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Minutes - San Leandro City Council Meeting - May 16, 1994 Page - 8 - NEW BUSINESS (continued) meetings utilized to develop the Strategies and the public input process at the meetings. He said the proposed budget will contain no new programs and only two new positions, both of which are police officers. He described the significant drop in sales and property tax in the last three years and the effect on the City's finances. He said it is also anticipated that the State will take additional property tax revenue from the City in November or December, and there are no new revenues to offset these reductions. He noted that $500,000 of sales tax revenue has been threatened by the potential loss of Costco. John Jermanis described the proposed increases in the Utility Tax and the Transient Occupancy Tax. He said the residential rate will increase from 5% to 6% to match the commercial rate and will also be applied to Cable TV bills. He said there is a $717,000 funding shortfall , despite a $1 .8 million reduction in expenditures, including elimination of 41 positions. He said a key element of the 1994-95 budget strategies is the proposed increase in the two Taxes, and he described the revenue that would be provided. He said the Utility Tax is collected via the individual utility company bills, and he described the average cost per individual . He said the City's Transient Occupancy Tax is currently 8%; recommended to be increased to 10%, which is the typical statewide rate. He said the Tax will go into the Marina Fund to help balance that fund. Council Member Myers noted these increases were recommended by the Task Force and the City Council Finance Committee, but were not implemented in 1993-94. He said the current recommendation is that the Taxes not be increased for the full year. Council Member Galvan noted reductions of $1 .7 million were made based on the Task Force recommendations. He asked for a report on which recommendations had been implemented and which had not. In response to Council questions, Mr. Jermanis noted that the Utility Tax fee is a percentage of utility bills, and would not be a flat fee but would depend upon the size of individual utility bills. He described his revenue projections for the end of the year but said final information would not be available until the end of August. He noted that, for all taxes paid in the City, businesses pay about two- thirds. He noted that homeowners pay large amounts of property taxes, but the City receives less than $100 per year for each home, and the State continues to take property taxes away from the City. Public Comments were then invited: 1 . Al Rosenga, 534 Parrott Street, President of Peralta Citizens Homeowners Association, said he shops for the least expensive hotel rooms, including the tax, and he feels if the City wants to attract people to hotels in San Leandro, the City should rethink the Transient Occupancy Tax, which could attract more business, which would offset a lower tax rate.