glenoaks Boulevard, sidewalk improvements, additional tree trimming, and replacing Public Works vehicles and equipment.
- Beautify Brand Boulevard to create a notable entrance into the City.
- Support a number of special events, including Dia de los Muertos 5k run, San Fernando Open Streets Festival, and JAM sessions.
- Construct facility improvements at Recreation Park, Las Palmas Park, Pioneer Park and Layne Park.
- Replace the City’s outdated network equipment and software to protect customer information and increase efficiency.
- Support the City’s COVID-19 emergency response efforts.
- Projected loss of sales tax revenue due to COVID-19 economic restrictions that closed many businesses in March through June 2020 did not materialize;
- The City’s significant “Building and Construction” industry has been deemed “essential” throughout the COVID-19 pandemic and was the primary driver of the City’s financial resilience in FY 2020-2021;
- Historically low interest rates resulted in increased spending on home improvement projects and supported strong vehicle sales locally;
- Increased online sales offset lost sales at brick and mortar retail outlets; and
- San Fernando voters approved Measure SF in November 2020 to increase the local Transaction Tax from 0.50 percent to 0.75 percent, which generated an additional $385,046 in FY 2020-2021.
The dramatic reduction was the result of a perfect storm as the City’s expenditures on operating services began to increase (e.g. the San Fernando Regional Pool and Los Angeles Fire Department contract) just as the onset of the “Great Recession” in 2008/2009 decreased tax revenues. Additionally, the State of California eliminated local redevelopment funding in 2012, which further reduced tax revenue the City had used to make infrastructure improvements and fund economic development programs.
To remain solvent, the City implemented layoffs and furloughs, eliminated vacant positions, reduced employee benefits, discontinued retiree medical benefits for new employees, reduced department budgets, and renegotiated the contract with Los Angeles Fire Department. In the ten (10) years following the Great Recession, the number of City employees was reduced from 160 in 2008 to 128 in 2017 (20% reduction). The number of Police Officers was reduced from 37 in 2008 to 31 in 2017 (16% reduction).
In FY 2012-2013, the City declared a fiscal emergency and held a special election on June 4, 2013 for the San Fernando electorate to vote on a temporary one-half (½) cent Transaction and Use Tax (“Tax”). The “City Services Emergency Protection Measure” (Measure A) was approved by sixty percent (60%) of voters. The increased Transaction Tax rate went into effect on October 1, 2013 with a sunset date of October 1, 2020. In November 2018, Measure A was extended indefinitely by voters.
Without the revenues generated by Measure A, the City would have struggled to stay out of bankruptcy. In 2013, the City’s auditors expressed their concern regarding the City’s ability to continue operate and carry out its financial commitments, obligations and objectives.
On November 3, 2020, the “Keep Sales Tax Local Measure” (Measure SF) was approved by fifty six percent (56%) of voters. Measure SF increased the local Transaction Tax from 0.50 percent to 0.75 percent. The increased Transaction Tax rate went into effect on April 1, 2021. Once fully implemented, Measure SF is expected to generate more than $1.1 million per year.
Tax revenues provided through Measure SF are inclusive of former Measure A funds; therefore, these Measures will be collectively referred to as Local Transaction Taxes throughout this Annual Report.
The planned use of Local Transaction Tax funds is discussed through the annual budget process and clearly identified in the City Manager’s Budget Message. All current and prior Annual Reports and Budget documents are posted on the City’s website (SFCITY.ORG/Financial-Documents) under the Financial Documents section of the Finance Department page.
Local Transaction Tax revenues are budgeted and recorded in a separate account in the City’s General Ledger. This allows the City staff to easily discern year-to-date receipts, update projections, and make budget adjustments, if necessary.
Lastly, City staff conducts quarterly meetings with a consultant to review Local Transaction Tax receipts in detail. This provides staff with valuable information on the health of the local economy, various business sectors, and individual companies by reviewing their quarterly sales tax reports. It also gives staff an opportunity to make the consultant aware of new businesses opening in the City so staff can ensure compliance with Local Transaction Tax collections.
The City’s General Fund has been in a deficit fund balance position since Fiscal Year 2010-2011. To address the deficit, the City took a number of steps to stabilize ongoing finances, including reducing programs and services, reducing training and professional development opportunities for City staff, implementing layoffs and furloughs, and eliminating vacant positions. Many of these actions were short-term fixes that were necessary to remain solvent, but were not sustainable in the long-term.
In addition to short-term actions identified above, the City has taken a number of longer-term actions since the passage of Measure A to address the City’s deficit and improve long-term financial stability, including:
- Renegotiated the Fire and Emergency Services contract with the Los Angeles Fire Department to reduce the City’s ongoing annual cost without reducing service (saved more than $500,000/year).
- Transferred operational and financial responsibility of the San Fernando Regional Pool to the County of Los Angeles through a lease of up to 55 years (saved more than $500,000/year).
- Reduced retiree health benefits to the statutory minimum for new employees to decrease the City’s retiree health (OPEB) liability (significant long-term savings).
- Sold surplus land and used the land sale proceeds to reduce the General Fund deficit (generated $1 million in proceeds).
- Developed a five-year General Fund projection to improve long-term decision making.
- Adopted a Development Agreement Ordinance to provide additional tools to increase economic development efforts and diversify the tax base.
- Re-established reserves for the Self-Insurance and Equipment Replacement Funds (more than $1.5 million in SIF reserve to protect against large lawsuits and $1.1 million set aside to fund future vehicle replacements).
- Updated user fees, development fees, cost allocation calculations to ensure an appropriate cost recovery for City services (more than $500,000/year in projected ongoing revenue).
- Updated the City’s long term financial planning policies, including budget, purchasing, debt management, grant management, investment, and reserve policies, with an emphasis on creating long term fiscal sustainability.