Our local economy has limited opportunities for residential and commercial development, a declining tax base, and a small retail industry. Benicia’s residential and business economy is not set up to sustain the City services we have come to enjoy as a full-service city.
To begin solving the structural budget deficit, Benicia developed a Resiliency Plan which aimed to align the programs and services the city offers to its strategic goals and put Benicia on solid long-term financial footing.
What's the Problem?
Today, Benicia faces an unsustainable structural budget deficit. This deficit has been a long time coming, caused by a declining population and limited opportunity for economic growth. Benicia’s local economy cannot support its level of City services as a full-service city – owning and operating its own fire department, police department, water, wastewater, parks and recreation, and library. These services are what make Benicia a safe, unique, and vibrant community, but we no longer have the resources to support all these services.
Our situation is that we are a built-out community with limited locations for new development and we do not have the economic tax base to support the level of services we enjoy and have come to expect. Below are some of the reasons Benicia's economy is unable to provide sufficient revenue to pay for expenses for programs and services.
Declining Population: In 20 years, our population has increased by less than 100 people and now is starting to decline
Limited Retail Revenue: There is so limited retail in Benicia, Amazon is a leading sales tax producer for the City
Limited Property Tax Revenue: If 71 housing units were to be added to the City valued at $1 million, it would only produce $200,000 in property taxes
Lack of New Development: There have only been 4 new commercial/industrial buildings constructed in the last 15 years.
ALL of the property tax revenue in Benicia isn’t even sufficient to pay for public safety costs: Each year, Benicia’s proceeds from Property Tax is $21 million… the cost for our Police and Fire services costs the City $26 million each year.
What about revenue from existing businesses? The vast majority of our Industrial Park is comprised of warehouse space (4.3 million square feet). Those businesses produce no sales tax and very little jobs. In fact, of the over 500 businesses in our Industrial Park, only a few (less than 20) produce significant sales tax (i.e. more than $50,000 per year).
Fixing the Structural Deficit
The City's plan to fix its structural deficit is to:
Reduce Expenses
Increase Local Revenue (taxes)
Grow our Tax Base through new development
This comprehensive approach of containing spending, securing additional local revenue, and encouraging new development, will help stabilize Benicia’s financial condition and have a strong and stable foundation to build a prosperous Benicia.
What We’ve Done So Far
1. Reducing Expenses
In the last 12 months, Benicia has proactively started cutting expenses and reducing operating costs by $4.5 million through the elimination of 10 positions (5% of the City's general fund workforce) and reducing programs. However, even with these reductions, an additional $6.5 million needs to be cut from the annual budget.
Fewer Staff Positions
Reduced 10 positions, saving over $1.5 Million
Parks and Community Services Director
Parks Superintendent
Management Analyst, Parks
Parks Landscape & Building Maintenance Journeyman
Parks Landscape & Building Maintenance Journeyman
Deputy City Manager
Sustainability Coordinator
Diversity Equity Inclusion Manager
Librarian
Library Technician
Hydrant maintenance worker position
Program Reductions
By reducing programs, services, and grants, the City is saving $3 million.
Reduction of Pool Hours
Canceled Park Road Construction Project
Delayed Vehicle and Equipment Replacement
Library closures on Sundays, starting in 2024
Eliminated/Delayed development of a Facility Assessment
4th of July Fireworks & Celebration
No road paving projects, only emergency repairs
Reduced parks watering
Community Grants for Nonprofits
Delayed and deferred maintenance on City facilities
No updates to storm water system
Christmas Tree Lighting
2. Increasing Local Investment
One component of Benicia’s Pathway to Resiliency Plan is to raise local revenue. Benicia has placed two measures on the upcoming March 5, 2024 ballot.
Measure A will raise the local hotel tax paid by tourists and guests from 9% to 13%.
Measure B is to Protect Benicia’s Public Safety and Essential Services. It will raise the local sales tax by ¾ cent, costing the average Benician about $10 a month.
Both measures were built with taxpayer safeguards and accountability. An independent citizen’s oversight committee will review annual audits to ensure both measures as used as promised.
By law, not one penny of either measure can be taken by the State. It all stays right here in Benicia.
