City to consider sales tax increase to balance deficit
by Joe Shreve
Jul 26, 2013 | 1273 views | 2 2 comments | 48 48 recommendations | email to a friend | print

At the Wednesday, July 17 meeting of the Scotts Valley City Council, city leaders voted to move forward with a plan that could call for a special election in November to address the city’s growing budget deficits.

Faced with an annual deficit of nearly $1.2 million — which the council members say has been exacerbated by interference from Sacramento, the council plans to ask residents to vote on a temporary half-cent sales tax increase to close the gap.

City Manager Steve Ando said that the drive for the tax increase measure was prompted by the addition of some $400,000 of former redevelopment agency obligations — mostly salaries and services — to the city’s budget following the state closure of redevelopment agencies statewide, adding to the city’s existing deficit of $800,000.

“Because of the state’s actions in doing away with the redevelopment agencies, it’s had a large impact on the city’s general fund,” Ando said.

He said that before the addition financial burden, the city had already adopted drastic measure to combat the existing deficit — including increasing the transient occupancy tax, reductions to city staff via a hiring freeze, mandatory furlough days for employees, and incentives to businesses — while waiting for the overall economy to improve. But, with the additional $400,000, the city can’t afford to wait any longer, he said.

“We could’ve managed 3 or so years more if this had not happened,” Ando said. “But this sped things up.”

The council will vote on a plan to present to voters at the Wednesday, Aug. 7 meeting, including for how long the increased taxes will be in place — most likely a 5- or 8-year window, Ando said.

Councilwoman Stephany Aguilar said that while the tax proposal would most likely pass the council’s vote as a temporary measure, she would welcome a discussion on whether the tax increase should be permanent, rather than a temporary fix.

“I don’t want a plan for a future where we’re sinking again,” Aguilar said. “(If the tax increase passed) we still would have furlough days, we would just barely float — that’s why I want to have a conversation.”

She said that other cities in the area, including Santa Cruz, Capitola, and Watsonville have adopted similar tax increases on a permanent basis as a bulwark against state encroachment.

“This is the result of the state pilfering since (the late 1990s),” Aguilar said. “We’ve lost a good $7 million, easy, to their sticky fingers.”

In Nov. 2005, Scotts Valley voters passed Measure C, a 5-year temporary sales tax that allowed the city to build its reserves. The tax expired in 2010 and a renewal was not put on the ballot at that time.

 

n To comment, email reporter Joe Shreve at joe@pressbanner.com, call 438-2500 or post a comment at www.pressbanner.com.

Comments
(2)
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Theryl McCoy
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August 10, 2013
I love it. The conservative Obama bashing republicans of the county are going to tax themselves. Nice!
repu b
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August 10, 2013
They would not have to if hacks like obama and brown were not robbing local cities blind damb liberal hacks


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