Talk About Money: Sales tax benefits outweigh costs

I’ve been writing this column for 4 years. Some months I come up with the topic and some months my editor does. This month falls into the latter category. I was asked to write about the sales tax increase Scotts Valley will vote on in November.
If it passes, it would cost me an extra half cent per dollar spent. A $10 plate of fish tacos at Taqueria Los Gallos would cost an extra nickel. I don’t ride motorcycles, but if I were to buy a Zero for $10,000, that would cost an extra $50.
I guess I’m supposed to care about this, but I really can’t get too worked up. All this would do is raise Scotts Valley’s sales tax to the same level as Santa Cruz’s and Capitola’s: 8.75 percent. Additionally, the tax would expire in eight years.
What about the unemployed, or people struggling to scrape by on minimum wage? Most groceries and all items purchased with food stamps are not subject to sales tax. I doubt this tax will have much impact on those folks’ lives.
What about the slippery-slope arguments, that this is yet another tax heaped on an already over-taxed populace? I certainly agree with that. Federal, state and local politicians are likely to keep raising taxes until we have another taxpayer revolution like we saw in 1978 with Proposition 13. But a half-cent tax is not going to spark any revolution.
While the proposed tax seems insignificant, the programs it would support are not.
“There are a lot of things that go into making Scotts Valley a special place,” said City Councilman Jim Reed, “like our parks and support of our schools. But of all things the city does, nothing is more important than retaining our great police officers, and a large part of that equation involves money. We have to pay competitive wages or we’ll lose good people.”
Scotts Valley’s ultra-low crime rate is testimony to our great police. Once when my son was a toddler, he got hold of our phone and randomly pressed buttons, apparently including the sequence 9-1-1. Within minutes, an officer was knocking on our door. We apologized for the false alarm, but the rapid response certainly made us feel safe.
That was years ago, and we didn’t have an 8.75 percent sales tax then. Why do we need it now?
Reed said the state has taken millions of dollars in revenue away from Scotts Valley in the last couple of years. “To a large extent, they’ve solved their financial problems on the backs of local schools and local governments,” he said.
When Gov. Jerry Brown and the Legislature eliminated local redevelopment agencies in 2011, Scotts Valley lost not only millions for RDA programs, but almost $400,000 in revenue that augmented the general fund every year. On top of that, the state now takes a comparable amount of school funding money directly from city revenue, as well as the city’s share of vehicle license fees, Reed said.
Altogether, that’s a loss of about $800,000 each year, Reed said, accounting for most of Scotts Valley’s $1.2 million budget deficit. The higher sales tax and an increase in sales from the planned town center will go a long way toward closing that deficit, he said.
“It’s up to the people what kind of city they want to live in,” Reed concluded. “We can’t continue the level of services we provide today; the state has taken too much money for us to overcome without gutting core services. The question is: Are people willing to pay a little more for a little while to keep what we have in Scotts Valley?”
– Mark Rosenberg is a financial adviser with Financial West Group in Scotts Valley, a member of FINRA and SIPC. He can be reached at 831-439-9910 or mr********@*wg.com.