Lafayette Set to Talk Budget, Possible Sales Tax

On Monday, the Lafayette City Council will likely agree to place a 1% sales tax measure on the November Ballot.

According to the staff report, over the last few months, the City Council’s fiscal sustainability subcommittee (Dawson, Kwok) has met with staff to review the five-year budget projection which forecasts ongoing structural deficits of over $2M annually– roughly 10% of the total General Fund budget. Recognizing that without new revenue, the City will not be able to continue to offer the current level of services or take on any additional new projects, the committee considered a variety of funding sources including increases to property tax and sales tax.

The committee recommends that the Council consider a sales tax increase of up to 1%, which would bring the rate up to 9.75% — the same as is currently in Moraga and Orinda. The city received 26-pages of public comments.

Budget Reduction Options and Impacts

The City will also discuss its budget reduction options and impacts (Item A2) where it possibly will delay immediate cuts while considering a potential ballot measure to increase sales tax—if a tax does not pass, they will look to cut 10% of general fund expenses ($2.7 million).

According to the staff report, there are a total of 6 positions that would be eliminated – 17% of the budgeted General Fund FTEs. Of these six positions, and given fiscal uncertainties, management has already taken steps to reduce the budget by keeping four of the currently open positions frozen (4 FTEs). These positions are – senior engineer, senior planner, administrative analyst and human resources analyst. It should be noted that current staff have taken on some tasks that would have been assigned to these vacant positions. This has resulted in service-level impacts and is not sustainable in the long term.

To meet the target of a 10% reduction the police department — whose budget equals 35% of the total General Fund budget — proposes a reduction of 2.5 employees – a sergeant, a motor officer and half of the vacation relief officer. While these positions are not included in the City’s total FTE count, their elimination will result in savings to the General Fund

The Council has several options for making budget cuts:

1. Make cuts immediately to the FY24-25 Proposed Budget. Note that the use of $1.99M in unused ARPA funds would allow the City to continue to meet the General Fund Reserve target through FY25-26 and as such, staff does not recommend this option.
2. Delay immediate cuts while considering a potential ballot measure to increase sales tax up to 1% and make cuts to the FY24-25 Final Budget in December, if necessary, or in June 2025. Staff recommends this option with the following stipulations:
   1. Freeze hiring for the four FTEs positions previously listed in this report.
   2. No new tasks or projects to be added to the current workload

Staff is recommending Option 2.

Other Items of Interest

• ARPA Spending Report: While the Council ponders how to solve the current budget issues, The ARPA Subcommittee recommends that the remaining $1.99M in ARPA funds be allocated to General Fund expenses in FY24- 25 which will extend the City’s ability to meet the General Fund reserve requirement for an additional year through FY25-26 and give the Council time to make thoughtful and strategic decisions about how best to balance the budget.
• Lafayette Chamber of Commerce seeks $20k in additional funding to help provide staffing to meet standards at local events.

City of Lafayette City Council Meeting
Lafayette Library & Learning Center-Don Tatzin Community Hall
3491 Mt. Diablo Boulevard Lafayette, California
Monday, June 10, 2024
7:00 p.m.
Agenda – click here

Previous Stories:

• May 30 – Sales Tax Measure Being Considered for Lafayette
• April 29 – Lafayette Says Road Repair Costs Increased by 33%
• March 11 – Lafayette Looks to Sales Tax Increase to Fix Budget Deficit