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Finance staff explains new storm special assessment, occupancy and cannabis tax estimates, and credit downgrade concerns
Summary
City finance staff outlined revenue adjustments including a new special storm assessment on tax bills to fund storm sewers, plans to step occupancy tax toward 3%, a preliminary cannabis tax estimate tied to one local establishment, and warned about a recent bond rating downgrade tied to fund balance use.
Finance staff walked the council through several revenue-side changes underpinning the 2026 tentative budget. They explained a special assessment line will appear on tax bills to fund storm sewer maintenance and related street-cleaning costs; the amounts were moved from expenditure lines and shown as a dedicated revenue line to better connect budgeted work with funding.
Staff also described occupancy tax implementation, which was phased in at 1% this year and is being modeled at a planned 3% rate for 2026 subject to council approval of the rate-setting resolution. A new cannabis tax estimate was presented but staff cautioned that the number is an initial guess based on reported sales from the single local dispensary currently operating.
On credit and cash flow: staff explained that ratings agencies (Moody’s and Fitch were named) have downgraded the city’s bond rating after several years of drawing down fund balance for capital projects. Staff said the city is managing short-term cash-flow with BANs (bond anticipation notes) and stressed the importance of planning to reduce interest burden while preserving capacity to borrow for critical projects.
Council members asked for ongoing review and for staff to revisit lease and sale assumptions around vehicle disposals and revenue recognition; staff said they will refine numbers as rates and final choices are set before the adoption deadline.
