COMMENTARY: Apples to Apples on Economic Activity

Data provides measures of economic activity and revenue
tax comparison.jpg
tax comparison.jpg

The basic California sales and use tax returned to the local community is a proxy for economic activity allowing for an apples to apples comparison between counties because that tax rate is the same statewide. Three quarters of 1 percent (0.75 percent) of the state basic sales and use tax comes back to the city or county where the sale was made or assigned. The other one quarter of 1 percent (0.25 percent) goes to the transportation agency for that county, but we only have to compare the first number adjusted for population (per capita) to make a comparison.

There are 58 counties in California including the City and County of San Francisco. When it comes to the services funded with basic sales tax revenue, it usually makes no difference if the activity is in a city or in an unincorporated area; more often than not, they both supply the same types of services funded by their general funds.

The following rounded calculations were made using the 2013-2014 sales tax figures from the Board of Equalization annual report and the Jan. 1, 2014 population figures from California Department of Finance.

The local sales tax share by all the taxing entities in a county (the cities and unincorporated areas) ranged from a high of $175 per capita for Alpine County to a low of $38 per capita for Sierra County; both are very thinly populated and therefore very sensitive to small changes in total sales tax intake. The weighted average for the entire state, which is a true average based on population, was $116 per capita.

Basic sales tax general fund revenue returned to all entities in San Benito County (the county, Hollister, and San Juan Bautista) totaled $4,223,000 or only $73 per capita. This ranked 49 among the 58 counties, the bottom 16 percent. But what does that mean on a practical basis?

If San Benito County as a whole  could just reach the weighted average of taxable economic activity the three general funds would take in a total increase of more than $2.5 million, a 60 percent boost, and all that without changing any tax rates.

San Benito County has the lowest per capita basic sales tax returns in the 5 county area. If we had the economic activity level of Santa Clara County we would have an added $4.5 million, Monterey's activity level would add $1.8 million, Fresno's $1.5 million, and even Merced’s activity level would add a total of $200,000 to the general funds.

The 2009-2013 median household income in Merced County was $42,591, for the same period the median household income in San Benito County was $66,237; yet Merced had a higher per capita sales tax revenue return using the same statewide tax rate.

These figures would appear to show that the economic activity throughout San Benito County remains both low and stagnant.  We are not "slow coming out of the recession" – we're not growing our economic activity level as we should.  

Marty Richman

Born and raised in Brooklyn, NY, Marty (Martin G.) spent his teen years in northern New Jersey. He served more than 22 years on active military duty, mostly in Europe, and is a retired U.S. Army Chief Warrant Officer 4, Nuclear Weapons Technical Officer. Marty then worked 25 years in various engineering and management positions in the electronics and energetic materials industries supporting the communications, computer, aerospace, defense and automotive sectors. He is a graduate, summa cum laude, from The College of Hard Knocks, among his numerous awards and accomplishments. He was a regular weekly Op/Ed columnist and feature writer for The Hollister Free Lance for seven years and a member of its editorial board for five years. Marty is a frequent commentator and contributor to BenitoLink on a wide variety of local, state, national and international subjects.   Marty was elected to represent the City of Hollister District 4 on the City Council in November, 2018. Marty and his wife, Joyce, have been residents of Hollister since 1996.