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REVIEW OF FINDINGS AND EVIDENCE REGARDING MEASURE A SUNSET EXTENSION
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RECOMMENDATION
It is recommended that the Measure A Citizens’ Advisory Committee (the “Committee”) review the applicability of the findings and evidence that will be presented to the City Council to extend the sunset of Measure A. Pursuant to the Measure A ordinance and Committee’s charter, no action is required. The Committee’s bylaws provide that the Committee may make recommendations regarding the sunset provision.
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Summary
Measure A is a ¾ cent general transaction and use (sales) tax initiative that was approved by voters on November 5, 2013. Per the Measure A ordinance (2013-07-09-1601), the tax would sunset after ten years unless the City Council holds two publicly noticed meetings and adopts specific findings based on evidence. (Attachment A). This evidence must demonstrate that the revenues provided by the tax continue to be necessary to accomplish the City’s general purposes and that the total compensation paid to City employees is not excessive when compared to those of other similarly situated public-sector employers. Per the ordinance, the Committee is responsible for reviewing any findings and evidence made by the City Council to extend the sunset. This material was first presented to the Committee on November 13, 2023. Two public hearings to review the findings and evidence are required by the ordinance prior to the Council extending the sunset of the tax. The first public hearing before the City Council was held on November 14, 2023. The second public hearing is scheduled for December 5, 2023 at the regularly scheduled City Council meeting.
As this report duplicates the November 13, 2023 report, Attachments B through D have not been included. A new section is included in this staff report under “The New Strategy” heading that outlines the police officer retention plan proposed to the City Council on November 14, 2023.
DISCUSSION
Background
In April 2012, the City initiated development of a Marshall Plan to reduce homicides and violence. Also in 2012, the City took the necessary action of filing for bankruptcy to maintain health and safety services for the Stockton community. An ultimate recovery plan was needed to emerge from the bankruptcy, become financially solvent again, restore City services, and invest in the Marshall Plan. In June of 2013, the City Council approved the Funding Proposal for Stockton’s Marshall Plan on Crime and Recovery from Bankruptcy (Attachment C to the November 13, 2023 version of this agenda item). The Law Enforcement, Crime Prevention, and Other Essential Services Measure was approved by the City Council on July 9, 2013 for placement on the November 5, 2013 ballot. The measure was assigned the letter A on the ballot and was approved by voters with an effective date of April 1, 2014.
Measure A is a ¾ cent transaction and use (sales) tax that was approved as a general tax. Under California law, a general tax is any tax imposed for general governmental purposes, while a special tax is one imposed for specific purposes. However, Measure A was accompanied by advisory Measure B, which allowed voters to express an advisement that 65% of Measure A proceeds would be prioritized for law enforcement and crime prevention purposes such as those outlined in the Marshall Plan, while the remaining 35% would be prioritized for bankruptcy recovery and general service purposes. Measure A and B also instituted the Measure A Citizens’ Oversight Advisory committee, which would meet at least once annually to review the expenditures of revenues generated by the tax measure and make recommendations to Council.
Measure B’s primary programmatic document is the Marshall Plan, which called for doubling the staff of the Office of Violence Prevention (OVP), the institution of Neighborhood Betterment (previously Blitz) Teams, and the approval of 120 additional fully funded police officers. The Office of Violence Prevention targets the highest risk individuals in the community, offering resources and assistance to alleviate the factors that lead to continued violence and gang activity on an individual level. The Neighborhood Betterment Teams perform targeted abatement actions on neighborhoods to reduce blight. Another component of the Marshal Plan that has been implemented through Measure A is Operation Ceasefire, a partner-based violence reduction strategy uses respectful, direct communication with the highest-risk youth and young adults.
On February 25, 2014, the City Council approved the Marshall Plan implementation plan to add 120 sworn police officers and 43 civilian staff positions to rebuild the Police Department, establish the Neighborhood Betterment Team, expand the Office of Violence Prevention, and provide administrative support to these areas. The Police Officer positions were phased in over a three-year period adding 120 new positions to the 365 authorized sworn positions prior to the new tax measure. Chart 1 below shows the City’s authorized sworn positions and the percent filled for each fiscal year through June 30, 2023. Over the years, Measure A also funded 114 cars, 412 radios, police recruitment expenses, police academy costs, OVP client services, fuel, radio system improvements, and numerous other services and supplies.
Chart 1
In addition to the 65% programmed for law enforcement and crime prevention efforts, 35% was advised, per Measure B, to be programmed towards funding the City’s bankruptcy exit plan, restoring reserves, replacing failing assets, and preparing for the next economic recession. In addition, any savings from the 65% also went to contribute to these efforts, including likely future programming for public safety. The FY 2023-24 Adopted Budget programmed 55%, or $158 million, of the General Fund’s $290 million in expenditures towards the Police Department alone.
Measure A funds have been subject to high levels of scrutiny since the ordinance’s inception, including a separate page for Measure B expenditures in both the City’s Annual Comprehensive Financial Report (ACFR) and Annual Budgets, additional external auditor attestation concerning the Measure’s agreed-upon procedures each year, and, most recently, a performance audit performed by the City’s internal auditors, which was presented to the Council Audit Committee in October 2023.
In addition to expending most of the unrestricted City funds each year on law enforcement, the following restorations to service from bankruptcy were funded using General Fund dollars. While the Measure A funds are legally classified as general-purpose revenues (i.e., General Fund), many of these service restorations would likely have been impossible without the additional General Fund revenues afforded by Measure A. Over the years that the transaction and use tax has been in effect, the City has leveraged the tax to effect considerable service recovery and delivery accomplishments.
Selected General Service / Bankruptcy Recovery Accomplishments Made Possible by Measure A
Over the decade that Measure A has been in service, the General Fund:
1. Provided for the fueling and operation of the City’s Police Helicopter and Unmanned Air Support program.
2. Resumed Cost of Living Adjustments for police officers. Cost-of-living and market adjustments increased Police salaries by an average of 6.1% annually over the last five years.
3. Added four Human Resources and Administrative Services Department positions.
4. Provided for a police wellness staff member and wellness program.
5. Performed clean-up efforts related to the City’s unhoused population consistent with Marshall Plan recommendation “Reclaim Neighborhoods: Disorder & Blight Reduction.”
6. Provided for community clean-ups/Clean City initiatives consistent with Marshall Plan recommendation “Reclaim Neighborhoods: Disorder & Blight Reduction.“
7. Maintained the Integrated Ballistics Identification (IBIS) System, software that allows for enhanced forensics in gun-related crimes.
8. Implemented Police Body Cameras.
9. Provided for the restoration and reopening of Fire Station No. 1, including facility improvements and the procurement of furniture, firefighting tools, and equipment.
10. Increased Fire sworn staffing levels 17 positions, with 9 positions for Station No. 1 which will be fully funded by the General Fund when the Staffing for Adequate Fire and Emergency Response (SAFER) grant ends.
11. Expanded the Fire Dispatch Center by 10 positions.
12. Implemented a fireworks program designed to decrease the possession and use of illegal fireworks through public awareness and enforcement.
13. Replaced outdated cardiac monitor/defibrillator equipment for emergency cardiac care.
14. Added a second fire academy per year to meet firefighter retention demands.
15. Added an Emergency Manager position that is responsible for emergency mitigation, preparedness, response, and recovery.
16. Allowed for Street Maintenance efforts, including: resurfacing streets, installing striped edge line lanes, improving sidewalk tripping hazards address, replacing sidewalks, sealing roadway cracks, street lighting improvement, and filling potholes.
17. Provided for tree services, including stump removal, trees trimmed at City Parks, and removed dead and hazardous trees citywide.
18. Helped fund parks maintenance and improvements, including replenishing playground surfacing; sports courts resurfacing; repairing and replacing playground structures; remodeling park restrooms; improvements to Pixie Woods’ boat, bridge, concession stands, irrigation system, and carousel; swimming pool repairs; Van Buskirk gym floor replacement; Victory Park tennis courts lighting improvements; Weber Point Events Center shade structure maintenance; and Oak Park ball field improvements.
19. Supported one-time costs associated with reopening the Fair Oaks Library in 2017, which was closed during the bankruptcy.
20. Performed field maintenance supporting youth and adult sports at City parks.
21. Investment in the Animal Shelter operations resulting in significantly improved live release rates.
22. Allocated $2 million in grant funding for expanded Youth Service programming in FY 2023-24.
23. Resumed and expanded staff training efforts, such as the City Manager’s Leadership Academy.
24. Provided a complete replacement of all public safety radios; nearly every radio was beyond its useful life, and implemented and funded a replacement schedule for radio equipment. Completed installation of a new radio infrastructure core and new network infrastructure.
25. Internal self-insurance fund resources have been restored to positive balances from negative $48 million.
26. Implemented a modernized Human Resources and Financial System resulting in increased financial accountability and efficiency.
The above list represents “one-time” and ongoing initiatives that might not have been possible without Measure A proceeds. The ongoing costs associated would likely make maintaining some of these efforts infeasible. Reproducing the “one-time” efforts the next time they are needed, such as the next financial system implementation or the next refresh of radio equipment or law enforcement vehicles would become very difficult without the continuation of Measure A revenues, eventually returning many service areas back to bankruptcy levels.
Present Situation
The voter-approved Measure A ordinance allows the City Council to extend the 10-year sunset of the tax through Section 17 of the ordinance, which reads:
Sunset of Tax. (a) The taxes imposed by this Ordinance shall remain effective until the soonest to occur of the following: (1) the City Council repeals, or the voters repeal, this Ordinance; (ii) the City Council determines that the City has experienced economic recovery as defined in Section 18 of this ordinance, or (iii) ten (10) years from the date the taxes imposed by this Ordinance are first collected. However, the voters hereby authorize the Council to extend the sunset of the taxes pursuant to paragraph (b) of this Section 17.
(b) The City Council may extend the sunset of the taxes imposed by this ordinance as follows. The Council shall hold two publicly noticed meetings at least 14 days apart and shall adopt findings based on evidence before it that: (i) the revenues provided by the taxes imposed by this Ordinance continue to be necessary to accomplish the purposes stated in Section 21 of this Ordinance and (ii) the total compensation paid to City employees is not excessive when compared to those of other similarly situated public-sector employees.
The above-referenced Section 21 defines the purpose of Measure A revenues as:
Declaration. The proceeds of the taxes imposed by this Ordinance may be used for any lawful purpose of the City, as authorized by ordinance, resolution or action of the City Council. These Taxes are not special taxes within the meaning of section 1, subdivision (d) of Article XIII C of the California Constitution, but are general taxes imposed for general governmental purposes.
Measure A is a vital tool for economic recovery and for the City to remain fiscally solvent at its current level of services offered to the community. Approximately 17% of General Fund Revenues are provided for by Measure A funding. If Measure A were to sunset, the financial situation of the City would substantially deteriorate without significant budget cuts to General Fund supported programs, quickly eating through reserves and putting the City back at risk of insolvency.
To best understand the implications of this eventuality, City departments prepared a list of services they would be forced to scale back or eliminate in order to reduce their impact on the General Fund by 17%to maintain solvency. While these cuts are not an action plan, they demonstrate a plausible look at the choices City leadership would be forced to make in terms of service delivery without the revenue provided by Measure A. These cuts are described in the findings in Attachment A. It is clear that the City would face vital challenges without the proceeds from Measure A; it is for that reason that the process outlined in the Ordinance to renew Measure A is being undertaken and the recommendation is to extend the tax an additional 10 years until March 31, 2034.
Findings Based on Evidence
The evidence presented in Attachment A clearly supports the findings required by the Measure A ordinance: that the Measure A tax has been and continues to be necessary to provide for the general purposes of the City. The evidence contains a list of services that were restored using the General Fund as well as a list of General Fund supported services that would be considered for elimination in order for the City to remain solvent should Measure A sunset.
The evidence also supports the finding that City employee compensation is not excessive when compared to other similarly situated public-sector employees. While the details of each labor negotiation are protected and confidential information, the broad process and methodology used to determine employee compensation is outlined in Attachment A and the results of these efforts are shown in the appendices (Attachment D to the November 13, 2023 version of this agenda item). In summary, during negotiations, an external consultant compares each position to comparable positions in other similar agencies to determine the median or “middle” rate for each position. Market adjustments are made to keep employee pay at this median.
Updating the Measure B Spending Plan with the Extension
In alignment with the advisory Measure B, Measure A funds have been successfully utilized to implement the Marshall Plan components as outlined in the June 2013 funding plan including rebuilding the Police Department and expanding the Office of Violence Prevention. As shown in Chart 1, it is only in the last few years (since the COVID-19 pandemic) that filling police officer positions has become a significant challenge. While the 120 Measure A funded police positions stand open and ready for recruits, hiring to the full authorized strength of 485 sworn police officers has proved a challenge due to many factors, including a nationwide staffing shortage of police officers. The number of filled police positions has risen as high as 97% of the 485 approved positions in recent years, but historic challenges have resulted in a vacancy rate of 28% as of November 6, 2023.
In the October 2023 performance audit, the City’s internal auditors made several recommendations to improve transparency and utilization of Measure A funds, including a more strategic approach to officer retention, developing key performance indicators (KPIs) to better define and publish success of the measure, and implement expenditure guidelines to fully define what expenditures can be classified as Measure B.
If Measure A is continued, several actions will occur to accept these recommendations:
• Additional guidelines on the use of Measure A funds for Measure B purposes are in development and will be introduced during the FY 2024-25 Budget Development process. These guidelines will assist in prioritizing how any unplanned tax receipts might be spent on service needs such as adding back police officer positions, reopening Fire Truck Company No. 7, adding more OVP outreach workers, or park improvements.
• A new strategy will be proposed to reprogram the funding currently appropriated toward recruitment and retention benefits for police officer positions. This proposed change in the spending plan is consistent with the recommendations in the October 2023 performance audit. Even with this reprogramming, per the required findings, officer compensation will not be excessive, being lower than several comparable agencies.
The New Strategy
With the consideration to extend Measure A, Staff is proposing a revision to the spending plan that will help in reducing the number of police officer vacancies. The City and the Stockton Police Officers Association (SPOA) have been collaborating to bring a plan to Council that represents a historic breakthrough in the City’s ongoing challenges to recruit and retain law enforcement officers. The City has attempted year after year to hire the 120 officers authorized by the Marshall Plan, and has come close, but new nationwide challenges have pushed this objective farther than ever in the last two years. By reducing the 120 positions to a more achievable target of 60 officers and reprogramming the funds allocated to those positions toward a retention program for all officers, the City will become a more attractive and enticing employer of sworn law enforcement professionals.
The total funding positions out of Measure A would be reduced from 120 to 60 police officers. The funding for these 60 positions would be reprogrammed to additional pay and benefits for all other non-management police positions. These compensation items are subject to the extension of Measure A and will only continue as long as economically feasible. The agreement with the union includes the following language:
1. Funding for recruitment and retention incentives is contingent on the extension of the sunset date in Measure A, which will be considered for approval by Council in December 2023.
2. The City will be reallocating Measure A funding to pay for temporary programs to address critical recruitment and retention issues of police officers.
3. The reallocation of Measure A funds by decreasing the number of allocated police positions from 120 to 60 full-time employees is temporary to fund a temporary recruitment and retention plan for the Police Department.
4. The reallocation of Measure A funds towards these recruitment and retention incentives shall be reviewed annually by the City Manager and the City Council and are subject to available Measure A Funding. The City retains the sole discretion to make changes to the reallocation and such determination shall be final.
5. The City retains the right to increase or decrease the allocation of police positions based on the performance of Measure A Sales Tax.
This revolutionary new plan is expected to significantly decrease the City’s law enforcement officer vacancy rate through highly attractive benefits for law enforcement officers.
Extending the tax measure requires two public hearings. Attached are the findings (Attachment A) based on evidence discussed during the November 14, 2023 Council meeting. Another public hearing has been programmed for the City Council meeting scheduled for December 5, 2023. Staff’s recommendation is that the Committee review the findings. The Committee may make recommendations to the City Council regarding the sunset provision if it desires.
Attachment A - Recommended Findings Based on Evidence for the Extension of the City of Stockton Measure A Sunset