Shooting ourselves in the foot?
I’m seeing a lot of boosterism for raising the sales-tax rates in Grass Valley and Nevada City, with campaign signs, “fact sheets” and appeals to “essential” City Services.
A lot of it comes from the “old guard” in both towns, not the “change agents.” Watch out, too, because you might get labeled a traitor if you dare to question any of this. It’s a small town.
The same “electeds” and city leaders who preach “fiscal conservatism” often are retired public servants, some of whom are “double dippers” when it comes to pensions and benefits.
And here’s the biggest irony of all: The anti-government drumbeat that a lot of people in our county think is so cool (at least when it comes to bashing President Obama) is making it harder to win support for even sensible spending plans.
The failed fire tax initiative in south county (Measure B) was just one example. It failed to reach the 2/3 majority threshold for a special tax.
So instead, we turn to initiatives such as Measure N and Measure L that send $$$ to the general funds with only a majority vote — but that is loaded with risk (see below).
I also haven’t read a word of analysis in the local media, including The Union, about the sales tax measures. In fact some residents don’t know what Measure N (Grass Valley) and Measure L (Nevada City) stands for.
Some of the most cogent analysis has appeared on Sierra Foothills Report:
GRASS VALLEY:
Yo,
Below is 12 year history(and projected for current year) of GV’s General Fund(GF), and the two biggest contributors to the GF, property tax(Average 20% of GF), and sales tax(average 45% of GF). GV hit a peak sales tax revenue in the boom years of 2006/7, and sales tax begin to decline in the following years, and hit a 12 year low in FY 2009/10. If measure N passes, GV’s sales tax revenue will grow by 50%(currently the city portion is 1%, and Meas N will add .5%, new total would 1.5%) The City will see an instant increase of over 2 million dollars. The GF will grow in one year to a 12 year high. The decrease in sales tax from 2006/7(peak) to current year is about 1 million. Measure N will DOUBLE that decrease in 1 year. I can not support Meas N because it is too general(by design!), and if a few Council people can not stay within a small budget for travel, why should the citizens trust them with millions! The better alternative is a specific/special tax(I know it takes 2/3 vote,etc). Note to Michael A. – yes, I think the Police Dept needs more money, as you pointed out the PD is 43% of the GF, and they have taken a huge hit since 2006/7. I support more $$$ for police and fire, but it needs to be raised via a special tax.
NEVADA CITY:
Interesting points. Regarding the Nevada City sales tax increase, unfortunately, it will be going into the black hole known as the General Fund (if passed) with no accountability. However, according to the city’s allocation spreadsheet presented a few months ago 37 – 40% of the increase over 5 years will be going to raises for top management positions. I would speculate that 90% of the citizens are unaware of this. While the election documents prepared probably meet the minimum legal standards the city is deceiving the voters by not mentioning this fact.
Also, I see the Nevada City political “machine” is at it again putting up fancy “Yes on Measure L” signs around town. I wonder who paid for those?
The “other side” might not like to read comments like this (and The Union has always been a champion of the “old guard,” often filtering the message).
But it’s true:
1. Both measures send money to the general fund, where accountability is limited. In the past, both cities have passed special tax measures that were targeted toward good causes (fire and street repair, for example), even with a 2/3 voting requirement. These tax increases, by design, only require a majority vote to win.
2. The sales tax increases will increase the gap between our county and Placer County, which already is sucking business out of the area with big-box stores and — at least a lot of people think so — lower prices.
A “Yes on Measure N” brochure points out that the sales tax on purchases in Grass Valley will increase to 7.875 percent — the rate in effect in Truckee and Nevada City.
And Nevada City’s sales tax will go even higher now with this proposed increase!
Here’s the kicker: The sales tax rate is in Auburn, where Home Depot and Target are located, is only 7.25 percent.
What about Roseville, where Costco is located? Also just 7.25 percent.
Do you hear a sucking sound? Losing even more business “off the hill” because we voted to increase our sales tax rates would not be a prudent economic development strategy. We’d be shooting ourselves in the foot.
To be sure, most people support spending money on police and fire staffing and street repair. I do.
But we ought to dig deeper and think harder about whether to support Measure N or Measure L, or ask the City Councils to go back to the drawing board and come up with a better plan.
We need City Council members who are “watchdogs,” not “lapdogs,” and we don’t need fear tactics.
It’s unpopular (even frowned upon) to raise questions around here — until the other shoe drops as it did with the 2008 “Asleep at the Wheel” grand jury report about Nevada City, or the unfortunate failure of Citizens Bank (which became too dependent on Grass Valley real-estate loans).
NO PUBLIC DEBATE!
The measure N supporters are holding a “townhall” meeting at the Contractors Association offices on October 11.
This is not a debate, however. It will discuss the “merits” of the program — in short a political rally. You can bet that The Union will be there to write a one-sided story.
The League of Women Voters will hold a meeting on the pros and cons of “the 11 ballot” measures on October 13. But I saw no mention of Measure L or Measure N, just the statewide ballot initiatives.
So the changes are growing that voters won’t have enough good information about the ballot measures when they cast their vote on November 6.
Filed under: Uncategorized
Jeff, I am no economist, so in elementary terms, what is the big difference between a 7.875% and a 7.25% sales tax? It doesn’t seem like that much to me. Shouldn’t we all be willing to pony up a bit more $ in these hard times?
Just wondering.
Judith, one of the problems that I see is that the major car dealers have all left town, and when you consider that an “average” sales price is @$27,000 there is a large loss to the community as this is @$2,000 in sales tax that is no longer here.
We just bought 2 new cars in the past year which means that our area lost out on $3,700 in revenue (we do not get all of that, but a chunk), so is it worthwhile to get a new car dealership back in town as I would have gladly purchased another Nissan Frontier in the very near future to replace the one I had with @260k minle.
Sure if you want. Remember though: First, it’s real money and it all adds up. Second, you create the perception that you’re a more expensive place for shopping “on and off” the hill — for locals and tourists alike. Third, you better be sure that the money is being spent wisely, because it goes into a general fund. Fourth, you ought to consider whether you can trust the financial acumen of your elected officials (past experience is often a good indicator). Politics also helps determine where general fund money is spent. Fifth, if and when we open car dealerships and big box stores here, we will be at a relative disadvantage to North Auburn.
Jeff:
What has concerned me from the start is that the Nevada City tax measure has the appearance of a special tax masquerading as a general tax. I don’t think the council was honest with the voters when it placed the measure on the ballot as a general tax requiring only 50%+1 voter support.
When the idea first surfaced publicly, there was a report prepared by staff detailing how the new money could be spent –– to include yearly totals for each department and category.
Steve Dodge is correct –– a large portion of the hoped-for money is to bolster salaries and benefits of key staff members so that the council can have a full-time city manager, a full-time police chief, and a new police officer.
Those are reasonable goals for any city council to pursue, but not by using a tax measure that addresses general infrastructure needs. Infrastructure can be whatever the legislative body deems it to be, of course, and in this case it seems that the infrastructure is primarily issues of personnel,
What also makes it appear to be a special tax and not a general tax is the idea bring considered that a Measure L Committee –– similar to the city’s Measure S Committee –– will be created to monitor the new money. Since when does the city have a committee to monitor general fund money?
Measure L may have met the legal threshold for qualifying as a general tax measure, but anyone who reads staff reports and council minutes would come away convinced that it is a special tax for special needs. And since “intent” is often a key issue when courts review legislative action, I can’t help but think that the city has set itself up for a taxpayers’ lawsuit that will make the whole thing moot.
How did we get the sales tax rate we have here to begin with? Why, they raised it. That same “old guard” raised it, along with all the other little municipalities in the state. It was for the same reasons last time- that they are this time, “were broke”. The difference in tax from border communities will even out, they’re broke too, and they are all talking about a raise.
Of course there isn’t a soul here who would think to drop over to Reno to buy a “big ticket item”.
Who turned down the thermostat last night?
I pulled some information from the City’s website this morning. Comparing the peak boom year of 2006/07 to the current fiscal year 2012/13 is below. The hit is significant, and Dan Holler and city staff have done a great job since the economic collapse in 2008. City staffing has been cut significantly, and city services have been adversely effected in my opinion. How do we get back to an acceptable level of service?( eg more Police officers, City Hall open 5 days a week vs 4, and more staff to keep our town better maintained – streets, maintenance, parks,etc). A good question!! If measure N passes, the City will have an instant cash stimulus(millions), but I am not comfortable having the new funds go to the general fund. I could get behind a special tax that would be directed to specific items to improve our quality of life – more public safety, fixing our streets, and dollars to maintain and improve our town’s quality such as landscaping and regular maintenance. Measure N does not guarantee accountability!
GV’s 6 year comparison 2006/07(audited) vs 2012/13(projected)
Gen Fund Revenues: $11,390,336 vs $10,040,382
Decrease of $1,349,954 or 12% decrease
Sales Tax Revenues: $5,3589,479 vs $4,438,400
Decrease of $921,079 or 17% decrease
(Sales tax: 6 year decline of $921,079 represents 68% of total GF revenue decline.)
If Measure N Passes:
The City’s sales tax revenue will increase by 50% – 2 million +/-
Where your sales tax goes:
If you buy a new ladder at Hills Flat for $100, you will pay in $7.38 in sales tax, $6.25 goes to the state(see link below), $1.00 stays in GV, and .13 cents goes to our local libraries.
GV’s Staffing(decrease of 40 in 6 years):
2006/07: 138 Full time employees(FTE), 2012/13: 98 FTE
Police Dept: 2006/07: 44 FTEs 2012/13: 31 FTE (decrease of 13)
General Calif Sales tax info:
Calif Sales tax rates range: 7.25% to 9.75%(Pico Riveria), Average statewide is 7.80%.
State BOE tax breakdown
http://www.boe.ca.gov/news/sp111500att.htm
California Sales Tax:
http://en.wikipedia.org/wiki/Sales_and_use_taxes_in_California
I pretty much agree with Judith. However, I get out seldom and unless an aide is sent on errands to buy things other than food, I now buy from catalogs. I’ve been thinking how the twin cities (g) merchants might do a collaborative, nicely done, competitive type of magazine. Plus, I automatically don’t buy often if product is imported. Lots of cites on WWW with made in USA products; a bit costlier, but so much of the stuff I’ve paid less for from Asia,, doesn’t work within two weeks.
And Jeff, I don’t think your response to Judith considered the cost of gas, even if it settles back some. One aide, drove me to Brownsville where my PCP is. Says her tiny car cost $60 to fill-up. Those prices sure outweigh a small tax increase. I don’t think I get to vote on this as I live outside city limits.
BTW, the young contractor whom added a room to my house, and does work for several people in my neighborhood did not buy any material from Hills Flat in G.V. as he says their prices are way high. He’s from Colfax and I think bought from a Hills Flat there–isn’t there another one?
Ed & Judith,
My primary issue is not the relatively small increase in sales tax, but how our city will effectively use the extra money. In fact I think a sales tax is the best way for Cities to raise revenue(A future discussion – I support a consumption tax vs a Federal income tax). Sales tax are paid by citizens, visitors and businesses. ie: My business annually purchases approximately $21,000 in fuel from Robinson Enterprises – a 1/2 cent increase in sales tax adds $105 per year, and less than $10 per month – not much, I agree. A bump in 1/2 cent will bring 2 million new dollars to the City each year($167,000 per month +/-). GV’s sales tax annual revenue decreased by $921,000 since 2006. Measure N will make up that loss 2 fold in year 1. The City has had a tough go the last 4 years, and so have a majority of local businesses. Many businesses have seen a sales decrease of 20-40% since 2008, and too many have closed. One of GV’s challenges is that it has lost three car dealerships since 2007 – A MAJOR contributor to sales tax. The City has become very lean over the last four years, and service to the citizens has been adversely effected. GV has taken a 4 million+/- hit since 2008 – not easy, and it shows. More sales tax – I agree, but it has to be dedicated(2/3 vote special tax) to essential and basic services(e.g. keeping City Hall open 5 days a week, and NO OPTIONAL TRAVEL EXPENSES!)
Agree with most of what you posted. Certainly city money should be spent wisely–a moving target. I don’t claim to know much at all about local finances or what is best. One point of disagreement, however, is my basic opposition to 2/3 vote to approve anything. This gives minority opinion power of determining policy/law. It’s a little ifferent in the U.S. Senate, but change in fillibuster rule allows minority’s will to prevail.
Thanks Jeff for this discussion. I would normally agree with Judith about everyone paying a small increase, however, these are extraordinary times in Nevada City. Many people are overwhelmed with increasing prices for just about everything and are literally watching their budgets down to the penny.
In addition to general price increases, we have gas at $4.50 a gallon and, to quote a Nevada City Councilperson, “terribly high and burdensome water rates”. If the NC sales tax in increased to 8.25%, one of the highest in the state you can bet there will be an exodus down the hill to buy big ticket items.
If true, that is short-sighted; penny wise, pound foolish. Look for sales, etc. Bargain, coerce but if large ticket items are bought from some big store along the I-80, then where are they when you have a problem.
Just my humble thoughts.
But money problems can’t be avoided with so many Cayman Islands accounts, and the creativeness of people to circumvent paying anything to a gov’t.
There is even a new scam, people from other states–probably organized crime types–bringing truckloads of recycables to CA for the refund.
How best to spend money?
Note to all: There is an item on the Council’s agenda this week about Measure L. It is this: “Consideration of Resolution No. 2012 – XX Informing the Voters of Measure L – ‘Nevada City General Taxation and Use Tax (Sales Tax) Measure’.”
Each of you who is curious, concerned, unclear, unsatisfied, etc., should come to the meeting. There will be time for public comment as there was on May 23rd and June 13th at the first and second reading of Ordinance 2012-05 “Imposing a Transaction and Use Tax to be Administered by the State Board of Equalization.”
The meeting begins at 6:30 this Wednesday, the 10th.
Our business clients buy hardware from us because it is convenient. I doubt that such a small sales tax uptick will change that, but I sure wish I could vote on this measure — I would vote against it.
I live a mile outside of Nevada City and my business is in the 7 Hills district. I used to live in town but I was willing to lose my local vote in order to have more room for the kids to stretch their legs.
That all being said, what is really broken is the entire state, federal, and local tax system. It is incredibly inefficient and wastes HUGE amounts of people’s time. The entire country needs to put tax reform as Issue #2. Issue #1 is legalizing drugs and ending the Drug War, which is a giant mess that has a tax component.
Broken country, broken systems, broken down ways to even resolve the problems. USSR here we come; Sac are you listening?
Robert – What would be the point of the citizens attending this meeting? The ballots are being printed and no matter how many of us pesky citizens complain you will ignore the input and forge ahead with this questionable tax measure.
Steve – I am only one vote. The residents of the city will decide the issue. My point is that coming to the meeting and commenting will give those attending or watching more information to consider before they make their decisions and cast their votes.
I would love for Richard Sumner to step in and look at all of this: http://www.imdb.com/title/tt0050307/