HERCULES -- A utility user tax hike proposal headed for the June 4 ballot would go a long way toward plugging the city's structural deficit, recently estimated at about $1.2 million a year, according to projections.
The City Council this week approved putting a measure to voters that would increase Hercules' existing tax on utility bills by 2 percentage points, to 8 percent.
The measure would require a simple majority to pass.
If the measure is successful, the increase would pour an estimated $1 million a year into the general fund. The tax would sunset in five years.
The vote Tuesday was 4-1, with Councilman Dan Romero dissenting. Romero and Councilman Bill Kelly had advocated a longer term for the tax, but Kelly ended up supporting the five-year measure.
A consultant had found that a five-year tax would generate wide support, while a 10-year tax likely would produce a much closer vote. Romero expressed frustration Wednesday that the consultant, as part of its polling, did not try to gauge support for a tax hike with terms between five and 10 years.
The council majority argued in favor of letting voters decide in five years whether the tax hike needs to be renewed. Several members also expressed hope that an improving economy and several development projects in the pipeline would generate enough revenue that a renewal would not be needed.
The city's current $12.65 million general fund budget faced a similar deficit at the beginning of the fiscal year that was plugged by tapping into other funds. But no further sources of one-time funds will be available next year, Finance Director Nickie Mastay has warned.
Normally, Hercules would have to wait until the next general election involving City Council members in November 2014 to put up a general tax measure requiring a majority vote. But that restriction does not apply when a council unanimously declares a fiscal emergency, which the council did Feb. 12.
Contact Tom Lochner at 510-262-2760. Follow him at Twitter.com/tomlochner.