YOLO SUN (COMBINED) NEWS REPORT & OPINION :
Woodland City Council has failed to act upon its February 2, regular-meeting agenda item involving placement of a measure on the June ballot, which if approved would increase local sales tax a quarter-cent or half-cent, for four years, to partially mitigate impacts of city revenues continuing to spiral downward, drowning municipal coffers in red ink.
Adjustments within the current (2009-10) fiscal year are now projected to require a $2.12 million budget reduction.
More than $3 million is expected to be slashed from the upcoming 2010-11 city budget. Such civic excision extends colossal cuts (~$7 million in 2009-10) to Woodland’s annual budgets in preceding years.
There is yet no end in sight to this financial calamity, according to the city manager, who explains that city revenue forecasts remain in an adverse, declining trend.
He describes that: “[M]ost economic forecasts suggest that the economy will recover only slowly, with incremental gains over the next 5 to 10 years.”
___ Exploring Budget Options ___
The city manager’s proposal component addressing current budget shortfalls through staff layoffs in the area of public safety (police records clerks and fire-protection training specialist) were unanimously rejected by the council, while it approved his various other components for adjusting the current budget.
He is attempting to identify “structural” reductions, rather than “one-time” savings, in order to help diminish cuts to the 2010-11 budget. His lengthy and detailed package of proposals was a mix of these approaches.
Potential need to further tap (modest) municipal reserve accounts (dipped into last year), for use at this mid-year budget adjustment, will soon be brought back before the council in the event that no other plausible and comprehensive budget solutions emerge.
The city’s police and firefighters’ unions appeared before the council to articulate their fiscal and policy perspectives, as well as to express an earnest willingness to discuss with the city manager and relevant staff possible options / alternatives to these — then rejected — public-safety staff layoffs.
The calendar deadline for placing a sales tax increase on the June ballot is February 16 — so the city council will now have to convene a special meeting (set for February 9), in order to attempt to accomplish such an initiative.
___ Political Turnaround ___
On January 19, city council instructed city staff to swiftly develop a proposal for such a sales tax measure — with the mayor publicly noting that he had been gently prodding the city manager for several months on this topic, because it is a clearly available avenue for diminishing obviously impending and serious losses of municipal services (likely including public-safety staff).
By February 2, though, the council had just plain lost its political nerve.
All council members were — significantly cooled — regarding the prospect of following through by approving this measure for the June ballot.
And suddenly – startlingly — they have begun to consider a likely bogus and politically inferior alternative — involving Measure E funding — apparently promoted by the mayor.
One council member frankly expressed after this meeting, however, that — to their understanding — there is probably insufficient (available) cash flow, from an in-process Measure E program, to furnish the many millions of dollars needed to staunch the budget bleeding.
___ Measure E ___
Woodland’s Municipal Measure E was adopted in June 2006 and became effective on October 1, 2006. It raised local sales tax by a half-cent for twelve years (expiring: Oct. ‘18), accompanied by a ballot advisory measure which identified a variety of specific capital improvements.
Measure E replaced a prior local sales tax initiative, Measure H, which expired in June, 2006.
An accompanying-advisory-measure type of ballot approach is perceived as the only politically plausible way to increase the local sales tax rate, since it operates upon — political faith — of elected officials to in effect circumvent the otherwise mandated two-thirds (66.1%) public vote on matters involving specific funding proposals.
To raise — general fund revenue — by an increase in sales tax, only a majority vote is required.
By law — the city could use Measure E funds to help offset general fund budget reductions.
___ Measure E Extension: A Budget Option? ___
The city council discussed the prospect of crafting a politically acceptable way of essentially achieving this result.
Extending Measure E (likely until Oct. 2022) through a specially designed June ballot measure was discussed — delaying its intended capital improvement program until general municipal operations are stabilized with the help of its monetary stream.
Uncertainties and absences pervaded this council discussion, apparently as a consequence of its very recently becoming a topic.
Strangely lacking from this council conference, also, was simple mention of the stark fact that extending Measure E would, of course, be a significant increase in taxes (identical in dimension to the half-cent, four year ballot proposal on the council meeting agenda).
___ Basic Difference In Sales Tax Contexts ___
The basic difference in these sales tax contexts, would be requesting voters at the June ballot to allow Measure E’s promised capital improvements be delayed for a time period of at least four years (in addition to this program being already significantly delayed because of the depressed condition of sales tax receipts).
And such an extensive delay in Measure E’s commitment to its original goals would — supposedly (only implicit in public discussion by council) — be duly compensated — simply through some greater / higher public value purportedly attaching to strict maintenance of the current sales tax rate.
This gambit does not appear to be in the local public interest.
Merging the city’s operations dilemma into its long established capital improvements program may, as well, be perceived as politically clumsy and weak-kneed by the municipal electorate.
___ Measure E Option Only Recently Surfaced ___
City staff had not been requested to explore the practicality / feasibility of such an approach — apparently — until the very day of this council meeting, February 2.
Informal, personal polling by council members (including a greatly emphasized, meeting with the local chamber of commerce that very morning) had apparently inclined them to — vaguely perceive purported non-viability — of any ballot measure that extends the present sales tax rate.
So, in such a position of political desperation — breaking into the already stunted piggy-bank of Measure E became an open recourse.
Doubt necessarily exists among council members, however, about the sheer viability of this recourse, due to its various fiscal logistics.
Obviously, this is no good and convincing face to put on what must soon become a robust and persuasive advocacy for some reasonable measure of municipal relief from ongoing and widespread economic calamity.
___ Sales Tax Rates Within Surrounding Area ___
The mayor emphasizes research revealing that any tax increase would place Woodland at the highest local rate (surrounding communities’ rates are as follows: Sacramento, W. Sac., Davis and Woodland are at 8.75%; Dixon, Vacaville and Fairfield are at 8.375%; and Yuba County is at 8.25%).
Of course, Woodland is certainly not the only local government in this area to suffer a deteriorating financial condition — and if it’s the first to elevate its sales tax increment — it likely won’t be the last local government to do so.
In fact, it very well may signal (and help induce) such a trend.
The council variously asserts that local businesses would significantly suffer from competition on the basis of such distant tax differentials.
Theoretically perhaps — for very large commercial items — such as refrigerators and motor vehicles. But, let’s closely examine the reality of these matters.
___ The Precise Difference In Tax Rate ___
Exactly what does a quarter-cent sales tax increase (to an even 9%) actually amount to?
One dollar for every $400, Ten dollars on a $4000 bill, and a hundred dollars for a $40,000 tab.
If you purchase — a new refrigerator or a big-screen television — in Woodland at a higher tax rate, rather than Davis or Sacramento, you would only pay an additional $2, $5 or $10.
Even a motor vehicle bought in Woodland would cost an added tax of only about $25 to $100. And of course, there is regularly more price flexibility regarding items of this magnitude.
Double these numbers to account for a half-cent tax differential.
___ Municipal Revenue Generation ___
A quarter-cent increase in local sales tax is estimated to raise $2 million dollars per year in municipal revenue ($1.5 million in the first year, due to incomplete function in first fiscal cycle), totaling $7.5 million over four years.
A half-cent increase would realize around $4 million per fiscal year, which is about the amount of budget slashing due in the upcoming (2010-11) fiscal year. A half-cent would raise an estimated $15 million over four years.
Unless the economy improves faster than presently anticipated by sober minds, the 2011-12 budget will likely be in basically similar shape.
Clearly, it’s prudent to enact such an increase of sales tax for four years, under existing circumstances.
___ Accompanying Advisory Measures ___
City staff has designed an advisory component for inclusion alongside the proposed sales tax measure, which describes intended distribution of thus derived funds to be: 40% for public-safety operations, and 30% apiece for library operations and that of the parks & recreation department.
A quarter-cent increase would: maintain the current level of sworn police officers and firefighters, as well as “restore [library] services to the level offered the community 2 years ago and provide [it] a dedicated revenue stream,” as well as “stabilize” the parks & recreation department (which suffered massive cuts in this budget cycle).
A half-cent increase would: permit reinstatement of outreach and educational programs in the public safety area, allow a greatly needed expansion of library services, as well as restore 67% of recent budget losses to the parks & recreation department.
___ Geographical Context Of Sales Tax ___
Sales tax has for some time been — an entire half-cent lower — in Yuba County. This imbalanced commercial field has not compromised the capable abilities of our local merchants and businesses to compete.
Although some level of sales tax leakage toward Solano County historically occurs, and a sales tax disequilibrium of 0.375% is already in place, would a 0.625% difference serve to significantly convince Woodlanders to routinely travel there to shop?
Clearly, these are not dimensions of sales tax differential which will quickly drive away business. A local resident may easily spend such a minor difference or more simply in vehicle fuel to travel such distances for their shopping.
Plus, what worth is ongoing wear-and-tear on vehicles, as well as on persons’ precious time and convenience — all to be firmly and easily sacrificed in order to evade basic and legitimately (- make that: desperately -) needed sales tax of the marvelous community in which they live?
Saving a single dollar (or even two) on a $400 tab is certainly no common and compelling urgency.
While — on the other hand — all of those many fairly negligible, sales tax increments — put together — will eventually add up to our having a viable and enjoyable city, a community that fundamentally, confidently continues to function and is a great pleasure within which to live.
___ Additional Relevant Considerations ___
When purchasing an expensive item (vehicle, appliance, etc.), it’s often a very good idea to consider where such an item would be best (and least expensively) serviced and how it might be delivered, if relevant; as well as whether, as is often the case, local merchants and businesses will make members of their own community an optimum deal.
Especially locally owned and operated businesses most often realize and succeed upon the value and incentive of customer service.
Existing inertia well inclines Woodlanders toward regularly shopping in Woodland, at least to the extent they presently do so, as long as its merchants and businesses continue to offer them authentic value — despite a relatively minor sales tax increase — both in the context of their comfort and convenience, their own health, safety and welfare, as well as in their recognition of the civic urgency of sustainably supporting the community framework upon which all of its residents genuinely depend.
___ Overall State Sales Tax is Soon Coming Down ___
Basic statewide sales tax of a — full cent — is scheduled to expire in June 2011, lowering a — newly increased — sales tax in Woodland back down to 8% or 8.25% (depending on which new increment — 1/4 cent or 1/2 cent — might be proposed / enacted).
A local sales tax measure approved on this June ballot would take affect in October — only nine months before sunset of the full cent of state sales tax.
Likely is the case, then, that more than three-quarters of the time period of this newly elevated sales tax increment, it will be reflected at this 8% or 8.25% rate (a half-cent or more lower than the current rate).
While sales tax differentials with surrounding areas may remain, a lower overall sales tax level will soon be in place, helping to offset an urgently needed, temporary increase to sustain our municipal government.
___ Conclusion ___
The role of (local) government is to empower and protect its citizens, bringing forward a nurturing network and sustainable system of common purposes and actions.
The worse economic times become — often the more we all need the capable services of a competent government. Its own citizens are clearly responsible for ensuring that key roles of such government are competently fulfilled.
Sometimes, this political burden means the community best managing its local sales tax program through its voters enacting a temporary increase.
Imperative council action is to accurately and comprehensively present the relevant options and consequences directly before local voters.
Let’s hope that Woodland City Council gets its act together at its special meeting of February 9 and, despite whatever its consideration or action regarding Measure E, adopts and — vigorously advocates for — a measure placing a reasonable rise in our local sales tax upon the June ballot.