Speaking at “Lunch with Leaders” sponsored by the San Benito Chamber of Commerce, Board of Supervisors’ Chairwoman Margie Barrios and Hollister Mayor Ignacio Velazquez were adamant that the county’s urban population and the balance in the unincorporated area were dedicated to working together. However, the deciding vote won’t be in until a full 1 percent unincorporated sales transaction tax is on the ballot and approved.
Both the cities of Hollister and San Juan Bautista have previously implemented transaction sales taxes; Hollister has a 1.0 percent renewable tax and San Juan Bautista a 0.75 percent permanent tax, while the unincorporated area remains at the state’s base rate.
Local transaction sales taxes are added to the 0.75 percent state sales tax returned to city or county credited with a taxable sales transaction. The upshot is that a business in Hollister or San Juan Bautista collects more sales tax on the same cost product as a business in the unincorporated area.
Over the decades, the county and Hollister have made significant errors on both the spending and revenue production sides of their budgets. The recession made the spending errors all too obvious.
The county had granted lifetime medical care to retired employees and the cost of that benefit, driven by insurance premiums, ate up a huge swath of the budget or, in the years it was ignored, accumulated tens of millions of dollars in long-term debt. Hollister funded new, expensive, retirement benefits by borrowing money from CalPERS at high interest rates. Combine those huge commitments with fanciful rates of return – that disappeared – and you have the makings of a fiscal disaster.
The recession was a sobering event and both entities have now taken aggressive steps to solve their spending problems, but we can’t get the money back and how long it will be before the lessons are forgotten is always an issue, especially when the public is often disinterested until it’s too late.
The revenue side was equally neglected and is finally getting some attention. All the political entities have failed to take advantage of an obvious potential source of additional income, the tens of thousands of drivers, passengers, and vehicles that travel the Highway 101 and highways daily within the county.
The new county General Plan designated four commercial nodes along 101 and Hollister, San Juan Bautista, and the county are investigating other possible commercial sites along Highways 156, 25, and 152. Additionally, the private and public sectors are now actively promoting the area’s unique tourist and recreational attractions.
To reap a significant sales tax benefit from the traveling public and the 17 percent commercial transportation elements we must first agree to tax ourselves. The area that does not currently have a transaction tax is the unincorporated portions of the county, and that is exactly where the 101 commercial nodes will be located.
Hopefully, this income will allow us to provide additional services and amenities to the residents of the county, but it may be that it will only allow us to continue on without dramatic cuts. That’s nothing to sneeze at. Our basic sales tax dollars have lost almost 30 percent to inflation between 1999-2000 and 2013-2014. The total county take per capita is in the bottom 20 percent of the state, but our costs are high because of our location.
It’s crunch time; the county supervisors who primarily represent the population in the unincorporated areas need to go out and support this tax proposal among their constituencies to keep the county whole.