More than year ago I pointed out a substantial inequity in San Benito County. The City of Hollister, with 66 percent of the population, had enacted a general 1 percent general transaction sales tax to help pay for critical public services. Meanwhile the county, in poor financial condition – perhaps worse if long-term debt is included – had not even tried to pass a similar sales tax for the unincorporated areas.
In my opinion, this was inequitable for several reasons — not the least of which was that median family incomes in the unincorporated areas were significantly higher than those in the city. Additionally, most high-income families itemize federal and state tax returns meaning they have a good chance of getting deductibility for the higher tax rate, thus reducing their actual out-of-pocket cost.
The inequity is especially glaring when it comes to big-ticket items. A resident of Hollister would pay $350 more for a $35,000 motor vehicle than a resident of the unincorporated area living down the street in a county pocket.
At the time the Board’s response was twofold. First, they said, there are very few sales in the unincorporated area; therefore, the tax would not be worthwhile. Second – and this was the showstopper — the law did not allow a tax district defined as the unincorporated area. Cities could do a district, but it was all or nothing for the county. I did not question the first claim because the legal situation made it all moot.
Things have changed. Last year, the state legislature enacted a law to allow the unincorporated area to be defined as a tax district and the county’s financial adviser pointed out that 40 percent of the taxable transactions in county took place in the unincorporated area. That should be worth about $2.5 million a year in transaction sales taxes if the rate were 1 percent, the same as Hollister’s; that's significant funding the board can use in any way it desires.
However, even now the board refuses to consider leveling the playing field proposing, instead, to bring forth a countywide transportation tax that would leave unincorporated areas at a lower rate. I believe that they have adopted this tactic for fear the unincorporated areas would vote down any general sales tax. They are counting on Hollister’s large number of voters to drag the rest of the county to the tax table.
Of course the transportation tax, if enacted, would apply across the board and the city transactions would provide 60 percent of the funds and most of the money would go to the unincorporated areas. There is no fairness in that.
It’s past time for the board to stand up and risk some political capital to level the playing field. They should put up a 1 percent transaction tax for the unincorporated areas, go out and campaign for it, then we shall see if the voters of the unincorporated areas are willing to pony up. Unless that happens, the residents of Hollister should refuse to be used as a Judas goat for any county transportation tax.
Until the residents of Hollister decide to flex their political muscle, they will continue to be treated as second-class citizens by the San Benito County Board of Supervisors.
