UNION CITY, Calif. — Union City is expecting to be short about $3 million every year by the end of the decade, and the City Council is thinking of raising taxes as a potential means of addressing the shortfall.
On Feb. 27, the City Council directed city staff and its consultants at CivX Group to do additional surveys to find out what people think about increasing the utility user tax, which is currently at 5%, as well as establishing a new public safety parcel tax. So far, residents haven’t expressed enough support to indicate either would be successful on the November ballot.
The city is also considering a business license tax, which was not discussed at the February meeting, but is expected to be discussed at an upcoming meeting.
City Manager Joan Malloy told the council that the city’s finances are fine at the moment, but long-range financial projections show the city will fall below its goal of maintaining a reserve equal to 20% of the general fund by 2028, necessitating budget cuts or new revenues to maintain services.
The city used to have a parcel tax specifically for public safety, which was established in 2004 and renewed in 2008 and 2016. It generated $4.1 million annually before it expired in March 2020. Voters decided not to renew it.
The city pivoted to establishing a 5% tax on gas, electricity, telecommunications and other utilities in the city. This brings in $6.3 million annually but is set to expire in 2028. Each 1% increase in the tax equates to about $1.3 million in annual revenue.
The survey is expected to find out what kind of tax increases the city’s voters would be most receptive to.
Councilmember Jaime Patiño said he was hesitant to support an increase to the utility user tax since residents see those bills more frequently than a parcel tax. Mayor Carol Dutra-Vernaci said getting a parcel tax approved would be more difficult since it requires two-thirds of the vote rather than 50% like an increase to the utility user tax.
The surveys are expected to take place in May with a report back in June. A resolution must be approved by Aug. 9 to place a measure on the November ballot.
