Benicia voters could decide on two new taxes in November

BENICIA – Benicia voters could decide on two ballot measures to raise taxes in the city in November as the City Council is proceeding with a plan for a new property transfer tax and a group of citizens have proposed a new sales tax, just months after voters already approved a sales tax hike.

The City Council voted on Tuesday to move forward with a proposal to place a measure on the November ballot to become a limited charter city for the sole purpose of instituting a real property transfer tax.

City staff will bring a proposed set of terms to the council for approval on May 21 which will include the tax rate and any property types that will be excluded from the tax.

The limited charter proposal and the real property transfer tax would both go to voters for approval in November. 

But during Benicia’s April 16 council meeting, Councilmember Tom Campbell said that he is concerned about overloading the November ballot with measures to increase taxes. In addition to the property transfer tax, Benicia residents may also see a voter initiative on the ballot for a 0.5% sales tax known as the Save Our Streets initiative.

“Voters are voters and if they start seeing too many taxes they are really good about saying no,” Campbell said.

However, while the Save Our Streets initiative has enough signatures to qualify for the ballot, it would exceed the maximum sales tax allowed under state law, and requires action by the state legislature before it reaches the ballot. 

Benicia voters just passed a 0.75% sales tax increase in March, bringing the rate to 9.125%. The Benicia City Council declared a fiscal emergency in November in order to place the rate hike, known as Measure B, on the ballot and it passed with 72% of Benicia voters’ support. 

But city officials say that the approval of Measure B has not solved the city’s financial problems, leading them to seek other new revenue sources, such as a property transfer tax. 

Incorporating as a charter city would allow Benicia to enact the property transfer tax, which is otherwise prohibited by the state laws that govern Benicia under its current status as a general law city. 

In California charter cities are allowed greater control over municipal affairs and can enact ordinances through the city’s charter that take precedence over state laws.

City of Benicia staff considered property sales over the last five years and calculated that a  property transfer tax would have increased revenues by $500,000 annually. But city officials also expect an increasing number of property transfers because a significant percentage of homes in the city have not changed hands since the 1980s and 90s.

“We are seeing an inflection point somewhere around 2027 when the number of millennials and the number of silver tsunami seniors are basically going to hit,” Councilmember Terry Scott said at a meeting on April 16, when the limited charter proposal was introduced. “This is a unique opportunity for us to be ahead of the curve when we are going to see a significant amount of transfers.”

Scott said that many of the surrounding cities offer sliding scales depending on the value of the property. He cited Oakland and Berkeley at $15 per $1,000 of value, Sacramento at $8.75, and said that Richmond ranges from $7 to $25, according to the value of the home. Vallejo levies a property transfer tax at a rate of $3.30 per $1,000 of property value. 

Solano County levies a similar tax, called a documentary transfer tax, which is also collected when a property is sold and is assessed based on the value of the property. Unlike the real property transfer tax, general law cities are permitted to impose this tax. Under the current structure, Benicia and the county split the revenue from a documentary transfer tax of $1.10 for every $1,000 of value.

At Tuesday’s meeting, Benicia City Manager Mario Giuliani said that the staff's request is specifically to limit the charter to the addition of the real property transfer tax because if the council were to add additional provisions, city staff would not be able to meet the August deadline to submit the measure to the November ballot. 

State law requires that the charter proposal appear on the ballot in an even year when there is a City Council election so the next opportunity for voters to approve the charter would not be until 2026.

But with another tax hike potentially on the ballot, Campbell raised concerns that voters could feel overwhelmed with too many taxes.

A group of Benicia residents collected enough signatures to qualify the Save our Streets initiative for the November ballot. But at the moment, it is ineligible for the ballot as the passage of Measure B put the city only an eighth of a cent below the county’s maximum sales tax rate. The addition of the Save our Streets half-cent sales tax would put Benicia’s sales tax rate over the limit.

The county registrar cannot place a measure on the ballot that does not comply with the county sales tax limit, so the measure was stalled, said Campbell. 

Since the county sales tax limit is set by the state legislature, residents and city officials urged state Assemblymember Lori Wilson to draft a bill raising the county’s limit. Wilson drafted and submitted the bill as urgent, but it is unclear if the legislation will pass the Assembly and the Senate in time for election deadlines, according to Campbell.

Giuliani said that although the Save our streets initiative could generate $4 million a year, the city needs $6 million a year to repair the roads. 

The limited charter proposal and the real property transfer tax are also on a tight deadline. After the terms of the limited charter go to the council for approval on May 21, the city is required to hold two public meetings on the measure that are at least 30 days apart, according to the staff report. 

The public meetings are scheduled for June 11 and July 16 in the City Council chambers.

Following the last public meeting, the council must wait 21 days before approving the measure for the ballot, which requires a two-thirds majority of the council. That vote for approval is slated to take place on Aug. 6, three days before the deadline to submit measures for the November ballot. 

The limited charter can pass with a simple majority, more than 50%, of voters approving it.