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CC 2020-06-09_11c Proposed Revenue Measure 2020MEMORANDUM TO: CITY COUNCIL FROM: BILL ROBESON, ACTING CITY MANAGER SUBJECT: CONSIDERATION AND DIRECTION REGARDING A PROPOSED REVENUE MEASURE TO ADDRESS THE CITY’S FUTURE FUNDING NEEDS DATE: JUNE 9, 2020 SUMMARY OF ACTION: The City Council will consider information regarding the City’s future funding needs and provide direction on a proposed 1% (7.75% to 8.75%) local sales tax revenue measure. IMPACTS TO FINANCIAL AND PERSONNEL RESOURCES: There is no fiscal impact to consider this item other than staff time to prepare the report. If authorized by the City Council, and approved by voters, it is estimated that a proposed local sales tax measure would generate approximately $4,000,000 annually in general revenue for vital public safety, street and sidewalk maintenance, and critical other infrastructure needs. RECOMMENDATION: It is recommended the City Council consider a proposed revenue measure to address the City’s future funding needs, and, if desired, direct staff to prepare an action item to place a local transaction and use tax (“sales tax”) measure on the November 2020 ballot. REPORT IN BRIEF: The proposed sales tax revenue measure would generate approximately $4,000,000 annually and is intended to augment the existing Measure O-06 local sales tax fund created in 2006. Funding received from a new sales tax measure would allow the City to expand its increasingly underfunded Capital Improvement Projects (CIP) and public facility maintenance funds. This includes the City’s: - Annual Street Repairs Program - Annual Concrete (sidewalks) Repairs Program - Maintenance of Parks and Open Space (Fire Hazard and Fuel Suppression) - Maintenance of Storm Water and Drainage Systems - Maintenance of Public Facilities (roof and structural repairs) - Savings plan for a new Recreation/Childcare Center Item 11.c. - Page 1 CITY COUNCIL CONSIDERATION AND DIRECTION REGARDING A PROPOSED REVENUE MEASURE TO ADDRESS THE CITY’S FUTURE FUNDING NEEDS JUNE 9, 2020 PAGE 2 The potential additional funding of these annual projects would result in more miles of street rehabilitation, more sidewalk repairs and improved maintenance of City parks and open space, and more rehabilitation of aging storm drain piping. Revenue from the proposed measure could be used to fund the rapidly increasing costs of emergency medical response services and fire protection, as well as police patrols and crime prevention. In addition, revenue from the proposed sales tax measure may be used to provide small/locally owned business recovery support, such as low interest loans or financial support for marketing and advertising. This use of sales tax revenue would directly support our local businesses in their COVID-19 recovery efforts, which would, in turn, generate additional economic benefit for the entire Arroyo Grande community. Other factors that contribute to the need for the proposed sales tax revenue measure include: - The projection that the COVID-19 economic impacts will result in a 10% to 15% drop in sales tax that will decrease funding for the projects listed above; - Uncertainty in the economic recovery timeframe that is projected to last 2 to 4 years, or possibly longer; - The City of Arroyo Grande’s last sales tax increase was 13 years ago and has not kept pace with significant labor and material costs associated with capital projects; - In an effort to achieve comparable City services and maintain parity with other cities within the County of San Luis Obispo, an increase in sales tax would be necessary in Arroyo Grande as Atascadero, Grover Beach, Morro Bay, Paso Robles and San Luis Obispo are currently considering similar sales tax measures. (Recently, Atascadero’s City Council approved the placement of a sales tax ballot measure on the November ballot and Pismo Beach’s Council approved the placement of a ballot measure increasing their TOT/hotel tax.) - Cities within Monterey County and Santa Barbara County currently have a sales tax rate of at least 8.75% or higher. BACKGROUND: On May 28, 2019, the City Council discussed the City’s revenue in general and potential opportunities to increase revenue in the face of rising business costs. At that time, the staff report recognized the work of previous assessments of unfunded or severely underfunded needs for core City infrastructure, including pavement (roads and parking lots), sidewalks, drainage facilities, parks, and government buildings. (Attachment 1). These assessments indicated that the City needs to invest an additional $2.4 million annually to maintain facilities already owned by and currently serving the community. At the same meeting, it was also noted that an additional $2.4 million annual investment would still result in a decrease in the pavement condition index (PCI) over time and that Item 11.c. - Page 2 CITY COUNCIL CONSIDERATION AND DIRECTION REGARDING A PROPOSED REVENUE MEASURE TO ADDRESS THE CITY’S FUTURE FUNDING NEEDS JUNE 9, 2020 PAGE 3 an additional $1.16 million would be needed to keep the PCI at 70 in order to avoid significantly larger maintenance costs in the future. Together, these needs total over $3.5 million in unfunded annual infrastructure maintenance. Following discussion, the Council directed staff to seek more information about community surveys and the ballot measure process. Pursuant to State law, cities may spend public funds to conduct public opinion surveys prior to putting a measure on the ballot as long as the results are not used later to influence the voters after the measure is placed on the ballot. The purpose of a community survey is to assess quality of life and community satisfaction, determine issues of importance to the community, evaluate the City’s perceived financial situation, and evaluate community perspectives on service levels and delivery options, including a potential local revenue measure where local taxpayer dollars would be spent solely on local needs within the community. On August 13, 2019, staff presented the Council with proposals from three professional research firms who have extensive experience working with local governments similar to the City of Arroyo Grande and have had relevant experience conducting community surveys for agencies within the County of San Luis Obispo. The Council authorized the City Manager to select a professional research firm to conduct a statistically valid voter opinion survey of Arroyo Grande voters. On January 28, 2020, the Council received a presentation of the community survey results from True North Research (Attachment 2). The survey conducted by True North Research evaluated community interest in a local (City of Arroyo Grande) sales tax revenue measure. This type of voter-approved funding measure would not be subject to funds being appropriated by the County, State or other public jurisdictions, and all funds generated would remain entirely in Arroyo Grande for local use. It is projected that a 1% sales tax measure would result in approximately $4,000,000 of additional locally controlled revenue to the City of Arroyo Grande on an annual basis, which could not be taken by the State. The survey consisted of a statistically valid sample of residents (541 residents were surveyed) to objectively evaluate the viability of passing a local ballot measure and to understand voter’s preferences for the funds raised. The survey found that Arroyo Grande voters, at that time, have a high opinion of the quality of life in the City and that they value the services they receive from the City of Arroyo Grande. Together, according to the survey, these sentiments translated into “solid natural support (57%)” for establishing a one percent local sales tax to provide funding for general City services. In the survey, when presented with a list of services that could be funded by the sales tax measure, voters were most interested in using the money to: • Maintain local streets and repair potholes. • Repair and maintain public buildings and infrastructure including sidewalks, curbs, flood prevention infrastructure, and storm drains. Item 11.c. - Page 3 --- CITY COUNCIL CONSIDERATION AND DIRECTION REGARDING A PROPOSED REVENUE MEASURE TO ADDRESS THE CITY’S FUTURE FUNDING NEEDS JUNE 9, 2020 PAGE 4 • Maintain parks and recreation facilities including Soto Sports complex, courts, fields, playgrounds, and community centers. • Provide fire protection and emergency medical response services, including police patrols, drug and crime prevention, fire, emergency medical, and 9-1-1 emergency response. • Maintain street, sidewalk, and pothole maintenance. • Address impacts from homelessness. • Maintain parks, recreation, childcare, and senior programs. ANALYSIS OF ISSUES: Sales and Use Tax The sales tax rate in the City of Arroyo Grande is currently 7.75%. This includes the statewide sales tax rate of 7.25% plus an additional 0.5% transaction and use tax approved by the voters in 2006 (Measure O-06, discussed later in this report). Sales tax rates can vary from jurisdiction to jurisdiction based on what the voters in that jurisdiction have approved. In looking through the State website, sales tax rates in California vary from 7.25% to 10.5%. Each incorporated city in the County currently has a sales tax rate of 7.75% and the County has a rate of 7.25%. As noted above, Atascadero, Paso Robles, San Luis Obispo, Morro Bay, and Grover Beach are all considering putting an additional 1% sales tax measure on the ballot. Distribution of the Statewide 7.25% base sales tax is shown below in Figure 1 (the City’s Measure O-06 local transaction and use tax of 0.5% is not included as this tax goes directly to the City). Sales and use taxes are taxes imposed on the total retail price of any tangible personal property. As shown, only 1% of the Statewide base sales tax rate goes to city operations. Figure 1. Distribution of Statewide 7.25% Base Sales Tax Item 11.c. - Page 4 Purchase price $10.00 Sales Tax 7 .25% = 73¢ State general fun d 3.9378% = 39¢ """i/Counties realigned program s / 1 .5625% = 16¢ Counties & c ities Prop172 --~---A" 0 .5% = 5¢ -;-_ Counti es tra nsportation \ 0 .25%=3¢ C ity ( or county) general fund 1%= 10¢ Races effec:tive January 1, 2017 after the expiration of the 0.2596 Proposition 30 temporary rate. In addition to the base, statewide rate of 7.25 percent local voters may authorize additional "transactions ond use tax" rates. These additional rotes raise the taro/ effec:tive rate co as much as 9. 7596 in some locations. CITY COUNCIL CONSIDERATION AND DIRECTION REGARDING A PROPOSED REVENUE MEASURE TO ADDRESS THE CITY’S FUTURE FUNDING NEEDS JUNE 9, 2020 PAGE 5 Cities, counties, and countywide transportation agencies may impose additional sales tax rates to be added on to the “base” Statewide sales and use tax rate. The add-on rate is referred to as a “transactions and use tax” and is allocated to the jurisdiction where the taxed product is received or registered (as in the case of a motor vehicle purchase). For purposes of our discussion here, the proposed local sales tax measure would authorize an additional transaction and use tax for products that are received or registered within the City of Arroyo Grande. Measure O-06 In 2006, Arroyo Grande voters approved Measure O-06, which established a half-percent (0.5%) local transaction and use tax (“Measure O-06 local sales tax”) to meet City needs identified in the City’s long range financial plan for infrastructure improvements, including the street, drainage and creek systems; transportation projects; public safety needs; and facility upgrades to meet Americans with Disabilities Act (ADA) requirements. The Measure O-06 local sales tax generates approximately $2 million annually for the City and has been utilized mainly for capital improvements, with approximately 30% or $853,000 used for public safety, consistent with advisory input submitted by the voters in 2006. For tracking purposes, the Measure O-06 local sales tax revenues and expenditures are shown in a separate fund and are not included in the General Fund. Additionally, to ensure accountability and transparency, the measure included a provision requiring the City to publish and distribute an annual report to each household on the revenues and expenditures from the local sales tax proceeds, and a review and public hearing by the City Council every five (5) years to determine whether the sales tax is necessary to remain in effect. The local sales tax took effect in April 2007. Since that time, the City has published and distributed an Annual Report to each City household. The Annual Reports are posted on the City’s website and are available for public review at (http://www.arroyogrande.org/Archive.aspx?AMID=44). The first five-year review and public hearing occurred in 2012 and the second was held in 2017. Sales Tax Rates in California Attachment 3 is a listing of California Sales and Use Tax Rates by County and City produced by the California Department of Tax and Fee Administration. A review of sales tax rates for California cities and towns in this publication reveals that approximately 11.8% of cities have a sales tax rate at or below the current sales tax rate in Arroyo Grande while 88.3% of cities have a higher sales tax rate. An approximation is used since many municipalities in the State are currently implementing increases or are proposing an increase to their sales tax rate. Public Input, City Revenue Impacts, and Proposed Revenue Measure When considering whether to place a ballot measure before the voters, cities generally undertake public outreach and education prior to the Council making a decision on whether or not to move forward with a ballot measure. Following the presentation of the community survey results in January, staff began gathering information to present an Item 11.c. - Page 5 CITY COUNCIL CONSIDERATION AND DIRECTION REGARDING A PROPOSED REVENUE MEASURE TO ADDRESS THE CITY’S FUTURE FUNDING NEEDS JUNE 9, 2020 PAGE 6 effective public outreach/education effort for consideration by the Council. Unfortunately, as a result of the COVID-19 outbreak and Governor Newsom’s March 4, 2020 declaration of a state of emergency for California, a local emergency was also declared in the City of Arroyo Grande and the public outreach/education efforts were placed on hold. Many City residents and local businesses have been impacted by the public health emergency and subsequent shelter at home directives, and the City’s ability to generate tax revenue has also suffered significantly. As a result of the pandemic, at its meeting on April 14, 2020, the Council received and filed a report on the estimated fiscal impacts as a result of reduced revenue associated with the COVID-19 pandemic. The report focused on impacts to three of the City’s largest General Fund revenue sources including property tax, sales tax, and transient occupancy tax, as well as shortfalls in Recreation Services fees due to the temporary closure of the City’s recreation and childcare programs. At its meeting on April 28, 2020, the City Council reviewed and discussed implementation of short-term strategies to address the projected FY 2019-20 budget shortfall due to impacts from the COVID-19 pandemic. The projected budget deficit due to revenue shortfalls brought on by COVID-19 is approximately $1.2million. The Council approved moving forward with recommended short-term budget balancing strategies for FY 2019- 20 which included a hiring and travel chill, operational cost savings, and a reduction in the overall General Fund reserve. The “chill” or postponement of hiring, for at least the first quarter of the new fiscal year, a permanent City Manager ($32,000), 1 vacant position in Public Works ($20,200), 1 vacant position in Community Development ($23,100), and 1 vacant position in the Police Department postponed for one full year ($124,000) translates into a savings of $199,300. However, there are certain and apparent service level decreases that will result, such as a reduction in the frequency and amount of smaller street repairs such as potholes or smaller sidewalk repairs, and the inability to fill specialized police officer positions. While these aforementioned actions were meant to address the FY 2019-20 budget shortfall, it is anticipated that financial impacts will continue into the next few fiscal years as a result of COVID-19. This, in conjunction with previously identified funding needs, emphasizes the importance of identifying new sources of revenue for the City in order to maintain current levels of service and to ensure that maintenance of the City’s infrastructure is not deferred further. In addition, the additional sales tax revenue may be used to provide assistance to local businesses that have been negatively impacted by COVID-19. For instance, financial assistance may be provided for purposes of supplementing advertising and marketing costs for Arroyo Grande businesses. Additionally, local banks may be approached to assist in providing low-interest loans to businesses using funds supplied by the new sales tax revenue. Item 11.c. - Page 6 CITY COUNCIL CONSIDERATION AND DIRECTION REGARDING A PROPOSED REVENUE MEASURE TO ADDRESS THE CITY’S FUTURE FUNDING NEEDS JUNE 9, 2020 PAGE 7 With regard to additional public education, the City is limited in its efforts in this area once the Council takes action to place the measure on the ballot. However, staff believes that over the course of the past year, significant efforts have been made to educate the Council and public on the City’s budget and long-range funding needs. Once shelter at home restrictions have been lifted, it is anticipated that educational presentations to community groups and neighborhood meetings could take place to provide information on the City’s long-range funding needs. If the Council decides to move forward with a proposed sales tax revenue measure, the City would use the results of the survey and Council direction to develop clear, resonant ballot language that effectively communicates how measure funds will be used and how accountability will be provided. It should be noted that the Chamber has sent out a survey to Arroyo Grande businesses regarding a potential sales tax measure. Should the Council move forward with a measure, staff will bring back the results of the survey for Council consideration. Advantages of a Sales Tax Measure The local sales tax option has a number of advantages, including the following:  Because the tax is established by a vote of the local electorate, it cannot be taken by the State;  This consumer tax is also paid by those who visit the city and utilize the City’s services and infrastructure but do not otherwise contribute directly to maintaining those services and infrastructure;  Generates additional revenue to meet the City’s long-term city-wide infrastructure needs;  Avoid deferred maintenance costs that would occur due to delayed projects and more severe degradation of conditions (e.g., street/asphalt conditions spreading and deepening, necessitating costlier and more extensive repair measures);  The ability to significantly add to the amount of street miles repaired each year. The potential, for not only an annual major/heavily used arterial street (i.e. West Branch St.) repair but additional residential streets that could be added to the annual projects. Several residential streets within the City have severe asphalt condition degradation because of the limitation in funding which results in focusing funding on heavily used streets;  An increase in the amount of damaged and unsafe sidewalk that can be replaced. This allows for safe pedestrian travel and a reduction in the amount of trip and fall claims;  Sales tax revenue may be used to provide assistance to local businesses that have been impacted by COVID-19. Item 11.c. - Page 7 CITY COUNCIL CONSIDERATION AND DIRECTION REGARDING A PROPOSED REVENUE MEASURE TO ADDRESS THE CITY’S FUTURE FUNDING NEEDS JUNE 9, 2020 PAGE 8 Business Concerns Regarding Impact on Sales The amount of the proposed increase in the actual sales tax is minimal when it is compared to the cost of a product purchased; however, local businesses may be concerned regarding the impact on sales if the measure were to pass in Arroyo Grande and not pass in neighboring jurisdictions. This situation already exists in Santa Maria, though, which now charges a sales tax of 8.75% compared to the 7.75% in Arroyo Grande. According to the City of Santa Maria’s Economic Development Agency, Santa Maria’s recent sales tax rate increase did not cause a decrease in retail sales in the city. Alternatives Involved in Drafting a Local Sales Tax Measure If the City Council decides to move forward with a local sales tax measure, it will require decisions on the following key issues in order to draft the measure:  Amount of Increase As has been discussed during previous Council meetings regarding the City’s financial outlook, one option to address projected budget shortfalls is to ask voters to consider an additional one percent (1%) local transaction and use tax. A proposed transactions and use tax ordinance would levy an additional 1% sales tax on the sales price of tangible personal property sold at retail in the City, and generate approximately $4,000,000 in revenue.  Sunset Clause Such a clause would present some difficulties for the City of Arroyo Grande because the majority of future needs identified include major capital improvement projects. As a result, a sunset clause would limit the City’s ability to issue debt for capital projects based upon the new revenue if there is no assurance the revenue would continue beyond a designated sunset date. In addition, the financial issues facing the City for the foreseeable future are not expected to go away. Despite the ongoing best efforts of a dedicated Council and City leadership team, expenses are expected to continue to rise faster than revenue growth, creating a drastic structural deficit if left unaddressed. The additional revenue from this measure will be needed as much 10-15 years from now as it is needed for next fiscal year. There are a number of areas that the Council and staff have collectively worked very hard to make headway on, including significant payments over the past two fiscal years to reduce the City’s pension liability. But significant challenges remain. Therefore, it is recommended that the measure not include a sunset clause while including the same accountability measures that are in place for Measure O-06 funds.  Special Tax or General Tax If the revenue is earmarked for a specific, single purpose, the measure would constitute a special tax and would require a 2/3 vote for adoption. If the revenue is not earmarked for a specific, single purpose, then the measure would constitute Item 11.c. - Page 8 CITY COUNCIL CONSIDERATION AND DIRECTION REGARDING A PROPOSED REVENUE MEASURE TO ADDRESS THE CITY’S FUTURE FUNDING NEEDS JUNE 9, 2020 PAGE 9 a general tax and would require only a majority vote for approval. Although the Arroyo Grande City Council would have the discretion to decide how to allocate the revenues, the survey results indicate that voters are most interested in using the proceeds to fund public works and public safety. Since the City has an established Local Sales Tax fund which is tracked separately from the General Fund, it is recommended that funds resulting from a successful local sales tax measure be accounted for and tracked in this fund. Next Steps In order to place a tax measure on the November 3, 2020 ballot, it takes a 2/3 vote of the City Council (at least 4 members). It is recommended that the City Council consider this report and, if desired, direct staff to proceed in drafting a ballot measure and provide specific direction on the alternatives outlined above. Staff would then present the proposed measure to the City Council for consideration on July 14, 2020, for inclusion on the November 2020 ballot. If so directed, the following steps would be taken to place the measure on the November 2020 ballot: 1. July 14, 2020 - Adopt a Resolution placing a local transaction and use tax (“sales tax”) measure on the ballot. The deadline for submitting the resolution to the County Clerk is August 7, 2020. 2. July 14, 2020 - Introduce an Ordinance adding Chapter 3.23 to Title 3 of the Arroyo Grande Municipal Code related to a transactions and use tax (subject to voter approval) 3. July 28, 2020 – Adopt the Ordinance described in Step 2. If passed by the Council and the electorate, the tax would be effective no sooner than the first day of the first calendar quarter, commencing more than 110 days after the adoption of the ordinance. Therefore, the tax would be effective no sooner than April 1, 2021. At the time of writing this memorandum, staff is in discussions with a public affairs consulting firm that will potentially provide the following services if the Council agrees to move forward with a ballot measure: - Project management - Collateral material development - Graphic design services - Talking points and FAQ content - Web page build out for the measure - Mailer development/creation - Digital outreach / advertising execution Item 11.c. - Page 9 CITY COUNCIL CONSIDERATION AND DIRECTION REGARDING A PROPOSED REVENUE MEASURE TO ADDRESS THE CITY’S FUTURE FUNDING NEEDS JUNE 9, 2020 PAGE 10 ALTERNATIVES: The following alternatives are provided for the Council’s consideration: 1. Direct staff to proceed with development of a sales tax measure for consideration by the Council; 2. Do not direct staff to proceed with development of a sales tax measure; 3. Provide direction to staff. Attachments: 1. May 28, 2019 City Council Staff Report 2. Voter Opinion Survey Summary Report 3. California Sales and Use Tax Rates by County and City Item 11.c. - Page 10 MEMORANDUM TO: CITY COUNCIL FROM: JAMES A. BERGMAN, CITY MANAGER SUBJECT: DISCUSSION BY THE CITY COUNCIL RELATED TO REVENUE GENERATION DATE: MAY 28, 2019 SUMMARY OF ACTION: This is an opportunity for the City Council to have an open discussion and dialogue amongst its members and with staff and the community about significant revenue categories of the City. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: No impact to financial or personnel resources. RECOMMENDATION: Receive information about various revenue generating concepts and provide direction to staff. BACKGROUND: On March 12, 2019, Council Member George requested, and the Council concurred, that items be placed on a future agenda regarding Council priorities, as well as revenue generating ideas. At the last City Council meeting, the Council discussed Council priorities. This item is in response to the second request related to revenue generating ideas. This staff report follows the intention of the current budget that recognizes the work of previous assessments of unfunded or severely underfunded needs to core City infrastructure, including pavement (roads and parking lots), sidewalks/concrete, drainage facilities, parks, and government buildings. These studies indicate that the City needs to invest an additional $2.4 million annually to maintain facilities already owned by, and serving the community. It should be noted that this total still results in a decrease in the pavement condition index (PCI) over time and that an additional $1.16 million would be needed to keep the PCI at 70 in order to avoid larger maintenance costs in the future. Together these needs total over $3.5 million in unfunded annual infrastructure upkeep. Future debt service for the Brisco Interchange project will reduce available Measure O- 06 funding which primarily supports these capital improvement projects. ATTACHMENT 1 Item 11.c. - Page 11 CITY COUNCIL DISCUSSION BY THE CITY COUNCIL RELATED TO REVENUE GENERATION MAY 28, 2019 PAGE 2 ANALYSIS OF ISSUES: Focus This staff report focuses analysis on revenue from property tax, sales tax, business license fee and transient occupancy tax. This focus is used since cost recovery of fees is being addressed in the current budget. Additionally, economic development is an ongoing discussion that will mainly influence property tax, sales tax, and Transient Occupancy Tax by increasing taxable sales and not by raising the tax rate. However, this report also provides an indication of the relative amounts of development that would need to occur in order to meet the assumption of raising $4 million annually and lengthy discussion of this subject is expected. Supplemental Information Attachment 1 is a thorough and understandable primer on Municipal Revenues in California. Staff recommends that this document be read prior to the rest of this staff report. City of Arroyo Grande Specific Information The City is fortunate to have a diversified source of revenue to provide enhanced public services to its residents, businesses, and visitors. Figure 1 presents the major revenue categories and their share of the City’s revenue. Figure 1 General Fund Revenue Categories Property Taxes 29% Sales Tax 23% Transient Occupancy  Tax 6% Franchise Fees 4% Other Taxes 10% Licenses & Permits 3% Charges for Services 8% Other Revenue 3% Transfers 14% General Fund Revenue 2018‐19 Item 11.c. - Page 12 ---- CITY COUNCIL DISCUSSION BY THE CITY COUNCIL RELATED TO REVENUE GENERATION MAY 28, 2019 PAGE 3 Figure 2 presents the General Fund Revenue detail used to create the current budget and will be referenced frequently in this report. Figure 2 General Fund Revenue Detail Property Tax The following excerpt from Attachment 1 provides a basic introduction to property tax in California: FUND:         010  GENERAL FUND 2015‐16 2016‐17 ORIGINAL AMENDED 2017‐18 ORIGINAL AMENDED ACCOUNT       LINE ITEM ACTUAL ACTUAL BUDGET BUDGET ACTUAL (Unaudited) BUDGET BUDGET      BUDGET ANALYSIS TAXES 4001      Current Secured 4,339,742$    4,578,200$       4,716,400$      4,725,000$      4,819,065$      4,928,200$      4,987,700$       4002      Current Unsecured 106,530   108,785      109,000   109,000    108,604     109,000      109,000    4003      Prior Secured (9,166)   (5,672)     (10,000)    (10,000)     (11,015)      (10,000)   (10,000)     4004      Prior Unsecured 4,817    3,044   4,000    4,200     5,963      4,200   4,200     4005      Redemptions 200    268      ‐      300    385     300   300     4007      Property Tax in Li eu  of VLF 1,419,412    1,487,748   1,550,000    1,559,600     1,559,664      1,626,700   1,626,700     4008      Triple Flip ‐ Sales  Tax 711,993    4010      Transient Occupancy Tax 966,384   966,861      1,030,200    995,900    961,923     1,126,000   1,126,000     4011      Sales  & Use Tax 3,057,103    3,674,171   3,777,700    3,800,000     3,918,956      3,955,200   3,955,200     4012      Sales  Tax ‐Safety 147,864   148,026      145,000   145,000    145,097     153,600      153,600    4013      Property Transfer  Tax 127,985   110,778      103,000   103,000    151,509     110,000      120,000    4030      Franchise Taxes 613,715   610,820      612,000   612,000    609,182     624,200      624,200    4050      Business License Tax 86,947      93,544    94,000     94,000  87,649   95,000    95,000         Total 11,573,526    11,776,573   12,131,300    12,138,000  12,356,981   12,722,400    12,791,900      GENERAL FUND REVENUE DETAIL 2017‐18 2018‐19 Item 11.c. - Page 13 I How Property Taxes Are Calculated in California The property tax is imposed on "real property" (land and permanently attached improvements such as bui ldings) and tangible personal property (movable pro pe rty su ch as boats , ai rcraft and business equipment). The maximum tax rate permitted on real property for general purposes is one percent of the property's assessed value plus voter approved rates to fund indebtedness (general obligation bonds , requiring two- thirds voter approval). The tax rate is app lied to the assessed va lue (AV) of the property. The assessed va lue of rea l property is the ''full cash value" of the property in 1975-76 or at change of ownership , whichever is more recent , adjusted annually by the change in the Consumer Price Index (CPI), not to exceed an annual increase of two percent. The value of new construction is additional. If a property changes hands , then the assessed value becomes the full cash value upon change in ownership . If a property's market value falls below its factored base year value , it may be temporarily reassessed to its lower actual value but in future years may be reassessed at the lesser of its actual value or its factored base year va lue . This can result in increases of more than two percent as a property's actual value returns to its earlier va lue , as when the housing market rebounds from a slump . CITY COUNCIL DISCUSSION BY THE CITY COUNCIL RELATED TO REVENUE GENERATION MAY 28, 2019 PAGE 4 Figure 2 (Lines 4001-4005)1 represents the City’s share of property tax paid by owners of real property within the City and is estimated to be $5,091,200. For perspective, the FY 2019-20 General Fund budget allocation for the Police Department is $6,578,500 ($6,455,700 excluding COPS grant). There are 7,020 parcels currently in the City with a total net assessed value of over $2.9 billion. The base rate of property tax collected by the County is over $29 million. Figure 3 shows the property tax distribution to public entities within the County from a property in the City with an assessed value of $510,000. [Note: Line 0001 refers to the County General Fund]. Figure 3 also indicates that only 17.2% of property tax revenues are allocated to the City’s General Fund. Figure 3 Distribution of property taxes for a property in the City of Arroyo Grande with an assessed value of $510,000. Of $5,100 in property tax, $878.59 goes to the City of Arroyo Grande. 1 Account 4007 (Property Tax in Lieu of Vehicle License Fee) is a share of property tax allocated to the City as compensation for Vehicle License Fee (VLF) revenues previously allocated to cities and counties by the State. Essentially, the State significantly reduced a fee Cities previously received based upon automobile ownership and substituted an additional share of property tax from State schools. This tax allocation cannot be altered. Item 11.c. - Page 14 0001 0007 0026 0227 0473 06 43 0647 0654 0837 1253 1303 1308 0115 COU NTY OF SA LUI S O BISPO RSCAL YEAA 2017/2018 POST RA TRAALLOCATION ACTORS TAX RA TE AREA 001-000 GENERAL FUt 0 AIR POLLUTION CNTRL COUNTY LIBRARY ARROYO GRANDE CITY PORT SAN LUIS HARBOR SLO CO FLOOD CONTROL SLO CO FCZ WCO (NPCI) FLOOD CONTROL ZONE 3 ARROYO GRANDE CEMETERY LUCIA MAA U !FIFED SLO CO CO COLLEGE CO SCHOOL SERVICE EDUCATIONAL RE\1:NUE AUGto ENTATION FU 0 STATE WATER PROJECT BONO LOPEZ DAM RB ED 80 LUCIAMAA 97 LUCIAMAA 04 LUCIAMAA 16 CUESTA2014 PO TE RA F FACTOR 21.4 9535 0.05985 1.607 16 17.22 689 1.1505 1 O.i2953 0.24 665 0.3487 1 0.11 370 35 .30632 6.20083 3.67 464 12.33986 100.00000 TRA AUOCATEO TAXR EVE NU 5.100.10 I 1,096 .27 3.05 81.97 878.59 58.68 11 .71 12 .58 17.78 5.80 1,800.66 316.25 187 .41 629.35 5,100.10 20.38 37 .32 83 .32 12 0.34 214 .18 98 .16 TOT .Al.. TAX BILL AMOU T 5,673 .80 ====:::::::::::::::::::::::= ALLOCATION OF 11-£ BASIC 1% °"'X CITY COUNCIL DISCUSSION BY THE CITY COUNCIL RELATED TO REVENUE GENERATION MAY 28, 2019 PAGE 5 Due to the variation of assessed values of property, property tax paid per parcel varies widely. Figure 4 indicates the average annual and monthly property tax allocation to the City as well as the minimum paid and the maximum paid. Figure 5 indicates the distribution of annual property tax allocation per parcel. Figure 4 Information regarding property tax allocation to the City of Arroyo Grande. Figure 5 Distribution of payments of the City's portion of annual property tax. As noted in Attachment 1, property taxes may only be increased with a two-thirds vote to fund a general obligation bond. A recent and local example of a property tax increase was in 2014 in the City of Grover Beach. The Measure K ballot question was: GROVER BEACH STREET REHABILITATION; SAFETY IMPROVEMENT BOND MEASURE: To rehabilitate/resurface deteriorating residential and major streets to improve drivability; maintain emergency response times; Yearly Monthly Mean $765.51 $63.79 Median $646.01 $53.83 Mode $165.88 $13.82 Minimum $0.00 $0.00 Maximum $28,510.50 $2,375.88 Property Tax Allocation to AG/ Parcel   Item 11.c. - Page 15 Distribution of Parcels and Annual Property Tax Allocation to AG 1400 1200 1000 800 600 400 200 0 I I I I ■ I ■ $-$50 $100 $300 $500 $700 $800 $900 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $3,000 More CITY COUNCIL DISCUSSION BY THE CITY COUNCIL RELATED TO REVENUE GENERATION MAY 28, 2019 PAGE 6 enhance safety for pedestrians, bicyclists, drivers, neighborhood school crosswalks; and promote economic/job growth; shall the City incrementally issue up to $48,000,000 of bonds at tax-exempt interest rates, requiring funds go directly into the Street Construction Designated Fund with all funds used exclusively for Grover Beach streets; subject to independent audits/citizens’ oversight committee? The average annual assessment over the life of the bonds in Grover Beach was estimated to be $77.66 per $100,000 of assessed valuation (not current market value) ending in 2054. Measure K was passed with the supermajority needed of 68.02% to 31.98%. Since the passing of Measure K, Grover Beach has completed significant street improvements. In essence, Grover Beach was able to raise $1.2 million per year for 40 years. Transient Occupancy Tax The Transient Occupancy Tax (TOT) is a tax imposed on transient guests for the privilege of occupancy in any hotel, inn, motel or other commercial lodging for sleeping purposes for a period of thirty (30) consecutive calendar days or less. These taxes are collected by the lodging operator and then forwarded to the City on a monthly basis. The TOT rate is 10% and is unrestricted revenue and for general governmental purposes, including community improvements, as determined by the City Council from time to time. These improvements greatly contribute to our City's desirability and encourage future tourism in our community. Figure 2 (line 4010) represents the TOT to be paid by lodging guests which is estimated to be $1,126,000. For perspective, the FY 2019-20 General Fund budget allocation for the Legislative and Information Services Department is $1,087,400. A recent and local example of a TOT increase was in 2018 in the City of Grover Beach. The Measure L-18 ballot question was: To provide funding for maintaining fire and police services, repairing streets, maintaining parks, and other general city services; shall the City of Grover Beach adopt an ordinance amending an ordinance increasing the Transient Occupancy Tax rate charged for hotels and other visitor-serving accommodations from 10% to 12%, providing $70,000 annually in unrestricted funding with all funds staying in Grover Beach? Measure L-18 passed 76.54% to 23.46%. Item 11.c. - Page 16 CITY COUNCIL DISCUSSION BY THE CITY COUNCIL RELATED TO REVENUE GENERATION MAY 28, 2019 PAGE 7 Sales and Use Tax Sales and use taxes are taxes imposed on the total retail price of any tangible personal property. A portion of the tax is a State tax and a portion is locally imposed. The City receives 1% of the 7.25% sales tax plus 0.5% of the transaction and use tax from Measure O-06 (discussed later in this report). Distribution of sales and use taxes is shown in Figure 6. Figure 6 Distribution of Sales and Use Tax Figure 2 (line 4011) represents the City’s portion of Sales and Use tax to be paid by consumers purchasing taxable goods and is estimated to be $3,955,200. For perspective, the FY 2019-20 General Fund budget allocation for the Five Cities Fire Authority and the Community Development Department totals $3,872,961. City of Arroyo Grande Specific Information (Sales Tax) There are 1,777 businesses in the City, of which 899 collect sales and use taxes from consumers. 11 businesses collect 50% of the sales tax; 25 businesses collect 66% of sales tax; 37 businesses collect 75% of sales tax revenue; and 100 businesses collect 93% of all sales tax revenue. The remaining 799 businesses that sell taxable goods collect 7% of sales tax. This leaves 878 businesses that do not collect sales tax. Measure O-06 Cities, counties and countywide transportation agencies may impose an additional sales tax rates to be added on to the “base” Statewide sales and use tax rate. The add-on rates are actually “transactions and use taxes” and are allocated to the jurisdiction where the taxed product is received or registered (as in the case of a motor vehicle purchase). Item 11.c. - Page 17 Purchase price $10.00 State gene ral fun d 3 .9378% = 39¢ "'i/Counti es realig ned progr ams / 1 .562 5%= 16¢ Counties & c ities Pro p1 72 0 .5% = 5¢ Counties t ransportati on 0 .25%= 3¢ City (or cou nty) genera l fund 1% = 10¢ Rates effective January 1, 2017 after the expiration of the 0.25% Proposition 30 temporary rate. In addition to the ba se, statewide rate of 7.25 percent, focal voters may authorize additional "transactions and us e tax" rates. These additional rates raise the total eftec-ti11e ra re to as muc-h as 9.75'¼ in some loca tions.. CITY COUNCIL DISCUSSION BY THE CITY COUNCIL RELATED TO REVENUE GENERATION MAY 28, 2019 PAGE 8 The voters of the City of Arroyo Grande passed a 1/2 cent Transaction and Use Tax in 2006. This tax generates approximately $2.3 million annually that has been used for various improvements consistent with advisory input submitted by the voters. A review of sales tax rates for California cities reveal that 34.8% of cities (169) have a sales tax rate at or below the current sales tax rate in Arroyo Grande while 65.2% are higher (316). This data has been mapped and is included as Attachment 2. Business License (Tax) Fee The current Business License fee (Tax) is $34 per business plus $5 per employee annually. There are also a series of special rates for select businesses (see Attachment 3). As stated in the Municipal Code, the purpose of the Business License Fees is enacted solely to raise revenue for general municipal purposes and they are not intended for regulations. Figure 2 (Line 4050) estimates that the City will receive $95,000 annually in Business License revenue. This equates to an average license fee of $61. A recent and local example of a business license (tax) increase was in 2018 in the City of Grover Beach. The Measure M-18 ballot question was: To provide funding for maintaining fire and police services, repairing streets, maintaining parks, and other general city services; shall the City of Grover Beach adopt an ordinance amending the annual Business Tax Certificate rate from $55 to a range of $60 to $950 based on building square footage and a separate flat rate of $60 for businesses located outside Grover Beach, providing $90,000 annually in unrestricted funding with all funds staying in Grover Beach? Measure M-18 passed 60.47% to 39.53% Economic Development Efforts Economic development activities will be a key component of increasing General Fund Revenue by increasing taxable sales and not by raising the tax rate. However, relying on economic development alone may be difficult due to the relative amounts of development that would need to occur in order to meet the assumption of raising $4 million annually. Figure 7 lists hypothetical individual development needed to achieve $4 million annually. Development needed to raise $4 million per year  Number of new hotels  (100 rooms each); or 12  Number of Five Cities Centers; or 4  Number of new car dealers 10  Figure 7 Scale of economic development needed for a $4 million goal. Item 11.c. - Page 18 CITY COUNCIL DISCUSSION BY THE CITY COUNCIL RELATED TO REVENUE GENERATION MAY 28, 2019 PAGE 9 ADVANTAGES: This item will allow the Council to openly discuss and give direction related to future revenue enhancement activities. DISADVANTAGES: No disadvantages identified. ALTERNATIVES: The following alternatives are provided for the Council’s consideration: 1. Receive and file the report and provide direction to staff. ENVIRONMENTAL REVIEW: In accordance with the California Environmental Quality Act (CEQA) and the State CEQA Guidelines, it has been determined that this item is not subject to CEQA Per Section 15061(b)(3) of the Guidelines, regarding the common sense rule that where it can be seen with certainty that there is no possibility of a significant effect on the environment, an activity is not subject to CEQA. PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted in accordance with Government Code Section 54954.2. ATTACHMENTS: 1. Understanding the Basics of Municipal Revenues in California: Cities, Counties and Special Districts 2. Map – Statewide Sales Tax by City 3. City of Arroyo Grande Business License Fee fact sheet Item 11.c. - Page 19 Understanding the Basics of Municipal Revenues in California: Cities, Counties and Special Districts 2016 Update ATTACHMENT 1 Item 11.c. - Page 20 IDII INSTITUTE FOR ~ LOCAL GOVERNMENTSM Promoting Good Government at the Local Level Table of Contents Overview............................................................................ 2 City Revenues In California ................................................ 4 County Revenues In California .......................................... 5 Special District Revenues In California .............................. 6 The Players: The State Legislature, Local Governments And The Voters ............................................ 7 Taxes .................................................................................. 8 Property Taxes ................................................................. 10 Sales And Use Taxes ......................................................... 12 Service Charges, Assessments, And Fees ......................... 15 Revenues From Other Government Agencies .................. 17 Rent For Use Of Public Property ...................................... 18 Fines, Forfeitures And Penalties ....................................... 18 Other Revenues ............................................................... 19 Acknowledgements ......................................................... 20 Item 11.c. - Page 21 OVERVIEW Each one of California's 39 million residents lives within the boundaries of one of the state's 58 counties. Nearly 33 million people also live in one of California’s 482 cities.i Californians are also served by 2,156 independent special districts. Counties, cities and special districts provide a vast array of municipal services to residents and businesses. These services include public safety (police, fire and emergency services), parks and recreation, roads, flood protection, sewers, water, electricity, refuse disposal, recycling and other utilities. Counties have an additional role as a provider for many state-mandated services, such as foster care, public health care, jails, criminal justice and elections.ii These municipal local governments rely on a variety of revenues to pay for the services and facilities they provide. The amount and composition of revenues: • Differ between cities, counties and special districts largely because of differences in responsibilities; and • Vary among cities, among counties and among special districts depending in part on differences in governance responsibilities. There is a complex web of legal rules for collecting and using the variety of revenues available to municipal governments in California. These rules derive from the state constitution, state statute and court cases further interpreting those laws. This guide provides an overview of the sources of county, city and special district revenues in California. It is an introduction to a complex topic. You can find further information in the resources listed on the last page. How To Use This Information These materials are not technical or legal advice. You should consult technical experts, attorneys and/or relevant regulatory authorities for up-to-date information and advice on specific situations. Item 11.c. - Page 22 CITY REVENUES IN CALIFORNIA Incorporated cities (including those that refer to themselves as “towns”) are responsible for a broad array of essential frontline services tailored to the needs of their communities. These include: • Law enforcement and crime prevention, • Fire suppression and prevention, natural disaster planning and response, emergency medical response and transport, • Land use planning and zoning, building safety, • Local parks and open spaces, recreation, • Water supply, treatment and delivery, • Sewage collection, treatment and disposal, • Storm water collection and drainage, • Solid waste collection, recycling and disposal, • Local streets, sidewalks, bikeways, street lighting and traffic controls, and • Public transit. Cities that are responsible for providing all or most of these functions are called “full service” - the services can be provided in-house or contracted through a private entity or another public agency. In other cities, some of these functions are the financial responsibility of other local agencies such as the county or special districts. For example, in about thirty percent of California cities, a special district provides and funds fire services. In sixty percent, library services are provided and funded by another public agency such as the county or a special district. The mix of service responsibilities and local choice regarding service levels affects the amount and composition of revenues of each city. Item 11.c. - Page 23 California City Revenues Not Restricted 36% Property Tax 14% L BusnlicTax 2% Uti li ty User Ta x 3% -Tra nsOccTax 2% Other Tax 3% Franchises 2% --•--------~State&Fed <1% Ot her 3% Licenses , Pe rm its <1% Fin es , Fo rfeitu res 1 % Be ne fi t Assessment s 2 % Speci a l Taxes 3% e Taxes e Fees e State/Federa l A id e other Investments , Re nts 1% State G rant s 4 % Fe de ra l G rant s 5 % Th ia is a statew ide mash-up of city revenues. In divid ual ci t ies vary. Source: Aut hor's comput at ions from data from California St at e Con trol ler2014-15. Does not incl ude t he City/County of San Francisco . COUNTY REVENUES IN CALIFORNIA California counties are responsible for three general areas of municipal services: 1) delegated state and federal programs, 2) countywide public services and 3) essential frontline services for residents not receiving those services from a city or special district, often in unincorporated areas (outside city boundaries). In unincorporated areas, counties provide the essential frontline services that cities provide that are not provided by a special district. These can include police protection (through a county sheriff), roads, planning and building safety. Counties also provide public services to all county residents, whether they live in or outside of cities. These countywide functions include: • Public assistance (notably welfare programs and aid to the indigent), • Public health services (including mental health and drug/alcohol services), • Local elections, • Local corrections, detention and probation facilities and programs (including juvenile detention), and • Property tax collection and allocation for all local agencies, including school districts. Funding from the federal and state government, primarily for health and human services, is the largest source of county revenues. Property taxes and sales and use taxes are the primary funding sources for many county services that do not have a dedicated state or federal funding source. General and Functional Revenues Municipal revenues may be viewed as falling into two broad categories: general revenues and functional revenues. General revenues can be used for any legitimate public purpose. General purpose taxes, especially property and sales taxes, account for most general city revenues statewide. Functional revenues are restricted by law to a particular use. These include funds derived from fees or rates that the local agency charges for public services, including municipal utilities such as water, sewer, and garbage collection, airports, marinas, harbors and water ports. Functional revenues also include most state or federal grants as they are usually restricted for particular programs. Item 11.c. - Page 24 California County Revenues Lice nse Sa les Pe rmits 1 ° Tax 1 % Property Tax Oth e r 22 % 1 Taxe s 4 % State Grants-i n- Aid 32% Fines , Fo rfe itures 2 % Inte rest, Re nts 1% Oth e r2% e Taxes e Fees e State/Federa l Aid e other Source: Au t hor's computations from dat a from Ca li fo rn ia St ate Contro ll er2014-15 . Includes t he County/City of San Francisco . SPECIAL DISTRICT REVENUES IN CALIFORNIA Most special districts provide one or a few municipal services to a particular geographic area. These include both enterprise and non- enterprise services. Enterprise services are funded primarily through charging a fee for service. For example, water and irrigation districts charge utility rates and fees from consumers of those services. Non- enterprise services generally do not lend themselves to fees and are primarily funded by property taxes, with relatively small amounts of fee and state and federal grant revenue. Library and fire protection services are examples of non-enterprise services. Other districts are multifunction, providing a number of municipal services. Community services districts (CSDs) can provide as many as 32 different types of services, approximating the scope of some cities. Multifunction districts have both enterprise and non-enterprise elements and may, like cities or counties, use an array of different revenue sources. Types of Special Districts • Air Quality Management / Air Pollution Districts • Airport Districts • Cemetery Districts • Community Services Districts • Flood/Drainage Districts • Fire Districts • Harbor Districts • Healthcare Districts • Irrigation Districts • Library Districts • Memorial Districts • Municipal / Resort Improvement Districts • Open Space Districts • Parks and Recreation Districts • Police Protection / Ambulance Districts • Public Utility Districts • Reclamation Districts • Resource Conservation Districts • Sanitary Districts • Waste Management Districts • Water Districts Item 11.c. - Page 25 California Special District Revenues Typical District (fire) Providing Non-Enterprise Services Licenses , Pe rm its <1% Federa l Gran ts <1% ---- State Grants <1% e Tax es e Fees California Special District Revenues Typical District (water) Providing Enterprise Services Propert y Taxes I sessments 2 % ther Re venues <1% e Taxes e Fees Inte rest , Re nts <1% e State/Federa l Aid e other e Sta t e/Fede ra l Aid e other Source: Aut hor's comput at ions from dat a from Ca li forn ia Stat e Con t ro ll er 2014-15 . Sou rce : Author's comput ations f rom data from Ca l ifornia St at e Cont roller 2014-15. THE STATE LEGISLATURE, LOCAL GOVERNMENTS AND THE VOTERS The options available to local officials in governing, managing their finances and raising revenues to provide services needed by their communities are limited. Voters have placed restrictions as well as protections in the state constitution. The state’s voters and the California Legislature have acted in various ways, to support and provide, and to limit and withdraw financial powers and resources from cities, counties and special districts. Some of the most significant limitations on the local revenue-raising include: • Property taxes may not be increased except with a two-thirds vote to fund a general obligation bond. • The allocation of local property tax among a county, and cities, special districts and school districts within each county is controlled by the Legislature. • Voter approval is required prior to enacting, increasing or extending any type of local tax. • Assessments to pay for public facilities that benefit real property require property owner approval. • Fees for the use of local agency facilities and for services may not exceed the reasonable cost of providing those facilities and services. • Fees for services such as water, sewer and trash collection are subject to property owner majority protest. The Legislature has enacted many complicated changes in state and local revenues over the past 30 years. Voters have approved state constitutional protections limiting many of these actions at times followed by even more complicated maneuvers by the Legislature in efforts to solve the financial troubles and interests of the state budget. Reacting to actions of the Legislature and the deterioration of local control of fiscal matters, local government interests placed on the ballot, and voters approved, Proposition 1A in 2004 and Proposition 22 in 2010. Together, these measures prohibit the state from: • Enacting most local government mandates without fully funding their costs. The definition of state mandate includes a transfer of responsibility or funding of a program for which the state previously had full or partial responsibility. • Reducing the local portion of the sales and use tax rate or altering its method of allocation, except to comply with federal law or an interstate compact. • Reducing the combined share of property tax revenues going to the county as well as cities and special districts in a county. • Borrowing, delaying or taking motor vehicle fuel tax allocations, gasoline sales tax allocations, or public transportation account funds. Item 11.c. - Page 26 TAXES According to the California Constitution, every local agency charge is a “tax,” unless it falls into a list of specified exceptions:iii • User fees for a specific benefit, privilege, service or product provided to the payor. Items include: fees for parks and recreation classes, some utilities, public records copying fees, DUI emergency response fees, emergency medical and ambulance transport service fees. • Regulatory fees for reasonable regulatory costs of issuing licenses and permits, and performing inspections and enforcement such as health and safety permits, building permits, police background checks, pet licenses, bicycle licenses and permits for regulated commercial activities. • Rental fees imposed for entrance to or use of government property. These include: facility room rentals, equipment rentals, park, museum and zoo entrance fees, golf greens fees, on and off-street parking and tolls. • Fines or penalties such as parking fines, code enforcement fees and penalties, late payment fees, interest charges and other charges for violation of the law. • A charge imposed as a condition of property development such as building permit fees, construction and grading permits, development impact fees and fees for California Environmental Quality Act requirements. • Benefit assessments and property related fees imposed in accordance with the provisions of Article XIII D (Proposition 218) such as a lighting and landscape assessment and fees for property related services such as many retail water and sewer fees.iv In contrast to an assessment or a fee, a tax need not be levied in proportion to specific benefit to a person or property. Tax revenues are an important source of funding for both county and city services and for many special districts. In addition to local taxes, counties rely significantly on tax dollars allocated from the state and federal governments. TAX- General TAX- Parcel or Special (earmarked) G.O. BOND (w/tax) Fee / fine / rent City / County Majority voter approval Two-thirds voter approval Two-thirds voter approval Majority of the governing board* Special District n/a Two-thirds voter approval Two-thirds voter approval Majority of the governing board* K-14 School n/a Two-thirds voter approval (parcel tax) 55% voter approval** Majority of the governing board* State For any law that will increase the taxes of any taxpayer, two-thirds of each house of the Legislature - or approval of majority of statewide voters. Statewide majority voter approval Majority of each house * Additional procedures apply for property related fees. ** Per Proposition 39 (2000), maximum tax rate limits and other conditions apply for a 55% threshold school bond or threshold is two-thirds. Item 11.c. - Page 27 Counties and cities may impose a variety of taxes. Taxes fall into one of two categories: general or special. A general tax is imposed to raise general-purpose revenues. Counties and cities may use revenues from a general tax for any lawful public purpose. A majority of voters must approve the decision to impose, increase or extend a general tax. A general tax may only be submitted for voter approval at an election for city council or board of supervisors unless a unanimous vote of the governing board declares an emergency. A special tax is a tax imposed for a specific purpose. For example, a city may increase the sales and use tax by adding a special use tax for public safety, the acquisition of open space or transportation projects. All taxes imposed by special districts are considered special taxes. Since the tax is for a specific purpose, the revenues may only be used for that purpose. Two-thirds of voters must agree to enact, increase or extend a special tax. General Tax Special Tax Use of Revenues Unrestricted Specific purpose Governing Body Approval • Counties and general law cities: two-thirds • Charter cities: majority • Transactions and use taxes: two-thirds • Special districts may not adopt general taxes. Majority Voter Approval Majority Two-thirds Other Rules A general tax election must be consolidated with a regularly scheduled general election of members of the governing body, unless an emergency is declared by unanimous vote (among those present) of the governing body. Special tax funds must be deposited in a separate account. The taxing agency must publish an annual report including: 1) the tax rate; 2) the amounts of revenues collected and expended; and 3) the status of any project funded by the special tax. County Property Tax Administration County Assessor. The assessor sets values on property and produces an annual property tax assessment roll. County Auditor-Controller. The auditor-controller receives the assessed values from the assessor and calculates the amount of property tax due. County Treasurer-Tax Collector. The treasurer-tax collector administers the billing, collection, and reporting of property tax revenues levied annually throughout California for not only the county, but also cities, schools and special districts. Item 11.c. - Page 28 PROPERTY TAXES All counties and cities in California receive property tax revenues. Many special districts do too. For all counties and most cities and non-enterprise special districts, property taxes are the largest source of discretionary revenues. How Property Taxes Are Calculated in California The property tax is imposed on “real property” (land and permanently attached improvements such as buildings) and tangible personal property (movable property such as boats, aircraft and business equipment). The maximum tax rate permitted on real property for general purposes is one percent of the property's assessed value plus voter approved rates to fund indebtedness (general obligation bonds, requiring two- thirds voter approval). The tax rate is applied to the assessed value (AV) of the property. The assessed value of real property is the “full cash value” of the property in 1975-76 or at change of ownership, whichever is more recent, adjusted annually by the change in the Consumer Price Index (CPI), not to exceed an annual increase of two percent. The value of new construction is additional. If a property changes hands, then the assessed value becomes the full cash value upon change in ownership. If a property’s market value falls below its factored base year value, it may be temporarily reassessed to its lower actual value but in future years may be reassessed at the lesser of its actual value or its factored base year value. This can result in increases of more than two percent as a property’s actual value returns to its earlier value, as when the housing market rebounds from a slump. Property Tax Revenue Distribution Counties allocate property taxes to the county as well as cities, special districts and school districts within the county according to state law. Allocations among local agencies vary from place to place due to differences in the service responsibilities among agencies serving different areas and differences in the tax rates enacted by those agencies prior to Proposition 13 in 1978. Full-service cities generally receive higher shares than those that do not provide the complete range of municipal services. For example, in a city where fire services are provided by a special district, the city will get a lower share, with a portion of the property tax revenues going instead to the special district. Item 11.c. - Page 29 Property tax revenues among local governments are, of course, also dramatically affected by differences in the assessed value of properties among jurisdictions. A ten percent share in a community of average property values will result in less revenue than in a similar size wealthy bedroom community, or a community that also has a sizable business/industrial area. Property Tax in Lieu of Vehicle License Fee In addition to their regular apportionment of property taxes, cities and counties receive property tax revenues in lieu of Vehicle License Fees (VLF). In 2004, the Legislature permanently reduced the VLF rate from two percent to 0.65 percent and compensated cities and counties for their revenue loss with a like amount of property taxes, dollar-for-dollar. Each agency’s property tax in lieu of VLF allocation increases annually in proportion to the growth in gross assessed valuation in that city or county. What is “ERAF?” The property tax revenues received by school districts in each county include amounts from the county “Educational Revenue Augmentation Fund” (ERAF) created by the California Legislature in 1991 as a way to reduce state general fund spending on schools. These funds receive some property tax that was previously allocated to counties, cities and special districts. Since 2004, California’s Constitution has prohibited the Legislature from increasing the amount of property tax shifted from counties, cities and special districts to ERAF or similar schemes. The state Constitution requires a two- thirds vote of the Legislature to change the allocation of property tax among the county, cities and special districts within a county. Item 11.c. - Page 30 SALES AND USE TAXES Consumers are familiar with the experience of going to a store, buying something and having an amount added for sales tax. Services are generally exempt from the sales tax as well as certain items, like most groceries and medicine. The sales tax is assessed as a percentage of the amount purchased. The “base” statewide sales tax rate of 7.25 percent includes amounts to: • The state general fund (3.9375 percent),v • County realignment programs (state health/ welfare and corrections / law enforcement programs shifted from the state, 1.5625 percent), • Supplemental local law enforcement grants (0.50 percent),vi • Transportation programs in the county where the transaction occurs (0.25 percent), and • The city where the transaction occurs (1.00 percent).vii If the transaction occurs in an unincorporated area, the 1.00 percent amount goes to the county. Cities, counties and countywide transportation agencies may impose sales tax rates to be added on to the “base” statewide sales and use tax rate. The add-on rates are actually “transactions and use taxes” and are allocated to the jurisdiction where the taxed product is received or registered (as in the case of a motor vehicle purchase). Over 120 cities have enacted transaction and use taxes of up to one percent, most commonly with majority voter approval for general purposes. Many counties and county transportation agencies have enacted rates, most commonly with two-thirds vote for specific purposes. Under current state law, the maximum combination of transactions and use tax rates in any location may not exceed two percent.viii State Sales and Use Tax Administration The State Board of Equalization collects local sales and use tax revenues from the retailer and sends revenue from local rates and allocations back to cities and counties. In addition to administering the sales and use tax system, the State Board of Equalization collects and allocates other state taxes including fuel, tobacco and alcohol taxes. The “Use Tax” Part of the Sales and Use Tax California’s sales tax has a relative called the “use tax.” While the sales tax is imposed on the seller, the use tax is imposed on the purchaser and at the same rate as the sales tax. The most common example of use tax is for the purchase of goods from an out-of-state retailer for use in California. Out-of-state retailers doing business in California are required to report to the State Board of Equalization the jurisdiction to which sold items are delivered. If the retailer has a physical presence (nexus) in California, they must collect use tax when goods are delivered to purchasers in this state. If the seller does not collect and remit the use tax, the purchaser is legally obligated to report and pay. Item 11.c. - Page 31 Purchase price $10.00 / Sales Tax State gene ral fund 3.9378%= 39¢ 7 .25 % _ ./Count ies rea li gned prog rams = 73¢ /i 1.5625 % = 16¢ Counties & cities Prop172 -----,?' 0 .5 %=5¢ Coun ties trans porta tio n ------, 0 .25% = 3¢ City (or county) gene ral fun d 1%= 10¢ Rates effective January 1, 2017 after the expira tion of the 0.25% Proposition 30 temporary rate. In addition to the base, statewide rate of 7.25 percent, local voters may authorize additional "transactions and use tax" rates. These additional rates raise the total effective rate to as much as 9. 75% in some locations. Business License Tax (BLT) Most cities and a few counties have enacted business license taxes. Business license tax rates are set individually by each city and county most commonly based on gross receipts (overall business revenue) or levied at a flat rate, but may be based on the quantity of goods produced, number of employees, number of vehicles, square footage of the business or some combination of factors. If a business operates in more than one city, a city may only tax that portion of the business’s activities conducted within the city. In most cases, business license taxes are not imposed for regulatory purposes (as the term “license” might imply) but to raise revenues for general municipal purposes (i.e. a tax). If imposed as a fee to pay for the cost of regulating the business, the fee may not exceed the reasonable cost of regulating the business. (See “regulatory fees.”) Transient Occupancy Tax (TOT) or Hotel Bed Tax Most cities and some counties impose a transient occupancy tax or hotel bed tax on persons staying thirty days or less in hotels, motels and similar lodgings, including mobile homes. A county may impose a transient occupancy taxes only in the county area outside city limits. Typically, the lodging provider collects the tax from guests and turns the funds over to the county or city. Transient occupancy taxes are imposed by most cities and counties and range from three and a half percent to 15 percent. For cities with a transient occupancy tax, it provides seven percent of general revenues on average, and as much as 17 percent in some cities. Any increase or extension of a local tax requires voter approval. Utility User Tax (UUT) Many cities impose utility user taxes on the consumption of utility services, including (but not limited to) electricity, gas, water, sewer, telephone (including mobile phone and long distance), sanitation and cable television. Counties may levy utility user taxes in county area outside city limits. Any increase or extension of a local tax requires voter approval. Utility companies usually collect utility user's taxes from their customers as part of their regular billing procedures and remit the funds collected to the city or county which imposed the tax. Over 150 cities and a few counties levy utility user rates varying from one to 11 percent. For those jurisdictions with utility user taxes, it provides an average of 15 percent of general revenue and often as much as 22 percent. Parcel Tax A parcel tax is a special tax on a parcel – or unit – of real property. Unlike the property tax, a parcel tax may not be based on the value of property. Instead, parcel taxes are generally based on a flat per-parcel rate. A parcel tax may be enacted, increased or extended by a city, county, special district or school district only with two-thirds voter approval, even for general purposes. Documentary Transfer Taxes and Property Transfer Taxes A documentary transfer tax is a tax imposed on the transfer of interests in real estate. Counties tax at a rate of 55 cents per $500 of the property’s value. Cities may impose the tax at up to one half of that amount, which is credited to the payment of the county tax. The Constitution allows charter cities ix to Item 11.c. - Page 32 enact a property transfer tax, with voter approval, on the value of real estate that is sold. In these cases, the entire county documentary transfer tax rate goes to the county. All cities and counties in California have documentary transfer taxes or property transfer taxes. Other Taxes A city or county may impose other types of taxes within the limitations of and if not prohibited by state law. These include: admissions taxes, parking taxes, construction/development taxes, local vehicle registration taxes. Item 11.c. - Page 33 SERVICE CHARGES, ASSESSMENTS AND FEES Utility Rates Utility rates are fees for utility services charged to users who pay for special district, county or city provided water, sewer, electric or other utility services. Utility rates cover some or all of the cost of providing the service, which may include operations, maintenance, overhead, capital improvements and debt service. Utility rates for water, sewer services and certain other utilities belong to a special category of fees called a “property-related fees.” A local government must follow certain specific procedures to impose, extend or increase a property-related fee. To impose a property-related fee, the agency must first hold a public hearing. At the hearing, a majority of affected property owners can prevent the fee’s adoption by filing written protests. If a majority of affected property owners do not protest the fee and the fees pays for sewer, water or refuse collection, then an election is not required and the governing body may approve the fee. Other property-related fees require approval, either of two-thirds of the electorate residing in the affected area or of a majority of the owners of the property who would pay the fee. Benefit Assessments Assessments are charges by cities, counties or special districts on real property to pay for public facilities or services within an area which benefit either real property or businesses. A common type of assessment is one used to pay for landscaping and lighting in a neighborhood. The amount of the assessment must reflect the special benefit to the property that results from the improvements. Assessments on property are typically collected through the owner’s annual property tax bill. A local government must follow certain specific procedures to impose benefit assessments. When a local agency considers an assessment, a majority of property owners may defeat the assessment in a public hearing procedure. If the proposed assessment is not defeated in a public hearing procedure, then a majority of the property owners subject to the charge must approve the assessment by a mailed ballot. The property owners’ votes are weighted according to how much their property will be charged. User Fees A city, county or special district may impose fees, charges and rates for services and facilities it provides. Examples include fees for checking plans for new construction or for recreation classes. The amount of a fee may not exceed the cost of providing the service or granting a benefit or privilege. This cost may include overhead, capital improvements and debt service. Regulatory Fees Regulatory fees pay for the cost of issuing licenses and permits, performing investigations, inspections and audits and the administrative enforcement of these activities. Examples include a fee to pay for the cost of processing pesticide license applications or a fee to inspect restaurants for health and safety compliance. Item 11.c. - Page 34 Development Impact Fees Development impact fees are imposed on new construction (like new houses, apartments, shopping centers or industrial plants). They pay for improvements and facilities required to serve new development and to reduce the impacts of new development on a community. Development impact fees (also known as “AB 1600 fees” after legislation adopted that governs such fees) pay for community amenities such as streets, sewers, parks and schools. They may not be used for day-to-day operating expenses. The ordinance or resolution establishing the fee must explain the connection between the development project and fee. For example, a library impact fee must be connected to the demand for library services created by the construction of the development project. The amount of the fee must not exceed the cost of providing the service or improvement that the fee pays for. Local Debt Financing Tools Local governments borrow money to pay for land, facilities and equipment that may require more funding than current revenues provide. Not a revenue source, but a way to leverage the timing of revenues, debt financing methods are important tools in government finance. Local governments may issue bonds and other debt instruments to finance improvements and services. These loans are paid off through taxes, assessments or fees. A variety of debt financing tools are available: • General Obligation Bonds. General obligation bonds are essentially IOUs issued by public entities to finance large projects. General obligation bonds are backed by property tax revenue, which is used to repay the bond over a twenty- to thirty-year period. Increasing the property tax to repay the debt requires two-thirds voter approval and may only be done to acquire or improve real property. • Lease-Purchase Agreements. In a lease- purchase agreement, sometimes called “certificates of participation,” the agency leases an asset for a period of years with the option to purchase the land or improvement at the end of the lease. The amount of the lease is equivalent to the principal and interest that would be paid if the transaction were financed as a loan. • Benefit Assessment and Special Tax Financing. Benefit assessment financing is supported by benefit assessments on the property to fund acquisition of property and improvement of infrastructure and additional facilities of benefit to the property that is charged. Similarly special taxes, such as Mello- Roos taxes, may be financed with bonds to provide public improvements. • Revenue Bonds. Revenue bonds are issued to acquire, construct or expand public projects for which fees, charges or admissions are charged. Because the debt service is paid from income generated by the facility or related service, such debt is considered self-liquidating and generally does not constitute debt of the issuer, subject to constitutional debt limitations. • Tax Allocation (Tax Increment). Tax allocation bonds (sometimes referred to as tax- increment financing) are issued by Enhanced Infrastructure Financing Districts or Community Revitalization and Investment Authorities and repaid from the growth in property tax revenue (i.e., tax increment) and other designated revenues over a certain period, largely as a result of the funded projects in the area. Item 11.c. - Page 35 REVENUES FROM OTHER GOVERNMENT AGENCIES Counties, cities and many special districts also receive revenues from the state and federal government. For example, over half of county revenues statewide come from state and federal sources. This reflects the role of counties in implementing state policy and programs for health and human services. Gas Tax or Highway Users Tax The state imposes per gallon tax on gasoline of 27.8 cents as of July 1, 2016. These funds are apportioned to cities and counties, primarily on the basis of their populations. Local gas tax revenues must be spent on research, planning, construction, improvement and maintenance of public streets, highways and mass transit. The federal government’s 18.4 cents per gallon rate pays primarily for federal highways with some local grants. Motor Vehicle License Fee (VLF) The Motor Vehicle License Fee is a state imposed and collected tax on ownership of a registered vehicle. Counties receive vehicle license fee revenues to fund certain health, social service and public safety programs that were realigned to counties in 1991 and 2011. State Public Safety Sales Tax Proposition 172, a ballot measure approved in 1993, imposed a one-half percent state sales tax to be used for local public safety activities. The state distributes Proposition 172 revenues to each county based on its proportionate share of statewide taxable sales. Many cities receive a share of those funds based on losses to the state’s ERAF property tax diversions. State Mandate Reimbursement The state constitution requires the Legislature to reimburse local governments for their costs to implement a state-mandated new program or higher level of service in an existing program. The Constitution requires the Legislature to suspend most state mandates in any year in which full funding is not provided for that mandate. The Commission on State Mandates determines the level of reimbursement in response to a claim for reimbursement filed by a local agency. The process typically takes several years during which time, local governments must spend money to comply with the mandate. Federal and State Grants and Aid The federal and state governments provide a wide variety of funds to counties, and a more limited set to cities and special districts. Federal and state grants comprise a large proportion of county revenues because of the many programs and responsibilities counties carry out on behalf of the federal and state governments. These funds are almost entirely restricted to specified uses. Examples include certain health, mental health, social and child welfare services. Item 11.c. - Page 36 Categorical grants support a defined program area. Categorical grants typically go to local agencies that either meet predetermined funding criteria or compete for project funding through an application process. Block grants provide funding to a broad functional area. For example, federal Community Development Block Grant (CDBG) funds support local housing and economic development activities. RENT FOR USE OF PUBLIC PROPERTY Rents, Royalties and Concessions Another way cities and counties and some special districts pay for public services is to charge rent for use of the public’s property. An example is royalties from natural resources taken from land the public owns. Others include selling advertisements in publications or on buses, as well as, receiving a percentage of net profits from concessionaires operating on public property. Franchise Fees Franchise fees are a form of rent for use of public streets and roadways. Examples of businesses that pay franchise fees include trash collectors, cable television companies, electric utilities and oil and natural gas pipeline companies. Federal and state law limits the amount of some franchise fees (for example, video and cable television franchise fees). Franchise fees for provision of video services (like television programming) are limited and administered by the state. FINES, FORFEITURES AND PENALTIES Violations of the law often result in a fine of some kind. Fines, forfeitures and penalties may be imposed for many reasons. Typical examples include traffic violations, court fines, penalties and interest on late or unpaid taxes. • State law determines the distribution of fines and bail forfeitures imposed by the state. • State law apportions revenues for parking violations and surcharges between issuing agencies and the counties. • A city or county may impose fines, forfeitures and penalties for civil violation of local ordinances. • Bail for local code violations charged criminally is established by the local courts with input from the city or county. Maintenance of Effort Requirements (MOE) When cities and counties receive funding for programs from the state or federal government, such funding may come with strings attached. A common condition is that the city or county commit to a certain level of funding. This commitment is called “maintenance of effort.” Local agencies also receive reimbursement for revenue lost as a result of some tax exemptions and reductions. An example includes the homeowners’ property tax exemption, which eliminates the property tax on a small portion of the assessed valuation of owner- occupied residential property. Item 11.c. - Page 37 OTHER REVENUES There are other local government revenues, comparatively minor in amounts. These include interest earned on investments, sales of surplus property and gifts. Item 11.c. - Page 38 ACKNOWLEDGEMENTS Special thanks to Michael Coleman whose expertise contributed to the 2016 update of this publication. Michael Coleman is a leading expert on California local government revenues, spending and financing. He is the creator of CaliforniaCityFinance.com, the California Local Government Finance Almanac, an online resource of data, analyses and articles on California municipal finance and budgeting. The Institute also appreciates the contributions from the staff of the California Special Districts Association, the California State Association of Counties and the League of California Cities for their contributions and suggestions to this revised document. Item 11.c. - Page 39 ENDNOTES i California Department of Finance, Demographic Research Unit www.dof.ca.gov/Forecasting/Demographics/Estimates/ ii Cal. Const. art. XI, § 1(a). See also Cal. Gov’t Code § 23002 (“The several existing counties of the State and such other counties as are hereafter organized are legal subdivisions of the State.”). People ex rel. Younger v. County of El Dorado, 5 Cal. 3d 480, 491, 96 Cal. Rptr. 557 (1971) iii Cal. Const. art XIIIC, section 1(e) iv A complete discussion of this list of seven exceptions can be found in the Proposition 26 Implementation Guide published by the League of California Cities. v Proposition 30 imposed an additional state general fund sales tax of 0.25 percent from 2013 through 2016, for a total base rate of 7.5% during that time. vi See “State Public Safety Sales Tax” under “Revenues From Other Government Agencies.” vii In some cities, by historic agreement, the city collects less than 1.00 percent, with the difference allocated to the county. For example, in San Mateo county each city receives 0.95% of transaction within its jurisdiction and 0.05% goes to the county general fund. For a full list of local sales tax rates see Table 23A of the California State Board of Equalization Annual Report. http://www.boe.ca.gov/annual/table23a.htm viii Except in the counties of Los Angeles, Alameda and Contra Costa where the maximum is 2.5 percent. Revenue and Tax Code §7251 et seq. ix For more information on Charter Cities see www.cacities.org/chartercities Resources for Further Information Coleman, Michael. California Municipal Revenue Sources Handbook, League of California Cities 2014. Multari, Michael, Michael Coleman, Kenneth Hampian, Bill Statler. Guide to Local Government Finance in California, Solano Press Books, 2012. California Legislative Analyst’s Office. www.lao.ca.gov “California Local Government Finance Almanac: Data, Statistics, Analyses on California City, County and Special District Finance.” www.californiacityfinance.com “Financial Management for Elected Officials.” Institute for Local Government. www.ca-ilg.org/post/financialmanagement “Learn About Cities.” League of California Cities. www.cacities.org/Resources/Learn-About-Cities “What Do Counties Do?” California State Association of Counties. www.csac.counties.org/californias-counties “What are Special Districts and What Do They do?” California Special Districts Association. www.csda.net/special-districts/ Item 11.c. - Page 40 Notes __________________ __________________ ______________ _________________________________________ Item 11.c. - Page 41 ABOUT THE INSTITUTE FOR LOCAL GOVERNMENT The Institute for Local Government (ILG) is the nonprofit 501(c)(3) research and education affiliate of the League of California Cities, the California State Association of Counties and the California Special Districts Association. Its mission is to promote good government at the local level with practical, impartial and easy-to-use resources for California communities. For more information and to access the Institute’s resources, visit www.ca-ilg.org. © 2016 Institute for Local Government. All rights reserved. Item 11.c. - Page 42 www.ca-ilg.org 1400 K Street, Suite 205 Sacramento, CA 95814 Item 11.c. - Page 43 1111111 INSTITUTE FOR I'll LOCAL GOVERNMENTSM Promoting Good Government at the Local Level CITIES BY SALES TAX 7.00% - 7.99% 8.00% - 8.99% 9.00% - 9.99% 10.00% - 10.99% CALIFORNIA COUNTIES SAN LUIS OBISPO COUNTY 0 100 20050 MILES S W E N | STATEWIDE SALES TAX BY CITY This map displays California cities displayed by proportionate symbols based on sales tax rates as reported by the California Department of Tax and Fee Administration on April 1, 2019. Data used for this map is not guaranteed to be accurate and should be used for reference only. CREATED BY: CAMILLA KARAMANLIS - PROGRAM ANALYST; MAY 2019 ATTACHMENT 2 Item 11.c. - Page 44 CITY OF ARRO~ANDE • • • ■ D - ... ) • I • • ,. GENERAL BUSINESS LICENSE FEES Annual Business License Fee $34 plus $5 per employee SPECIFIC BUSINESS LICENSE FEES Billboards $129 Commercial Auctions $29 per day of Auctioning or $89 annual fee Hospitals and Rest Homes $44 plus $3 per bed Hotels and Motels $34 plus $1 per room Public Utilities $74 Taxicabs $49 for 1st vehicle plus $15 for each additional vehicle Trailer Parks and Mobile Home Parks $34 plus $1 per trailer or mobile home Contractors $64 Circuses and similar shows $74 Bazaars and street fairs: Small $15 per display per every two days plus $4 State fee Large $70 per day plus $4 State fee ADDITIONAL FEES Parking Assessment Fee $132* * This fee is applied to those businesses located within the Village of Arroyo Grande CITY OF ARROYO GRANDE ANNUAL BUSINESS LICENSE FEE SCHEDULE Effective January 1, 2018 ATTACHMENT 3 Item 11.c. - Page 45 ~CITY OF --,;-• ~-~~ ATTACHMENT 2 Item 11.c. - Page 46 THIS PAGE INTENTIONALLY LEFT BLANK Item 11.c. - Page 47 Table of ContentsTrue North Research, Inc. © 2019 iCity of Arroyo Grande . . . . . . . . . . . . . . . . T ABLE OF CONTENTS Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii List of Figures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Motivation for Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Overview of Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Organization of Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 About True North. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Just the Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Quality of Life & City Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Initial Ballot Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Positive Arguments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Interim Ballot Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Negative Arguments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Final Ballot Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Support at Lower Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Quality of Life & City Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Quality of Life. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Question 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Changes to Improve Arroyo Grande . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Question 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Overall Performance Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Question 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Initial Ballot Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Question 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Support by Subgroups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Reasons for Opposing Measure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Question 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Question 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Service Ratings by Initial Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Positive Arguments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Question 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Positive Arguments by Initial Support. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Interim Ballot Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Question 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Support by Subgroups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Negative Arguments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Question 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Negative Arguments by Initial Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Final Ballot Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Question 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Change in Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Final Ballot Test at Lower Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Question 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Background & Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Questionnaire Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Item 11.c. - Page 48 Table of ContentsTrue North Research, Inc. © 2019 iiCity of Arroyo Grande . . . . . . . . . . . . . . . . Programming & Pre-Test. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Sample. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Statistical Margin of Error. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Recruiting & Data Collection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Data Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Rounding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Questionnaire & Toplines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Item 11.c. - Page 49 List of TablesTrue North Research, Inc. © 2019 iiiCity of Arroyo Grande . . . . . . . . . . . . . . . . L IST OF TABLES Table 1 Demographic Breakdown of Support at Initial Ballot Test. . . . . . . . . . . . . . . . . . . . 13 Table 2 Top Services by Position at Initial Ballot Test. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Table 3 Top Positive Arguments by Position at Initial Ballot Test . . . . . . . . . . . . . . . . . . . . 18 Table 4 Demographic Breakdown of Support at Interim Ballot Test . . . . . . . . . . . . . . . . . . 20 Table 5 Negative Arguments by Position at Initial Ballot Test. . . . . . . . . . . . . . . . . . . . . . . 22 Table 6 Demographic Breakdown of Support at Final Ballot Test . . . . . . . . . . . . . . . . . . . . 24 Table 7 Movement Between Initial & Final Ballot Test. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Table 8 Demographics of Sample . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Item 11.c. - Page 50 List of FiguresTrue North Research, Inc. © 2019 ivCity of Arroyo Grande . . . . . . . . . . . . . . . . L IST OF FIGURES Figure 1 Quality of Life. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Figure 2 Quality of Life by Years in Arroyo Grande, Overall Satisfaction, Child in Hsld & Fiscal Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 3 Quality of Life by Direction of Country, Homeowner on Voter File, Age & Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 4 Changes to Improve City. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Figure 5 Overall Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 6 Overall Satisfaction by Years in Arroyo Grande, Child in Hsld & Fiscal Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 7 Overall Satisfaction by Direction of Country, Homeowner on Voter File, Age & Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 8 Initial Ballot Test. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 Figure 9 Reasons for not Supporting Measure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Figure 10 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 11 Positive Arguments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Figure 12 Interim Ballot Test. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Figure 13 Negative Arguments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Figure 14 Final Ballot Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 Figure 15 Final Ballot Test at One-Half Cent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Figure 16 Maximum Margin of Error Due to Sampling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Item 11.c. - Page 51 IntroductionTrue North Research, Inc. © 2019 1City of Arroyo Grande . . . . . . . . . . . . . . . . I NTRODUCTION One of five cities that comprise California’s Central Coast, the City of Arroyo Grande is a small town in San Luis Obispo County known for its village, agriculture, rural character and temperate climate. Incorporated in 1911 and currently home to an estimated 17,876 residents1, the City’s team of full-time and part-time employees provides a full suite of municipal services including police, fire, public works, and recreation services. Over the past decade, the City of Arroyo Grande’s revenues have not kept pace with the growing costs associated with providing municipal services and facilities. Although the City has been pro- active in responding to this challenge by reducing its costs where feasible and through effective financial management practices, the practical reality is that existing revenues simply do not sup- port the high quality services that residents have come to expect. To provide the funding required to maintain and improve the quality of essential city services, the City of Arroyo Grande is considering establishing a local revenue measure. MOTIVATION FOR RESEARCH The primary purpose of this study was to produce an unbiased, statistically reliable evaluation of voters' interest in supporting a general sales tax measure to provide the funding noted above. Additionally, should the City decide to move for- ward with a revenue measure, the data provide guidance as to how to structure the measure so it is consistent with the community's priorities and expressed needs. Specifically, the study was designed to: • Gauge current, baseline support for enacting a local sales tax measure to ensure adequate funding for general municipal services; • Identify the types of services voters are most interested in funding, should the measure pass; • Expose voters to arguments in favor of, and against, the proposed tax measure to assess how information affects support for the measure; and • Estimate support for the measure once voters are presented with the types of information they will likely be exposed to during an election cycle. It is important to note at the outset that voters’ opinions about tax measures are often some- what fluid, especially when the amount of information they initially have about a measure is lim- ited. How voters think and feel about a measure today may not be the same way they think and feel once they have had a chance to hear more information about the measure during the elec- tion cycle. Accordingly, to accurately assess the feasibility of establishing a sales tax increase to fund municipal services, it was important that in addition to measuring current opinions about the measure (Question 5), the survey expose respondents to the types of information voters are likely to encounter during an election cycle, including arguments in favor of (Question 8) and opposed to (Question 10) the measure, and gauge how this type of information ultimately impacts their voting decision (Questions 9 & 11). 1. Source: California Department of Finance estimate for January 2019. Item 11.c. - Page 52 IntroductionTrue North Research, Inc. © 2019 2City of Arroyo Grande . . . . . . . . . . . . . . . . OVERVIEW OF METHODOLOGY For a full discussion of the research methods and tech- niques used in this study, turn to Methodology on page 28. In brief, the survey was administered to a random sample of 541 voters in the City of Arroyo Grande who are likely to participate in the November 2020 election. The survey followed a mixed-method design that employed multiple recruiting methods (telephone and email) and multiple data collection methods (telephone and online). Administered between November 11 and November 21, 2019, the average interview lasted 16 minutes. ORGANIZATION OF REPORT This report is designed to meet the needs of readers who prefer a summary of the findings as well as those who are interested in the details of the results. For those who seek an overview of the findings, the sections titled Just the Facts and Conclusions are for you. They provide a summary of the most important factual findings of the survey in bul- let-point format and a discussion of their implications. For the interested reader, this section is followed by a more detailed question-by-question discussion of the results from the survey by topic area (see Table of Contents), as well as a description of the methodology employed for col- lecting and analyzing the data. And, for the truly ambitious reader, the questionnaire used for the interviews is contained at the back of this report (see Questionnaire & Toplines on page 31) and a complete set of crosstabulations for the survey results is contained in Appendix A. ACKNOWLEDGMENTS True North thanks the City of Arroyo Grande for the opportunity to assist the City in this important effort. The collective expertise, local knowledge, and insight pro- vided by city staff and representatives improved the overall quality of the research presented here. DISCLAIMER The statements and conclusions in this report are those of the authors (Dr. Timothy McLarney and Richard Sarles) at True North Research, Inc. and not necessarily those of the City of Arroyo Grande. Any errors and omissions are the responsibility of the authors. ABOUT TRUE NORTH True North is a full-service survey research firm that is dedicated to providing public agencies with a clear understanding of the values, perceptions, priorities, and concerns of their residents and voters. Through designing and implementing scientific surveys, focus groups, and one-on-one interviews as well as expert interpretation of the findings, True North helps its clients to move with confidence when making strategic decisions in a variety of areas—such as planning, policy evaluation, performance management, establishing fiscal priori- ties, passing revenue measures, and developing effective public information campaigns. During their careers, Dr. McLarney and Mr. Sarles have designed and conducted over 1,000 sur- vey research studies for public agencies, including more than 350 revenue measure feasibility studies. Of the measures that have gone to ballot based on Dr. McLarney’s recommendation, 97% have been successful. In total, the research that Dr. McLarney has conducted has led to over $32 billion in successful local revenue measures. Item 11.c. - Page 53 Just the FactsTrue North Research, Inc. © 2019 3City of Arroyo Grande . . . . . . . . . . . . . . . . J UST THE FACTS The following section is an outline of the main factual findings from the survey. For the reader’s convenience, we have organized the findings according to the section titles used in the body of this report. Thus, if you would like to learn more about a particular finding, simply turn to the appropriate report section. QUALITY OF LIFE & CITY SERVICES • Nine-in-ten voters surveyed shared favorable opinions of the quality of life in Arroyo Grande, with 42% reporting it is excellent and 50% stating it is good. Approximately 7% of voters sur- veyed said the quality of life in the City is fair, whereas about 1% used poor (<1%) or very poor (<1%) to describe the quality of life in Arroyo Grande. • When asked what changes the City could make to improve the quality of life in Arroyo Grande, 23% of respondents could not think of any desired changes (16%) or reported that no changes are needed (7%). Among specific changes desired, improving streets, roads, and infrastructure (9%) and limiting growth/development and preserving the small town feel (9%) were the most common, followed by providing affordable housing (8%) and reducing traffic congestion (7%). • Eighty-one percent (81%) of Arroyo Grande voters surveyed indicated that they were satisfied with the City’s efforts to provide municipal services, with 30% saying they were very satisfied and 51% somewhat satisfied. Approximately 14% reported that they were dissatisfied with the City’s overall performance, and 5% were unsure or unwilling to state their opinion. INITIAL BALLOT TEST • With only the information provided in the ballot language, 57% of likely November 2020 vot- ers surveyed indicated that they would definitely or probably support the proposed one-cent sales tax, whereas 32% stated that they would oppose the measure and 11% were unsure or unwilling to share their vote choice. • Among voters who initially opposed the sales tax or were unsure, the perception that city funds have been/will be mismanaged or misspent and a belief that taxes are already too high were the most common, each mentioned by over a quarter of voters who received the question. An additional 19% cited a desire for additional information about the measure. SERVICES When presented with a list of 12 services that could be funded by the sales tax measure, voters were most interested in using the money to: • Maintain local streets and repair potholes. • Repair and maintain public buildings and infrastructure including sidewalks, curbs, flood prevention infrastructure, and storm drains. • Maintain parks and recreation facilities including Soto Sports complex, courts, fields, play- grounds, and community centers. • Provide fire protection and emergency medical response services. Item 11.c. - Page 54 Just the FactsTrue North Research, Inc. © 2019 4City of Arroyo Grande . . . . . . . . . . . . . . . . POSITIVE ARGUMENTS When presented with arguments in favor of the measure, voters found the following arguments to be the most persuasive: • The funding raised by this measure will allow the City to keep up with basic repairs and maintenance to public facilities, storm drains, streets, and sidewalks. If we don't take care of it now, it will be a lot more expensive to repair in the future. •Fast emergency response times for 9-1-1 calls are critical for saving lives and property. This measure will ensure that we have enough police officers, firefighters, and other emergency personnel to respond quickly to 9-1-1 emergencies. •High quality parks, open spaces, sports fields, and recreation programs help keep kids healthy, active, and away from drugs, gangs, and crime. INTERIM BALLOT TEST • After learning more about the services that could be funded, as well as hearing arguments in favor of the measure, overall support among likely November 2020 voters increased slightly to 59%, with 28% of voters indicating that they would definitely vote yes on the mea- sure. Approximately 30% of respondents opposed the measure at this point in the survey, and an additional 12% were unsure or unwilling to state their vote choice. NEGATIVE ARGUMENTS Of the arguments in opposition to the measure, voters found the following arguments to be the most persuasive: • Taxes are already too high, we can't afford another tax increase. This is especially true for seniors and others on fixed-incomes. •There are no guarantees on how funds will be spent, which means the City can divert the money to pet projects. The City government can't be trusted with our tax dollars. FINAL BALLOT TEST • After providing respondents with the wording of the proposed measure, a list of services that could be funded by the measure, as well as arguments in favor of and against the pro- posal, support for the one-cent sales tax measure was found among 55% of likely November 2020 voters, with 27% indicating that they would definitely support the measure. Approxi- mately 33% of respondents were opposed to the measure at the Final Ballot Test, and 12% were unsure or unwilling to state their vote choice. SUPPORT AT LOWER RATE • Voters who did not support the proposed measure at the Final Ballot Test were asked if they would support the measure at a lower sales tax rate of one-half cent. An additional 8% of voters indicated they would support the measure under this condition. Item 11.c. - Page 55 ConclusionsTrue North Research, Inc. © 2019 5City of Arroyo Grande . . . . . . . . . . . . . . . . C ONCLUSIONS The bulk of this report is devoted to conveying the details of the study findings. In this section, however, we attempt to ‘see the forest through the trees’ and note how the collective results of the survey answer the key questions that motivated the research. The following conclusions are based on True North’s interpretations of the survey results and the firm’s experience conducting revenue measure studies for public agencies throughout the State. The bulk of this report is devoted to conveying the details of the study findings. In this section, however, we attempt to ‘see the forest through the trees’ and note how the collective results of the survey answer the key questions that motivated the research. The following conclusions are based on True North’s interpretations of the survey results and the firm’s collective experience conducting revenue measure studies for public agencies throughout the State. Is it feasible to place a local sales tax measure on the ballot in 2020? Yes. Arroyo Grande voters have a high opinion of the quality of life in the city, and they value the services they receive from the City of Arroyo Grande. Together, these sentiments translate into solid natural support (57%) for establishing a one cent sales tax to provide funding for general city services including police patrols, drug and crime prevention, fire, emergency medical, and 9-1-1 emergency response, street, sidewalk, and pothole maintenance, addressing impacts from homelessness, and parks, recreation, childcare, and senior programs. The results of this study suggest that, if structured appropriately and combined with an effective public outreach/education effort and a solid independent campaign, the proposed sales tax measure has a good chance of passage if placed on the November 2020 ballot. Having stated that a general sales tax measure is feasible, it is important to note that the measure’s prospects will be shaped by external factors and that a recommendation to place the measure on the November 2020 ballot comes with several qualifications and conditions. Indeed, although the results are promising, all revenue measures must overcome chal- lenges prior to being successful. The proposed measure is no exception. The following paragraphs discuss some of the challenges and the next steps that True North recommends. Which services do Arroyo Grande voters view as priorities? A general tax is “any tax imposed for general governmental purposes”2 and is distinguished from a special tax in that the funds raised by a gen- eral tax are not earmarked for a specific purpose(s). Thus, a general tax provides a municipality with a great deal of flexibility with respect to what is funded by the measure on a year-to-year basis. Although the Arroyo Grande City Council would have the discretion to decide how to spend the revenues, the survey results indicate that voters are most interested in using the proceeds to fund public works and pub- 2. Section 1, Article XIIIC, California Constitution. Item 11.c. - Page 56 ConclusionsTrue North Research, Inc. © 2019 6City of Arroyo Grande . . . . . . . . . . . . . . . . lic safety. Specifically, voters most strongly favored using measure pro- ceeds to maintain local streets and repair potholes, repair and maintain public buildings and infrastructure including sidewalks, curbs, flood pre- vention infrastructure, and storm drains, maintain parks and recreation facilities including Soto Sports complex, courts, fields, playgrounds, and community centers, provide fire protection and emergency medical response services, keep public areas clean and free of graffiti, and pro- vide quick responses to 9-1-1 emergencies. How might a public information campaign affect support for the proposed measure? As noted in the body of this report, individuals’ opinions about revenue measures are often not rigid, especially when the amount of information presented to the public on a measure has been limited. Thus, in addition to measuring current support for the measure, one of the goals of this study was to explore how the introduction of additional information about the measure may affect voters’ opinions about the proposal. It is clear from the survey results that voters’ opinions about the pro- posed revenue measure are somewhat sensitive to the nature, and amount, of information they have about the measure. Information about the specific services and infrastructure improvements that could be funded by the measure, as well as arguments in favor of the measure, were found by many voters to be compelling reasons to support the pro- posed sales tax. However, voters were also sensitive to opposition argu- ments designed to reduce support for the measure. Accordingly, one of the keys to building and sustaining support for the proposed measure will be the presence of an effective, well-organized public outreach effort and a separate, independent campaign that focuses on the need for the measure as well as the many benefits that it will bring. How might the eco- nomic or political cli- mate alter support for the measure? A survey is a snapshot in time—which means the results of this study and the conclusions noted above must be viewed in light of the current economic and political climates. Should the economy and/or political cli- mate improve, support for the measure could increase. Conversely, neg- ative economic and/or political developments, especially at the local level, could dampen support for the measure below what was recorded in this study. Item 11.c. - Page 57 Quality of Life & City ServicesTrue North Research, Inc. © 2019 7City of Arroyo Grande . . . . . . . . . . . . . . . . Q UALITY OF LIFE & CITY SERVICES The opening section of the survey was designed to gauge voters’ opinions regarding the City of Arroyo Grande’s performance in providing municipal services, as well as their perceptions of the quality of life in the City. QUALITY OF LIFE At the outset of the interview, voters were asked to rate the quality of life in the City of Arroyo Grande using a five-point scale of excellent, good, fair, poor, or very poor. As shown in Figure 1 below, nine-in-ten voters shared favorable opinions of the quality of life in Arroyo Grande, with 42% reporting it is excellent and 50% stating it is good. Approximately 7% of voters surveyed said the quality of life in the City is fair, whereas about 1% used poor (<1%) or very poor (<1%) to describe the quality of life in Arroyo Grande. Question 2 How would you rate the overall quality of life in Arroyo Grande? Would you say it is excellent, good, fair, poor or very poor? FIGURE 1 QUALITY OF LIFE Figures 2 and 3 on the next page show how ratings of the quality of life in Arroyo Grande varied by a host of demographic subgroups. Ranging from a low of 69% to a high of 99%, the figures make clear that the vast majority of subgroups provided favorable quality of life ratings. Even among the minority of respondents dissatisfied with the job the City is doing to provide services and those who rated the City’s fiscal management as poor or very poor, seven-in-ten provided positive assessments for the quality of life in the City. Very poor 0.2Poor 0.5 Fair 7.2 Excellent 41.8 Good 50.2 Prefer no to answer 0.2 Item 11.c. - Page 58 Quality of Life & City ServicesTrue North Research, Inc. © 2019 8City of Arroyo Grande . . . . . . . . . . . . . . . . FIGURE 2 QUALITY OF LIFE BY YEARS IN ARROYO GRANDE, OVERALL SATISFACTION, CHILD IN HSLD & FISCAL MANAGEMENT FIGURE 3 QUALITY OF LIFE BY DIRECTION OF COUNTRY, HOMEOWNER ON VOTER FILE, AGE & GENDER 46.2 16.1 44.0 41.2 52.3 35.1 24.1 49.4 53.9 49.9 50.9 46.9 56.1 44.9 41.447.641.0Excellent 40.1 54.1 51.5 47.0 Good 55.1 0 10 20 30 40 50 60 70 80 90 100 Less than 5 5 to 9 10 to 14 15 or more Satisfied Dissatisfied Yes No Excellent, good Fair Poor, very poor Years in Arroyo Grande (Q1) Overall Satisfaction (Q4) Child in Hsld (Q14) Fiscal Management (Q13)% Respondents39.0 40.3 43.1 36.7 46.0 44.7 41.5 51.2 57.4 53.0 48.8 47.8 47.2 51.8 Excellent 44.0 39.4 45.2 34.5 Good 40.2 57.8 46.656.3 0 10 20 30 40 50 60 70 80 90 100 Right direction Wrong direction Yes No 18 to 29 30 to 39 40 to 49 50 to 64 65 or older Male Female Direction of Country (Q15) Homeowner on Voter File Age Gender% RespondentsItem 11.c. - Page 59 Quality of Life & City ServicesTrue North Research, Inc. © 2019 9City of Arroyo Grande . . . . . . . . . . . . . . . . CHANGES TO IMPROVE ARROYO GRANDE The next question in this series asked voters to indicate the one thing that city government could change to make Arroyo Grande a bet- ter place to live, now and in the future. Question 3 was posed in an open-ended manner, allow- ing residents to mention any aspect or attribute that came to mind without being prompted by or restricted to a particular list of options. True North later reviewed the verbatim responses and grouped them into the categories shown in Figure 4 below. Twenty-three percent (23%) of respondents could not think of any desired changes (16%) or reported that no changes are needed (7%) to make Arroyo Grande a better place to live. Among specific changes desired, improving streets, roads, and infrastructure (9%) and limiting growth/ development and preserving the small town feel (9%) were the most common, followed by pro- viding affordable housing (8%) and reducing traffic congestion (7%). Question 3 If the city government could change one thing to make Arroyo Grande a better place to live now and in the future, what change would you like to see? FIGURE 4 CHANGES TO IMPROVE CITY 1.8 1.8 1.9 2.0 2.3 2.5 2.6 2.6 2.8 3.6 4.1 4.2 4.5 4.6 5.0 6.6 7.3 7.8 9.3 9.4 16.0 3.0 4.1 0 5 10 15 20 Improve city planning Improve, provide additional parks, rec facilities Reduce cost of living Improve economy, jobs Provide additional activities, events for all ages Improve government, leadership, transparency Enforce traffic laws Improve public safety, police services Beautify city, landscaping Improve zoning laws, building permit process Add more safer bike, walking trails, lanes Improve Brisco freeway access Provide more dining, shopping opportunities Address water-related issues Reduce taxes, fees Improve budgeting, spending Address homeless issues, poverty Reduce traffic congestion No changes needed / Everything is fine Provide affordable housing Limit growth, development, preserve small town feel Improve streets, roads, infrastructure Not sure, nothing comes to mind % Respondents Item 11.c. - Page 60 Quality of Life & City ServicesTrue North Research, Inc. © 2019 10City of Arroyo Grande . . . . . . . . . . . . . . . . OVERALL PERFORMANCE RATING The final question in this series asked respondents to indicate if, overall, they were satisfied or dissatisfied with the job the City of Arroyo Grande is doing to provide city services. Because this question does not reference a specific program, facil- ity, or service and requested that the respondent consider the City’s performance in general, the findings of this question may be regarded as an overall performance rating for the City. As shown in Figure 5 below, 81% of Arroyo Grande voters surveyed indicated that they were sat- isfied with the City’s efforts to provide municipal services, with 30% saying they were very satis- fied and 51% somewhat satisfied. Approximately 14% reported that they were dissatisfied with the City’s overall performance, and 5% were unsure or unwilling to state their opinion. For the interested reader, figures 6 and 7 on the next page display how the percentage of respondents satisfied with the City’s overall performance varied across several demographic subgroups. Question 4 Generally speaking, are you satisfied or dissatisfied with the job the City of Arroyo Grande is doing to provide city services? FIGURE 5 OVERALL SATISFACTION Somewhat satisfied 51.3 Very satisfied 29.5 Somewhat dissatisfied 10.1 Very dissatisfied 4.0 Prefer not to answer 0.5 Not sure 4.6 Item 11.c. - Page 61 Quality of Life & City ServicesTrue North Research, Inc. © 2019 11City of Arroyo Grande . . . . . . . . . . . . . . . . FIGURE 6 OVERALL SATISFACTION BY YEARS IN ARROYO GRANDE, CHILD IN HSLD & FISCAL MANAGEMENT FIGURE 7 OVERALL SATISFACTION BY DIRECTION OF COUNTRY, HOMEOWNER ON VOTER FILE, AGE & GENDER 34.3 28.3 51.4 9.3 9.5 41.4 54.8 43.7 69.6 36.4 27.829.532.4 Very satisfied 32.3 55.6 57.8 50.1 Smwt satisfied 45.6 0 10 20 30 40 50 60 70 80 90 100 Less than 5 5 to 9 10 to 14 15 or more Yes No Excellent, good Fair Poor, very poor Years in Arroyo Grande (Q1) Child in Hsld (Q14) Fiscal Management (Q13)% Respondents22.8 42.3 35.5 21.1 30.9 29.6 30.7 71.5 35.8 38.9 53.6 54.6 51.3 50.0 Very satisfied 32.1 29.2 28.5 31.7 Smwt satisfied 41.3 50.251.857.8 0 10 20 30 40 50 60 70 80 90 100 Right direction Wrong direction Yes No 18 to 29 30 to 39 40 to 49 50 to 64 65 or older Male Female Direction of Country (Q15) Homeowner on Voter File Age Gender% RespondentsItem 11.c. - Page 62 Initial Ballot TestTrue North Research, Inc. © 2019 12City of Arroyo Grande . . . . . . . . . . . . . . . . I NITIAL BALLOT TEST The primary research objective of this survey was to estimate voters’ support for establishing a one-cent sales tax to provide funding for general city services in the City of Arroyo Grande, including police patrols, drug and crime prevention, fire, emergency medical, and 9-1-1 emer- gency response, street, sidewalk, and pothole maintenance, addressing impacts from homeless- ness, and parks, recreation, childcare, and senior programs. To this end, Question 5 was designed to take an early assessment of voters’ support for the proposed measure. The motivation for placing Question 5 near the front of the survey is twofold. First, voter support for a measure can often depend on the amount of information they have about a measure. At this point in the survey, the respondent has not been provided information about the proposed measure beyond what is presented in the ballot language. This situation is analogous to a voter casting a ballot with limited knowledge about the measure, such as what might occur in the absence of an effective campaign. Question 5, also known as the Initial Ballot Test, is thus a good measure of voter support for the proposed measure as it is today, on the natural. Because the Initial Ballot Test provides a gauge of natural support for the measure, it also serves a second purpose in that it provides a useful baseline from which to judge the impact of various informa- tion items conveyed later in the survey on voter support for the measure. Question 5 Next year, voters in Arroyo Grande may be asked to vote on a local ballot measure. Let me read you a summary of the measure. To provide funding for general city services in Arroyo Grande, including police patrols, drug and crime prevention; fire, emergency medical, and 9-1-1 emergency response; street, sidewalk, and pothole maintenance; addressing impacts from homelessness; and parks, recreation, childcare, and senior programs; shall an ordinance establishing a one cent sales tax be adopted, providing approximately 4 million dollars annually for city services until ended by voters that can't be taken by the State, and requiring citizen over- sight and all funds controlled locally? If the election were held today, would you vote yes or no on this measure? FIGURE 8 INITIAL BALLOT TEST As shown in Figure 8, 57% of likely November 2020 voters surveyed indicated that they would definitely or probably support the proposed one-cent sales tax, whereas 32% stated that they would oppose the measure and 11% were unsure or unwilling to share their vote choice. For general taxes in California, the level of sup- port recorded at the Initial Ballot Test is approx- imately seven percentage points above the simple majority (50%+1) required for passage. Probably yes 33.2 Definitely yes 23.6 Probably no 12.5 Definitely no 19.8 Prefer not to answer 1.1Not sure 9.7 Item 11.c. - Page 63 Initial Ballot TestTrue North Research, Inc. © 2019 13City of Arroyo Grande . . . . . . . . . . . . . . . . SUPPORT BY SUBGROUPS For the interested reader, Table 1 shows how support for the measure at the Initial Ballot Test varied by key demographic traits. The blue column (Approxi- mate % of Universe) indicates the percentage of the electorate that each subgroup category com- prises. Initial support for the proposed sales tax measure varied considerably across voter subgroups, with the largest differences found among partisan subgroups (household and indi- vidual), age, vote by mail status, and by voters’ perceptions regarding the City’s fiscal manage- ment and the job the City is doing to provide services. It is also worth noting that support among the subset of voters likely to participate in the March 2020 election was just slightly lower than that found among the larger group of November 2020 voters (55% vs. 57%). TABLE 1 DEMOGRAPHIC BREAKDOWN OF SUPPORT AT INITIAL BALLOT TEST Approximate % of Voter Universe % Probably or Definitely Yes % Not sure Overall 100 56.8 9.7 Less than 5 16 63.5 8.2 5 to 9 17 65.8 9.9 10 to 14 13 49.2 16.4 15 or more 53 54.1 8.5 Satisfied 85 63.0 8.2 Dissatisfied 15 29.2 12.4 Yes 28 61.9 7.5 No 72 56.2 9.9 Excellent, good 51 76.1 5.7 Fair 33 46.4 12.3 Poor, very poor 16 19.9 5.6 Right direction 34 48.5 8.9 Wrong direction 66 64.7 7.9 Yes 68 56.0 10.5 No 32 58.7 8.0 Yes 86 54.0 10.4 No 14 74.7 5.0 Democrat 35 66.5 9.0 Republican 39 46.9 9.9 Other / DTS 26 58.7 10.4 Single dem 14 65.5 9.9 Dual dem 10 74.4 4.8 Single rep 13 41.6 5.4 Dual rep 16 44.9 14.5 Other 17 56.2 13.7 Mixed 29 60.2 8.3 18 to 29 8 70.1 16.2 30 to 39 11 49.2 11.6 40 to 49 15 59.7 10.9 50 to 64 28 52.5 9.2 65 or older 39 58.3 7.7 Since Nov 16 8 68.5 9.5 Jun 10 to <Nov 16 15 63.3 12.4 Jun 04 to <Jun 10 13 54.8 3.7 Before June 04 65 54.4 10.2 Yes 79 54.9 10.1 No 21 64.2 8.2 Yes 87 55.3 10.4 No 13 67.7 4.6 Male 49 56.0 8.4 Female 51 60.7 10.2 Likely Nov 2019 Voter Likely Mar 2020 Voter Gender Registration Year Household Party Type Years in Arroyo Grande (Q1) Age Party Fiscal Management (Q13) Overall Satisfaction (Q4) Child in Hsld (Q14) Direction of Country (Q15) Homeowner on Voter File Likely to Vote by Mail Item 11.c. - Page 64 Initial Ballot TestTrue North Research, Inc. © 2019 14City of Arroyo Grande . . . . . . . . . . . . . . . . REASONS FOR OPPOSING MEASURE Respondents who opposed the measure (or were unsure) at the Question 5 Initial Ballot Test were subsequently asked if there was a particular rea- son for their position. Question 6 was asked in an open-ended manner, allowing respondents to mention any reason that came to mind without being prompted by, or restricted to, a particular list of options. Among specific reasons offered for not supporting the measure, the perception that city funds have been/will be mismanaged or misspent and a belief that taxes are already too high were the most common, each mentioned by over a quarter of voters who received the question. An addi- tional 19% cited a desire for additional information about the measure. Question 6 Is there a particular reason why you do not support or are unsure about the mea- sure I just described? FIGURE 9 REASONS FOR NOT SUPPORTING MEASURE 1.5 1.5 2.7 2.8 3.3 3.9 5.2 6.5 8.1 26.5 27.9 18.8 0 5 10 15 20 25 30 City is okay as-is, no need for more money Mentioned past ballot measure Other higher priorities in community Cost too high and/or duration too long Not sure, no particular reason City has enough money Do not trust Government Other ways to be funded Money will go to employees/union pensions, salaries Need more information Taxes, already too high Money is misspent, mismanaged % Respondents Who Do Not Support Measure Item 11.c. - Page 65 ServicesTrue North Research, Inc. © 2019 15City of Arroyo Grande . . . . . . . . . . . . . . . . S ERVICES The ballot language presented in Question 5 indicated that the proposed measure would provide funding for general city services in the City of Arroyo Grande, including police patrols, drug and crime prevention, fire, emergency medical, and 9-1-1 emergency response, street, sidewalk, and pothole maintenance, addressing impacts from homelessness, and parks, recreation, childcare, and senior programs. The purpose of Question 7 was to provide respondents with a full range of services that may be funded by the proposed measure, as well as identify which of these services voters most favored funding with the proceeds of the measure. After reading each service, respondents were asked if they would favor or oppose spending some of the money on that particular item assuming that the measure passed. Descriptions of the services tested, as well as voters’ responses, are shown in Figure 10 below. The order in which the services were presented to respondents was randomized to avoid a systematic posi- tion bias. Question 7 The measure we've been discussing will provide funding for a variety of services in your community. If the measure passes, would you favor or oppose using some of the money to: _____, or do you not have an opinion? FIGURE 10 SERVICES Overall, the services that resonated with the largest percentage of respondents were maintaining local streets and repairing potholes (88% strongly or somewhat favor), repairing and maintaining public buildings and infrastructure including sidewalks, curbs, flood prevention infrastructure, and storm drains (86%), maintaining parks and recreation facilities including Soto Sports com- plex, courts, fields, playgrounds, and community centers (83%), and providing fire protection and emergency medical response services (82%). 29.3 25.5 40.8 35.1 39.8 43.6 56.2 46.5 56.7 44.6 52.4 62.6 29.9 34.6 25.7 32.0 29.9 30.4 23.3 33.5 25.4 38.2 33.2 25.4 0 102030405060708090100 Provide early childhood education programs, quality childcare services Provide community events that promote a sense of identity, place, health, wellness, community celebration Reduce drug-related crimes Promote economic development to attract new employers, good paying jobs to the city Address the impacts of homelessness Provide police services, including neighborhood police patrols, crime investigations, neighborhood code enforcement Provide quick responses to 9-1-1 emergencies Keep public areas clean, free of graffiti Provide fire protection and emergency medical response services Maintain parks, recreation facilities incl Soto Sports complex, courts, fields, playgrounds, community centers Repair, maintain public buildings and infrastructure incl sidewalks, curbs, flood prevention infrastructure, storm drains Maintain local streets and repair potholes Q7i Q7l Q7b Q7k Q7j Q7a Q7d Q7h Q7c Q7g Q7f Q7e % Respondents Strongly favor Somewhat favor Item 11.c. - Page 66 ■ ■ ServicesTrue North Research, Inc. © 2019 16City of Arroyo Grande . . . . . . . . . . . . . . . . SERVICE RATINGS BY INITIAL SUPPORT Table 2 presents the top five services (show- ing the percentage of respondents who strongly favor each) by position at the Initial Ballot Test. Not surprisingly, individuals who initially opposed the measure were generally less likely to favor spending money on a given service when compared with supporters. Nevertheless, initial sup- porters, opponents, and the undecided did agree on three of the top five priorities for funding. TABLE 2 TOP SERVICES BY POSITION AT INITIAL BALLOT TEST Position at Initial Ballot Test (Q5) Item Project or Improvement Summary % Strongly Favor Q7e Maintain local streets and repair potholes 74 Q7c Provide fire protection and emergency medical response services 74 Q7d Provide quick responses to 9-1-1 emergencies 73 Q7f Repair, maintain public buildings and infrastructure incl sidewalks, curbs, flood prevention infrastructure, storm drains 68 Q7a Provide police services, including neighborhood police patrols, crime investigations, neighborhood code enforcement 56 Q7e Maintain local streets and repair potholes 49 Q7h Keep public areas clean, free of graffiti 36 Q7c Provide fire protection and emergency medical response services 33 Q7d Provide quick responses to 9-1-1 emergencies 32 Q7f Repair, maintain public buildings and infrastructure incl sidewalks, curbs, flood prevention infrastructure, storm drains 31 Q7e Maintain local streets and repair potholes 45 Q7c Provide fire protection and emergency medical response services 42 Q7b Reduce drug-related crimes 40 Q7d Provide quick responses to 9-1-1 emergencies 37 Q7g Maintain parks, recreation facilities incl Soto Sports complex, courts, fields, playgrounds, community centers 35 Probably or Definitely Yes (n = 308) Probably or Definitely No (n = 175) Not Sure (n = 52) Item 11.c. - Page 67 Positive ArgumentsTrue North Research, Inc. © 2019 17City of Arroyo Grande . . . . . . . . . . . . . . . . P OSITIVE ARGUMENTS If the City chooses to place a measure on an upcoming ballot, voters will be exposed to various arguments about the measure in the ensuing months. Proponents of the measure will present arguments to try to persuade voters to support a measure, just as opponents may present argu- ments to achieve the opposite goal. For this study to be a reliable gauge of voter support for the proposed sales tax measure, it is important that the survey simulate the type of discussion and debate that will occur prior to the vote taking place and identify how this information ultimately shapes voters’ opinions about the measure. The objective of Question 8 was thus to present respondents with arguments in favor of the pro- posed measure and identify whether they felt the arguments were convincing reasons to support it. Arguments in opposition to the measure were also presented and are discussed later in this report (see Negative Arguments on page 21). Within each series, specific arguments were admin- istered in random order to avoid a systematic position bias. Question 8 What I'd like to do now is tell you what some people are saying about the measure we've been discussing. Supporters of the measure say: _____. Do you think this is a very convinc- ing, somewhat convincing, or not at all convincing reason to SUPPORT the measure? FIGURE 11 POSITIVE ARGUMENTS Figure 11 presents the truncated positive arguments tested, as well as voters’ reactions to the arguments. The arguments are ranked from most convincing to least convincing based on the percentage of respondents who indicated that the argument was either a ‘very convincing’ or ‘somewhat convincing’ reason to support the sales tax measure. Using this methodology, the 16.6 15.7 29.5 31.2 32.1 31.4 36.4 35.6 31.2 32.4 33.0 31.1 36.0 31.6 30.9 31.9 34.5 31.0 32.2 37.0 38.3 39.0 0 102030405060708090100 State mandating early parole, more criminals being released into city, county; measure provides funds we need to combat crime in community Measure will help fund economic development programs City needs to attract new employers, good paying jobs to Arroyo Grande Over past 10 yrs, cut staff by 20%, reformed pension costs, deferred maintenance, cut services; still need $3M to maintain services, facilities, quality of life There will be a clear system of accountability incl independent citizen oversight, annual reports to community to ensure that money is spent properly Measure will provide funding to avoid deep cuts in all service areas, incl police, fire, 9-1-1, maintenance of streets, parks, public facilities, programs for youth, seniors By keeping city safe, clean, well-maintained, measure will help protect property values, keep Arroyo Grande a great place to live All money raised by measure will be used to fund essential services, facilities here in Arroyo Grande; by law, it can’t be taken away by State About half of money raised by sales tax will come from people who visit community, but don’t live here; measure will make sure they pay their fair share High quality parks, open spaces, sports fields, recreation programs help keep kids healthy, active, away from drugs, gangs, crime Fast response for 9-1-1 critical for saving lives; measure will ensure enough police officers, firefighters, emergency personnel to respond quickly to 9-1-1 Funding will allow City to keep up with repairs, maintenance to facilities, storm drains, streets, sidewalks; If we don’t take care of it now, will be more expensive in future Q8d Q8h Q8i Q8a Q8k Q8f Q8b Q8g Q8j Q8c Q8e % Respondents Very convincing Somewhat convincing Item 11.c. - Page 68 ■ ■ Positive ArgumentsTrue North Research, Inc. © 2019 18City of Arroyo Grande . . . . . . . . . . . . . . . . most compelling positive arguments were: The funding raised by this measure will allow the City to keep up with basic repairs and maintenance to public facilities, storm drains, streets, and sidewalks. If we don't take care of it now, it will be a lot more expensive to repair in the future (72% very or somewhat convincing), Fast emergency response times for 9-1-1 calls are critical for saving lives and property. This measure will ensure that we have enough police officers, fire- fighters, and other emergency personnel to respond quickly to 9-1-1 emergencies (71%), and High quality parks, open spaces, sports fields, and recreation programs help keep kids healthy, active, and away from drugs, gangs, and crime (68%). POSITIVE ARGUMENTS BY INITIAL SUPPORT Table 3 lists the top five most convinc- ing positive arguments (showing the percentage of respondents who cited it as very convincing) according to respondents’ vote choice at the Initial Ballot Test. The positive arguments reso- nated with a much higher percentage of voters initially inclined to support the measure com- pared with those who initially opposed the measure or were unsure. Nevertheless, two arguments were ranked among the top five most compelling by all three groups. TABLE 3 TOP POSITIVE ARGUMENTS BY POSITION AT INITIAL BALLOT TEST Position at Initial Ballot Test (Q5) Item Positive Argument Summary % Very Convincing Q8b All money raised by measure will be used to fund essential services, facilities here in Arroyo Grande; by law, it can’t be taken away by State 53 Q8k Measure will provide funding to avoid deep cuts in all service areas, incl police, fire, 9-1-1, maintenance of streets, parks, public facilities, programs for youth, seniors 51 Q8e Funding will allow City to keep up with repairs, maintenance to facilities, storm drains, streets, sidewalks; If we don’t take care of it now, will be more expensive in future 51 Q8g About half of money raised by sales tax will come from people who visit community, but don’t live here; measure will make sure they pay their fair share 51 Q8c Fast response for 9-1-1 critical for saving lives; measure will ensure enough police officers, firefighters, emergency personnel to respond quickly to 9-1-1 49 Q8g About half of money raised by sales tax will come from people who visit community, but don’t live here; measure will make sure they pay their fair share 15 Q8b All money raised by measure will be used to fund essential services, facilities here in Arroyo Grande; by law, it can’t be taken away by State 14 Q8j High quality parks, open spaces, sports fields, recreation programs help keep kids healthy, active, away from drugs, gangs, crime 14 Q8a There will be a clear system of accountability incl independent citizen oversight, annual reports to community to ensure that money is spent properly 13 Q8f By keeping city safe, clean, well-maintained, measure will help protect property values, keep Arroyo Grande a great place to live 11 Q8a There will be a clear system of accountability incl independent citizen oversight, annual reports to community to ensure that money is spent properly 25 Q8j High quality parks, open spaces, sports fields, recreation programs help keep kids healthy, active, away from drugs, gangs, crime 24 Q8c Fast response for 9-1-1 critical for saving lives; measure will ensure enough police officers, firefighters, emergency personnel to respond quickly to 9-1-1 20 Q8g About half of money raised by sales tax will come from people who visit community, but don’t live here; measure will make sure they pay their fair share 19 Q8b All money raised by measure will be used to fund essential services, facilities here in Arroyo Grande; by law, it can’t be taken away by State 19 Probably or Definitely Yes (n = 308) Probably or Definitely No (n = 175) Not Sure (n = 52) Item 11.c. - Page 69 Interim Ballot TestTrue North Research, Inc. © 2019 19City of Arroyo Grande . . . . . . . . . . . . . . . . I NTERIM BALLOT TEST After exposing respondents to services that could be funded by the measure as well as the types of positive arguments voters may encounter during an election cycle, the survey again presented respondents with the ballot language used previously to gauge how support for the proposed sales tax measure may have changed. As shown in Figure 12, overall support among likely November 2020 voters increased slightly to 59%, with 28% of voters indicating that they would definitely vote yes on the measure. Approximately 30% of respondents opposed the measure at this point in the survey, and an additional 12% were unsure or unwilling to state their vote choice. Question 9 Sometimes people change their mind about a measure once they have more infor- mation about it. Now that you have heard a bit more about the measure, let me read you a sum- mary of it again. To provide funding for general city services in Arroyo Grande, including police patrols, drug and crime prevention; fire, emergency medical, and 9-1-1 emergency response; street, sidewalk, and pothole maintenance; addressing impacts from homelessness; and parks, recreation, childcare, and senior programs; shall an ordinance establishing a one cent sales tax be adopted, providing approximately 4 million dollars annually for city services until ended by voters that can't be taken by the State, and requiring citizen oversight and all funds controlled locally? If the election were held today, would you vote yes or no on this measure? FIGURE 12 INTERIM BALLOT TEST SUPPORT BY SUBGROUPS Table 4 on the next page shows how support for the measure at this point in the survey varied by key voter subgroups, as well as the change in subgroup sup- port when compared with the Initial Ballot Test. Positive differences appear in green and negative differences appear in red. As shown in the table, support for the sales tax measure increased or decreased by modest amounts (less than 5 percentage points) between the Initial and Interim Ballot Test for most voter subgroups. The largest increases in support occurred among voters not likely to vote by mail (+10%) and those who have lived in Arroyo Grande between 10 and 14 years (+9%). Not sure 11.3 Prefer not to answer 0.5 Definitely no 16.3 Probably no 13.2 Definitely yes 28.2 Probably yes 30.6 Item 11.c. - Page 70 Interim Ballot TestTrue North Research, Inc. © 2019 20City of Arroyo Grande . . . . . . . . . . . . . . . . TABLE 4 DEMOGRAPHIC BREAKDOWN OF SUPPORT AT INTERIM BALLOT TEST Approximate % of Voter Universe % Probably or Definitely Yes Change From Initial Ballot Test (Q5) Overall 100 58.8 +1.9 Less than 5 16 70.2 +6.7 5 to 9 17 62.7 -3.2 10 to 14 13 58.4 +9.2 15 or more 53 54.3 +0.3 Satisfied 85 65.1 +2.1 Dissatisfied 15 31.9 +2.7 Yes 28 66.9 +5.0 No 72 57.8 +1.5 Excellent, good 51 79.5 +3.3 Fair 33 49.1 +2.7 Poor, very poor 16 14.6 -5.3 Right direction 34 48.5 -0.0 Wrong direction 66 68.0 +3.3 Yes 68 56.2 +0.2 No 32 64.3 +5.5 Yes 86 56.4 +2.3 No 14 73.9 -0.7 Democrat 35 69.8 +3.3 Republican 39 49.0 +2.2 Other / DTS 26 58.4 -0.3 Single dem 14 70.3 +4.8 Dual dem 10 77.5 +3.0 Single rep 13 47.4 +5.8 Dual rep 16 45.7 +0.7 Other 17 55.6 -0.6 Mixed 29 60.7 +0.5 18 to 29 8 71.9 +1.8 30 to 39 11 51.5 +2.3 40 to 49 15 65.4 +5.8 50 to 64 28 50.3 -2.3 65 or older 39 61.6 +3.3 Since Nov 16 8 75.2 +6.7 Jun 10 to <Nov 16 15 63.6 +0.3 Jun 04 to <Jun 10 13 57.0 +2.2 Before June 04 65 56.0 +1.7 Yes 79 54.9 +0.1 No 21 72.8 +8.6 Yes 87 56.0 +0.8 No 13 77.4 +9.7 Male 49 58.7 +2.8 Female 51 61.9 +1.2 Likely Mar 2020 Voter Gender Household Party Type Age Registration Year Likely Nov 2019 Voter Direction of Country (Q15) Homeowner on Voter File Likely to Vote by Mail Party Years in Arroyo Grande (Q1) Overall Satisfaction (Q4) Child in Hsld (Q14) Fiscal Management (Q13) Item 11.c. - Page 71 Negative ArgumentsTrue North Research, Inc. © 2019 21City of Arroyo Grande . . . . . . . . . . . . . . . . N EGATIVE ARGUMENTS Whereas Question 8 of the survey presented respondents with arguments in favor of the sales tax measure, Question 10 presented respondents with arguments designed to elicit opposition to the measure. In the case of Question 10, however, respondents were asked whether they felt that the argument was a very convincing, somewhat convincing, or not at all convincing reason to oppose the measure. The arguments tested, as well as voters’ opinions about the arguments, are presented below in Figure 13. Question 10 Next, let me tell you what opponents of the measure are saying. Opponents of the measure say: _____. Do you think this is a very convincing, somewhat convincing, or not at all convincing reason to OPPOSE the measure? FIGURE 13 NEGATIVE ARGUMENTS Most voters found the negative arguments tested to be less convincing than the positive argu- ments. The most compelling negative arguments were: Taxes are already too high, we can't afford another tax increase. This is especially true for seniors and others on fixed-incomes (67% very or somewhat convincing) and There are no guarantees on how funds will be spent, which means the City can divert the money to pet projects. The City government can't be trusted with our tax dollars (64%). NEGATIVE ARGUMENTS BY INITIAL SUPPORT Table 5 on the next page ranks the negative arguments (showing the percentage of respondents who cited each as very convincing) according to respondents’ vote choice at the Initial Ballot Test. 23.4 31.1 26.8 33.4 36.5 28.0 25.2 31.7 30.5 30.3 0 102030405060708090100 City employees are making too much money in salary, pensions, benefits, that’s the problem; City needs to tighten its belt before asking residents to pay more taxes This tax will last forever; there is no expiration date We already pay a half-cent sales tax for city services; now they want more money? That’s not fair to taxpayers There are no guarantees on how funds will be spent, which means City can divert the money to pet projects; City government can’t be trusted with tax dollars Taxes are already too high, we can’t afford another tax increase; this is especially true for seniors, others on fixed-incomes Q10b Q10e Q10c Q10d Q10a % Respondents Very convincing Somewhat convincing Item 11.c. - Page 72 ■ ■ Negative ArgumentsTrue North Research, Inc. © 2019 22City of Arroyo Grande . . . . . . . . . . . . . . . . TABLE 5 NEGATIVE ARGUMENTS BY POSITION AT INITIAL BALLOT TEST Position at Initial Ballot Test (Q5) Item Negative Argument Summary % Very Convincing Q10a Taxes are already too high, we can’t afford another tax increase; this is especially true for seniors, others on fixed-incomes 22 Q10d There are no guarantees on how funds will be spent, which means City can divert the money to pet projects; City government can’t be trusted with tax dollars 21 Q10e This tax will last forever; there is no expiration date 17 Q10b City employees are making too much money in salary, pensions, benefits, that’s the problem; City needs to tighten its belt before asking residents to pay more taxes 13 Q10c We already pay a half-cent sales tax for city services; now they want more money? Tha 11 Q10a Taxes are already too high, we can’t afford another tax increase; this is especially true for seniors, others on fixed-incomes 65 Q10c We already pay a half-cent sales tax for city services; now they want more money? That’s not fair to taxpayers 58 Q10e This tax will last forever; there is no expiration date 55 Q10d There are no guarantees on how funds will be spent, which means City can divert the money to pet projects; City government can’t be trusted with tax dollars 53 Q10b City employees are making too much money in salary, pensions, benefits, that’s the problem; City needs to tighten its belt before asking residents to pay more taxes 44 Q10d There are no guarantees on how funds will be spent, which means City can divert the money to pet projects; City government can’t be trusted with tax dollars 37 Q10a Taxes are already too high, we can’t afford another tax increase; this is especially true for seniors, others on fixed-incomes 28 Q10e This tax will last forever; there is no expiration date 28 Q10b City employees are making too much money in salary, pensions, benefits, that’s the problem; City needs to tighten its belt before asking residents to pay more taxes 15 Q10c We already pay a half-cent sales tax for city services; now they want more money? That’s not fair to taxpayers 14 Probably or Definitely Yes (n = 308) Probably or Definitely No (n = 175) Not Sure (n = 52) Item 11.c. - Page 73 Final Ballot TestTrue North Research, Inc. © 2019 23City of Arroyo Grande . . . . . . . . . . . . . . . . F INAL BALLOT TEST Voters’ opinions about ballot measures are often not rigid, especially when the amount of infor- mation presented to the public on a measure has been limited. A goal of the survey was thus to gauge how voters’ opinions about the proposed measure may be affected by the information they could encounter during the course of an election cycle. After providing respondents with the wording of the proposed measure, services that could be funded, and arguments in favor of and against the proposal, the survey again asked voters whether they would vote ‘yes’ or ‘no’ on the proposed sales tax measure. Question 11 Now that you have heard a bit more about the measure, let me read you a sum- mary of it one more time. To provide funding for general city services in Arroyo Grande, includ- ing police patrols, drug and crime prevention; fire, emergency medical, and 9-1-1 emergency response; street, sidewalk, and pothole maintenance; addressing impacts from homelessness; and parks, recreation, childcare, and senior programs; shall an ordinance establishing a one cent sales tax be adopted, providing approximately 4 million dollars annually for city services until ended by voters that can't be taken by the State, and requiring citizen oversight and all funds controlled locally? If the election were held today, would you vote yes or no on this mea- sure? FIGURE 14 FINAL BALLOT TEST At this point in the survey, support for the one-cent sales tax measure was found among 55% of likely November 2020 voters, with 27% indicating that they would definitely support the mea- sure. Approximately 33% of respondents were opposed to the measure at the Final Ballot Test, and 12% were unsure or unwilling to state their vote choice. Probably yes 28.3 Definitely yes 27.1 Probably no 14.8 Definitely no 17.8 Prefer not to answer 2.0Not sure 10.0 Item 11.c. - Page 74 Change in SupportTrue North Research, Inc. © 2019 24City of Arroyo Grande . . . . . . . . . . . . . . . . C HANGE IN SUPPORT Table 6 provides a closer look at how support for the proposed measure changed over the course of the interview by calculating the difference in support between the Initial, Interim, and Final Ballot tests within various subgroups of voters. The percentage of support for the measure at the Final Ballot Test is shown in the column with the heading % Probably or Definitely Yes. The columns to the right show the difference between the Final and the Initial, and the Final and Interim Ballot Tests. Positive differences appear in green, and negative differences appear in red. TABLE 6 DEMOGRAPHIC BREAKDOWN OF SUPPORT AT FINAL BALLOT TEST Approximate % of Voter Universe % Probably or Definitely Yes Change From Initial Ballot Test (Q5) Change From Interim Ballot Test (Q9) Overall 100 55.4 -1.5 -3.4 Less than 5 16 66.7 +3.2 -3.5 5 to 9 17 60.1 -5.8 -2.6 10 to 14 13 47.5 -1.7 -10.9 15 or more 53 52.6 -1.5 -1.7 Satisfied 85 61.7 -1.2 -3.3 Dissatisfied 15 28.5 -0.7 -3.3 Yes 28 66.2 +4.3 -0.7 No 72 53.0 -3.2 -4.8 Excellent, good 51 75.9 -0.2 -3.6 Fair 33 47.1 +0.7 -1.9 Poor, very poor 16 11.6 -8.3 -3.0 Right direction 34 42.6 -5.8 -5.8 Wrong direction 66 65.2 +0.5 -2.8 Yes 68 53.3 -2.6 -2.8 No 32 59.7 +1.0 -4.6 Yes 86 52.3 -1.8 -4.1 No 14 74.9 +0.3 +1.0 Democrat 35 66.8 +0.3 -3.0 Republican 39 43.0 -3.9 -6.0 Other / DTS 26 58.4 -0.3 +0.0 Single dem 14 66.4 +0.9 -3.9 Dual dem 10 75.6 +1.2 -1.8 Single rep 13 39.3 -2.3 -8.1 Dual rep 16 41.3 -3.6 -4.3 Ot her 17 57.3 +1.1 +1.7 Mixed 29 56.7 -3.5 -4.0 18 to 29 8 66.3 -3.8 -5.6 30 to 39 11 49.2 No change -2.3 40 to 49 15 65.4 +5.8 No change 50 to 64 28 50.5 -2.0 +0.3 65 or older 39 54.4 -3.8 -7.2 Since Nov 16 8 75.2 +6.7 No change Jun 10 to <Nov 16 15 57.4 -5.9 -6.3 Jun 04 to <Jun 10 13 56.6 +1.8 -0.4 Before June 04 65 52.3 -2.0 -3.7 Yes 79 52.4 -2.4 -2.5 No 21 66.2 +2.0 -6.6 Yes 87 53.6 -1.7 -2.5 No 13 67.8 +0.1 -9.6 Male 49 55.7 -0.3 -3.0 Female 51 58.3 -2.4 -3.7 Years in Arroyo Grande (Q1) Overall Satisfaction (Q4) Child in Hsld (Q14) Fiscal Management (Q13) Direction of Country (Q15) Homeowner on Voter File Likely to Vote by Mail Party Likely Mar 2020 Voter Gender Household Party Type Age Registration Year Likely Nov 2019 Voter Item 11.c. - Page 75 Change in SupportTrue North Research, Inc. © 2019 25City of Arroyo Grande . . . . . . . . . . . . . . . . As expected, voters generally responded to the negative arguments with a reduction in their sup- port for the sales tax measure when compared with the levels recorded at the Interim Ballot Test. The general trend over the course of the entire survey (Initial to Final Ballot Test) was also one of mildly declining support for most voter subgroups, averaging -2 percentage points overall. Nev- ertheless, even with this decline, support for the proposed measure at the Final Ballot Test remained above the simple majority required for passage of a general tax. Whereas Table 6 displays change in support for the measure over the course of the interview at the subgroup level, Table 7 displays the individual-level changes that occurred between the Ini- tial and Final Ballot tests for the measure. On the left side of the table is shown each of the response options to the Initial Ballot Test and the percentage of respondents in each group. The cells in the body of the table depict movement within each response group (row) based on the information provided throughout the course of the survey as recorded by the Final Ballot Test. For example, in the first row we see that of the 23.6% of respondents who indicated that they would definitely support the measure at the Initial Ballot Test, 20.1% also indicated they would definitely support the measure at the Final Ballot Test. Approximately 3.0% moved to the proba- bly support group, 0.0% moved to the probably oppose group, 0.2% moved to the definitely oppose group, and 0.3% stated they were now unsure of their vote choice. To ease interpretation of the table, the cells are color coded. Red shaded cells indicate declining support, green shaded cells indicate increasing support, whereas white cells indicate no move- ment. Moreover, within the cells, a white font indicates a fundamental change in the vote: from yes to no, no to yes, or not sure to either yes or no. TABLE 7 MOVEMENT BETWEEN INITIAL & FINAL BALLOT TEST As one might expect, the information conveyed in the survey had the greatest impact on individ- uals who either weren’t sure about how they would vote at the Initial Ballot Test or were tentative in their vote choice (probably yes or probably no). Moreover, Table 7 makes clear that although the information did impact some voters, it did not do so in a consistent way for all respondents. Some respondents found the information provided during the course of the interview to be a rea- son to become less supportive of the measure, while a slightly larger percentage found the same information reason to be more supportive. Despite 15% of respondents making a fundamental3 shift in their opinion about the measure over the course of the interview, the net impact is that support for the measure at the Final Ballot Test was approximately two percentage points lower than support at the Initial Ballot Test. 3. This is, they changed from a position of support, opposition, or undecided at the Initial Ballot Test to a dif- ferent position at the Final Ballot Test. Definitely support Probably support Probably oppose Definitely oppose Not sure Definitely support 23.6%20.1% 3.0%0.0% 0.2% 0.3% Probably support 33.2%6.6% 22.1%1.9% 0.3% 2.3% Probably oppose 12.5%0.0% 0.8%6.4% 3.2%2.0% Definitely oppose 19.8%0.3% 0.3%4.6% 13.3%1.3% Not sure 10.8%0.1% 2.0% 1.9% 0.8%6.0% Initial Ballot Test (Q5) Final Ballot Test (Q11) Item 11.c. - Page 76 Final Ballot Test at Lower RateTrue North Research, Inc. © 2019 26City of Arroyo Grande . . . . . . . . . . . . . . . . F INAL BALLOT TEST AT LOWER RATE The ballot language tested throughout the survey indicated that the measure would increase the local sales tax rate by one cent and be used to fund general city services. Voters who did not support the proposed measure at the Final Ballot Test (Question 11) were subsequently asked if they would support the measure if the rate were set at a lower amount: one-half cent. As shown in Figure 15, lowering the tax rate to one-half cent generated a modest amount of additional support for the proposed measure. An additional 8% of voters indicated they would support the measure if the tax rate were lowered to one-half cent, although nearly all of the addi- tional support for the measure was ‘soft’ (probably yes). Question 12 What if the measure I just described raised the sales tax by a lower amount: one- half cent? Would you vote yes or no on the measure? FIGURE 15 FINAL BALLOT TEST AT ONE-HALF CENT Definitely yes 1.0 Def, prob yes @ one cent (Q11) 55.4 Probably yes 7.0 Probably no 12.5 Not sure 6.1 Definitely no 15.8 Prefer not to answer 2.1 Item 11.c. - Page 77 Background & DemographicsTrue North Research, Inc. © 2019 27City of Arroyo Grande . . . . . . . . . . . . . . . . B ACKGROUND & DEMOGRAPHICS TABLE 8 DEMOGRAPHICS OF SAMPLE In addition to questions directly related to the proposed measure, the study collected basic demographic informa- tion about respondents and their households. Some of this information was gathered during the interview, although much of it was collected from the voter file. The profile of the likely November 2020 voter sample used for this study is shown in Table 8. Total Respondents 541 Years in Arroyo Grande (Q1) Less than 5 16.3 5 to 9 17.1 10 to 14 13.4 15 or more 52.4 Not sure / Prefer not to answer 0.7 Fiscal Management (Q13) Excellent, good 43.7 Fair 28.9 Poor, very poor 13.7 Prefer not to answer 13.8 Child in Hsld (Q14) Yes 27.2 No 70.0 Prefer not to answer 2.9 Direction of Country (Q15) Right direction 28.8 Wrong direction 56.5 Not sure / Prefer not to answer 14.7 Homeowner on Voter File Yes 67.9 No 32.1 Age 18 to 29 8.1 30 to 39 10.9 40 to 49 15.0 50 to 64 27.7 65 or older 38.4 Registration Year Since Nov 16 7.7 Jun 10 to <Nov 16 15.0 Jun 04 to <Jun 10 12.5 Before June 04 64.8 Party Democrat 35.0 Republican 38.7 Other / DTS 26.4 Household Party Type Single dem 14.4 Dual dem 10.2 Single rep 12.9 Dual rep 16.3 Other 16.8 Mixed 29.4 Likely to Vote by Mail Yes 86.3 No 13.7 Likely Nov 2019 Voter Yes 78.6 No 21.4 Likely Mar 2020 Voter Yes 87.2 No 12.8 Gender Male 46.8 Female 48.2 Prefer not to answer 5.0 Item 11.c. - Page 78 MethodologyTrue North Research, Inc. © 2019 28City of Arroyo Grande . . . . . . . . . . . . . . . . M ETHODOLOGY The following sections outline the methodology used in the study, as well as the motivation for using certain techniques. QUESTIONNAIRE DEVELOPMENT Dr. McLarney of True North Research worked closely with the City of Arroyo Grande to develop a questionnaire that covered the topics of interest and avoided possible sources of systematic measurement error, including position-order effects, wording effects, response-category effects, scaling effects, and priming. Several questions included multiple individual items. Because asking items in a set order can lead to a systematic position bias in responses, items were asked in random order for each respondent. Some of the questions asked in this study were presented only to a subset of respondents. For example, only individuals who did not support the sales tax or were unsure at the Final Ballot Test (Question 11) were asked if they would support the measure at a lower tax rate (Question 12). The questionnaire included with this report (see Questionnaire & Toplines on page 31) iden- tifies the skip patterns that were used during the interview to ensure that each respondent received the appropriate questions. PROGRAMMING & PRE-TEST Prior to fielding the survey, the questionnaire was CATI (Computer Assisted Telephone Interviewing) programmed to assist interviewers when conduct- ing telephone interviews. The CATI program automatically navigates skip patterns, randomizes the appropriate question items, and alerts the interviewer to certain types of keypunching mis- takes should they occur. The survey was also programmed into a passcode-protected online sur- vey application to allow online participation for sampled voters. The integrity of the questionnaire was pre-tested internally by True North and by dialing into voter households in the City prior to formally beginning the survey. SAMPLE The survey was administered to a random sample of 541 registered voters in the City likely to participate in the November 2020 election. Consistent with the profile of this uni- verse, the sample was stratified into clusters, each representing a combination of age, gender, and household party-type. Individuals were then randomly selected based on their profile into an appropriate cluster. This method ensures that if a person of a particular profile refuses to partic- ipate in the study, they are replaced by an individual who shares their same profile. STATISTICAL MARGIN OF ERROR By using the probability-based sampling design noted above, True North ensured that the final sample was representative of voters in the City who are likely to participate in the November 2020 election. The results of the sample can thus be used to estimate the opinions of all voters likely to participate in this election. Because not all voters participated in the study, however, the results have what is known as a statistical margin of error due to sampling. The margin of error refers to the difference between what was found in the survey of 541 voters for a particular question and what would have been found if all 10,729 likely November 2020 voters identified in the City had been surveyed for the study. Item 11.c. - Page 79 MethodologyTrue North Research, Inc. © 2019 29City of Arroyo Grande . . . . . . . . . . . . . . . . Figure 16 provides a graphic plot of the maximum margin of error in this study. The maximum margin of error for a dichotomous percentage result occurs when the answers are evenly split such that 50% provide one response and 50% provide the alternative response. For this survey, the maximum margin of error is ± 4.1%. FIGURE 16 MAXIMUM MARGIN OF ERROR DUE TO SAMPLING Within this report, figures and tables show how responses to certain questions varied by sub- groups such as age, gender, and partisan affiliation. Figure 16 is thus useful for understanding how the maximum margin of error for a percentage estimate will grow as the number of individ- uals asked a question (or in a particular subgroup) shrinks. Because the margin of error grows exponentially as the sample size decreases, the reader should use caution when generalizing and interpreting the results for small subgroups. RECRUITING & DATA COLLECTION The survey followed a mixed-method design that employed multiple recruiting methods (telephone and email) and multiple data collection meth- ods (telephone and online). Telephone interviews averaged 16 minutes in length and were con- ducted during weekday evenings (5:30PM to 9PM) and on weekends (10AM to 5PM). It is standard practice not to call during the day on weekdays because most working adults are unavailable and thus calling during those hours would likely bias the sample. Voters recruited via email were assigned a unique passcode to ensure that only voters who received an invitation could access the online survey site, and that each voter could complete the survey only one time. During the data collection period, an email reminder notice was also sent to encourage participation among those who had yet to take the survey. A total of 541 surveys were completed between November 11 and November 21, 2019. Sample of 541 Likely November 2020 Voters ± 4.1% 0% 2% 4% 6% 8% 10% 12% 14% 0 100 200 300 400 500 600 700 800 900 1000 Sample Size (Number of Respondents)Margin of ErrorItem 11.c. - Page 80 ---1------7------,------1------------T------ - - - - - ----t-- - - - -t-- - - - --1-- - - - - - - - - - -+-- - - - --------+------! - - --I-- - - - -l-- - - - --1-- - - - - - - - - - -+-- - - - --------+------1 I CJ I I ______ __l ______ j - - - - -_I - - - - - - I ______ I _____ _ ------I _____ _ I I I I -------------------------------------------- ' ' I ' MethodologyTrue North Research, Inc. © 2019 30City of Arroyo Grande . . . . . . . . . . . . . . . . DATA PROCESSING Data processing consisted of checking the data for errors or inconsis- tencies, coding and recoding responses, weighting, and preparing frequency analyses and cross- tabulations. ROUNDING Numbers that end in 0.5 or higher are rounded up to the nearest whole num- ber, whereas numbers that end in 0.4 or lower are rounded down to the nearest whole number. These same rounding rules are also applied, when needed, to arrive at numbers that include a decimal place in constructing figures and tables. Occasionally, these rounding rules lead to small discrepancies in the first decimal place when comparing tables and charts for a given question. Due to rounding, some figures and narrative include numbers that add to more than or less than 100%. Item 11.c. - Page 81 Questionnaire & ToplinesTrue North Research, Inc. © 2019 31City of Arroyo Grande . . . . . . . . . . . . . . . . Q UESTIONNAIRE & TOPLINES True North Research, Inc. © 2019 Page 1 City of Arroyo Grande Revenue Measure Feasibility Survey Final Toplines (n=541) November 11, 2019 Section 1: Introduction to Study Hi, may I please speak to _____. My name is _____, and I’m calling on behalf of TNR, an independent public opinion research firm. We’re conducting a survey of voters about important issues in Arroyo Grande (Uh-ROY-yo GRAWN-day) and I’d like to get your opinions. If needed: This is a survey about important issues in your community. I’m NOT trying to sell anything and I won’t ask for a donation. If needed: The survey should take about 12 minutes to complete. If needed: If now is not a convenient time, can you let me know a better time so I can call back? If the person asks why you need to speak to the listed person or if they ask to participate instead, explain: For statistical purposes, at this time the survey must only be completed by this particular individual. If the person says they are an elected official or is somehow associated with the survey, politely explain that this survey is designed to measure the opinions of those not closely associated with the study, thank them for their time, and terminate the interview. Section 2: Quality of Life & City Services I’d like to begin by asking you a few questions about what it is like to live in Arroyo Grande. Q1 How long have you lived in Arroyo Grande? 1 Less than 1 year 1% 2 1 to 4 years 16% 3 5 to 9 years 17% 4 10 to 14 years 13% 5 15 years or longer 52% 99 Prefer not to answer 1% Q2 How would you rate the overall quality of life in Arroyo Grande? Would you say it is excellent, good, fair, poor or very poor? 1 Excellent 42% 2 Good 50% 3 Fair 7% 4 Poor 1% 5 Very Poor 0% 98 Not sure 0% 99 Prefer not to answer 0% Item 11.c. - Page 82 A uENORTH 1,r RESEARCH Questionnaire & ToplinesTrue North Research, Inc. © 2019 32City of Arroyo Grande . . . . . . . . . . . . . . . . City of Arroyo Grande Survey November 2019 True North Research, Inc. © 2019 Page 2 Q3 If the city government could change one thing to make Arroyo Grande a better place to live now and in the future, what change would you like to see? Verbatim responses recorded and later grouped into categories shown below. Not sure, nothing comes to mind 16% Improve streets, roads, infrastructure 9% Limit growth, development, preserve small town feel 9% Provide affordable housing 8% Reduce traffic congestion 7% No changes needed / Everything is fine 7% Address homeless issues, poverty 5% Improve budgeting, spending 5% Reduce taxes, fees 4% Provide more dining, shopping opportunities 4% Address water-related issues 4% Add more safer bike, walking trails, lanes 4% Improve Brisco freeway access 4% Improve public safety, police services 3% Improve zoning laws, building permit process 3% Enforce traffic laws 3% Beautify city, landscaping 3% Improve, provide additional parks, rec facilities 2% Provide additional activities, events for all ages 2% Reduce cost of living 2% Improve city planning 2% Improve government, leadership, transparency 2% Improve economy, jobs 2% Q4 Generally speaking, are you satisfied or dissatisfied with the job the City of Arroyo Grande is doing to provide city services? Get answer, then ask: Would that be very (satisfied/dissatisfied) or somewhat (satisfied/dissatisfied)? 1 Very satisfied 29% 2 Somewhat satisfied 51% 3 Somewhat dissatisfied 10% 4 Very dissatisfied 4% 98 Not sure 5% 99 Prefer not to answer 0% Item 11.c. - Page 83 Questionnaire & ToplinesTrue North Research, Inc. © 2019 33City of Arroyo Grande . . . . . . . . . . . . . . . . City of Arroyo Grande Survey November 2019 True North Research, Inc. © 2019 Page 3 Section 3: Initial Ballot Test Next year, voters in Arroyo Grande may be asked to vote on a local ballot measure. Let me read you a summary of the measure. Q5 To provide funding for general city services in Arroyo Grande, including: Police patrols, drug and crime prevention Fire, emergency medical, and 9-1-1 emergency response Street, sidewalk, and pothole maintenance Addressing impacts from homelessness And parks, recreation, childcare, and senior programs shall an ordinance establishing a one cent sales tax be adopted, providing approximately 4 million dollars annually for city services until ended by voters that can’t be taken by the State, and requiring citizen oversight and all funds controlled locally? If the election were held today, would you vote yes or no on this measure? Get answer, then ask: Would that be definitely (yes/no) or probably (yes/no)? 1 Definitely yes 24% Skip to Q7 2 Probably yes 33% Skip to Q7 3 Probably no 13% Ask Q6 4 Definitely no 20% Ask Q6 98 Not sure 10% Ask Q6 99 Prefer not to answer 1% Skip to Q7 Q6 Is there a particular reason why you do not support or are unsure about the measure I just described? If yes, ask: Please briefly describe your reason. Verbatim responses recorded and later grouped into categories shown below. Money is misspent, mismanaged 28% Taxes, already too high 26% Need more information 19% Money will go to employees/union pensions, salaries 8% Other ways to be funded 6% Do not trust Government 5% City has enough money 4% Other higher priorities in community 3% Cost too high and/or duration too long 3% Not sure, no particular reason 3% Mentioned past ballot measure 2% City is okay as-is, no need for more money 1% Item 11.c. - Page 84 Questionnaire & ToplinesTrue North Research, Inc. © 2019 34City of Arroyo Grande . . . . . . . . . . . . . . . . City of Arroyo Grande Survey November 2019 True North Research, Inc. © 2019 Page 4 Section 4: Services Q7 The measure we’ve been discussing will provide funding for a variety of services in your community. If the measure passes, would you favor or oppose using some of the money to: _____, or do you not have an opinion? Get answer, if favor or oppose, then ask: Would that be strongly (favor/oppose) or somewhat (favor/oppose)? Randomize Strongly Favor Somewhat Favor Somewhat Oppose Strongly Oppose Not sure Prefer not to answer A Provide police services, including neighborhood police patrols, crime investigations and neighborhood code enforcement 44% 30% 10% 8% 7% 1% B Reduce drug-related crimes 41% 26% 13% 8% 10% 3% C Provide fire protection and emergency medical response services 57% 25% 5% 6% 6% 2% D Provide quick responses to 9-1-1 emergencies 56% 23% 6% 5% 8% 2% E Maintain local streets and repair potholes 63% 25% 3% 3% 4% 2% F Repair and maintain public buildings and infrastructure including sidewalks, curbs, flood prevention infrastructure, and storm drains 52% 33% 5% 3% 5% 1% G Maintain parks and recreation facilities including Soto Sports complex, courts, fields, playgrounds, and community centers 45% 38% 7% 5% 4% 1% H Keep public areas clean and free of graffiti 46% 33% 8% 5% 6% 1% I Provide early childhood education programs and quality childcare services 29% 30% 18% 11% 9% 3% J Address the impacts of homelessness 40% 30% 9% 11% 8% 2% K Promote economic development to attract new employers and good paying jobs to the city 35% 32% 14% 9% 8% 2% L Provide community events that promote a sense of identity and place, health and wellness, and community celebration 25% 35% 17% 12% 9% 2% Item 11.c. - Page 85 Questionnaire & ToplinesTrue North Research, Inc. © 2019 35City of Arroyo Grande . . . . . . . . . . . . . . . . City of Arroyo Grande Survey November 2019 True North Research, Inc. © 2019 Page 5 Section 5: Positive Arguments What I’d like to do now is tell you what some people are saying about the measure we’ve been discussing. Q8 Supporters of the measure say: _____. Do you think this is a very convincing, somewhat convincing, or not at all convincing reason to SUPPORT the measure? Randomize Very Convincing Somewhat Convincing Not At All Convincing Don’ t Believe Not sure Prefer not to answer A There will be a clear system of accountability including independent citizen oversight and annual reports to the community to ensure that the money is spent properly. 31% 31% 18% 13% 3% 3% B All money raised by the measure will be used to fund essential services and facilities here in Arroyo Grande. By law, it can’t be taken away by the State. 36% 31% 16% 8% 5% 4% C Fast emergency response times for 9-1-1 calls are critical for saving lives and property. This measure will ensure that we have enough police officers, firefighters, and other emergency personnel to respond quickly to 9- 1-1 emergencies. 32% 38% 15% 7% 4% 3% D With the State mandating early parole for prisoners, more and more criminals are being released into our city and county. This measure provides the funds we need to combat crime in our community. 17% 31% 31% 14% 3% 4% E The funding raised by this measure will allow the City to keep up with basic repairs and maintenance to public facilities, storm drains, streets, and sidewalks. If we don’t take care of it now, it will be a lot more expensive to repair in the future. 33% 39% 14% 7% 3% 4% F By keeping our city safe, clean and well- maintained, this measure will help protect our property values and keep Arroyo Grande a great place to live. 31% 35% 22% 7% 2% 3% G About half of the money raised by the sales tax will come from non-residents and tourists who visit our community. This measure will make sure they pay their fair share for the facilities and services they use while visiting our city. 36% 32% 17% 9% 3% 3% Item 11.c. - Page 86 Questionnaire & ToplinesTrue North Research, Inc. © 2019 36City of Arroyo Grande . . . . . . . . . . . . . . . . City of Arroyo Grande Survey November 2019 True North Research, Inc. © 2019 Page 6 H This measure will help fund the economic development programs the City needs to attract new employers and good paying jobs to Arroyo Grande 16% 36% 28% 12% 4% 4% I The City of Arroyo Grande has been fiscally responsible. Over the past 10 years, it has cut staff by 20%, worked to reform and control pension costs, deferred maintenance projects, and cut back on services. Even with these cost-cutting efforts, however, the City needs an additional 3 million dollars per year to maintain the quality of services and facilities. There is no more room to cut if we want to maintain the quality of life in our community. We need to support this measure. 29% 32% 17% 12% 4% 5% J High quality parks, open spaces, sports fields, and recreation programs help keep kids healthy, active, and away from drugs, gangs and crime. 31% 37% 19% 7% 3% 3% K This measure will provide the funding needed to avoid deep cuts in all service areas, including police, fire protection, 9-1-1 emergency response times, the maintenance of streets, parks and public facilities, as well as programs for youth and seniors. 32% 32% 18% 11% 3% 4% Section 6: Interim Ballot Test Sometimes people change their mind about a measure once they have more information about it. Now that you have heard a bit more about the measure, let me read you a summary of it again. Q9 To provide funding for general city services in Arroyo Grande, including: Police patrols, drug and crime prevention Fire, emergency medical, and 9-1-1 emergency response Street, sidewalk, and pothole maintenance Addressing impacts from homelessness And parks, recreation, childcare, and senior programs shall an ordinance establishing a one cent sales tax be adopted, providing approximately 4 million dollars annually for city services until ended by voters that can’t be taken by the State, and requiring citizen oversight and all funds controlled locally? If the election were held today, would you vote yes or no on this measure? Get answer, then ask: Would that be definitely (yes/no) or probably (yes/no)? 1 Definitely yes 28% 2 Probably yes 31% 3 Probably no 13% 4 Definitely no 16% 98 Not sure 11% 99 Prefer not to answer 0% Item 11.c. - Page 87 Questionnaire & ToplinesTrue North Research, Inc. © 2019 37City of Arroyo Grande . . . . . . . . . . . . . . . . City of Arroyo Grande Survey November 2019 True North Research, Inc. © 2019 Page 7 Section 7: Negative Arguments Next, let me tell you what opponents of the measure are saying. Q10 Opponents of the measure say: _____. Do you think this is a very convincing, somewhat convincing, or not at all convincing reason to OPPOSE the measure? Randomize Very Convincing Somewhat Convincing Not At All Convincing Don’ t Believe Not sure Prefer not to answer A Taxes are already too high – we can’t afford another tax increase. This is especially true for seniors and others on fixed-incomes. 37% 30% 23% 4% 3% 3% B City employees are making too much money in salary, pensions and benefits – that’s the problem. The City needs to tighten its belt before asking residents to pay more taxes. 23% 28% 31% 10% 4% 3% C We already pay a half-cent sales tax for city services. Now they want more money? That’s not fair to taxpayers. 27% 32% 31% 6% 3% 2% D There are no guarantees on how funds will be spent, which means the City can divert the money to pet projects. The City government can’t be trusted with our tax dollars. 33% 30% 23% 7% 4% 3% Only odd clusters receive item E. E This tax will last forever. There is no expiration date. 31% 25% 27% 6% 7% 3% Item 11.c. - Page 88 Questionnaire & ToplinesTrue North Research, Inc. © 2019 38City of Arroyo Grande . . . . . . . . . . . . . . . . City of Arroyo Grande Survey November 2019 True North Research, Inc. © 2019 Page 8 Section 8: Final Ballot Test Now that you have heard a bit more about the measure, let me read you a summary of it one more time. Q11 To provide funding for general city services in Arroyo Grande, including: Police patrols, drug and crime prevention Fire, emergency medical, and 9-1-1 emergency response Street, sidewalk, and pothole maintenance Addressing impacts from homelessness And parks, recreation, childcare, and senior programs shall an ordinance establishing a one cent sales tax be adopted, providing approximately 4 million dollars annually for city services until ended by voters that can’t be taken by the State, and requiring citizen oversight and all funds controlled locally? If the election were held today, would you vote yes or no on this measure? Get answer, then ask: Would that be definitely (yes/no) or probably (yes/no)? 1 Definitely yes 27% Skip to Q13 2 Probably yes 28% Skip to Q13 3 Probably no 15% Ask Q12 4 Definitely no 18% Ask Q12 98 Not sure 10% Ask Q12 99 Prefer not to answer 2% Skip to Q13 Q12 What if the measure I just described raised the sales tax by a lower amount: one-half cent? Would you vote yes or no on the measure? Get answer, then ask: Would that be definitely (yes/no) or probably (yes/no)? Def, prob yes @ one cent (Q11) 55% 1 Definitely yes 1% 2 Probably yes 7% 3 Probably no 12% 4 Definitely no 16% 98 Not sure 6% 99 Prefer not to answer 2% Item 11.c. - Page 89 Questionnaire & ToplinesTrue North Research, Inc. © 2019 39City of Arroyo Grande . . . . . . . . . . . . . . . . City of Arroyo Grande Survey November 2019 True North Research, Inc. © 2019 Page 9 Section 9: Background & Demographics Thank you so much for your participation. I have just two background questions for statistical purposes. Q13 In your opinion, has the City of Arroyo Grande done an excellent, good, fair, poor or very poor job of managing its financial resources? 1 Excellent 4% 2 Good 40% 3 Fair 29% 4 Poor 9% 5 Very poor 5% 98 Not Sure 12% 99 Prefer not to answer 2% Q14 Do you have children under the age of 18 living in your household? 1 Yes 27% 2 No 70% 99 Prefer not to answer 3% Q15 Over the past two years, do you think the United States has been heading in the right direction or wrong direction? 1 Right direction 29% 2 Wrong direction 56% 98 Not sure 7% 99 Prefer not to answer 8% Those are all of the questions that I have for you. Thanks so much for participating in this important survey. Post-Interview & Sample Items S1 Gender 1 Male 47% 2 Female 48% 3 Prefer not to answer 5% Item 11.c. - Page 90 Questionnaire & ToplinesTrue North Research, Inc. © 2019 40City of Arroyo Grande . . . . . . . . . . . . . . . . City of Arroyo Grande Survey November 2019 True North Research, Inc. © 2019 Page 10 S2 Party 1 Democrat 35% 2 Republican 39% 3 Other 4% 4 DTS 22% S3 Age on Voter File 1 18 to 29 8% 2 30 to 39 11% 3 40 to 49 15% 4 50 to 64 28% 5 65 or older 38% S4 Registration Date 1 Since Nov 2016 8% 2 Jun 2010 to before Nov 2016 15% 3 Jun 2004 to before Jun 2010 12% 4 Before June 2004 65% S5 Household Party Type 1 Single Dem 14% 2 Dual Dem 10% 3 Single Rep 13% 4 Dual Rep 16% 5 Single Other 9% 6 Dual Other 8% 7 Dem & Rep 7% 8 Dem & Other 10% 9 Rep & Other 10% 0 Mixed (Dem + Rep + Other) 3% S6 Homeowner on Voter File 1 Yes 68% 2 No 32% Item 11.c. - Page 91 Questionnaire & ToplinesTrue North Research, Inc. © 2019 41City of Arroyo Grande . . . . . . . . . . . . . . . . City of Arroyo Grande Survey November 2019 True North Research, Inc. © 2019 Page 11 S7 Likely to Vote by Mail 1 Yes 86% 2 No 14% S8 Likely November 2019 Voter 1 Yes 79% 2 No 21% S9 Likely March 2020 Voter 1 Yes 87% 2 No 13% S10 Likely November 2020 Voter 1 Yes 100% 2 No 0% Item 11.c. - Page 92 I I I I I I I I I I I I I I I I City of Compton 10.25% City of Covina 10.25% City of Cudahy 10.25% City of Culver City 10.25% City of Downey 10.00% City of El Monte 10.00% City of Glendale 10.25% City of Glendora 10.25% City of Hawthorne 10.25% City of Huntington Park 10.25% City of Inglewood 10.00% City of Irwindale 10.25% City of La Puente 10.00% City of Lawndale 10.25% City of Long Beach 10.25% City of Lynwood 10.25% City of Monrovia 10.25% City of Pico Rivera 10.25% City of Pasadena 10.25% City of Pomona 10.25% City of San Fernando 10.00% City of Santa Fe Springs 10.50% City of Santa Monica 10.25% City of Sierra Madre 10.25% City of South El Monte 10.00% City of South Gate 10.25% City of South Pasadena 10.25% MADERA COUNTY 7.75% City of Chowchilla 8.75% City of Madera 8.25% MARIN COUNTY 8.25% Town of Corte Madera 9.00% Town of Fairfax 9.00% City of Larkspur 9.00% City of Novato 8.50% Town of San Anselmo 8.75% City of San Rafael 9.00% City of Sausalito 8.75% MARIPOSA COUNTY 7.75% MENDOCINO COUNTY 7.875% City of Fort Bragg 8.875% City of Point Arena 8.375% City of Ukiah 8.875% ALAMEDA COUNTY 9.25% City of Alameda 9.75% City of Albany 9.75% City of Hayward 9.75% City of Newark 9.75% City of San Leandro 9.75% City of Union City 9.75% ALPINE COUNTY 7.25% AMADOR COUNTY 7.75% BUTTE COUNTY 7.25% City of Oroville 8.25% Town of Paradise 7.75% CALAVERAS COUNTY 7.25% City of Angels Camp 7.75% COLUSA COUNTY 7.25% City of Williams 7.75% CONTRA COSTA COUNTY 8.25% City of Antioch 9.25% City of Concord 8.75% City of El Cerrito 9.75% City of Hercules 8.75% City of Martinez 9.25% Town of Moraga 9.25% City of Orinda 8.75% City of Pinole 9.25% City of Pittsburg 8.75% City of Pleasant Hill 8.75% City of Richmond 9.25% City of San Pablo 8.75% DEL NORTE COUNTY 7.50% EL DORADO COUNTY 7.25% City of Placerville 8.25% City of South Lake Tahoe 7.75% FRESNO COUNTY 7.975% City of Coalinga 8.975% City of Fowler 8.975% City of Huron 8.975% City of Kerman 8.975% City of Kingsburg 8.975% City of Parlier 8.975% City of Reedley 8.475% City of Sanger 8.725% City of Selma 8.475% GLENN COUNTY 7.25% City of Orland 7.75% HUMBOLDT COUNTY 7.75% City of Arcata 8.50% City of Eureka 8.50% City of Fortuna 8.50% City of Rio Dell 8.75% City of Trinidad 8.50% IMPERIAL COUNTY 7.75% City of Calexico 8.25% City of El Centro 8.25% INYO COUNTY 7.75% KERN COUNTY 7.25% City of Arvin 8.25% City of Bakersfield 8.25% City of Delano 8.25% City of Ridgecrest 8.25% City of Wasco 8.25% KINGS COUNTY 7.25% City of Corcoran 8.25% LAKE COUNTY 7.25% City of Clearlake 8.75% City of Lakeport 8.75% LASSEN COUNTY 7.25% LOS ANGELES COUNTY 9.50% City of Arcadia 10.25% City of Avalon 10.00% City of Burbank 10.25% City of Commerce 10.00% City of Willits 8.375% MERCED COUNTY 7.75% City of Atwater 8.25% City of Gustine 8.25% City of Los Banos 8.75% City of Merced 8.25% MODOC COUNTY 7.25% MONO COUNTY 7.25% Town of Mammoth Lakes 7.75% MONTEREY COUNTY 7.75% City of Carmel-by-the-Sea 8.75% City of Del Rey Oaks 9.25% City of Gonzales 8.25% City of Greenfield 9.50% City of King City 8.75% City of Marina 9.25% City of Monterey 8.75% City of Pacific Grove 8.75% City of Salinas 9.25% City of Sand City 8.75% City of Seaside 9.25% City of Soledad 8.75% NAPA COUNTY 7.75% City of St. Helena 8.25% NEVADA COUNTY 7.50% City of Grass Valley 8.50% City of Nevada City 8.375% Town of Truckee 8.25% ORANGE COUNTY 7.75% City of Fountain Valley 8.75% City of Garden Grove 8.75% City of La Habra 8.25% City of La Palma 8.75% City of Placentia 8.75% City of Santa Ana 9.25% City of Seal Beach 8.75% City of Stanton 8.75% City of Westminster 8.75% CDTFA-95 (FRONT) REV. 18 (4-20) STATE OF CALIFORNIA SALES AND USE TAX RATES CALIFORNIA DEPARTMENT OF TAX AND FEE ADMINISTRATION California Sales and Use Tax Rates by County and City* Operative April 1, 2020 (includes state, county, local, and district taxes) *(For more details, refer to www.cdtfa.ca.gov/taxes-and-fees/sales-use-tax-rates.htm.) Note: Some communities located within a county or a city may not be listed. If you are in doubt about the correct rate or if you cannot find a community, please call our toll-free number at 1-800-400-7115 (CRS:711), or call the local California Department of Tax and Fee Administration office nearest you for assistance. ATTACHMENT 3 Item 11.c. - Page 93 CDTFA-95 (BACK) REV. 18 (4-20) SALES AND USE TAX RATES PLACER COUNTY 7.25% Town of Loomis 7.50% City of Roseville 7.75% PLUMAS COUNTY 7.25% RIVERSIDE COUNTY 7.75% City of Cathedral City 8.75% City of Coachella 8.75% City of Hemet 8.75% City of Indio 8.75% City of La Quinta 8.75% City of Menifee 8.75% City of Murrieta 8.75% City of Norco 8.75% City of Palm Springs 9.25% City of Riverside 8.75% City of Temecula 8.75% City of Wildomar 8.75% SACRAMENTO COUNTY 7.75% City of Galt 8.25% City of Isleton 8.75% City of Rancho Cordova 8.25% City of Sacramento 8.75% SAN BENITO COUNTY 8.25% City of Hollister 9.25% City of San Juan Bautista 9.00% SAN BERNARDINO COUNTY 7.75% City of Barstow 8.75% City of Montclair 8.00% City of San Bernardino 8.00% Town of Yucca Valley 8.75% SAN DIEGO COUNTY 7.75% City of Chula Vista 8.75% City of Del Mar 8.75% City of El Cajon 8.25% City of La Mesa 8.50% City of National City 8.75% City of Oceanside 8.25% City of Vista 8.25% SAN FRANCISCO COUNTY 8.50% SAN JOAQUIN COUNTY 7.75% City of Lathrop 8.75% City of Lodi 8.25% City of Manteca 8.25% City of Stockton 9.00% City of Tracy 8.25% SAN LUIS OBISPO COUNTY 7.25% City of Arroyo Grande 7.75% City of Atascadero 7.75% City of Grover Beach 7.75% City of Morro Bay 7.75% City of Paso Robles 7.75% City of Pismo Beach 7.75% City of San Luis Obispo 7.75% SAN MATEO COUNTY 9.25% City of Belmont 9.75% City of Burlingame 9.50% City of East Palo Alto 9.75% City of Redwood City 9.75% City of San Bruno 9.75% City of San Mateo 9.50% City of South San Francisco 9.75% SANTA BARBARA COUNTY 7.75% City of Carpinteria 9.00% City of Guadalupe 8.00% City of Santa Barbara 8.75% City of Santa Maria 8.75% SANTA CLARA COUNTY 9.00% City of Campbell 9.25% City of Los Gatos 9.125% City of San Jose 9.25% SANTA CRUZ COUNTY1 8.50% City of Capitola 9.00% City of Santa Cruz 9.25% City of Scotts Valley 9.00% City of Watsonville 9.25% Santa Cruz (Unincorporated Area)2 9.00% SHASTA COUNTY 7.25% City of Anderson 7.75% SIERRA COUNTY 7.25% SISKIYOU COUNTY 7.25% City of Dunsmuir 7.75% City of Mount Shasta 7.50% City of Weed 7.50% City of Yreka 7.75% SOLANO COUNTY 7.375% City of Benicia 8.375% City of Fairfield 8.375% City of Rio Vista 8.125% City of Suisun City 8.375% City of Vacaville 8.125% City of Vallejo 8.375% SONOMA COUNTY 8.25% City of Cotati 9.25% City of Healdsburg 8.75% City of Rohnert Park 8.75% City of Santa Rosa 9.00% City of Sebastopol 9.00% City of Sonoma 8.75% STANISLAUS COUNTY 7.875% City of Ceres 8.375% City of Oakdale 8.375% SUTTER COUNTY 7.25% TEHAMA COUNTY 7.25% City of Corning 7.75% City of Red Bluff 7.50% TRINITY COUNTY 7.25% TULARE COUNTY 7.75% City of Dinuba 8.50% City of Farmersville 8.75% City of Lindsay 8.75% City of Porterville 9.25% City of Tulare 8.25% City of Visalia 8.50% City of Woodlake 8.75% TUOLUMNE COUNTY 7.25% City of Sonora 7.75% VENTURA COUNTY 7.25% City of Oxnard 7.75% City of Port Hueneme 8.75% City of Santa Paula 8.25% City of Ventura 7.75% YOLO COUNTY 7.25% City of Davis 8.25% City of West Sacramento 8.25% City of Woodland 8.00% YUBA COUNTY3 7.25% City of Marysville 8.25% City of Wheatland 7.75% Yuba (Unincorporated Area)4 8.25% 1. This county tax rate applies to areas that are within the boundaries of any incorporated cities within the Santa Cruz county. 2. This county tax rate applies to areas that are not within the boundaries of any incorporated cities within the Santa Cruz county. 3. This county tax rate applies to areas that are within the boundaries of any incorporated cities within the Yuba county. 4. This county tax rate applies to areas that are not within the boundaries of any incorporated cities within the Yuba county.Item 11.c. - Page 94