- Elizabeth Larson
The Measure I question: Lakeport Council divided over how to use sales tax measure funds
LAKEPORT – How the city spends sales tax revenues – whether for road improvements or for other city projects – is increasingly becoming a focus of concern for the the city of Lakeport's leadership. {sidebar id=128}
Measure I is a half-cent sales tax – raising Lakeport's sales tax rate to 7.75 percent – that is meant to raise money for city projects.
The funds go directly into the city's general fund. Once in the general fund, the money can be used how the city's leaders see fit.
The current City Council appears to have ideological divisions on how the money should be spent, whether it should go specifically toward roads or other purposes.
In recent months, the city's financial situation has led to repeated discussions about how to cut costs and raise revenue, and Measure I often arises as a steady source of funding that can be used for a variety of purposes. In fact, it currently makes up most of the city's general fund.
Interim City Manager Kevin Burke told the council at a special meeting Tuesday night that the funds already are being used for general funding purposes in what is shaping up to be a challenging budget year.
A brief history of sales tax measures
Before voters approved Measure I and J in November of 2004, three sales tax measures targeting roads – two in Lakeport and one in the county – failed, according to city and county records.
First came Measure R in 1995.
Lake County Registrar of Voters Diane Fridley said Measure R was a 1-percent sales for the city of Lakeport.
City Attorney Steve Brookes said Measure R was a targeted tax that was aimed at road repairs only. As such, it needed to receive a two-thirds majority vote, or 66 percent approval.
When voters went to the polls on Sept. 19, 1995, Measure R failed to get the needed votes, with 574 yes votes and 488 no votes, said Brookes.
The city's second attempt at a targeted sales tax measure was Measure S in 1998.
City Clerk Janel Chapman provided Lake County News with the original arguments offered to voters for Measure S, which was a three-quarter-percent sales tax that was to be used specifically for repair, construction, or reconstruction of streets and roads.
Measure S, which would have lasted for 10 years, also would have increased the city's spending limits to allow it to spend the collected sales tax revenues for the intended road repairs, Chapman said.
Because it was a targeted tax, Measure S needed a two-thirds majority vote, which it failed to get, said Chapman.
Then in November 2003, Measure C went on the ballot. Unlike Measures R and S, Measure C was aimed at the entire county, according to election records. It would have instituted a half-percent sales tax for county road repairs.
Measure C also was a targeted tax that required a super majority of 66 percent. Voting records show the measure received just over 50 percent of the vote, with 4,858 voters casting a yes vote, and 4,809 county residents voting no.
It would be the following year that Measures I and J were successful, after the city decided not to pursue a targeted tax but instead asked voters to approve a general tax. Brookes said that change required the measure to only pass with a 50-percent-plus-one margin.
Councilman Bob Rumfelt is the only remaining council member from the time when Measure I and J were passed on Nov. 2, 2004.
Rumfelt said a consultant hired by the city to look at the issue told them that a general tax measure required the simple majority vote.
However, the accompanying Measure J contained nonbinding advisory language suggesting the priority projects for which the money should be used.
Voters passed Measure I with a 59.6 percent yes vote, according to election records. At the same time, Measure J received the approval of and 81.6 percent of voters. The measures have no sunset.
City leaders had urged passage of the measures, saying that the half-cent sales tax would raise roughly half a million dollars annually.
Those estimates appear to be slightly under the actual gross revenues. Mayor Ron Bertsch reported that the sales tax measure currently brings in about $750,000 a year.
He said Measure I has brought in approximately $1,961,216.98 since 2005, of which $1,025,300.82 has been spent on roads and $249,827.37 was spent on the Westshore Pool renovation.
According to a city breakdown, for the 2004-05 fiscal 2005, Measure I brought in $73,204. The following year, for 2005-06, city records show $531,089.94. Moving forward, gross revenues were $614,174.97 for 2006-07 and $742,748.07 for 2007-08. Anticipated revenue for 2008-09 is $675,000.
The debate over the uses of Measure I
Measure I and the uses for the revenue it generates have become a subject of disagreement in the city's leadership as the city as struggled with balancing its budget.
However, because of the city's budget shortfall, Measure I funds are being looked at as a way of bringing the budget into line, at least in the short term.
City Councilman Jim Irwin has been consistently vocal about his opposition to using the money for anything but road projects.
The city of Lakeport began the fiscal year with a $400,000 gap between revenue and spending. A line of credit was proposed last summer as the manner of covering that shortfall, but city officials have stated that the line of credit was never set up. To do so now would require a vote of the council, and Irwin guaranteed he wouldn't vote for it.
City Finance Director Janet Tavernier explained to the Lakeport City Council at its Feb. 17 meeting that the line of credit would require action by the council.
Even if the council did approve the line of credit – that's if the city could even get credit given the tight credit market – Irwin said the end result would be Measure I money paying off the debt.
The council directed staff at a special meeting on Tuesday not to use the line of credit. Burke said senior city management staff agreed that using the line of credit wasn't the best way of addressing the shortfall.
Irwin told Lake County News in a recent interview that his point of view is that voters wanted the money to be spent specifically on roads, although he added, “In all fairness, the Westshore Pool was a Measure I project.”
And he said he can handle a part of the Measure I funds being spent on pool maintenance – he said he's not willing to shut down the pool – but he doesn't want to see the pool become a priority for the funds, because he believes roads and infrastructure come first.
Irwin said he's concerned that Measure I is increasingly being used to cover the day-to-day expenses of the Westshore Pool and the Department of Public Works.
For Irwin, there's a very real concern that Measure I funds could be “hijacked” and used for other purposes for which the funds weren't originally intended.
If that doesn't seem like a probability, Irwin points to the controversy over the city of Santa Rosa's Measure O, also a sales tax measure that was passed in 2004, the same year as Measures I and J. Measure O supports the city's police department.
Earlier this month, the Santa Rosa Press Democrat published several stories about the Measure O controversy, which has arisen over a $23 million budget deficit for the city of Santa Rosa. One of the proposals for addressing that deficit is the diversion of Measure O funds to filling the budget gap.
Irwin said he feels at odds with other council members about how the money should be spent. He said he wants to see the council at least agree on the city's “big picture” financial issues.
For Irwin, there isn't any particular project for which he wants to see Measure I funds used. However, he said it's a priority for him that Main Street, Lakeport Boulevard and 11th Street – main city arteries which also are commerce and tourism centers – are maintained because those areas are what many visitors see.
He added that the sidewalks along Main Street should be completed to make the city more walkable.
“I'd love to see sidewalks connecting all along Main Street the whole way,” he said.
At a Jan. 20 budget workshop, Irwin stated that the city already had taken from Measure I for this current budget year, and he didn't intend for it to be allowed to balance the budget for the fiscal year 2009-10.
During that same workshop, Burke, in responding to Irwin's concerns, said, "Measure I is what's been keeping this city afloat."
Burke stated his concern that the debate over Measure I and its uses ultimately was going to come down to roads on one hand and employees, police officers and equipment on the other.
He suggested that Measure I isn't such a sacred cow that it shouldn't contribute to paying the city's overall expenses, in an amount determined by the council.
Irwin reiterated his opposition to using Measure I funds to balance the budget at the Tuesday special council meeting, which was convened specifically to look at balancing the budget.
Council member Suzanne Lyons told Lake County News that she has questions about Measure I and how much of the proceeds actually are being used for roads.
"I think there is a problem with it residing in the general fund," she added.
Rumfelt, who championed the Westshore Pool renovation, said he feels the money is being used correctly, as it was originally intended to be spent.
“I guess that's where I differ from the other council members, that they seem to think it's for roads only,” he said.
In 2004, the council had said the money would be used for deferred maintenance projects, and they've held true to that, said Rumfelt.
“Those are the kind of things it was initially designed to be used for, but who would have known that the economy was going to do what it did,” he said.
The council hasn't used the money to cover salaries, although they could, since the money can legitimately be used for any general fund use, salaries included, he said.
“We still don't intend to use it that way,” Rumfelt said, explaining that salaries and regular increases could quickly eat up Measure I funds.
Other possible uses could be for police cars, said Rumfelt.
The money is not supposed to be used for sewer or water projects, which are covered by enterprise funds, said Rumfelt.
Considering the current economic climate, Rumfelt said he can't see any reasonable person in the city objecting to using Measure I funds to keep the city solvent.
Tomorrow: Exploring the legal limits for how the money can be spent, the council plans a Measure J committee and a full rundown of Measure I revenue and expenditures since 2004.
E-mail Elizabeth Larson at
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