Urbana alderwoman: Put cannabis tax revenue toward city's pensions

Urbana alderwoman: Put cannabis tax revenue toward city's pensions

URBANA — An alderwoman is proposing using tax revenue from recreational cannabis to replenish the city's underfunded pension funds and other long-term obligations.

In a letter to her colleagues, Maryalice Wu said she wants the council to focus on the city's future by diverting all potential cannabis taxes to both the Vehicle and Equipment Replacement Fund and pension funds.

She said this revenue should not replace the existing funding, but rather add to it.

Until then, Wu is proposing that the 70 percent annual charges from various operating budgets going to the vehicle fund be reverted back to a 90 percent annual charge.

That's money taken off the top from the general budget.

Wu is proposing these measures because she said the city is setting itself up for "massive debt in the 2030s" to the tune of about $10 million.

"I cannot in good conscience support such a plan that would put our future decision-makers in a precarious financial position," Wu said. "Essentially, we are passing the buck."

City Administrator Carol Mitten warned that confirming a policy like this would be a mistake, since the city will have to borrow regardless of projections, and the amount needed in the future can change.

And Finance Director Elizabeth Hannan said that there will be consequences to implementing Wu's proposal, which would add to the city's expected cuts of $500,000 next year "by hundreds of thousands of dollars."

Wu also supported a plan to hire an employee to work 20 hours a week to address future large development projects. She said city staff is proposing the hire, which is the equivalent of 1,040 hours a year, "to fill a 90-hour job a year."

"That leaves 950 hours to fill, and there are two items that I am aware of that staff have not had time to explore," Wu said.

The first is whether the city should consider adding a tax to Airbnb rentals, and the second is to focus on the comprehensive plan, which has not been updated since 2005. She said the half-time staff member wouldn't be expected to come up with a whole comprehensive plan, but lay the groundwork for one.

"We are now almost 15 years in, and much has changed in our community," Wu said. "It is time that the city start laying the foundation for a new comprehensive plan. At a minimum, these two items should be addressed during the next fiscal year using the additional hours."

Mayor Diane Marlin, however, dispelled the idea that this temporary position or any other staff member would be involved in the comprehensive plan, saying it will be an outside process completed through a consultant.

"We simply don't have the staff capacity to do the plan overhaul," Marlin said.

Still, the temporary position won't be idle. Mitten said that the staff member could focus on developing strategies for implementing a tax on Airbnb rentals, as well as other topics city staff has been putting on the back burner, such as zoning issues, evaluating the viability of older housing stock or coming up with development opportunities for large former sorority and fraternity houses.

Alongside proposals to replenish city reserves and what to do with new staff, Wu also called on her colleagues to support her in asking staff to re-evaluate the way the bid-request process works. She specifically called out a recent bid for a facilities assessment that she said was budgeted for $150,000 but came in way over that amount.

"I was surprised that the city undertook a process which did not consider the amount that was budgeted for the facilities-assessment project," Wu said. "This process needs to be re-evaluated to ensure that the city is staying within the intended guidelines of the project, the budget and approval of the city council."

Mitten said the initial scope of the project has changed since the $150,000 placeholder amount went into the budget in 2012. And Mayor Diane Marlin explained that the $150,000 placeholder figure was just that, and not meant to be a budget for the project.

"There are a few things to keep in mind also," Mitten said. "At first, all the major buildings we have were in the draft scope back in 2012. All the buildings were in this final scope. What stands out with also is that what we have gotten already from (winning bidder) CannonDesign includes cost estimates."

CannonDesign will also be providing a facilities plan whose scope is much larger and more people-focused than other bidders, Mitten said. The architecture firm will not only look at what to do with the city's facilitie but also outline ways city staff can work differently or more efficiently or how space can be used differently or more efficiently.

"This was expected," Mitten said of the high-cost of the CannonDesign contract. "We advanced the level of sophistication a lot from the original scope of work. We'll have deliverables and actionable items that would focus on the short-term, medium-term and long-term."

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