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OPINION: Raise Hollister's TOT and development tax, not sales taxes again

All taxes are not created equal, so the city should aim at the right tax target and the county needs to step up

The City of Hollister needs more money – what’s new about that? This time the major item on the agenda is road maintenance; it will cost about $4 million a year just to keep the city’s roads in their current condition plus a little bit of year-over-year improvement. We don’t have those funds, we’re going to be short about half that total when Senate Bill (SB) 1 is operating fully. Right now, we have about 25 percent of what we need.

Hollister may get a little road funding help from time to time, but the state and federal government won’t let the city just print money; therefore, the city looks to taxes to generate the required revenue, but all taxes are not created equal.

It’s true that the state has just approved SB1, a massive transportation tax bill to provide some local funds, but it is also true that Hollister is going to get the very short end of that stick and that is why I opposed it. As I previously wrote, the state is skimming 62 cents of every dollar just to start. Then, locally, about $3.5 million a year, three-quarters of what is left of our share, goes to San Benito County; only $1.2 million goes to Hollister, which has more than 60 percent of the population that generated those tax dollars. The gasoline, diesel and registration cost increases are going to hit our commuting population and transportation costs of ag products hard. Additionally, Hollister voters recently and generously extended the local transaction 1 percent sales tax for 20 years. Another sales tax increase in Hollister should not be on the table.

Now is not time to get greedy and try to raise the sales tax again by having COG front the tax increase countywide or to cover for the gun-shy county government by having Hollister voters drag the unwilling unincorporated voters along. After all, the county is the big local winner on SB1.  It's high time for the unincorporated area of the county to step up and do their fair share as did the Hollister and San Juan Bautista residents.

That being said there are two taxes the city should raise that will have little or no impact on current residents. The first would be the TOT (Transient Occupancy Tax) sometimes called the hotel or “welcome stranger” tax; these are usually paid by short-term visitors. Both SBC and Hollister have 8 percent TOT rates, these should be raised to 12 percent and changed to a split tax similar to the way it works in San Jose. Ten percent for general TOT with 2 percent reserved to improve tourist-related business.

In FY 2015 Hollister collected $178,479 on TOT, using that base the revised tax would provide $223,098, an added $44,619 for the General Fund and the same amount for tourism. The county won't get much because they have very low hotel use.

A tax revenue analysis shows that Hollister is severely underperforming both Morgan Hill and Gilroy in Construction Development Taxes Functional Revenues. In 2015, Morgan Hill generated $6.1 million ($140 per capita) and Gilroy generated $8.90 million ($161 per capita) and Hollister only $1.02 million ($28 per capita) in that category. We need to analyze and concentrate on increasing that category to mitigate the impact of development on the roadways.

Those two taxes will have a low impact on the majority of our hard-pressed residents and provide some extra funding for infrastructure and maintenance such as road repair. 

About:
Marty Richman (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. You can follow Marty Richman on twitter @Marty_Richman. Marty and his wife, Joyce, have been residents of Hollister since 1996.

Comments

I disagree with this commentary. Measure P - the proposed 2016 road improvement tax measure - failed by only a few percentage points of the required 67% votes. I submit voters - a majority of whom commute daily and contribute to the wear and tear of the county/city streets and roads - recognize the need to improve, expand and maintain this critical infrastructure upon which our economy functions.

Additionally, San Benito County and its municipal government partners should continue to try until they succeed to pass a special 1/2 cent sales tax specifically for roadway maintenance and improvements. And they should join other Self-Help Counties in the state that successfully implement and manage similar road taxes. http://selfhelpcounties.org/wp-content/uploads/SHCC_Fact_Sheet_20160322.pdf

It is wrong to describe necessary tax assessments such as Measure P as 'being greedy' which is a negative characterization of the people and processes in place trying to make improvements to our roadways. 

The revenue streams to fund necessary road reconstruction and ongoing maintenance are such that a 1/2 cent sales tax is a prudent and justifiable proposition in San Benito County. 

Submitted by (Jacob Higginns) on

Sales Tax is regressive taxation, it is not fair nor equal. It hurts the poor disproportionately more than the rich. Developmental impact fees are the correct and equal way to pay for infrastructure(roads).
I will fight another rise in sales tax hard. Measure P was pushed at the voters because the Supervisors of the county are not prudent and have not been prudent for 10 plus years. The supervisors give potential money away by lowering development fees hurting the community of San Benito. Supervisors are lacking in prudence when it comes to impact fees. Developers should pay for the impacts of additional houses and traffic. Equity is lost on greedy people who support sales tax. Sales tax is greedy it distracts from the theft of potential funding for roads by supervisors inactions and developer greed. People who think sales tax is fair our rich and don't think they should pay for the system that helped create their wealth.

As I pointed out by implication, Measure P, which had my support, was put up before the massive SB1 $6 billion to $7 billion a year increase in transportation taxes by the state government that is about to land squarely on the heads of the local commuters and consumers.  Had SB1 been in place at the time I would not have supported Measure P. 

Those total costs are going to be a shock, at least a 12-cent a gallon increase in gasoline taxes, a 20-cent a gallon increase in diesel fuel taxes (probably more) an increase in truck weight fees and vehicle registration fees.  They make a real difference in the tax equation, between the state and local government they have to leave something for the earners - they should not try to take it all - that is the definition of greed.

The residents of Hollister should be encouraging the businesses in the unincorporated area to step up and do their fair share before considering any increases to sales taxes in the city.  Your neighbor in the county, sometimes living right across the street, is getting their new car for 1 percent cheaper than you are even if they buy it locally and they are often using the same police and fire department you are (and you can't declare them as dependents, lol).  Fair is fair and this "ain't".

Marty Richman

Oops, apologies to all, I overlooked the most obvious and best solution.

Why don't we take the millions and millions we are going to get from taxes on growing, processing and selling marijuana, deduct the cost of administration and enforcement and just use the balance to fix the roads?  We have been assured the money will be there - then we can call the repairs "fixed-by-pot-holes."

Marty Richman

 

Submitted by Tod DuBois (John Galt) on

The 400 Block Hotel would have produced $250,000 in TOT by itself as well as 100 jobs...and not retail crap jobs...oh well...that axe has been ground to dust. This time I want to support more sales taxes...more...more...more..evil cackle. 

My wife suggested even a better program name - "Pot for the potholes." 

Tod, we have a new hotel...if it ever opens (that last part really matters).

Since I am not opposed to developing the 400 block and never have been you need to sharpen your aim.  I will point out, however, that the potential for booked rooms does not seem to be inspiring the current project to completion.  That seems to be an economic disconnect.

Marty Richman

Submitted by Tod DuBois (John Galt) on

Marty, my guess is that there are skeletons in the soil....LOL. The site was back filled with rubble after the demolition and so has to be excavated and re-compacted to meet current codes, plus there is an alleyway that the city may have to abandoned full of utilities to be rerouted. Bottom line, very expensive to build....which of course is why it was advised to be a hotel and should have been a 5 story tower because if you are going to go deep, then go tall, otherwise you get short space for big money. 

You think Rubcic wants to touch that project...no way. The city will want that 100% outsourced so nobody can possible be held responsible. I feel bad for the city, they got that $6,000,000 parking garage built now to get a $4,000,000 project next door that won't pencil either. They will not only need to give away the land but also subsidize the construction. Political disaster coming like a train wreck in slow motion. 

Submitted by Robert Gilchrist Huenemann (bobgh) on

Of course Hollister residents would like to see higher county taxes, some of which would benefit them. Everybody wants something for nothing. Mike and Marty have been leading that parade forever.

Actually, Bob, I would prefer a tax-free society, but I am unwilling to live in a service-free and/or  run down infrastructure society.  I happen to believe that some taxation is necessary for our mutual benefit and I try - many timers fruitlessly - to get my money's worth.  That is why I opposed SB!1, but I am too often caught between what I consider radical positions, those who want to mindlessly tax the society to death and those who want to make everyone to go it alone.

Yes, everyone's opinion is predictable. but at least the three of us, you, Mike and I, have an opinion.

Just call me moderate and reasonable - but don't call me late for dinner.

Marty Richman

 

It's pathetic that a duly elected official like Huenemann cannot understand the relationship between taxes, fees and assessments - including water rate structures - and the need to invest in critical public infrastructure like roads and water systems.

Everybody wants something for something in a capitalistic society including fair and consistent tax structures across the board. Huenemann lives in a perverse alternate universe devoid of facts and business analysis that contradicts the realities of infrastructure management. If ignorance is bliss, the SBCWD director exists in a state of Nirvana.

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