CARLSBAD — The City of Carlsbad is conducting a randomized survey among a selection of residents to gauge whether they’d prefer either a one-cent sales tax increase or legalizing recreational marijuana as a future revenue source.
Jason Haber, the city’s intergovernmental affairs director, said the Carlsbad City Council directed staff last year to come up with new revenue streams after learning expenditures are forecasted to outpace revenues within five years, according to the city’s 10-year forecast.
The email survey asks hundreds of residents their preference between a one-cent tax increase earning up to $20 million annually or legalizing cannabis (medicinal or recreational) to help pay for capital improvement projects and day-to-day services.
While the council could legalize cannabis after voters approved Proposition 64 in 2016, which legalized recreational marijuana statewide, the tax must be approved by voters.
In Carlsbad, 56% of voters supported Prop 64.
The survey results, along with any possible action, will be discussed during the council’s April 20 workshop.
“That’ll cover the results of the revenue study survey and cover the (Capital Improvement Program) prioritization that council has requested,” Haber said of the workshop. “What we want to talk to council about, is understanding their priorities for the major projects in terms of what order of priority do they hold them.”
Haber said the city’s Capital Improvement Program has a budget of $56.2 million for the Fiscal Year 2021-22, which includes more than $23 million for a total of 21 projects, including modernizing roads, improving traffic and repairs. The program’s funding plan, Haber added, covers 15 years, which includes the City Council’s goals along with 254 other projects.
According to the FY 2021-22 budget, the city has an estimated $669 million for project costs. Staff identified 50% for wastewater and water projects, 23% for transportation, 12% for civic facilities, 9% for parks and 6% for drainage. Revenues for the program are projected at $800 million.
The city also has $85.9 million in unfunded projects, which include the College Boulevard extension (estimated last year at $30 million) and the Carlsbad Boulevard realignment ($26.1 million).
Kristina Ray, director of community engagement, explained a number of factors that show the city’s future revenues are not in line with expenditures, such as fewer large-scale developments and associated fees.
Haber said city staff has identified the need for additional revenue streams as the 10-year forecast shows a deficit coming by the Fiscal Year 2024-25.
“The directed staff to undertake a revenue study to identify revenue enhancements,” Haber said of the council’s action last year before adopting the budget. “The general approach is looking at the typical revenue enhancements like transient occupancy taxes and various fees. Cannabis was identified as one opportunity that other municipalities are allowing to occur in their jurisdictions.”
According to Haber, a one-cent sales tax, if approved by the council and voters, would be in perpetuity unless rescinded through a ballot measure or other legislative action.
Resident Vicky Syage railed against the proposed tax during the council’s April 5 meeting and questioned the city’s hiring of more than 50 new employees, 30 of which are in management positions, over the past three years. Typically, management salaries range from $100,000 to $300,000, according to the city’s budget.
Syage said the city has always prided itself on being fiscal sound, but now is going in the opposite direction.
“It appears the city has put on some weight in the past few years,” Syage said. “We now have an assistant city manager and deputy city manager that together cost us, the taxpayers, $650,000 every year.”
Syage acknowledged the city seemed understaffed in 2016 but has now gone overboard. She asked whether the city is “going broke,” suggested cutting some projects such as trenching the railroad tracks, for the city to be transparent and “open the books.”
Mayor Matt Hall has long opposed the city’s vast number of new hires, voting against the previous three budgets, including the council’s approval of a $5.9 million appropriation from its reserves to cover the Fiscal Year 2021-22 budget.
“It’s very noteworthy on the number of new employees that have been hired over the last four years and that is an ongoing cost of millions of dollars,” Hall said. “Our community needs to be aware of that.”
As for cannabis, Haber said city staff has yet to dig into those details of what any citywide program would look like. However, the survey is a method to measure residents’ interest in legalized cannabis.
After Prop 64 passed, the City Council unanimously voted against legalization, which included retail, testing, distribution and manufacturing facilities. However, the city does allow specific uses as permitted by federal law, Haber said.
Carlsbad would be the fourth city in North County to legalize cannabis after Vista, Oceanside and Encinitas. However, Vista and Encinitas both needed voters to approve referendums to legalize recreational cannabis after their councils opted to vote no on legalizing in their cities.