Title
a. Receive a staff report on cannabis tax revenue, the community engagement process and funding allocations made by the Board of Supervisors using cannabis tax revenue.
b. Provide direction to staff.
Report
RECOMMENDATION:
It is recommended that the Budget Committee:
a. Receive a staff report on cannabis tax revenue, the community engagement process and funding allocations made by the Board of Supervisors using cannabis tax revenue.
b. Provide direction to staff.
SUMMARY:
In October 2018, as part of a CAO-IGLA request to increase resources/funding allocation to more effectively implement the County’s Cannabis Program, the Board of Supervisors concurred with the request made by Chair Alejo and Supervisor Parker that the Board Budget Committee review the uses of cannabis revenue in light of the community engagement process conducted in early 2018. This report is intended to respond to that request.
Background
In 2016, the voters of Monterey County approved a general tax on commercial cannabis in the unincorporated area. The tax was approved for “general governmental purposes” and is discretionary revenue which may be allocated at the discretion of the Board as part of the annual County budget process.
In late 2017, the Board directed CAO-IGLA to conduct a community engagement process to gain input from the community on potential uses of this new source of discretionary revenue. CAO-IGLA convened a working group which included County budget staff, CAO-Community Engagement, the Health Department, First 5, Building Healthy Communities and MILPA. The results of Impact Monterey County were used as a starting point in developing the engagement process.
The engagement process included a random telephone survey of 625 registered voters in Monterey County, an online survey and 5 community forums, one in each supervisorial district. As part of the engagement process, it was made clear that public input was sought and also that the ultimate decision regarding use of cannabis tax revenue is the purview of the Board of Supervisors.
On April 17, 2018, CAO-IGLA presented a report to the Board of Supervisors on the results of the community engagement process. Overall, education, health and safety were viewed as priorities by the community at large. Specifically, the “education” preference was more clearly defined as “early childhood education and pre-school programs”. The health preference was defined as “providing quality healthcare, including mental health care, for County residents”. In both a health and a safety context, homeless services and violence prevention/reduction were identified as priorities as well.
On April 17, 2018, the Board of Supervisors received the staff report on the results of the community engagement process and heard from numerous speakers. At the conclusion of the discussion, the Board accepted the report and commented on the difficult process ahead for the FY 2018-19 County budget and indicated that it would consider the community engagement input as it deliberated on budget decisions which would be made in June 2018. The Board reserved its prerogative to make decisions on use of Cannabis tax revenue to address overall County budget needs in the FY18-19 budget process.
Attached to this staff report are several tables. Table 1 shows the status of the cannabis assignment fund from the beginning of cannabis tax collection in FY16-17 to the present. As the committee is aware, the Board approved a significant reduction in the cannabis tax rate in early 2018. This was done at the request of the cannabis industry and approved by the Board in an effort to support and facilitate the development of this new, important local industry. It should be noted that the FY18-19 estimated cannabis revenue shown on Table 1, $4,259,000, is a very conservative number. Actual 1st quarter billing for FY18-19 is approximately $3.2m.
Table 2 shows cannabis tax revenue expenditures over time beginning in FY16-17. In general, a significant portion of cannabis tax revenue has been allocated by the Board to fund has the day to day operations of this complex, rapidly evolving new industry. In addition, in FY18-19 The Board has exercised its discretion to allocate cannabis tax revenue through budget decisions to provide one time funding for a variety of programs, many of which conform to general priorities identified in the community engagement process such as the Children’s Emergency Response Team, Adult Protective Services, the Winter Warming Shelter, Whole Person Care, and the County Library book budget. The Board also used its discretion to direct cannabis tax revenue to the General Fund contingency for FY18-19, thus freeing up other funds to be used to fill budget gaps to protect critical County safety and health services and to avert staff layoffs. The Board, in its discretion, also used cannabis tax revenue to assist with costs associated with the Interlake Tunnel project.
In addition to regular, monthly meetings of the Budget Committee, the public will have the opportunity to engage the Board regarding the FY19-20 County budget as follows:
April 19, 2019 Board of Supervisors Budget Workshop
June 3 and 4, 2019 Board of Supervisors Budget hearings
June 25, 2019 Board of Supervisors Final Budget adoption
At the December 19, 2018 Budge Committee meeting, staff will present a brief PowerPoint presentation for the benefit of the Committee, staff and members of the public.
OTHER AGENCY INVOLVEMENT:
This report was prepared with input from the CAO cannabis program, community engagement and budget staff.
FINANCING:
There is no impact to the General Fund through acceptance of this report.
BOARD OF SUPERVISORS STRATEGIC INITIATIVES:
Mark a check to the related Board of Supervisors Strategic Initiatives
__Economic Development
X Administration
__Health & Human Services
__Infrastructure
__Public Safety
Prepared by: Maegan Ruiz Ignacio, Admin. Assist. Confidential, ext. 5508
Approved by: Nicholas E. Chiulos, ACAO, ext. 5145
_______________________________________ ____________________________
Nicholas. E. Chiulos Date
Attachments:
Table 1
Table 2
Cannabis Tax Revenue Allocations