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ADOPT A RESOLUTION APPROVING MEASURE A EXPENDITURE GUIDELINES
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RECOMMENDATION
It is recommended that City Council adopt a Resolution to:
1. Approve the Measure A Expenditure Guidelines (Exhibit 1 to the proposed Resolution); and
2. Authorize the City Manager, or designee, to take necessary and appropriate actions to carry out the purpose and intent of the Resolution.
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Summary
On December 5, 2023, the City Council adopted an ordinance to extend Measure A, a three-quarter percent transactions and use (sales) tax through March 31, 2034. The measure was originally approved by voters on November 5, 2013, and became effective April 1, 2014.
In an October 2023 performance audit, the City’s internal auditors recommended the City implement expenditure guidelines for Measure A revenues to improve transparency and utilization of Measure A funds. The proposed Measure A Expenditure Guidelines are hereby presented to City Council for approval.
DISCUSSION
Background
On December 5, 2023, the Stockton City Council adopted an ordinance to extend Measure A, a three-quarter percent transactions and use (sales) tax, through March 31, 2034. The measure was originally approved by voters on November 5, 2013, and became effective April 1, 2014.
On the same ballot, voters also approved Measure B, a non-binding advisory measure, to help communicate priorities and express an opinion about how the additional tax money should be used. On February 25, 2014, Stockton’s City Council supported the citizens’ approval of Measure B by implementing the first phase of the Marshall Plan on Crime.
Measure B recommends that 65% of Measure A proceeds be used for law enforcement and crime prevention services, such as the Marshall Plan on Crime, and that 35% of Measure A proceeds be used for general City services, including recovery from bankruptcy.
A performance audit conducted by the City’s internal auditor, Moss Adams LLP, noted the following:
While expenditure processes appear to comply with Measure A provisions, the City does not have updated expenditure guidelines to define allowable expenditures, proactively plan for future use of the funds, or support tracking of expenditures. This contributes to limited visibility into the impact of the Measure among the public and creates a lack of clarity among City staff for what constitutes allowable use of the funds.
The Measure A Citizens Advisory Committee receives regular reports from City staff on Measure B eligible expenditures, including annual economic recovery reports, quarterly financial reports, annual reports on the 65%/35% usage, and quarterly statistics concerning progress on crime reduction and staff retention.
Present Situation
The proposed Measure A Expenditure Guidelines (Exhibit 1 to the Resolution) address the City’s internal auditor’s finding noted above, by constructing expenditure guidelines that can be used to understand, direct, and track eligible costs.
According to Section 21 of the Ordinance (2013-07-09-1601), 100% of the proceeds of Measure A may be used for any lawful purpose of the City, as authorized by ordinance, resolution, or action of the City Council. The Ordinance explicitly states that Measure A is a general tax and not a special tax. The proposed guidelines do not restrict or legislate the use of these general-purpose tax revenues and are not intended in any way to legally obligate Measure A funds for any particular purpose. Instead, this document is designed to increase visibility and transparency, and demonstrate the City’s alignment with Measure B.
The spending priorities for Measure A funds included in the proposed guidelines can be summarized as follows:
• Law Enforcement and Crime Prevention (65% recommended): This category includes Police Department and Crime Prevention personnel and related program expenditures, recruitment and retention incentives, and any special projects or initiatives to the extent funds are available.
• General City Services (35% recommended): The priorities for this category include contingency payments made to Assured Guaranty as required under the current terms and agreement, post-bankruptcy recovery/restoration of services, general City expenditures as approved by City Council, and maintaining a healthy General Fund reserve to mitigate impacts from the next economic downturn.
Several benefits will be achieved by establishing clear Measure A guidelines:
• Specific guidance to prescribe and encourage eligible costs to incur against Measure B.
• Specific contingencies for use of Measure B when savings occur in high priority areas.
• Outlining the Marshall plan into specific items that can be adjusted to respond to changes in the City’s demand for services.
The guidelines are meant to replace the aging Marshall Plan with a list of items categorized into goals that can be adjusted annually to respond to a changing fiscal environment.
As part of the annual budget process, the City will develop and present an expenditure plan for Measure A funds for the upcoming fiscal year based on the spending priorities identified in the proposed guidelines. The plan will be presented to the Measure A Citizens’ Advisory Committee, followed by a presentation to City Council for approval.
Any revisions to the spending plan will be presented to the Measure A Citizens’ Advisory Committee at regularly scheduled meetings. City Council will be presented with spending plan updates and/or revisions as part of the quarterly budget updates that are currently provided to Council.
Attachment A displays the Measure A Expenditure Plan for FY 2024-25 for informational purposes. This plan was incorporated into the FY 2024-25 Adopted Budget that was approved by City Council on June 18, 2024.
The approved guidelines may subsequently be modified or revised as economic and programmatic conditions evolve over time, including but not limited to:
• Anticipated or unanticipated changes in projected or actual revenues and/or expenditures
• Economic trends and/or forecasts
• Overall fiscal health of the City
• Changes in programmatic and/or personnel needs
• Council priorities
Any future proposed changes to the guidelines will be presented to the Measure A Citizens’ Advisory Committee for discussion, and subsequently presented to City Council for approval.
A draft of the Measure A Expenditure Guidelines was presented to the Measure A Citizens’ Advisory committee for review and discussion on June 6, 2024. The Committee did not make any recommendations concerning the guidelines for staff to consider. Staff subsequently made minor, technical changes to the draft guidelines, and those changes are reflected in the current version recommended for Council approval (Exhibit 1 to the Resolution).
FINANCIAL SUMMARY
There is no fiscal impact associated with City Council’s approval of the Measure A Expenditure Guidelines. The expenditures displayed in the FY 2024-25 Measure A Expenditure Plan (Attachment A) are already included in the FY 2024-25 Budget that was adopted by City Council on June 18, 2024.
Attachment A - FY 2024-25 Measure A Expenditure Plan