Commerce council declares fiscal emergency, moves 0.25% sales-tax measure to June ballot

The Commerce City Council voted unanimously on Feb. 24 to declare a fiscal emergency and call a special municipal election consolidated with the June 2, 2026 statewide primary to ask voters to approve a 0.25% transactions and use tax.

City Manager (speaker 5) told the council the city relies heavily on revenue from the Commerce Casino, which he said generates roughly $30,000,000 a year and accounts for about 40% of the city's operating budget. He said recently announced regulations by Attorney General Rob Bonta that restrict certain blackjack-style play were implemented without a thorough statewide impact analysis and could lead to substantial revenue losses. "These are radical changes without a single shred of evidence that they improve public safety," the City Manager said, warning that the city estimates the hit could be somewhere between $8 million and $18 million annually.

Why it matters: staff and the finance director told the council that sales tax and card-club license fees together represent the bulk of general-fund revenues and that the potential drop in card-club income creates near-term fiscal risk. Finance Director Castellon (speaker 14) told the council the midyear report through Dec. 31, 2025, shows general fund revenues largely tracking as expected but said sales tax receipts were running below estimates and that the card-club regulatory changes add uncertainty to the largest general-fund revenue source.

Details and council action: the city manager described the proposed measure as a 0.25% transactions and use tax: if approved by voters, the quarter-cent would be added to the city's existing transaction and use tax to total 1.0% and would be administered by the California Department of Tax and Fee Administration. Staff recommended declaring a fiscal emergency under the California Constitution (Article 8, section 2(b)) and initiating ballot procedures, including an impartial analysis and authoring ballot arguments ahead of the March 13, 2026 filing deadline. The interim city clerk read the ordinance language amending Commerce Municipal Code Chapters 3.09 and 3.26.

Councilmember (speaker 4) moved to approve the item as presented; the motion was seconded and the council recorded a unanimous vote (motion passes, 5 ayes). The clerk recorded the ayes and the mayor confirmed the motion carried. Council members asked for public-facing materials and an impartial analysis to be prepared as part of the next steps.

Budget context: Finance Director Castellon presented the midyear budget report showing the city received approximately $48.7 million across funds through Dec. 31 and highlighted two notable exceptions: sales tax and card-club revenues. He reiterated staff's planning range estimating an $8'$18 million annual revenue decrease tied to the Attorney General's regulation changes and described staff plans focused on revenue enhancement, monitoring, and cost control. He also asked the council to recognize higher interest earnings and recommended some midyear adjustments that staff said would be offset by additional interest income.

What comes next: staff said the next steps include preparing the impartial analysis, drafting ballot arguments and rebuttals with designated authors, meeting the March 13 ballot-filing deadline, and continuing to monitor card-club activity and sales-tax receipts. The council also voted to receive and file the midyear budget report; any budget appropriations related to the report were to be returned for public notice and a formal amendment.

Authorities referenced in the meeting included state Government Code provisions cited for closed-session items, Revenue and Taxation Code sections listed in the proposed ordinance, and a constitutional citation for declaring fiscal emergency. The council did not adopt the ordinance on final reading tonight; it introduced the ordinance and moved forward with the special-election schedule and associated materials.

Ending: the council approved placing the measure on the June ballot and directed staff to complete the impartial analysis and ballot materials; staff will return with required documents for the election record and implement public outreach.