Business / Economy

County mulls higher taxes, more debt for road work

Local governments could impose additional taxes on local sales to secure municipal bonds, and fund highway and road projects across San Benito County.

San Benito County officials put taxation on the table Tuesday in consideration of more debt and municipal capital for road improvements valued at more than $102 million.

The Board of Supervisors in public session March 31 welcomed David Leifer, a senior director of KNN Public Finance, who presented possible strategies that could help local governments convince their voters to additionally impose potentially permanent taxation of sales, allowing the county to lift its ceiling for municipal bonds and fund new projects in local transportation.

The county, along with its two cities, Hollister and San Juan Bautista, and the Council of San Benito County Governments have the authority to tack on additional taxes to the state's base rate for sales, though such financing requires the approval of voters, ranging from a simple majority to two-thirds of them depending on the classification of proposed taxation — a special or general tax. California law, according to Leifer, caps add-on taxes by city and county governments at 2 percent above the state's base rate of 7.5 percent.

"We know that the city of Hollister has a sales tax; the county could impose a sales tax; and COG as the transportation authority also could impose a countywide sales tax for transportation," said Leifer in a statement to supervisors.

A special tax, such as an add-on to the state's base tax rate, would require the approval of two-thirds of voters for a specific purpose, such as transportation. A general tax, however, would require the approval of a simple majority of voters, and could be used for purposes beyond the planned improvements for roads and highways.

Leifer also touched on certificates of participation, another option for a municipal bond. A COP requires a specific asset or combination of assets for collateral, which could present additional risks of funding issued after the implementation of a new tax.

Possible scenarios in Leifer's presentation included an additional half-cent of tax on sales based on the state's rate over 20 years, yielding a debt capacity of about $11 million to $30 million and generating a pay-as-you-go capacity of as much as $46.7 million. Such figures mark only some of the financing projected for improvements to the county's dated infrastructure of roads, highways and bridges.

San Benito County Chief Administrative Officer Ray Espinosa and Interim Public Works Director Joe Horwedel did not immediately respond to queries by BenitoLink.

Tuesday's agenda included an overview of estimated costs for highway and road work throughout San Benito County. A staff report in the agenda's packet projected more than $58 million for a widening of Highway 25 as well as about $44 million for road improvements.

The county also aims to invest tens of millions of more dollars to improve local bridges, including a crossing at Cienega and Hospital roads. That project could require another year or more for completion, originally expected years ago.

In public session March 17, supervisors approved plans to expand a previous contract with Kathy Wood & Associates, a Sausalito sole proprietor providing right-of-way appraisal services since 2010 for the project beside Hospital Road. The last amendment to that contract, according to a report by Horwedel, occurred Feb. 18, 2014, and expired before any right-of-way closure.

Supervisor Margie Barrios noted the longevity of the county's transportational infrastructure, along with potentially permanent taxes for improvements of local routes.

"Roads are forever," said Barrios. "Perpetuity could be for us."

Jason McCormick

Jason McCormick is a journalist taking a break from news and now running mcormc corporation, a data driven digital marketing agency in Redding, Calif.