By Steve Young and Mark Hughes, January 22, 2024
[A note from the authors: Some may be surprised to see both of us as authors of this opinion piece. We served together on the Council from 2016–18, and while we did vote differently on a variety of issues, we respected each other’s point of view. We never ran against each other, but did support different candidates in various elections. But the one thing we never doubted was our mutual commitment to the betterment of the City. We both know that our financial situation is dire, and that these revenue measures will help keep Benicia financially stable moving forward.]
Slowly, Benicia residents are becoming aware of the extent of the fiscal challenge facing the City. There is an ongoing annual deficit of $6.5 million. Currently we are using reserves to cover the deficit, but those reserves will only last one more fiscal year.
Then what? There must be a combination of budget cuts and new revenue if we are to put off cuts to programs and services that Benicia residents have come to expect. Part of the reason for our rapidly increasing costs are the same as those affecting all of our residents, such as higher energy costs for fuel and heating/cooling, increasing health care costs, as well as the cost of virtually everything the City buys. In short, the City’s expenses have been increasing year over year, while revenue has been stagnant.
Some people point at recent raises given to City employees as the problem. The fact is that our employees were falling further and further behind other local area governments in compensation, and we were losing trained employees to other cities and counties, as well as finding it very difficult to recruit and hire new employees, especially those with specialized skills.
The simple fact is we cannot cut our way to a balanced budget; we also need additional revenue. The City’s two main sources of revenue are property taxes and sales taxes. Because our town is so attractive to families and others, there are relatively few houses for sale. This low turnover rate, combined with Prop. 13, has resulted in essentially flat property tax levels for several years. It’s also important to note that Benicia only receives approximately ¼ of the property tax collected, with the remaining money going to State, County, and School agencies.
Sales taxes have also been relatively flat, with very little new development for more than a decade. And while a small town, no-growth attitude is what some people love about Benicia, it comes at a real cost.
In response to this situation, which has been brewing for more than a decade, the City Council is facing up to the challenge by proposing reductions in expenses, and two tax increase measures that will appear on the March 5 ballot. The first tax measure is Measure A, which will raise the local hotel tax paid by tourists and guests from 9% to 13%. The second tax measure is Measure B, which will ask voters to approve a 3/4 cent increase in the sales tax, from 8.375% to 9.125%. This increase represents 75¢ for every $100 spent. The increased tax would generate $5-5.5 million/year, and go a long way towards eliminating the deficit, and maintaining the programs and services the City currently provides. This sales tax increase, if approved will be overseen by a Citizens Review Committee, and will be in effect for 12 years, at which time it will sunset.
What will happen if the measure fails? This is where the conversation becomes much more difficult. While the City Council unanimously supports this measure, the only responsible thing to do is to hope for the best, but plan for the worst, in the event that it fails. The City has been, and will continue to ask citizens to share what services are most important to them, because if Measure B does fail, the City will need to consider budget cuts and service reductions in all areas of the city, including Public Safety, Parks, Library, Public Works, etc. In addition, it is likely that most of the Boards and Commissions would be eliminated, as well as the Grants that the City provides to the Arts, Culture and Human Services organizations.
And please believe us when we say that these are definitely not intended to be scare tactics; it really comes down to basic math.
We love our town, and the quality of life that we enjoy here. Please join us by supporting the City’s strategies to address our financial challenges.
We ask you to support Measures A and B on the March ballot, and encourage you to ask your friends and neighbors to do the same.
Visit BelieveInBenicia.org to learn more about Benicia’s Resiliency Plan, sign up for updates from Benicia City Manager Mario Giuliani, and join the effort to help shape Benicia’s future. While some workshops have already occurred, there is still time to add your voice! Look for the red, bolded text below to see upcoming workshops, and please fill out the community survey (also linked below).