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Capitola staff brief council on Measure Y receipts and community questions about spending and transparency
Summary
City staff reported early Measure Y receipts track close to budget but rising CalPERS UAL and salary adjustments have complicated expectations; council and residents urged clearer midyear reporting and options for designating projects funded from the general fund.
City finance staff updated the Capitola City Council Feb. 12 on Measure Y, the 0.5% local sales tax approved by voters in 2024, and answered questions about how the revenues are being used.
Finance Director Jim said Measure Y replaced Measure F, became effective April 1, 2025 and is projected to generate approximately $2.2 million annually for the general fund. The August 2024 forecasts presented to voters showed a budget gap without Measure Y; subsequent CalPERS actuarial updates increased the city’s unfunded accrued liability (UAL) and added approximately $756,000 over two years to retirement-related costs, which changed earlier projections.
Jim told the council the city received one quarter of Measure Y receipts ($574,000) in the first partial reporting period and that first-quarter receipts for the current fiscal year are tracking slightly below budget. The city receives CDTFA sales-tax distributions two months in arrears; staff said a full midyear projection will be available at the council’s Feb. 26 midyear budget review when the February payment posts.
Councilmembers and public commenters raised concerns about timing and public expectations. Several speakers, including Councilmember Jensen and residents, asked why salary adjustments tied to Measure Y took effect before the city began receiving Measure Y revenues in April. Staff and council explained that memoranda of understanding (MOUs) adopting salary changes were approved in June 2024 and that the Measure Y ballot language authorized a general fund tax; as a general tax, Measure Y revenues flow into the city’s general fund rather than into a restricted account.
Members of the public and some councilmembers urged clearer public reporting and an explicit midyear presentation showing how Measure Y revenues contribute to salaries, projects and reserves. Staff said it will include Measure Y impacts in the midyear report and that the council can designate projects through the normal budget process. The presentation noted that, after accounting entries, about $17,000 of Measure Y receipts in the initial presentation were not formally allocated to a specific project and that staff will recommend any adjustments through the upcoming budget review.
The council received the report; no council motion was required.
