Councilwoman looks to renew Measure C sales tax

Petitions will circulate around Scotts Valley in the coming weeks to renew a quarter-cent sales tax that helps pay for everything from public safety to parks, road improvements and other services in the city.
City Councilwoman Stephany Aguilar says she is confident that she and roughly 30 supporters can gather the required 1,400 signatures within 180 days to call for a special election in February.
Aguilar, the only council member in favor of renewing the tax, said she worries about the community’s safety, public services and well-being if Measure C— which is set to expire March 31, 2011, after being initially approved in 2006 — isn’t renewed.
“We’ve laid off eight people, city staff is on furloughs and we’ve had to eliminate positions,” Aguilar said.
Many city employees work two jobs, including City Manager Steve Ando, who also serves as finance director, Aguilar said.
Since it took effect April 6, 2006, Measure C has helped the city build up $3.7 million in reserves as of June 30. The city’s reserves were at about $400,000 when the measure passed.
Measure C added a half-cent to Scotts Valley’s sales tax for the first three years after its approval. The added tax dropped to a quarter-cent in 2009 and is set to expire March 31.
Scott’s Valley’s sales tax rate is 9.25 cents, the second highest in the county behind Santa Cruz’s 9.5-cent tax.
In May, Aguilar asked council members to consider placing a measure on the November ballot to extend the tax five more years.
But Aguilar’s request was thwarted by a 4-1 vote, as the council decided against asking voters to renew it, saying the trust of the community was more important than extending the tax.
Mayor Jim Reed said that while he supported the measure five years earlier, the city can stay afloat during tough times with its $5 million in reserves.
“We’ve got some of the highest reserves, compared to other cities in the county,” Reed said.
At its peak, Measure C raised about $1 million annually. Most recently, it provided about $500,000 of Scotts Valley’s $8.2 million budget.
When first proposed, the tax was touted as a “bridge to the future” to close an $800,000 budget gap, offer competitive police salaries and strengthen the city’s reserve funds.
Initially, city leaders banked on replacing Measure C money with revenue from the much-anticipated Town Center. Due to broader economic woes, though, the center is still in the early planning stages as developers and businesses have been hesitant to set up shop.
Aguilar said that when the tax expires, Scotts Valley will lose about $435,000 in taxes that pay for city services. The $5 million the city has in reserves, she said, is limited to specific projects and cannot be used for city services.
But the mayor said there are too many unknown sources of revenue, which could have Scotts Valley running surpluses every year, to renew Measure C.
Reed pointed, for example, to money Scotts Valley is expected to receive from a lawsuit that charged Santa Cruz County with illegally keeping millions of dollars of the city’s property tax revenues. The city is waiting on an appeals court hearing in the coming months.
When Scotts Valley won the case in superior court in 2009, the judge ordered the county to pay the city about $3 million in back revenues and $400,000 to $500,000 each year going forward.
“The back payments owed to us, plus the $400,000 to $500,000 we’d get a year, combined with the city’s frugality, would largely solve our financial problems for years to come,” Reed said.
But Aguilar said that judgment from the county wouldn’t leave the city floating in money.
“Even with the $3 million we’d get from the lawsuit over a 10-year period, the city would still be in a deficit,” Aguilar said.
Still, Reed maintains the city should wait to see whether things fall through before considering a Measure C renewal.
“We could lose the lawsuits, the Town Center might not be up and running,” Reed said. “Only then should we consider thinking about alternatives.”
Councilwoman Donna Lind said that when the tax was approved she made a promise to the community that the tax would last only five years.
“I gave my word,” said Lind, who was elected to the council in 2008 and was a Scotts Valley police officer until 2006. “We need people to be able to trust that we will keep our word. Three different business owners personally thanked me for not trying to renew it.”
However, Aguilar said many business people and individuals in the community have asked for a chance to renew Measure C.
“Renewing the tax would hold things at current levels,” Aguilar said. “It wouldn’t improve things or reinstate jobs — it just maintains the basic, bare-bones structure of this city.”
Correction:
In the article “Councilwoman looks to renew Measure C sales tax” the $5 million Scotts Valley has in reserve can be used for general fund expenditures. Also, last year the city cut two full-time positions, two part time positions and cut a full-time position in half to satisfy budget cuts.
The Press-Banner regrets the errors.