In an attempt to attract new types of businesses, Hanford's City Council may consider revising the municipal code with lower tax rates for some non-retail cannabis businesses.
The city currently has no non-retail cannabis businesses, according to staff.
Deputy City Manager Jason Waters said during a presentation on the issue at a recent study session that Hanford’s tax rates on cannabis businesses working within cultivation, manufacturing, distribution and testing are higher than other regional cities like Woodlake or Lemoore.
Staff asked council members their preference as to whether tax rates should stay the same, be moved to be competitive or undercut other cities’ rates. A change to any tax rate would require an amendment to Hanford’s municipal code, which would be approved at a later date.
Of 18,000 water meters in Hanford, approximately 2,500 are producing inaccurate readings for an unknown reason that will likely leave residents with unexpected bills for months of underreported usage, according to Public Works Director Jim Ross.
Some council members expressed support for keeping the tax rates the way they are, while others voiced support for lowering tax rates to undercut other regional cities.
A compromise was eventually reached, with the council expressing support for setting cannabis tax rates for non-retail businesses at what was described as the approximate average of other regional cities. This would include dropping the distribution tax from 3 percent to 1 percent and eliminating Hanford’s 2.5 percent testing tax, in addition to other tax code changes.
With Council direction, staff can now start to prepare ordinances that would change Hanford’s municipal code to reflect lower rates for non-retail cannabis businesses.
In other business during the study session, the Council decided to look at future budget years using more optimistic revenue projections.
“We feel those [optimistic revenue projections] are reasonable,” said Hanford Finance Director Chris Tavarez. “They are stretched, but they are reasonable. We think they could be achieved. That’s not accounting for any recession or economic impacts. We don’t know if that’s going to happen. If everything is as-is, then we should reasonably expect to get those revenues.”
Available General Fund dollars and the difficulty of passing a balanced operating budget for the 2024 fiscal year were affected by a $12.5 million legal settlement agreement with Helena Agri-Enterprises, of which $7.5 million has already been paid.
The finance director’s presentation was the second of four planned presentations about potential capital improvement projects and the City’s budget. Included was a short conversation about the City’s operating budget and a look at potential capital improvements from the City’s enterprise or internal service funds, including examining accounts generating revenues earmarked for the City’s airport, building safety, refuse, water and more.
The study session also saw a presentation on the maintenance of the 219 miles of center lane streets Hanford is responsible for maintaining. A number of different techniques are used by city staff to maintain streets including complete reconstruction, which involves hiring contractors and is more expensive than other processes with less life expectancy.
Others, like deep patching, are more affordable and are performed by city staff.
