With an eye toward asking Union City residents to approve a pair of tax-generating ballot measures sometime this year, the Union City Council may declare a fiscal emergency this week.
Union City’s budget forecast for the next five years estimates multi-year budget deficits will deplete its reserves by Fiscal Year 2021-22.
To increase revenues, Union City staff proposes placing a cannabis tax on gross receipts on the ballot this year, possibly this June, in addition, to an Enhanced Real Estate Transfer Tax next fall. Combined the measures could create an estimated $4-6 million per year starting in 2019, according to city staff.
Since the state Constitution requires cities to only propose tax measure during their own municipal elections, the declaration of a fiscal emergency would allow Union City to place a cannabis gross receipts tax on the June ballot. Union City mayoral and city council elections occur in November.
Furthermore, in order for Union City to place an Enhanced Real Estate Transfer Tax on the November ballot, voters would also need to agree to make the switch from a general law city to a charter city.
The council discussed declaring a fiscal emergency at its Feb. 13 meeting, but without resolution. Some councilmembers appeared reticent toward the declaration how it would be received by the public. Others offered the council should have handled the city’s financial predicament much better over the past few years. Last summer, the Moraga town council contemplated a similar declaration.
Skyrocketing costs associated with public employee pensions and what the city staff report refers to as “unpredictable state takeaways of local revenue” have taken a toll on Union City’s treasury, said a staff report.
Based on Union City’s budget forecast, it expects a $2.2 million deficit for the current fiscal year and steadily increases to $4.5 million by 2021-22. The city’s reserves, pegged at $12.1 million this fiscal year would be in the red by $785,000 in three years.