Like many regions in the nation dealing with the huge impact of COVID-19, North Bay citizens may find themselves immersed in two sure things in life come Nov. 3 — death and taxes.
A collective of California’s 482 cities is lining up with ballot measures to raise taxes aimed at offsetting the monumental dent in their budgets due to the loss in mainly transient occupancy and sales taxes during the economic upheaval caused by the global pandemic.
North Bay cities in Sonoma and Marin counties, as well as Sonoma County itself, are making plans to ask for help from taxpayers.
But there is push back. North Bay Leadership Council is leading the charge of a coalition to fight the measures.
The employer-led public policy advocacy organization representing more than 25,000 businesses, nonprofits and educational institutions wrote a letter to the Sonoma County Board of Supervisors insisting the jurisdiction impose a moratorium on all tax measures. The letter dated July 31 was also signed by the heads of the Sonoma County Farm Bureau and North Coast Builders Exchange.
The opposition to the flurry of tax measures expected to hit the ballot this year is not aimed at a general disdain for taxes. Instead, the group contends the timing is poor.
“The first thing is, we’re in an economic crisis. No one has money now. We’d like government to take a pause. Their deficits are bigger than what the taxes are asking for anyway,” council Executive Director and group Co-Chairwoman Cynthia Murray told the Business Journal.
The group’s letter stated:
“There are double-digit unemployment rates, small businesses are shuttered and economists predict almost half of those businesses will not reopen. Local families are struggling to pay bills and adjust to a virtual school model. “We are fighting a health pandemic, but the resulting economic crisis will most likely have a longer effect on the well-being of our community.”
The proposed tax measures spanning over two counties from Healdsburg to San Rafael range in categories from transportation to lodging. Some are new. Others represent continuations of previously agreed-upon initiatives. Major cities in Napa County such as Napa, St. Helena and Calistoga passed on the options.
But as recent as Tuesday, the Sonoma County Board of Supervisors decided to place a sales tax increase for mental health and homeless services. The additional tax amounts to a quarter-cent increase over 10 years.
Despite California cities aiming to counter an estimated $7 billion shortfall, Murray warned local governments to refrain from thinking of the taxpayers as “their favorite ATMs” — especially now.
“The timing is wrong to ask the businesses and residents of the North Bay to reach into their empty pockets to fund a mishmash of tax measures in these uncertain times,” according to the leadership group’s website policy watch page. “This is not about what the ballot measures are slated to fund, it is about hitting people with new taxes when they can’t afford it.”
Murray recommended that local governments “need to look at the bigger picture” in finding ways “to live within their means.”
When faced with the question of how a local government funds the needs of the people when it’s lost so much, Sonoma County Farm Bureau Tawny Tesconi countered that these times require cities to operate as businesses have been forced to.
“Most small businesses have had to lay off staff, downsize or cut out discretionary purchases. Government needs to do the same,” Tesconi told the Business Journal. She suggested a government model that emulates a quasi “privatization” as a solution.
“Moving services currently provided by public employees to the private sector will likely result in more efficient use of the taxpayer’s dollar,” she said.
Whatever the route, the outcome will most certainly involve an uphill climb.
For years, cities have grappled with out-of-control payouts to fund the state Public Employees Retirement System — the cash cow for government workers. Just last week, the California Supreme Court halted these PERS recipients from heaping onto their pensions by working extra hours and cashing out unused vacation and sick leave. The practice called “pension spiking” is something that “should be looked at” more thoroughly, Murray lamented.
Still, the reality of lost revenues plagues city governments that have succumbed to asking for state and federal assistance.
A study spun out of the League of California Cities indicates nine out of 10 cities project their shortfalls will lead to service cuts, furloughs and layoffs. Nearly three in four cities have reported they may take a combination of actions to offset their losses.
“In every city and every town in California, local leaders are working to protect the health and safety of residents and the financial viability of local businesses impacted by the coronavirus outbreak. As emergency costs continue to grow city revenues to fund local services are plummeting,” said John Dunbar, Yountville mayor and League president.
The study showed the decline in sales tax revenue attributing to 57% of the shortfall in the estimated $7 billion gap over the next two years. TOT is predicted to be down by 27% in that equation.
“Since the beginning of this crisis, cities have stepped up to protect and serve their communities, taking actions that have saved lives and served as a model for the country,” League Executive Director Carolyn Coleman said, adding that “now is the time” for the state and federal governments to step in with assistance.