On June 3 at 5 p.m., there was a joint meeting of the county and local cities about sales taxes at the Board of Supervisors' Chambers, 481 Fourth St. in Hollister.
According to my calculations, based on the current data from the California Board of Equalization, a 1 percent transaction sales tax in the unincorporated areas of the county would generate $2 million for its General Fund. Adding 1 percent to the unincorporated areas would also level the tax rate between Hollister, currently 8.50 percent, and the unincorporated areas, currently 7.50 percent, and come close to doing so for San Juan Bautista’s permanent rate, currently 8.25 percent.
The necessary action has a simple solution, put it on the ballot in the unincorporated area as a general tax with a sunset, spend political capital by going to the rural voters and making the case for the tax increase. It would need only a simple majority in the unincorporated areas to pass. However, that is not the solution I expect to hear at this evening’s meeting. What I expect to hear is a series of complex proposals designed to provide political cover to all parties.
The supervisors simply refuse to spend any political capital with the rural voters for this tax so they want to make it a countywide election. That way they believe that they can have the city voters support the tax and override any rural opposition. This is interesting since at least one board member keeps saying that Hollister’s transaction sales tax shows that “they can’t live within their budget.”
As far as the city goes, its transaction tax has made some real progress in paying off the enormous CalPERS side fund debt and its crippling interest payments, but we have not made the necessary progress in economic activity to provide the required income stream for services and – as always – available money gets spent, often carelessly such as exaggerated overtime. The city has not closed the revenue versus operating expenses gap to any great extent and will have to ask the voters to extend the tax again. When it came in I called it the “forever temporary tax” and it’s going to live up to that moniker. Will the voters understand a complex tax-sharing agreement desinged to protect county politicians? I would not bet on it; the risk will be large, the reward nil compared to the simple transaction tax.
The SEIU was in to the city the other day looking for significant raises, if that happens the other bargaining units will not be far behind; they just play off of each other and the employees still do not consider the cost of short- and long-term benefits pay. It is pay even if they can’t spend it.
Collectively, we feel better because the state and national economy look better, but economically, our cities and the county are not much better off than they ever were and there is hardly a boom. If you don’t believe me just check the occupancy rates and businesses along San Benito Street, in the industrial parks, and the sparse businesses at the airport. The best, and probably biggest, in-county employer is the aggregate of public agencies and the largest sales tax generator in the city is gasoline, purchased so the commuters can go to work elsewhere.
Shoving economic development to the back of the bus only to be funded with leftovers is both short sighted and self-defeating, but it is also selfish. It takes care of government first at the expense of the taxpayers.
So we are left with nothing but poor choices, but the failure of the Board of Supervisors to get out in front with the rural constituency bothers me most. The simple answer is to give that group a chance to do the right thing and if they say no, the city should start doing more on its own with the clear understanding that the county does not care about Hollister’s residents.
