TO: LINDA REICH, CITY MANAGER
FROM: ROB BURNS, DIRECTOR OF FINANCE
SUBJECT
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Administration and Examination of Records of the Local Transaction and Use Tax (Measure V).
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RECOMMENDATION
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Approve 1) Adopt Resolution No. 2024-015 authorizing the City Manager to execute agreements with the California Department of Tax and Fee Administration to implement a local transaction and use tax; 2) adopt Resolution No. 2024-016, rescinding Resolution No. 2003-32 and authorizing examination of sales or transactions and use tax by City officials and an independent contractor; 3) approve a contract between HdL Companies and the City of Chino for the administration of the City’s 1% Transaction and Use Tax (Measure V); and 4) authorize the establishment of Fund 103 titled Measure V 2024.
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FISCAL IMPACT
The implementation of Measure V will result in approximately $28 million in revenue for the City’s General Fund (Fund 103). There is an estimated cost of $175,000 payable to the California Department of Tax and Fee Administration (CDTFA) that was appropriated on November 21, 2023. Lastly, there is a cost of $2,400 annually with Hinderliter deLlamas & Associates (HdL Companies) for the administration of the Transaction and Use Tax.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Positive City Image
• Financial Stability
• Responsible Long-Range Planning
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Revenue: 1031000-51310 |
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BACKGROUND
On Tuesday, March 5, 2024, the voters of the City of Chino approved the local 1% sales tax increase (Measure V). This sales tax measure was a general-purpose tax taking effect on approximately July 1, 2024. This tax will generate approximately $28 million annually in revenues for the City’s General Fund. The passage of Measure V will increase the City’s overall tax rate to 8.75% and will apply to general merchandise and consumer goods. Purchases of items such as groceries, medicine, education, labor, and housing are all exempt from this tax.
ISSUES/ANALYSIS
Pursuant to Revenue and Tax Code section 7265, the new tax is scheduled to become effective July 1, 2024, and will be administered by the CDTFA.
The CDTFA requires that the City Council approve two resolutions: 1) Authorizing the City Manager to execute an agreement with the CDTFA for implementation of the local transactions and use tax; and 2) authorizing examination of sales or transactions and use tax by City officials and an independent contractor.
The CDTFA is requiring the City to submit the following items as soon as possible, but no later than April 14, 2024:
• Preparatory Agreement
• Administration Agreement
• Certified Copy of Resolution Authorizing the Execution of Agreements
• Certified Copy of the Transaction and Use Tax Ordinance
• Certified Copy of the Final Election Results
• Contract Form for All Communications
• Resolution for Examination of Confidential Records
• Copy of Consultants Agreement
• Designation Letter
• Contact Form for Notifications & Appeals
• EFT Authorization Agreement plus copy of voided check
• Media and Registration Request Form
To ensure the continued confidentiality of sales, transactions and use tax records, as mandated by California Revenue and Taxation Code Section 7056, the City will restrict access to collections and receipts to those positions requested in the Resolution. It is recommended that the City update its current list of designated City positions that are permitted to receive and examine City sales, transaction and use tax records from the CDTFA. It is also recommended to include Hinderliter deLlamas & Associates (HdL), as this firm is contracted by the City to provide sales, transaction and use tax consulting services for the City.
As indicated in the Resolution, the following are recommended City positions to have access to the sales, transactions and use tax records along with the City’s sales tax consultant, HdL:
City Manager
Assistant City Manager
Economic Development Manager
Director of Finance
Deputy Director of Finance
Management Analyst (Finance Department)
Management Assistant (Administration Department)
Assistant to the City Manager (Administration Department)
Attachments: Resolution No. 2024-015 Exhibits A & B
Resolution No. 2024-016
HdL Consulting Agreement
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