Agenda Item Wording:
title
Measure T District Tax Recertification - Recertify the Measure T Plan for fiscal year 2026/27.
body
Agenda Date: 06/15/2026
Prepared by: Renee Nagel, Finance and Technology Director,559-713-4375, Renee.Nagel@visalia.gov, Amee Swearingen, Budget Analyst, 559-713-4170, Amee.Swearingen@visalia.gov
Department Recommendation: It is recommended that the Council recertify the Measure T expenditure plan for the new budget year July 1, 2026 to June 30, 2027 (FY 2026/27) as required per the plan to be done annually; and to continue with the existing plan until all staffing levels and projects have been met.
Summary:
In March of 2004, the voters of Visalia passed a Sales Tax Override measure to increase public safety in the community. The plan had several accountability components to assure that the City was accountable to the public, namely:
• An independent auditor will annually review and audit expenditures to ensure monies are spent as outlined in the plan.
• The Citizens Advisory Committee will annually review revenues and expenditures, providing a second independent verification.
• Annually in June, the City Manager will recertify the plan to City Council.
• Every eight years, a public hearing will be conducted to review the progress of the plan and the continuing need for the sales tax. After public comment, Council will consider the appropriateness of the sales tax. To maintain the sales tax measure in place, a supermajority vote (4/5ths) is required. The public hearing will be held the first meeting of January starting January 2013, January 2021, and continuing every 8 years thereafter.
Background Discussion:
In 2004, City of Visalia voters approved a measure to increase sales tax by ¼ cent. This was known as Measure T and the sales tax revenues generated by the voter-approved measure are earmarked for public safety. The sales tax is shared 60% police and 40% fire. Thus, the City maintains two funds: Measure T - Fire and Measure T - Police. The measure uses a detailed, 20-year plan which includes hiring of personnel, construction of capital projects, and equipment purchases. The last year of the plan was FY 2024/25. The plan requires each fund to maintain an economic uncertainty fund of 30% of expenditures that was recently changed from 25% of budgeted revenues in the original plan. This is to be used if revenues do not cover expenditures.
Annually the plan is required to get recertified by Council and every eight years a review of the sales tax measure and the need to continue it. The next effectiveness review is schedule for January 2029. For the annual recertification, staff brings all the completed elements and a projection of both the funds revenues and expenditures. Plan elements implemented to date are as follows:
• Two Police substations built
• 23 Police Officers hired and vehicles purchased (reduced from 28 due to revenue shortfalls and as directed by the City Council at their June 20, 2011 meeting)
• 13 Firefighters hired (reduced from the original plan of 18)
• Built Fire Station 55 and Training Facility
• Built Fire Station 53
• Purchased 2 New Fire Trucks
• Built Visalia Emergency Communication Center
In addition, the plan requires both police and fire portions of the funds to contribute towards the Public Safety building. The building is currently under construction. At the time of the contract award for construction, staff evaluated the Measure T funds and to ensure the funds stayed healthy enough to fund the amended plan operations, it was decided that Measure T funds would not contribute towards the Public Safety building.
It is important to remember that the original Measure T plan was not balanced from its inception and included a structural deficit. The original Measure T plan was adopted with a deficit after the first 20 years. The plan anticipated that the solution for the deficit would be funded by 1) greater than expected revenues, 2) less than expected costs; or 3) addition General Fund revenues. In reality, Measure T had several years of revenues being lower than the plan and higher expenditures due to increased personnel costs (PERS and health), construction, and vehicle costs. In addition, the General Fund has had limited available resources due to the same increased costs.
To keep the Measure T funds from going negative, the City has taken several remedial actions over the years, specifically:
• Reduced Police Officers allocation by 5 (2 through attrition & 3 transferred to the General Fund). The current number of officers is 23 reduced from 28.
• Fire original plan was for 14 positions and was amended to add 4 bringing the total to 18. During the economic down turn this was amended to 15 and then again in June 2019 which moved the Battalion Chief and Administrative Captain to Measure N bringing the total Fire position allocation to 13 which is 1 less than the original plan.
• Declared a fiscal emergency for fiscal years 09/10, 10/11, 11/12, and 12/13
• Maximum of 1 vacancy is allowed in each Measure T fund
Sales Tax
Last fiscal year, Measure T increased by 2% and is projected to increase by 3% in FY 25/26. Measure T sales tax growth and declines are not the same as the General Fund sales tax due to not receiving any of the general 1% sales tax. It only receives the additional ¼ cent tax. The difference is due to how district sales taxes are applied compared to general sales taxes in two main areas: car sales and business to business sales. District sales tax is applied to the City the car is registered in, not the City it is sold in. Therefore, for Visalia to receive the district sales tax for a purchase of a vehicle, that vehicle would have to be registered in Visalia. If a resident from Dinuba purchases a vehicle in Visalia, Visalia would receive their local 1% share of the State sales tax but would not receive any of the district taxes (Measure T & N). Likewise, Business to Business sales tax works the same way. One of the areas that Visalia has seen a large sales tax growth is in Business to Business sales. These transactions do not help Measure T as they do our General Sales Tax.
Chart 1 - Measure T Revenues, shows the projected sales tax to be equal to the amended plan expenses for FY 2026/27. In reality, the expenses will be less than FY 2026/27 proposed budget due to vacancies. In addition, the chart does not include interest earnings which is approximately $0.5 million annually.
Chart 1 - Measure T Revenues & Expenditures
Fire Measure T
The majority of expenditures for the Fire Measure T fund are for salary and benefits, as shown in Table 1 - Fire Measure T Projections. The five-year projection is conservative and has the sales tax growing each year by 2%. The fund is projected to have an operating surplus of $0.4 million which brings the fund balance to $6.8 million at the end of this fiscal year. The end of year surplus is projected to decrease annually, mainly due to the increase in salary and benefit costs. This projection assumes there will be no vacancies and no recession. Typically, there are 1-2 vacancies in this fund per year.
Table 1 - Fire Measure T Projections
Measure T - Police
Police Measure T revenues have exceeded the expenditures since FY 2012/13 due to the reduction in police officers. This reduction, as well as reducing the VECC contribution, has allowed the fund to have a surplus at the end of each year. Like Fire, the majority of the expenditures are for salary and benefits which consists of 23 officers as shown in Table 2 - Police Measure T Projection. The five-year projection is conservative and has the sales tax growing by 2% each year. The fund is projected to have a surplus of $0.4 million which brings the fund balance to $8.9 million at the end of this fiscal year. The Police Measure T Fund contributes $151,200 (9.6% of total debt payment) towards the annual VECC debt payment which started in fiscal year 15/16 and will end in December 2029. Per the original Measure T plan, this fund would be paying 25% ($284,500 annually) of the debt payment. Since revenues could not cover the full debt payment, staff reduced the Measure T portion of the annual debt payment to $151,000. In addition, the General Fund is carrying three Measure T officers. Each officer costs about $180,000. The end of year surplus is projected to decrease, mainly due to the increase in salary and benefit costs. Once the debt is fully paid (FY 29/30), the end of year surplus will increase. This projection assumes there will be no vacancies. Typically, there are 1-2 vacancies in this fund per year and there will be no recession.
Table 2 - Police Measure T Projections
Measure T Economic Uncertainty Fund
In June 2024, Council amended the uncertainty fund policy to be maintained at 30% of operating expenditures to match the General Fund and Measure N and this started in FY 24/25.
Measure T Recertification and Maintenance of Effort Requirement
Measure T is required to complete an annual recertification and maintenance of effort (MOE) calculation. The MOE is to ensure that the General Fund monies budgeted for Police and Fire operations does not fall below the previous years’ service level. In the event of an economic emergency, the City Council may only alter this provision by a supermajority (4/5th’) vote. The City meets this calculation for FY 2026/27 as shown in Table 3: FY 2026/27 MOE Calculation.
Table 3 - FY 2026/27 MOE Calculation
Conclusion
Measure T has implemented the majority of the components of the expenditure plan. Previously, the City has taken steps to reduce ongoing operational costs as expenditures have exceeded revenues. The 5-year projection shows revenues exceeding expenditures which results in cash balances increasing each year. This projection does not include an economic downturn, which would result in less revenues. At this time, staff recommends continuing with the plan and its amendments and will continue to monitor revenues and expenditures to assure that the funds remain in balance. If the projection continues to be met, staff will return with recommendations to add to the plan.
Fiscal Impact including annual maintenance and operating costs: N/A
Prior Council Action: Measure T Reauthorization 1/4/21, Recertification annually in June.
Alternatives: N/A
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to recertify the Measure T expenditure plan for FY 2026/27 and continue with the amended plan until all staffing levels have been met.
Environmental Assessment Status: N/A
CEQA Review: N/A
Deadline for Action: 06/30/2026
Attachments: None
Strategic Goal: Indicates which City Strategic Goal(s) this item supports. Check all that apply.
|
☒ Economic Vitality |
☒  Organizational Excellence |
☒ Fiscal Strength |
☒  Infrastructure & Growth |
☒  Quality of Life |