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Politics & Government

Council considers new sales tax, other measures for upcoming budget

A proposal to increase sales taxes by either a 1/4 or 1/2 percent likely; other considerations include new visitors taxes and the creation of special districts

The considered a new sales tax, an increased hotel tax and the creation of special districts to raise extra revenue and scale back the town's debt burden during a special budget session held Monday night.

The discussion was one of several which will lead up to the council’s adoption of a new city budget in June for the 2011-2012 fiscal year. City Manager Marjie Pettus said she would take the various ideas that were discussed and develop some concrete proposals to be presented at the next budget gathering.

“We built today’s agenda to be completely flexible, so you (the council) could send us back almost anything,” Pettus said.

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Among the challenges facing the city are a reduction in under Governor Jerry Brown’s new budget; the professed need for capital improvements like an improvedand repairs to ; and a that will carry over from the current fiscal year. According to city records, the city’s expenses for the 2010-2011 fiscal year are $105,128,004, almost $7 million more than the allotted budget of $98,906,255.

Among possible ballot initiatives that the Council focused on were a sales tax increase of either a ¼ or ½ percent, an increased transient occupancy tax (i.e. – tax on guests at hotels and other temporary lodgings), a utility tax, a parcel tax and the creation of a special district. Pettus mentioned a parks and recreation district or landscaping and light district as possibilities. 

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“The concept is you have a special fund set up that would free up money for other purposes,” Pettus said.

Among the ideas floated for generating extra revenue, a new sales tax elicited the least resistance from council members, all five of whom offered at least tempered support for the idea. Mayor Tom Chambers and Councilmembers Jim Wood and Susan Jones all expressed their categorical support, while both Gary Plass and Stephen Babb said they favored new polling to gauge the level of public interest.

Plass said he would support the tax if it was sufficiently favored by the public, though he expressed a worry that people are “already taxed to death right now.” Chambers suggested that the tax include a “sunset clause of maybe four years, to make it clear to people that (it’s only for a certain time period).”   

Pettus said previous polls have shown strong support for a sales tax increase, whether it be ¼ percent or ½ percent.

The idea of new taxes on visitors was also well-received. Mostly that idea centered on an add-on to the city’s transient occupancy tax, although the idea was also raised of a “special events tax” on out of town vendors or corporate sponsors participating in public events.

"I like the idea that the debt not just be a burden on residents, but on visitors, too," Jones said. "Because they use our services as well."

On the other hand, board members expressed mostly disapproval for a possible parcel tax, largely because such a tax is more difficult to pass – under state law, parcel taxes require a 2/3 majority vote, whereas most other taxes require only a simple majority. In Healdsburg, a proposed $80-a-year parcel tax to fund local schools in the wake of state budget cuts failed by a narrow margin in 2008, despite a strong and well-organized campaign to get it through.

The utility tax idea also did not rate well. Pettus said such a measure would likely prove unpopular because utilities have already been subject to recent rate hikes.

In terms of cost-cutting, Plass mentioned community benefit grant funds as a possible area for scaling back, mainly because it’s a “completely discretionary” outlay. Babb said perhaps money to the could be scaled back given that the chamber didn’t even exhaust its budget in the current fiscal year. But Pettus cautioned that this year was an “anomaly.”

“(The chamber) lost its executive director this year, so they went a long period of time without someone at the helm pushing forward,” she said.

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