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San Leandro Times




Sales Tax Increase: Pro and Con
Friday, 17 October 2014 09:33
101614

By Amy Sylvestri
San Leandro Time

The city has placed a measure to create a half-cent, 30-year long sales tax on the November ballot –  Measure HH.

About one-third of the city’s total annual revenue comes from sales tax. The total sales tax last fiscal year was $29 million, according to finance director David Baum.

The current sales tax rate in San Leandro is 9.25 percent and 1.25 percent of that goes to the city. The city receives base 1 percent of sales tax and the other .25 percent comes from Measure Z, the sales tax the city passed in 2010 that was originally set to end in 2018.

Measure HH would double Measure Z to .5 percent and extend it for 30 years.

The rest of the sales tax is divided as follows: the state receives 5.5 percent, the county gets .25 percent, the state education fund gets .25 percent, the state safety fund gets .5 percent, the transportation commission gets .5 percent, the county heath department gets . 5 percent, and BART gets .5 percent.

If Measure HH passes, the sales tax rate in San Leandro would increase to 9.5 percent. And if the Alameda County sales tax increase and extension, Measure BB, passes – sales tax in San Leandro would be 10 percent, among the highest in the state.

Proponents of Measure HH says it is necessary to “maintain” 911 response times, neighborhood patrol officers, fire prevention services, library programs, children’s after school programs,and school police officers. The tax money would also be used for anti-gang efforts and repairing roads, the city says.

Those are the exact areas that voters who were surveyed earlier this year said they valued.

Opponents of the tax accuse the city of specifically tailoring the tax to look good to voters and leaving out the fact that the majority of the revenue would go to the salaries of city staff.

“A big problem with HH is that the city commissioned a survey to find the best way to sell it to the public,” said Marga Lacabe, who signed the ballot argument against HH. “If they tell people it’s for the libraries they are much more likely to vote in favor of it than if they say it’s for salaries. It’s very deceptive.”

Mayor Stephen Cassidy, who supports HH, says that “of course” the money would go to salaries, because all of the above services are performed by people who need to be paid.

“Cities are a largely people-based organizations and the services that we count on are provided by people,” said Cassidy.

The city is currently facing $187 million in unfunded debt from pension and health benefits for employees. Over 125 of the city’s employees make over $100,000 per year, including the police chief whose total compensation including pension and benefits is over $300,000. Additionally, almost 30 retired employees of the city have pensions over $100,000.

When Measure Z was first introduced in 2010, it was called “temporary emergency funding” during the economic downturn and now HH would extend the tax for 30 years

Opponents of HH say that the city is disingenuous in the phrasing of the ballot measure which doesn’t say that it doubles the existing tax and turns a “temporary” tax into something that will last until 2045.

In the ballot argument against HH, Terry Floyd of the Alameda County Libertarian Party wrote that the city is forgetting the promises it made voters four years ago when Measure Z was passed.

“We’ve seen the economy improve and the city has passed balanced budgets for three years in a row, so isn’t it about time they ended this ‘state of emergency?’  It is time for voters to hold the City Council to its word. Raising ‘emergency’ taxes to meet routine operating expenses isn’t anything remotely resembling leadership. Rewarding bad behavior only encourages more of it.”

The increase in sales tax would have an impact on local business owners. Mike Casey, owner of Cal West motors says that he opposed Measure Z then and opposes HH now.

“One of these days, it’s going to be that all of our money just goes to taxes,” said Casey.  “I feel bad for people who live in San Leandro. We’ve had to cut our expenses these past few years and that’s how we’ve survived the economy. It seems to me that when the government wants more money, they don’t tighten their belts, they just raise taxes.”

But Ethan Falls, who owns Health Unlimited, a store with branches in San Leandro and Castro Valley says that the sales tax increase is unlikely to affect his business.

“When the tax started a few years ago, a couple people mentioned it, but it didn’t really

 

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