In December of 1990, the transient occupancy tax was increased from 6% to 10% of the hotel room charge by City Council-adopted ordinance. Because transient occupancy tax revenue is deposited into the City of Tracy's General Fund, the tax is considered to be a general tax. At the time of the tax increase in 1990, voter approval was not required for general tax increases. Proposition 218 required that any general tax imposed, extended or increased from January 1, 1995, through November 6, 1996, receive voter approval. Given the language of Proposition 218, it was determined that general tax increases adopted before January 1, 1995, did not require voter approval. However, since that time, court decisions have created uncertainty as to whether a general tax increased over ten years ago now requires voter approval. Because transient occupancy tax revenue supports a variety of essential City services, the City of Tracy has deemed it prudent to place the tax on the ballot for voter approval. City staff estimates that a reduction in the transient occupancy tax would result in a loss of approximately $300,000 a year to the City's General Fund. This is approximately two percent of the City of Tracy's annual General Fund tax revenue. By putting the transient occupancy tax on the ballot, the Tracy City Council seeks voter ratification of this general tax in the amount of 10% of the hotel room charge. If ratified, the City's current transient occupancy tax in the amount of 10% of the hotel room charge will remain in place. No change to the City of Tracy's Municipal Code implementing the current transient occupancy tax will be necessary.

Adoption of the proposed measure (Measure "N') will continue collection of the City's existing transient occupancy tax at the rate of 10% of hotel room charges.

The above statement is an impartial analysis of Measure "N." If you desire a copy of the measure, please call the Tracy City Clerk at 209-831-4113 and a copy will be mailed at no cost to you.

One hundred percent of the revenue from the TOT in Tracy goes into the General Fund and is used to support Police and Fire operations, and recreation programs for youth and seniors. If Measure N were not approved, the City would lose about $300,000 per year in revenue. This is the equivalent of the cost to employ 4 police officers or to pay for the operations of the library and all senior programs for a year.

Unlike many other cities, Tracy does not tax its citizens or business owners a "Utilities Users Tax". Tracy does not have a "Gross Receipts" or "Mill Tax" on business activity. Many cities supplement their General Fund with these taxes. Since Tracy does not have these taxes, it is very important to continue the TOT to help pay for public safety and recreation programs in our community.

Whenever Tracyites travel on business or pleasure, we pay a "bed tax" in the communities we are visiting. These communities use the tax we pay as visitors for the benefit of their own citizens. If Tracy did not have an equivalent "bed tax", then we would pay this tax wherever we travel, but our city would not receive any like benefit. To be fair to our citizens, Tracy needs to maintain its TOT for those visiting our city, just as we pay when visiting other places.

We ask you to join us in voting "Yes" on Measure N.

Submitted by:

/s/ Ray McCray, City Treasurer
/s/ Kathy Mast, Registered Nurse, Eaton Medical Plaza
/s/Judy Griffith, 2001 President, Tracy Chamber of Commerce, Uniglobe West Valley Travel
/s/John Day, President, Downtown Tracy Business Improvement Area

(No arguments against Measure N were submitted)