May 14 2011

Municipal Tax Review Committee News – May 11, 2011

A summary submitted by Michael Rancer, Chair of the 2011 Municipal Tax Review Committee

At its May 11 meeting, the Municipal Tax Review Committee began to fill in the outline of fiscal issues that will govern its parcel tax recommendations to the City Council.  Preliminary review of available revenues and funding commitments resulted in the following conclusions on topics previously discussed in these reports:


  • Other city revenue sources over the life of the next tax will grow slowly.  Increases in property tax revenue, the largest contributor of city funds, will depend on the sales and reappraisals of existing homes.  Historically property tax revenue has only grown on average by about 4% annually over most of the past decade, barely ahead of inflation.  The city’s second largest revenue source, the real estate transfer tax, is still recovering from the housing market crash and is well below the peaks of earlier years in the past decade.
  • On the expenditure side the city faces several challenges:
    • Inadequate funding for equipment replacement and capital maintenance of aging facilities;
    • Declining reserves to fund known future commitments and provide contingency for unexpected events;
    • Demands for new or possibly expanded programs including the municipal pool, operation of Blair Park, and future costs related to Oakland Public Library access
    • Continuing cost pressures from city employee benefit commitments combined with challenges to maintain current staffing levels.
  • Separate from the basic parcel tax issue is the likelihood of a significant increase in the city’s sewer tax to comply with EPA clean water mandates governing discharges into San Francisco Bay.

At the May 11 meeting, the committee began to review specific numbers for most of these items, including budget comparisons with similar cities.  The committee’s goal is to complete the review of revenue trends and cost estimates by the time of its next meeting on May 25, then to assemble them into a single fiscal projection for the next 5 to 8 years.  That projection will give the committee its first estimate of what the funding gap might be over the life of the next parcel tax.  The committee will then revise the projection to produce (1) a parcel tax recommendation for the Council and (2) a spending plan recommendation to conform to the proposed tax.  The committee is still on track to produce these recommendations by August.

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