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Sales Tax Increase Looms

Council Waits for Poll Results Before Acting


Thursday, March 21, 2013

Whether Santa Barbara voters are allowed to choose to increase the sales tax charged within city limits by an additional half cent this November will depend largely on the results of a $25,000 poll that has yet to be commissioned. At stake in the equation is about $9 million in additional revenues City Hall would generate a year that could be used to restore some of the services cut the previous six years or to address a massive gap ​— ​ranging from $200 million to $400 million in size ​— ​in unfunded and deferred capital needs.

The issue is especially charged given that this year is an election year for the City Council with four of the council’s seven seats up for grabs. For the sales tax to be placed on the ballot, a minimum of five councilmembers would have to put it there, and it’s not clear if the votes exist. Mayor Helene Schneider, up for reelection with no evident challenger in sight, is a strong proponent of the tax hike, arguing the additional revenues are needed for a host of pressing issues ranging from street repairs to a new police station. “If we don’t start fixing some of these things now,” she said, referring to the deteriorating quality of the 400 miles of roads City Hall has to maintain, “it’s going to cost us a whole lot more down the road.”

In 2001, the road-quality index for city streets was 74 out of 100; last year, it dropped to 63. Five years ago, a council subcommittee identified a list of major projects that needed funding; high on the list was a new police department, a refurbished fire station on the Riviera, and a revamped Cabrillo Bathhouse. Schneider said the bathhouse could generate revenues if fixed up, but she added that the downstairs gym ​— ​which many don’t know exists ​— ​is in such bad repair that “you don’t want to go in there.”

Councilmember Frank Hotchkiss, an outspoken and to-the-point conservative, is the only one to unequivocally state he’ll vote against placing the matter before the voters regardless of what the survey says. Hotchkiss ​— ​up for reelection ​— ​said surveys can be made to say anything and brought up the Saturday Night Live skit in which it was satirically demonstrated that “leisure suits cause cancer.” Hotchkiss said he has no plan yet how he would generate the additional revenues that would be required to hire the additional police officers he believes are needed. “It’s more of a philosophical starting point,” he said. “I don’t want to see more taxes.”

The council’s two other conservatives ​— ​Dale Francisco and Randy Rowse ​— ​expressed skepticism about the fiscal prudence of such a sales-tax increase but stated they’d be open to placing the matter on the November ballot, depending on the poll results. “If the voters say they want to tax themselves, who am I to stand in their way?” said Francisco. Francisco elaborated that he’d need to see a strong showing by survey respondents ​— ​closer to two-thirds than just one-half ​— ​to vote in favor of placing the tax increase on the ballot.

Both Rowse and Francisco expressed concern that the council has not demonstrated an ability ​— ​in relatively good economic times ​— ​to withstand public-employee demands for pay increases. Both the police and fire unions have just started contract negotiations; the union representing most city workers begins contract talks in September. Neither Rowse nor Francisco is up for reelection in November, but four years ago, Francisco ran for mayor against Schneider. Asked if he was contemplating another mayoral bid, Francisco stated, “No comment.” Francisco didn’t deny that the city had pressing capital needs, but he said many California cities were in far worse condition. The problem, he said, was structural in nature and could not really be addressed until the state’s regulatory bureaucracy stopped squelching California entrepreneurs.

City Administrator Jim Armstrong noted that the shortfall for major capital projects was first identified five years ago but that it made little sense to contemplate a sales-tax increase in the midst of a severe recession. Since then, he noted, the state shut down all redevelopment agencies, which Armstrong estimated cost the City of Santa Barbara up to $55 million over the next three years. Throughout the recession, he said, councilmembers voted to trim 90 positions from the City Hall payroll, making structural changes that saved $8 million a year. With or without the sales-tax increase, Armstrong said, the city could provide the same level of services without forcing unpaid furloughs on its workers. But, like Schneider, he stated some improvements would get more expensive over time. Armstrong noted that last year, 79 percent of the sales-tax increases proposed throughout California were approved, even one in Santa Maria. Such measures need only a simple majority if the funds are not earmarked for specific purposes. If they are earmarked, a two-thirds supermajority is needed.

Without five votes, the tax increase is dead well before it ever arrives. But even with the five votes, it remains unclear what community organization ​— ​or politician ​— ​would raise the funds to wage a credible campaign. Schneider would seem the obvious choice, but last year she unveiled a complicated package of ballot initiatives ​— ​including a sales-tax increase ​— ​that could not garner the political support needed for a host of reasons. While a simple sales-tax increase has less for opponents to lambaste, it would still face criticism from conservatives, who oppose any tax increase, and from liberals, who contend sales taxes unfairly burden the poor. Whether Schneider has the stomach for a repeat engagement has yet to be seen and would depend, in some measure, on whether she faced a serious mayoral challenge.

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