Pacifica City Council members received notification last week that the State of California is taking $1.4 million out of the city’s annual budget over the next two years due to the loss of the Educational Revenue Augmentation Fund (ERAF), which is commonly referred to as the property tax shift — the reallocation of taxes from counties, cities and special districts to school districts via the ERAF.
What was once a mainstay in the budget, will be no more, resulting in a shortfall of $700,000 in each of the next two years.
“The budget was balanced last year for the first time in 16 years, so this news is a blow,” said Mayor Len Stone. “It’s all hands to the pump to make some serious decisions on how we’re going to move ahead without this money. This affects everyone.”
At Thursday’s City Council study session, the Financing City Services Task Force presented options they developed to balance the city's budget, gain revenue and cut expenses in light of this bad financial news.
According to a report in the Pacifica Tribune, those revenue options include putting taxes on the ballot. Some of the options include a fire suppression assessment to gain $1 million a year, a revised utility users tax to generate $800,000 a year, a one-half cent sales tax on the Nov. 2013 ballot to collect $1 million a year, a potential $118 parcel tax to generate $1.2 million a year, or service reductions.
Expenditure options include contracting police services to save $1.7 million, after a start-up cost of about $500,000, $600,000 reductions in employee costs (subject to bargaining), police department efficiencies to be determined by the study that is underway and other reductions, which include the second half year of funding for library hours, PCT, the Resource Center and the Visitors Center.
In the Pacifica Tribune article, Ann Ritzma, Pacifica's director of administrative services, summarizes the impact to Pacifica over the loss of the ERAF funds:
"For the City of Pacifica, the excess ERAF has annually amounted to approximately $1.4 million per year. The county's distribution of excess ERAF each year is comprised of three components -- 50 percent of the current year excess, 50 percent of the prior year excess and a 10 percent set aside from three years prior. The distribution allows for adjustments between years and per state statute a final three year 'true up' before all funds are released. The city of Pacifica has just received the 2012 distribution of $1,529,392 (50 percent of 2012, 50 percent of 2011 and 10 percent of 2009). The city expected the reduction of excess ERAF in the preparation of the fiscal year 2012/13 budget and in the draft of the five-year financial plan. At this time, the city has been advised that the county will no longer encumber any new excess ERAF (2013). The city can expect the final distribution of prior excess ERAF being held by the county. The final distributions will occur in January 2014 -- $815,000 (50 percent of 2012 and 10 percent of 2010), January 2015 -- $128,700 (10 percent of 2011) and finally January 2016 -- $152,940 (10 percent of the 2012).”
Read the full article in the Pacifica Tribune here.
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