This Wednesday, the Nevada City Council will consider an ordinance to pass a three-eights of one percent (.375 percent) sales tax increase and put it on the Nov. 6 ballot. You can expect some rancor as residents show up to protest.
Still, Nevada City’s sales tax initiative stands a chance of passing (many residents are pragmatic, not anti-tax ideologues). A sales-tax initiative to pave city streets passed previously, for example.
But City Hall first will have to take steps to make more cuts on its end.
To be sure, cuts have been made – staff reductions, furloughs, part-time positions for City Manager, Police Chief, City Engineer and City Attorney, two-tiered pensions and so on – but reader Steve Dodge made comments that will resonate with others:
“NC should make the appropriate cuts . . . Do we need a full-time Planner and Parks and Recreation Director? BTW the last sales tax hike was to go for redoing the streets. Seen any of that activity lately? I wonder where the money is going?”
Whether the sales tax measure passes or fails will largely depend on the attitude of City Hall toward its constituents. They will have to navigate the era of widespread government discontent – just like our governor.
In the past, City Hall has shown some signs of arrogance toward citizens; that will not be well received this time. A dose of “humble pie” is called for.
Many citizens still are angry about City Hall’s perceived inflexibility about merging the police department with Grass Valley or the county Sheriff to cut costs. It will come up again.
The recent water rate hike caused a public outcry, with concerns that the increases – under a complex formula – were not explained well enough.
The sales-tax hike resolution and background is here, including a discussion of its biggest ongoing financial “elephant in the corner” – a General Fund “negative balance.”
A resolution calling for an election on Nov. 6 to ask the voters to approve a three-eighths of one percent general transactions and use tax.
The city has a negative balance in the unrestricted General Fund reserve in excess of $250,000 instead of a recommended minimum balance of $500,000, resulting in a $750,000 reserve balance shortfall.
Due to the General Fund negative balance, the city continues to need tax advances from the County although we are slowly reducing that amount, it is a sign of weak financial standing.
Employees continue to be on a 12 day/year furlough program which typically is intended to be temporary in nature and is an inefficient savings.
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Measure “S” -–– supported by 81% of the voters in 2006 –– was successful because the money was (and remains) targeted for a specific purpose that all residents could identify with and benefit from. Nevada City streets and sidewalks were in bad condition and the sales tax measure, with a 16-year sunset clause, was a pretty benign fix for a major problem.
City Engineer Bill Falconi prepared an analysis of every street in town, what needed to be done to get each back in decent shape, and the approximate cost (based on 2006 dollars). Then, thanks to the hard work of Don Baumgart and Paul Matson, who co-chaired a citizens committee in support of Measure “S”, residents understood where and how the money was going to be spent.
As I understand the anticipated uses for the proposed new measure, (described in the packet as a “Probable Expenditure Plan”), new tax money would go into the governmental black hole known as the General Fund, then be used for a variety of General Fund purposes –– to include salaries.
In fact, if my math is right, over 40% of the projected $1.955 million in new income over the five-year life of the tax, would go toward staff salaries and benefits. Another big chunk would help remedy the current General Fund deficit.
Are they serious?
I can’t imagine the community supporting a sales tax increase in order to enhance staff salaries and compensate for earlier General Fund overspending.
Not even Don Baumgart and Paul Matson –– two of the savviest campaign organizers in town –– could convince voters to support a new tax that has over 40% of the expected income targeted for staff salary increases.
Agreed Steve. This one has little chance of passing unless tied to something specific, which padding the General Fund is decidedly not.
Jeff P. mentions some more cost-cutting proposals that could be looked at to fix in the imbalance between income and expense, but I would also like to see the NC City Council expend some effort on the income side as well.
A renewed focus on Nevada City business growth in sectors other than tourism, entertainment, and boutique-retail would boost sales tax revenue which remains flat.