Sales-tax increase planned for ballot

At its July 10 meeting, the City Council will consider a proposal to put a measure on the Nov. 6 ballot. That measure will ask voters to enact a half-cent raise in the current sales tax. This “Essential Services Protection Measure” would protect the city’s General Fund from a projected $4.7 million annual deficit by fiscal year 2021-2022, according to a city staff report.

These projected deficits are due in large part to what the staff report calls “unfunded liabilities.” However, the city’s liabilities come from two sources, the report said:

Recent changes in the California Public Employees Retirement System’s (CalPERS) to its longevity assumptions

The city’s nearly $300 million in infrastructure needs

The report points out that the city faces one of two difficult choices: potential reductions in service levels or an increase in revenues. The City Council has already explored revenue-producing measures to submit to the voters on Nov. 6. These include a cannabis tax, a one-half cent sales tax or an infrastructure bond.

According to city staff, a majority of the City Council has expressed an interest in placing either the infrastructure bond or half-cent sales tax on the ballot. Last month, the City Council provided direction to staff to prepare to place the tax on the ballot.

The staff report spells out the consequences of the proposed sales tax. If passed by a simple majority of the voters, the city’s sales tax would increase from 9.25 to 9.75 percent and would add in the neighborhood of $5 million to the city’s General Fund each year. Of the 9.75 percent tax, 1.5 percent would go directly into the General Fund, up from the current 1 percent.

Revenue from the current sales tax generates $10.4 million, which is 11 percent of the General Fund revenue. The tax would become effective on April 1, 2019, and the city would begin receiving revenue from the tax two months later on June 1.

Alameda has placed only four revenue measures before the voters since 2000. During this same period, the cities of Berkeley has placed 19; Oakland, 14; and San Leandro, seven.

Alameda voters last considered a sales-tax increase in a special June 5, 2012, election. Voters turned Measure C down with 8,616 saying “no” and 8,426 giving a thumbs up. The measure needed a two-thirds majority to pass and fell far short. Former City Manager John Russo and his team put Measure C on the ballot as a special tax and opponents reminded Alameda voters that money generated by the measure would rebuild “unsafe facilities such as the Carnegie Library.”

In 2012 the measure needed a two-thirds majority vote. Now, thanks to changes in the law, approval by a simple majority (50 percent plus one) would put the measure on the books. Local blogger Robert Sullwold points out that structuring the 2018 proposals as a general tax — rather than a special tax for special purposes like 2012 — shows that the city has learned its lesson.

The staff report points out several benefits the increased revenue would bring. For example, if voters approve the new sales tax, its revenue would eliminate the $4.7 million deficit projected for fiscal year 2021 to 2022. The money raised would also help maintain essential city services, such as public safety, 911 response times and park maintenance. It would also help reduce the mounting repairs necessary to bring the city’s aging infrastructure into the 21st century.

The City Council is neither supporting nor opposing the sales tax with its July 10 vote. Councilmembers are voting whether to place the measure on the November ballot “so Alameda voters have the opportunity to consider it and decide” whether they want to pay the increased sales tax.

If approved by the City Council, this is how the measure might read on the Nov. 6 ballot:

“City of Alameda Essential Services Protection Measure.

“Shall the measure maintaining the City of Alameda’s financial stability and protecting services and infrastructure such as police response to violent crimes and burglaries; 911 emergency medical and fire response; maintaining neighborhood parks; repairing potholes, maintaining streets and protecting the Bay from pollution by enacting a 0.5 percent sales tax until repealed by voters, providing approximately $5,000,000 annually in locally controlled revenues, requiring independent audits and public spending review, be adopted?”

Although it’s a general tax, the city appears to be pushing police, parks, potholes and pollution.

The city hopes that Alamedans will bring the same attitude into the voting booth that they have when answering pollsters. Staff points to a community survey taken last summer. That survey found that Alamedans “prioritized maintaining public safety services and financial stability.” And when considering a measure similar to the one it hopes to put before them in November, the city found that 65 percent of those polled were in favor, up 2 percent from a 2015 survey.

Read Sullwold’s complete sales-tax story at alamedamgr.wordpress.com/2018/07/01/a-half-sense-sales-tax-increase.